The Cosmetics Market in Portugal

1. The Cosmetics Market in Portugal Let the U.S. Commercial Service connect you to a world of opportunity.

2. About Portugal Portugal is a smallcountrylocatedontheIberianPeninsula, insouthwesternEurope. Portugal isborderedbytheAtlanticOceanintheWestandSpainontheEast. Its total areais 92,391 sq km andthecoastlineis 1,793 km. ThePortuguesepopulationisaround 10.5 million.

3. Let Us Help You Export Thispresentationismeant to facilitatetheentryofAmericanmanufacturedcosmeticsin to Portugal. Ifyou are anAmericanmanufacturerand/orexporterofcosmeticsoranykindofhygieneorskincareproductspleasemakesureallyourproducts are ready to beexportedinto Portugal. InfarmedisthePortugueseinstitution, undertheMinistryofHealth, thatinspectsalldocumentsandreleasestheproductsfromCustoms. InfarmedandPortugueseCustoms are known for beingofthemostdemandinginEuropebuteverythingmaybesimplifiediftherightdocumentsaccompanyeachorder.

4. A Summary of the Portuguese Cosmetics Trends. The economic climate which began in 2011 forced sales of beauty and personal care products to decline, as consumers tightened their budgets. In 2012 this trend continued to impact all market segments and the crisis in Portugal dominated newspaper, press and media articles; these had a negative impact on economic situation. As a result, mature categories such as fragrances, skin care and cosmetics suffered the most. Price-sensitivity is now the reality for the majority of Portuguese consumers, who use techniques such as more frequent visits to outlets to find promotions. Along with many other markets segments, beauty and personal care struggled in 2011. Nonetheless, some product categories succeeded in growing sales despite the recession.

5. A Summary of the Portuguese Cosmetics Trends. In general, imported cosmetics have a great impact on the local market. Until 2008, the increasing disposable income was responsible for the emergence of a young urban elite which changed life styles and the need for luxury products as well as demand for lifestyle enhancement products. Retail stores adhered to this tendency and several brands sell their products in local supermarkets - in 2010 Portuguese consumers favored the mass market for purchasing their beauty products, as they preferred to do their shopping under the same roof and at convenient prices.

6. A Summary of the Portuguese Cosmetics Trends A numberofspecialtystoresopeneddoorsoverthepast 10 yearsandhavebeenextremelysuccessful, Thatisthe case for MAC Cosmetics, Douglas, Perfumes & Co., SephoraandlastlyKikoCosmetics. Natural Products are also very popular as Portuguese consumers believe that natural products are healthier and have been around for longer. Storessuch as theBodyShop (UK), O Boticario (Brazil) andL’Occitanne (France) are verysuccessfulandhavestoresinmostoftheshoppingmalls.

7. MarketData According to local sourcesthePortuguesecosmeticsmarketisdividedintoseveralsubsectors, eachoneoccupying a slicethewhole sector, as follows: According to thesamesource, below are the total revenuesgeneratedin 2009: Deodorants Market: $94.4 million, Facial care market: $226 million, Fragrances market: $266 million.Hair care market: $304.2 million Hand & body care market: $32 million.Make-up market: $110.5 million Hygiene market: $205.1 million Skincare market: $295.2 millionSoap market: $33.2 million.

8. Market Trends • The growing trend for consumers to seek cheaper ways to maintain their beauty led to a general movement away from salons, with hair removal home-kits and women’s razors and blades seeing growth in response. Permanent solutions such as laser hair removal in salons still pose a growing threat to home treatments. However, simple procedures such as waxing have to a significant extent turned to a DIY base. • Sets/kits were quite well received by Portuguese consumers in 2012 and in the more economically challenging times, proved the right choice for consumers. Indeed, when willing to spend a bit more, consumers looked for promotions and gifts or free products such as those included in kits. Unlike in previous years manufacturers responded to this by adapting their offers and enlarging them to other areas less prone to these types of products, such as skin care or more specifically in anti-aging products. • Strong competition from the cosmetic products sector, increasingly positioned as alternative treatments for the alleviation or prevention of minor skin conditions, together with the poor economic conditions experienced in Portugal inhibited stronger growth in the category. In addition, advertising campaigns by cosmetic manufacturers are responsible for blurring the distinction between the two products as consumers seek new alternatives for skin treatment.

