Costa Rica - Country Commercial Guide
Cosmetics

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2019-10-13

Overview

 

2014
 

2015
 

 2016
 

2017
Estimated

 2018
Estimated

Total Market Size

197.61

211.86

219.11

236.06

253.47

Total Local Production

14.70

16.50

17.11

18.47

19.86

Total Exports

2.94

10.83

11.99

13.27

14.70

Total Imports

185.85

206.19

213.99

230.87

248.30

Imports from the U.S.

31.61

39.35

42.02

48.04

55.39

Exchange Rate: 1 USD

534

538

570

690

720

 












Data in millions of US
Dollars
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources:
Total Local Production: Industry sources
Total Exports: Industry sources
Total Imports: Costa Rican Customs Directorate
 Imports from U.S.: Costa Rican Customs Directorate
This market study includes cosmetic products listed in chapters 33 and 34 of the Harmonized System. The products included in this study are the ones listed below:
 
Tariff Number                        Description

3303.00.00.00                      Perfume and Toilet Waters

3304.10.00.00                      Lip Make-up Preparations

3304.20.00.00                      Eye Make-up Preparations

3304.30.00.00                      Manicure or Pedicure Preparations

3304.91.00.00                      Beauty or Make-up Preparations

3305.10.00.00                      Shampoos

3305.20.00.00                      Permanent Waving or Straightening

3305.30.00.00                      Hair Lacquers

3306.10.00.00                      Dentifrices

3306.20.00.00                      Dental Floss

3307.10.00.00                      Pre-shave, Shaving or After-shave

3307.20.00.00                      Deodorants and Antiperspirants

3307.30.00.00                      Bath Salts and Other Bath Preparations

3401.11*                              Soaps

3304.99.00.00                     Other Make-up Preparations

3305.90.00.00                     Other Capillary Preparations

 

According to Costa Rica’s Ministry of Foreign Trade, imports of cosmetic products have increased in recent years. The consumer habits of Costa Ricans are becoming more complex due to an increased awareness of aging processes. Costa Ricans are investing more in premium products such as hair treatments and hair removal treatments.

It is expected that this sector will continue to grow due to the Costa Rican population’s demand for personal care products. U.S. imports of cosmetic products increased from 2016 to 2017, but Mexico continues to dominate the Costa Rican cosmetic market with 34% of total imports in 2017. Mexico is followed by the U.S. with 21% and Colombia with 16%.  Guatemala and Colombia have also become important competitors within the Central American region, due to sustained development in the cosmetic sector and recent free trade agreements.

Within Costa Rica, mass consumption products account for 80% of the entire cosmetic product market.  Premium and high-end products account for the other 20% of the market. Profit margins for high-end products are between 50% - 100% for distributors.  Beauty salons’ profit margins often exceed 100% for products used in hair treatments such as tints, keratin, etc. Roughly 70% of cosmetic sales are made within the Central Valley, in the greater San Jose Metropolitan Area. The remainder of cosmetic sales are made in rural areas, of which the top three locations are Guapiles, Perez Zeledon and Puntarenas. 

The distribution channel for professional products includes approximately 4,000 beauty salons in the Greater Metropolitan Area (GMA). Around 200 of these salons sell high-end products while 3,000 are smaller spas that only sell mass consumption products. There are also approximately 1,000 professional spas of which 100 are premium spas, 200 are small spas, and 700 are independent estheticians. Professional products can also be found in pharmacies (approximately 1,000 in Costa Rica).  Dermatologists and plastic surgeons recommend the products purchased in pharmacies. Mass consumption products are distributed in big box stores such as Walmart, PriceSmart, retail stores, discount stores, pharmacies and through catalogs.

The prices of perfumes vary according to brand.  Premium perfumes such as Jean Paul Gutier and Gucci range from $150-$200. Mass consumption perfumes and splashes, usually generic brands that are manufactured in China, range from $12-$20. Professional shampoos cost between $50-$80, while mass consumption shampoos cost between $6-$10. Mass consumption make-up products cost between $4-$10, while high-end and premium make-up products cost between $20-$70.

Even though Costa Rica has a high demand for cosmetic products, there are some disadvantages in terms of market accessibility. Costa Rica is a competitive market that is very price sensitive.  Minimum quantities can be an issue due to the proportion of the Costa Rican sector and the market share of other countries’ products. Product registration has been an obstacle for U.S. companies trying to access the Costa Rican cosmetics market. The main issue with product registration is the requirement by the Costa Rican Health Ministry to obtain a Certificate of Good Manufacturing Practices or License of Operation, which must be issued to the manufacturer by either the government or a trade association.

The registration process additionally requires a power of attorney (in Spanish) to allow a third party to sign in the name of the foreign company, and to specify a person that will be responsible for sanitary registration when importing and selling the product in Costa Rica. Finally, a clarification letter is required, certifying that the respective company is the manufacturer of the product that will be exported to Costa Rica. In some cases, the Ministry of Health will accept the Manufacturing License of Operation that is issued by the respective state’s Municipal License emitting office, in place of the Good Manufacturers Practices document.
 
Sub-Sector Best Prospects
The local market has always been very receptive to purchasing from U.S. companies due to their excellent reputation, prestige, and quality guarantee. Statistics demonstrate how American-made makeup products, perfumes, and soaps have great recognition in the Costa Rican cosmetic market.
Makeups include eye makeup preparations, lip makeup, compact powders, mascara, and others. Perfumes include splashes and toilet waters.  These categories along with soap are in high demand in the local market with prices depending upon the type of buyer.

Opportunities    
Because Costa Rica’s local production is not significant, most of the cosmetic products sold in the country are imported. Furthermore, the class distribution means that the top 20% of the population can afford premium products, whereas 80% of the population will only buy mass consumption products. It follows that 20% of the cosmetics market consists of premium products and the other 80%  is made up of products for mass consumption.

Actual consumption patterns demonstrate a tendency to acquire a diversity of products such as oils, keratin, and capillary and facial treatments. This is a market opportunity among high-end products. This line of products is very attractive to suppliers and distributors due to the large profit margins. Meanwhile in the mass consumption market, there are opportunities because of the active commercialization of these types of products in Costa Rican discount stores.

Additionally, U.S. companies have an advantage to commercialize in Central America, especially Costa Rica, because of the benefits under the CAFTA-DR free trade agreement with the U.S. Under this agreement almost all cosmetic products import duties have been significantly reduced.
 
                                                            With CAFTA                               Without CAFTA

Perfumes and Toilet Waters                     13%                                               29.95%
Make-Up                                                   13%                                               29.95%          
Soaps                                                       14.81%                                         24.30%
Hair Products                                            46.9%                                           63.85%

 
Web Resources
CS Costa Rica Commercial Assistant: Emilio Cordoba
Emilio.Cordoba@trade.gov
CS Costa Rica office: http://www.export.gov/costarica
Costa Rican Customs Directorate Website:  www.hacienda.go.cr
Costa Rican Ministry of Health: http://www.ministeriodesalud.go.cr/