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Giants In Cosmetics Essay

1245 words - 5 pages

To L'Oréal, Brazil's Women Need New Style of Shopping
(See Correction & Amplification below .)
RIO DE JANEIRO—Brazilian women are among the biggest spenders on beauty products anywhere. But the world's largest cosmetics company, L'Oréal SA, has faltered in Brazil.
The reason: Brazilian women from the banks of the Amazon to Sao Paulo's slums and the affluent beach communities of Rio de Janeiro have traditionally bought their skin creams and mascaras from door-to-door sales representatives, not the shops where L'Oréal sells its brands.

Cosmetics giant L'Oreal is trying to change the way Brazilian women buy makeup. WSJ's Christina Passariello reports from ...view middle of the document...

Getting Brazilians to alter their buying habits won't be easy. The two major players who use the door-to-door method claim roughly 50% of all color cosmetics sales and 42% of skin-care sales. Natura Cosméticos, the market leader in beauty and personal care, has one million salespeople across the country, and U.S. cosmetics company Avon Products Inc. has built up a larger market share in Brazil than L'Oréal thanks to its expertise in direct sales.
L'Oreal's challenge also reflects the rising competition that global consumer-goods companies face from local rivals who understand the tastes and peculiarities of their home markets. Mexican bread maker Grupo Bimbo, for example, leads rivals such as Kraft Foods Inc. in Latin America, and last year it became the second-biggest bread maker world-wide after buying Sara Lee Corp.'s bakery unit. India's United Breweries Group has built a spirits giant around its popular Kingfisher beer.
Door-to-door vending is a longstanding custom in Brazil that has ushered millions of Brazilian women into the middle class. Some 2.5 million women, out of a total female work force of 42 million, earn a living from direct sales in Brazil.
Valdiane Vanessa Soares de Lima lives in one of Rio de Janeiro's toughest slums. A stay-at-home mother with two kids, she is accustomed to spending as much as $120 a month on Natura products. "I'm totally out of control!" the 23-year-old Ms. De Lima said with a laugh as she displayed some of her makeup in her tiny living room.
Natura Chief Executive Alessandro Carlucci predicts the direct-sales model in Brazil will be going strong for at least another decade. Customers like "the cultural side," he says.
But Mr. Agon takes a different view. The 54-year-old executive, who took over as L'Oréal's CEO five years ago, made his name as head of L'Oréal's U.S. unit by opening a center to research black skin and hair in 2003 and launching Soft Sheen-Carson hair-conditioning oils for African-Americans. In 2006, he spearheaded L'Oréal's purchase of The Body Shop.
Peddling Beauty
View Slideshow

Lucas Zappa/izp for The Wall Street Journal
Marcia Reis tries on Natura lipstick with saleswoman Andreia Zacaro.
Two years ago, L'Oréal was looking for new ways to grow as the financial crisis hit its core European and U.S. markets, and Brazil, the world's third-largest cosmetics market after the U.S. and Japan, seemed an obvious target. While it had been in Brazil for 50 years, it had mainly focused on hair products. Last summer,...

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