Growing Opportunities in Aesthetic Care

In 2015, Mexico occupied fifth place globally in the total number of cosmetic procedures, stacking up an impressive 907,913 elective surgeries, according to the International Society of Aesthetic Plastic Surgery. The country fell behind the US, Brazil, South Korea and India.

With an obesity problem plaguing Mexican society as well as the transformation of the country into a medical tourism hub for bariatric surgery, there is no doubt Mexico’s aesthetic industry is thriving. According to Fernando García, Director of Tijuana Bariatrics, 98 percent of his patients are international and only 2 percent are domestic.

Data from the National Chamber for the Cosmetic Products Industry (CANIPEC) states that personal care products represent 1.2 percent of Mexico’s GDP, which makes it the second largest beauty market in Latin America after Brazil.

In an official statement, Expo Feria de la Belleza y el Estilismo or Expo EBIO 2016, one of the industry’s leading events, states that only 20 percent of Mexican households own at least one personal care product and that 70 percent of all merchandise available is directed to females. This leaves significant room to grow the Mexican beauty industry from a mere US$10.5 billion in 2015 to USUS$14 billion in 2020, according to Mordor Intelligence.

Last year beauty exports surpassed US$2.5 billion while imports amounted to a little more than half thatat US$1.3 billion, says CANIPEC. Considering market fluctuations and the depreciation of the peso against the dollar, this shows a strong industry poised to grow. Carlos Berzunza, Director General for CANIPEC, says that on average the sector grows 4-5 percent annually and this year will be no exception.

In the past decade the country has attracted US$300 million in foreign direct investment annually, thereby creating an industry that provides more than 200,000 direct and indirect jobs, he adds.

Berzunza says 96 percent of Mexican personal care products exported stay in the continent, with over half going to the US. This creates a multifaceted market with a large catalogue ready to cater to international markets.

The industry’s exports are driven by numerous treaties the country already has including the Pacific Alliance, its negotiations for the Trans-Pacific Partnership (TPP) and the Panama Free Trade Agreement. CANIPEC is also negotiating tariff reductions and commercial facilitation for beauty products through the Economic Complementation Agreement with Brazil, says Berzunza.

Skincare is also an important issue that is being targeted by the market. Corrado de Gennaro, General Manager Mexico & Central America for Nestlé’s Galderma, says 70 percent of the Mexican population is afflicted by some variety of skin disease, which would explain the company’s emphasis on R&D and the registration of 55 new patents since 2014.

According to Euromonitor, dermatologicals are anticipated to increase by a value compound annual growth rate (CAGR) of 3 percent at constant 2015 prices, to reach MX$6.6 billion (US$358.1 million) by 2020. According to Carlos Kruyff, Partner and Managing Director at CDM Labs, this growth includes dermocosmetic and skin disease medicines and it still barely covers inflation. Kruyff says, though, that in the past dermatologists sneered at the aesthetic and corrective industry but the tide has changed as proven by growth percentages.

Farmapiel plans to launch 13 new products this year, adding to the 18 launched in 2014, says Ricardo Spinola, CEO of the company. “Beauty is becoming a relevant topic and today we see people in their 60's and 70's looking like 50-year-olds.”

He emphasizes though that chemotherapy patients are also pushing the market, looking for products to counter the effects the treatment has on their skin. Diabetes, one of the leading conditions in Mexico, is also a driver for skincare.

To ensure success, Sesderma focuses its sales strategy on medical practitioners as they represent 80 percent of their revenues. The company has only added 20 sales points for over the counter (OTC) products, which strategically cater to the practitioners' preferences. “Sesderma had to lower pharmaceutical points that were no longer profitable such as Sanborns, which was dropped from 40 to 20, and San Pablo, cut from 50 to 30,” says Geraldine Waked, Director General of Sesderma.

Merz Pharma is focusing on bringing to Mexico a new cellulite correction device known as Selfina, which has already been approved by the Federal Drug Administration (FDA) and exists in the US market, says Victor Anaya, CEO. The company is also proud of its botulinum toxin, which is the only one in the market that does not contain complex proteins, minimizing side effects.

In 2015, the largest market dermatological competitors were Genomma Lab Internacional with a 35 percent value share and Bayer de Mexico with an 11 percent share, claims Euromonitor. Both have continued doubledigit growth.

Hair loss is another trend driving the market in Mexico. As in the rest of the world, this is the number one aesthetic concern for men and one of the main concerns for women, says Ariel Díaz, Co-founder of Kaloni Holding Group. Up to 40 percent of men suffer from some kind of alopecia, he adds. Therefore, though the treatment provided by the company lasts 14 months they welcome their clients for lifelong follow-ups.

Euromonitor states that in 2015 Procter & Gamble Mexico continued to lead hair care, accounting for a 21 percent value share. The company owns several brands including Head & Shoulders and Pantene, which are in the top five hair care brands in the country.

CDM Labs is investing most of their capital in capillary care and hair products, pigmentation skincare and skin blockers hoping to grow domestically and put off exports, says Kruyff.

However, in the baby shampoo market Grisi is still leading the pack after launching Ricitos de Oro, the country’s blockbuster shampoo, 26 years ago. According to Alejandro Grisi, the company’s Director General, the star chamomile product still represents 40 percent of the national market share.

Grisi is focusing on the development of natural-based products including soaps, which are now made from vegetable oil. Alejandro López, Director General of IM Natural, says the company prefers to invest in the quality of their natural products instead of marketing, and therefore they focus on multilevel programs and catalogue sales for their revenue. Their high-quality mascaras are also conquering new grounds in the male grooming sector.

López foresees that the beauty products market could be growing at rates of about 11 percent by 2019, propped up by research efforts to find new ingredients and solutions and more professionals entering the sector. “Mexico is an attractive investment and distribution destination adding to the positive outlook we have on the future.”