Argentina

Argentina is certainly a resilient country – and one which has weathered much in its history. Nestled at the tip of South America, Argentina has a terrain of rocky mountains, sandy beaches and flat lowlands. This variety coupled with a year-round sunny climate makes Argentina the jewel in the crown of the region.

But times have not always been so sunny – indeed, just seven years ago, governmental instability and corrupt leadership led to the country suffering its worst financial crash since the early part of last century. Under the then president Fernando de la Rúa, bad decisions led to a coalition split within his government and the people revolted against it which led to his resignation. During the next two weeks, Argentina experienced three presidents in quick succession which led to the country defaulting on its international debt. This quickly led to the major depreciation of the peso and a huge spike in inflation.

Argentines started to suffer in 2002, with a 25% unemployment rate and the lowest real wages in 60 years. That didn’t start to be rectified until the election of Néstor Kirchner as president in May 2003. This move represented a turning point for many Argentines and from that point on the country started to right itself economically and its C&T sector rose from the ashes. However it has been a long hard struggle, according to Argentine analyst, Ignacio Pons.

“We have seen a good economic upturn since those days, and this also holds true for the C&T market in Argentina, but it has been very difficult. Figures from Euromonitor show that the C&T market was worth US$2.9bn in 2008, compared to US$2.3bn in 2007 and US$2.01bn in 2006. This has been an impressive turnaround and we have just passed where the market stood in 2000 before it plummeted after the crash.”

Pons says that nobody in the industry will underestimate the effect of the crash on employment, production, import and export levels were all affected on a mass scale.

“The financial situation the people found themselves in was really dire and through no fault of their own. Nobody wanted to go near a country with such an unstable economy and business really suffered. But thankfully, Argentines are strong people and have managed to claw their way back up to where we were before. And we are lucky in this country that we have many natural resources which we can rely on.”

Indeed Argentina is one of the world’s biggest producers of aluminium, hence the deodorant market is a big money spinner for it. It also produces a plentiful supply of the propane gas used in the canisters themselves.

In plentiful supply

Meanwhile, the Patagonia region of Argentina is a useful source of flora and fauna, which is used in natural beauty products – a growing Argentine export product. Other natural resources include mud from the volcanos in the Mendoza region and jojoba and aloe vera which are also in good supply in the country. Because of this, natural, particularly mud-based beauty products, are very popular in Argentina. Argentina is also famed for its wines and is now also using the Vitis viniferas complex found in grapes as an antioxidant ingredient in some beauty lines.

Argentina is the second biggest South American C&T market in terms of value, behind Brazil. Indeed, Brazilian direct seller Natura has huge success in Argentina as do Oriflame and Avon.

Comments Pons: “In Argentina there are the five big cities – Patagonia, Buenos Aires, Cordobo, Rosario and Mendoza and these all have huge shopping malls carrying a wide selection of domestic and international beauty goods. But, aside from these areas much of the country is very rural and people have very little access to shops because of their geographical location and limited transport facilities. Because of this, direct sellers flourish in Argentina and Avon in particular has seen its sales rise exponentially.”

He also talks about the rise of the pharmacy channel in Argentina which, since the launch of the FarmaCity chain of pharmacies ten years ago, has provided Argentines with more choice. “Argentines are busy people,” comments Pons, “and they prefer to get their pharmacy supplies and their beauty supplies in the same place if possible – this is where FarmaCity has proved very useful. More stores are opening all over the country and there is talk of expanding northwards into other South American countries.”

Despite the global economic situation in 2009 causing concern, Capa, (Cámara Argentina de la Industria de Cosmética y Perfumería), the C&T trade body feels that there is room for optimism as the past few years have left Argentina in a strong position. The country has had to rely very much on domestic companies due to several multinationals pulling out of trading with the country after the 2002 meltdown.

Rodolpho Prieto is Capa’s president: “Our industry has proved that it is capable of working in different circumstances and under high fiscal pressure. In 2007 alone our industry grew by 25% compared to the previous year. Our export value was worth US$345m whereas we imported only US$318m worth of goods.

“We also use international events to showcase our wares on a world stage and find this is effective thanks to international audiences taking a real interest in what we have to offer.”

Overcast outlook

Yet despite this sunny message, there are some in the industry who are less optimistic about how the country will fare as this recession bites deeper. Cristina Landler is the international director for the Issue Group, which manufactures several C&T lines at its headquarters in Buenos Aires. She feels that the country is facing a critical period: “When a situation such as this happens, I believe that the C&T industry is one of the first areas to suffer – many brands suddenly disappear from the market and international brands leave the country. However, certain things do work to our advantage at the moment. After 2002, companies here were forced to become more competitive price-wise. And getting good value for money definitely appeals to people at times like these.”

David Assennato, ceo of natural body care brand Universo Garden Angels feels that as long as manufacturers keep their target audience in mind, the industry should weather this latest storm.

“We create products using aromatherapy and floral essences because consumers today want beauty products to affect them not just physically but also emotionally,” says Assennato.

“Because we offer products at all ends of the pricing spectrum, we can appeal to everyone and it is commonly known that Argentina is a country of polarised wealth. Therefore we have three different brands and two different marketing models to target all income brackets.”

He adds that after 2002, the country became “economically isolated” and had to learn to survive on its own, particularly in export terms. The country relies more heavily on domestic trade, not just in C&T terms but also when it comes to food, wine and engineering, than it does on international trade and this should put it in a better position to cope.

Argentina is a country renowned for its natural beauty and indeed its natural resources seem to strengthen and support its beauty industry. While insiders are split as to whether the country can withstand another financial crisis, they do agree that past problems have hardened Argentina to whatever life can throw at it, with an ability to adapt and mould itself to adjust to new situations. And this might just be its saviour.

L Oval capitalizes on a core Argentinean market

“Our main deodorant brand is Kevingston, a range which targets males all the way from six to 70, at a variety of price points. It is based on a sporting ethos as we recognise that sport is a common denominator with men and the bottles display a selection of fun characters.
“And following this success we are rolling out the Kevingston franchise into a full range of male C&T products which will hit Argentine shelves later this year. Not forgetting our female customers, we have the equivalent range for women with our Muaa line and this also has accompanying products such as body splashes, shower gels and body lotions.”