Premium Beauty and Personal Care in Costa Rica

PROSPECTS

Use tradition, brand recognition and peer recommendations set the pace

Because mid- to high-income locals have invested so much in recognised premium beauty and personal care goods, demand for such products continued to remain associated with more traditional brand positioning strategies. Point-of-sale availability and top-of-mind awareness, particularly of fragrances, skin care and colour cosmetics, kept leveraging on aspirational lifestyle concepts, status and self-indulgence.

Economic uncertainty affects premium performance in second half of 2018

Premium categories were affected by overall economic uncertainty that prevailed in Costa Rica in the second half of 2018, which was characterised by a general slowdown in the country’s economic growth and a significant drop in domestic confidence indexes resulting from anticipation of a major tax reform, which was finally approved in December 2018. This change also affected the availability of international currencies and their exchange rates.

Focus to remain on additional segmentation and specialisation

As major international premium players look to expand the sales potential of their main global premium brands, it they are expected to focus on developing promising fast-growing categories, including facial skin care, men’s grooming, colour cosmetics and even baby and child-specific products, where demand remains incipient. We expect to see more mature premium categories, including fragrances and skin care, engage more deeply in the use of high-quality natural and herbal formulations, with a rising number of added-value claims such as organic ingredients or vegan formulations appealing to younger millennials.

COMPETITIVE LANDSCAPE

Traditional global brands continue to lead premium beauty and personal care in 2018

Despite the broad assortment of imported premium fragrances and skin care proposals found across most high-end beauty specialist retailers in Costa Rica, such as Amphora, and in department stores throughout the country, top-of-mind international premium brands such as Chanel, Dior, Carolina Herrera, Dolce Gabbana, L’Oréal and Estée Lauder managed to remain ahead in sales in 2018. These players continued to benefit from their strong levels of recognition and the aspirational use experiences they are capable of recreating for their target base of loyal buyers.

Estée Lauder continues to consolidate its position within premium colour cosmetics

On the other end, significant sales concentration is set be seen in premium colour cosmetics, where MAC Cosmetics (Estée Lauder) has rapidly consolidated its dominant position as the main premium category reference by targeting a growing base of younger, economically advantaged millennials. Other types of value proposals from such as Chanel and Clinique are only capable of gaining a portion of MAC sales, given their limited capacity to refresh their brands’ positioning to address younger buyers’ fashion expectations and their corresponding spending capacities.

New added-value and more affordable premium proposals to boost competition

As most premium beauty and personal care manufacturers and importers strive to move away from economic uncertainty and price-based competition, they will continue to focus on value-generation alternatives over the forecast period. Added-value options such as limited blends’ editions, mostly in the case of fragrances, are anticipated to consolidate as one of the most relevant value growth opportunities by 2023.

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