Fragrances in Costa Rica

PROSPECTS

Economic uncertainty and contraband continue to impact fragrances sales

Smuggling of premium fragrances from neighbouring countries – in particular from Panamá, which has a major free trade zone, and the US (through small-scale personal practices) – has historically been the main threat for these products’ retail sales in Costa Rica. Smuggling of fragrances has continued to escalate in recent years with other similar practices that also affect mass-orientated and more generic proposals such as those manufactured by mass players like Avon, and which also include different types of cloning practices for the most popular value brands.

Strong brand recognition and aspirational lifestyle concepts will influence demand for premium fragrances

Driven by global marketing dynamics, we anticipate that a broader base of local millennial consumers will continue to gain interest in recognised global fragrances brands over the forecast period. These products’ positioning in terms of status, recognition and use experiences will continue to inspire demand for higher-end fragrances between 2019 and 2023.

Mass fragrances to reinvent themselves

On the other end, major mass-orientated players such as Corporación Belcorp de Costa Rica and Avon de Costa Rica are expected to reinvent their value proposals by increasing their juice blends, whilst also trying to reach the growing base of younger local millennials. Through these efforts, they will keep gaining proximity to the available masstige brands in terms of their marketing approaches, such as by using celebrity endorsements and developing lifestyles/aspirational concepts.

COMPETITIVE LANDSCAPE

Regional distributor and retailer Saint Honoré maintains its lead in premium fragrances

In 2018, the regional distributor and retailer Saint Honoré Costa Rica continued to benefit from the legal framework that presents different types of small-scale importing barriers to most beauty and personal care categories as well as that of consumer health goods, which makes it very difficult to buy these types of products directly from US-based internet sites such as Amazon. Saint Honoré benefits from operating its own Amphora stores, whilst also being the main importer and distributor of the main global fragrances brands in Costa Rica.

Direct sellers reach broad base of low- and middle-income buyers

On the other end of the spectrum, international direct selling players Corporación Belcorp, Avon, Oriflame and Zermat continued to take advantage of their developed economies of scale in terms of manufacturing and distribution throughout the region. With their consolidated logistics networks and well-developed sales platforms, these companies have the capacity to attract a broad base of low- and middle-income buyers across the country, at both urban and rural locations to their value-for-money fragrance options.

Recognised global brands expected to keep their competitive advantages

Despite the rising availability of smuggled and cloned products that are anticipated to continue emerging across black markets over the forecast period, the leading players are expected to remain focused on increasing their competitive advantages. They will keep improving their logistics and operational savings in order to provide the most attractive value-for-money options possible to their target domestic buyers, as the best way to remove their incentives to make illegal purchases.

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