Cosmetic industry opens a market of opportunities for the Dominican Republic
The cosmetics industry in the Dominican Republic is developing as a segment with great growth potential. As of October 2017, exports of products from the area amounted to US$33.4 million, with a relative variation of 1.9% compared to the same period in 2016, when the figure reached US$32.8 million, according to the General Directorate of Customs (DGA). .
Among these exports are eye makeup (US$17.39 million) and hair products (US$13.61 million). Also creams, lotions, powders, lip makeup, and manicure and pedicure products (US$2.36 million).
The executive vice president of the Association of Industries (AIRD), Circe Almánzar, believes that Dominican beauty products are perceived as a "country brand", especially in communities abroad, where quality is appreciated of Creole articles.
“It could be said that exports of beauty products have almost quadrupled in recent years and that the volume of sales has been significant,” he points out.
Almánzar explains that the Beauty Products Cluster was created taking into account the potential of this industrial subsector and the large number of chemical, beauty and hair companies in the country. In the same way, for the innovation of the product, its relationship with the ethnic market and the Dominican agribusiness.
“If we can use our agricultural products to further enhance the development of innovation in beauty, the industry will develop further. Right now we are trying to take advantage of the mixture of coconut and cocoa”, indicates Almánzar.
According to AIRD data, from January to April 2017, US$6.7 million worth of cosmetics were exported, of which US$4.4 million belong to conditioning creams, treatments, leave-in, dyes, hairspray, and gel.
The United States and Haiti continue to be the largest buyers of industrial products, importing US$2.6 million and US$1.7 million, respectively, during this period.
During 2016, exports reached US$22 million. The most demanded products include essential oils (US$1.4 million); bath gel, deodorant and air freshener (US$1.4 million); lipstick, enamel, creams, powders, oils, gel and lotion (US$2.7), and conditioners, treatments, leave-in, dyes, hairspray and gel (US$14.9 million).
For that same year, the AIRD reported the export of artificial essences and flavors (US$640,401 million), colognes and perfumes (US$614,280 million), as well as toothpaste and mouthwash (US$179,792).
Cluster
The president of the Beauty Products Cluster, Rommy Grullón, highlights the social impact of the local industry, by supplying an important part of the informal businesses run by women in the Dominican Republic.
Grullón points out that the Dominican industry is in one of its best moments, being more valued, and being well positioned within its market range in relation to foreign products.
He explains that previously the trend in the Dominican Republic was to use straighteners. However, the market is more in favor of the natural and, for this reason, currently what is sold the most are conditioners and protectors of the hair strand, as well as hair dyes that continue with their trend.
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“Our conditioning creams are of exceptional quality, both in ethnic and non-Latino markets and are highly accepted by African-Americans,” he says regarding the US market.
Manufacturers
The president of the Association of Small and Medium-sized Cosmetic Manufacturers (Apymefac), Juan Rodríguez, points out that the cosmetics sector generates 193,500 direct and indirect jobs. Rodríguez points out that in the country there are 150,000 beauty salons and another 40,000 consumers in lines such as suppliers and representatives of product lines.
The cosmetics manufacturing sector has 150 registered companies, of which 25 are integrated into Apymefac. While the Beauty Products Cluster brings together both manufacturers and representatives of brands or distributors.
Julia Jiménez, former president of Apymefac and current advisor to its board, points out that the sector faces some difficulties, such as high tax payments, high electricity costs, access to credit and national regulations that require very high investments and delay exports.
Meanwhile, Juan Rodríguez points out that the offer of cosmetics has diversified, reaching countries such as Spain, Italy, France, Brazil and Mexico. "We have participated in international fairs to promote and locate potential customers, and others to sell the product, such as in Puerto Rico and Curaçao," says the businessman.
Rodríguez considers that the products that are sold the most are hair products (shampoo, conditioner, treatment, drop of shine, straightening, leav-in) and maintains that for the year 2016 exports were located at US$26 million. The main economic destinations were the United States, Haiti, Puerto Rico, Cuba and the Caribbean Islands.
"It is expected that in 2017 these exports will increase by 5%, because it has managed to conquer other markets such as Saint Martin, Bahamas, Virgin Islands, Spain, Aruba, Curaçao, Switzerland", he pointed out. According to Rodríguez, from 2015 to 2016 exports grew by approximately 12%.
It stands out that in the last three years the cosmetics sector has been awarded the prize for excellence in exports in SMEs, a constant indicator of growth in the sector.
Local Market
Rodríguez explains that 75% of the Dominican products sold are consumed, despite the fact that these items only represent 25% in the stands of stores and supermarkets.
A survey conducted in 2013 by the Beauty Products Cluster found that 94% of low-income consumers used Dominican products.
Karl Luna, manager of Tienda Bomba, located on Duarte avenue, considers that the local market "is a good consumer" of cosmetics, since they always keep going to the salon. He points out that this is the only country where he goes to the weekly salon.
La Bomba sells products for final consumers. Luna explains that the line of straightening and treatments is the one that is sold the most. However, he considers that the cosmetics area is not the most profitable in the country given the high competition.
Value chain
According to the report Diagnosis of Four Value Chains with the Presence of SMEs in the DR, carried out by the Think Big Analytics consultancy and sponsored by the Ministry of Industry, Commerce and MSMEs in 2015, 90% of the raw material used to create Dominican cosmetics is imported. However, there is a tendency to use local products, since it allows a better external positioning and at the same time a better price.
The study points out that this represents a great opportunity to intertwine value chains, such as that of processed fruits, to take advantage of the wealth of tropical fruits and products in the country, such as common salt, cocoa and coconut butter , avocado oil and coffee essence.
The report explains that local formula prices range between RD$4,000 and RD$8,000, depending on their complexity. However, according to the businessmen consulted, these are basic formulas, with few competitive advantages.