9. Color Cosmetics • New product launches observed during the past three years included mascaras with ingredients that offered more intense and dramatic looks, nail products full of color and brightness, and developments in foundation/concealer which match the skin tone. Facial make-up was the least affected category in throughout this period, mainly due to special value offers in sets/kits, such as buying one product and having another almost free, an example being an anti-ageing product with a facial make-up product. Direct selling is an important channel in color cosmetics ant it is often more aggressive in periods of economic crisis, due to direct sales staff trying to push sales more aggressively during the economic crisis. However, as consumers have less purchasing power, volume sales are affected. Avon and Mary Kay are the two leading U.S. cosmetics brands in this sector but face strong competition from the French Yves Rocher and Swedish Oriflame. • This segment is expected to suffer a considerable decrease over the next two to three years, as consumers are likely to cut down on their purchases or buying less expensive brands. Simultaneously, product innovation and marketing activities will help color cosmetics to remain important for the consumer.

10. Color Cosmetics (continued) • New product developments over the forecast period are expected to include brands with added benefits, natural and mineral products, as well products with sun protection attributes. In terms of color cosmetics, consumers are expected to stop purchasing some goods, whilst they will look for private label products and brands with better offers; price and promotions will continue over the next two to three years. • Average unit prices are likely to be driven by two diverging trends, brand and innovation. Portuguese consumers are becoming more aware of the ingredients used in color cosmetics, and are concerned about the long-term effects of these ingredients and their impact on their skin. Facial make-up is expected to see a constant decline on annual sales volume over the next three year period.

11. What about U.S. Cosmetics? • U.S. manufacturedcosmetics are trendyandwellrated. A specificawareness for “made-in-America” isinstalledandAmericanproducts are inhighdemand. U.S. cosmeticsandskincareproductshave a veryhighreputationin Portugal andmanybrandshavesuccessfullysettledinthemarket. • Cosmetics for menhavealsobeenintroducedinthemarketand are a good subsector for US companies. • EventoughtheEuropeanCosmetics, ToiletryandPerfumeryAssociation (COLIPA), considers Portugal as oneofthesmallestmarkets for cosmeticsinthe EU, 2008 Portuguesesalestotaled €1.2 billion, representing 1.8% ofthewhole EU market. COLIPA rated Portugal as the 12th largestmarketinthe EU.

12. How much does the U.S. Export to Portugal?

13. Legal and Regulatory Issues When exporting to Portugal • Whenyouconsider Portugal as yourexportcountry, pleasemakesurethateachproducthas a listofingredientsand “CertificateofAnalysis” dulysignedbytheanalyzingentity/laboratorydatedlessthan a yearold. Pleaserememberthat for eachbatchmanufactured a newCertificateofAnalysishas to beissued. Inanordersent to Portugal allproductshave to have a manufacturingbatchnumberanditslistofingredientsandCertificateofAnalysis. • The manufacturing laboratory has to be registered with FDA and has to have a Cosmetic Manufacturing License issued by the Department of Health in its State. Thesedocumentsassurethatthelaboratoryisfunctioningunderthe U.S. lawandthatallproducts are manufacturedandtested for healthsafetyreasons. Please note thatevenifyou are alreadyexporting to Europe, PortugueseCustomsstillrequireallthesedocuments. Pleasefeelfree to contactouroffice for support prior to exporting to Portugal. • All labels have to be translated into Portuguese. We strongly advise that a Portuguese importer/distributor is selected and that he takes responsibility for or selects a translation company for the correct translation of all labels. Infarmed will not release any products that are not correctly translated and labeled.

14. Get Export Ready Inshort, to place a cosmeticproductonthe EU market, thefollowingregulatoryproceduresmustbecompleted: • Legal representation • ProductInformationPack (includingtheCosmeticSafetyReport, a descriptionofthecosmeticproductandthemanufacturingmethodStatement) • Notification to thecompetentauthority

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20. Work with us to connect with a world of opportunity U.S. Commercial Service PortugalAna Paula Vila – Cosmetics Specialist Ana.vila@trade.gov Tel: +351 217 702 532