Peru is located on the other side of the world from Korea and has a GDP per capital of $7,000. What are the beauty practices of Peruvians who are mainly Mestizos and Indios? I had no idea until I arrived in Lima that Peruvians rarely apply basic skincare products such as cream or lotion let alone makeup. It is more accurate to say that they use cosmetics products much less frequently. Most people wake up in the morning, wash their faces and start eye makeup right away without basic skincare. Even base makeup such as the use of foundation is not common here. Some use creams depending on skin types, but only a few do that. In other words, the most common beauty practice is 'cleansing -> eye makeup' and only those who are interested in their skin use creams. Lip makeups are for special days (parties and events), which is not an easy practice for us to understand.

 This may be difficult to understand for women in Korea. Even I find it hard to understand. I did an in-depth interview with local friends to see the reasons behind such practice and, according to the, the biggest reason is they are not used to it. Lima is a coastal city bordering the Pacific Ocean, so the city is fairly humid. I have dry lips but I do not really need lip balms here. As a result, it is not a common practice for Peruvian women to apply skincare products. Of course it may differ for different skin types but the majority of the respondents said the same thing. The next reason could be related to income and financial status. The average salary of new graduates is 2,000PNS (around \700,000) and Peruvians may not have enough financial resources to purchase cosmetics products.

 The total size of Peru's cosmetics market is worth 3 trillion Korean won (estimate for 2018, 5% growth compared to 2017), which is a small size compared to Korea and the global market. However, its high growth rate is noteworthy as the estimated average growth rate of the market in 2020 is around 7~8%. The increased participation of women in economic activities and improvement of welfare conditions among Peruvians support the rapid growth of the cosmetics market. It is obvious that the focus should be on Lima, the capital of the country where 12 million people out of the total population of 33 million reside in. In addition, cosmetics influencers on YouTube and Facebook provide information on cosmetics use and trends to young Peruvian women, triggering higher demand for cosmetics products.

 Let's talk about the sales channels in Peru. The distribution channels of cosmetics in Peru can be divided into door-to-door sales (50%), offline shop (supermarket 23%, drug store 16%, department store 4%) and online shop (5%). It is interesting that the cosmetics distribution market in Peru is similar to that of Korea as there is door-to-door sales. It is even more interesting that door-to-door sales accounts for 50% of the distribution market share. Door-to-door sales took up almost 70% of the market share up to 2010 but declined until 2015 before it started grow again in volume. The skincare product market is small in size but organic (hypoallergenic) products are popular.

 How about Peru's local cosmetics companies? I visited a famous organic cosmetic company in Peru called 'Santa Natura' and had a meeting with the CEO, Carmen. It was a good opportunity to have a better insight into the cosmetics market in Peru.

 The company is an SME established in 1995 and is posting a solid annual revenue of 30 million US dollars as of now despite its relatively small size. Santa Natura focuses on organic health products and, although it is not big in size, it is widely recognized as a brand. The company began its cosmetic business 10 years ago and has launched cream and essence products based on organic ingredients. The CEO herself is an expert in ingredients with a great interest – she is over 60 years old but still passionate enough to participate in academic research and discussions with experts at graduate schools or collect rare materials in jungles or mountainous regions in different parts of Peru. She is older than my parents but a meeting with her energized me. Rather than TV commercials, the CEO prefers to sponsor TV programs or to go on TV shows herself to promote the excellent quality of products or ingredients. She is already famous in the local community as a major economic, political, entertainment and social figure and it was not so easy to arrange a meeting with her due to her busy schedule.

 The CEO was concerned about lower-than-expected sales of natural cosmetics. When I told her about the revenue and the number of brands of Amorepacific, she was shocked and asked me repeatedly as the figures were much higher than what she had imagined. There are a few types of door-to-door sales in Peru, and Unique and Esika, the top local companies in Peru, use catalog sales. They communicate with customers via catalogues published every two months. Sales staff who sell the products of these brands via catalogs only need to meet a few criteria (age, debt level, residential ID). Santa Natura is also posting fairly high profits using this method. Another type of door-to-door sales is network sales whereby top managers and sales staff continue to recruit other sales staff and consumers to share their profits. Santa Natura has increased its revenue by over 20% in the past year through the network sales. She was confident in explaining about the company since the Santa Natura already has gained trust from the locals for its high quality products.

 Santa Natura's major sales channel is catalog and network sales (40%), followed by dealers (30%), online sales (10%) and specialized shops (10%). The company began online sales only 8 months ago and it is receiving positive feedbacks from the young generation. However, I have noticed that the infrastructure for online shopping in Peru is still insufficient and Peruvians have negative views on online shopping as they believe that using credit card online is not secure. Also, people in Peru do not trust the quality of products sold online. It is similar to how Koreans viewed online shopping 20 years ago. Nevertheless, online shopping is growing fast among young Peruvians and the boom can be a game changer for Peru's shopping trend.

 Still, direct selling is the main sales channel in Peru and the company emphasizes partnerships with counsellors as the key factor. Santa Natura currently has around 4,500 counsellors in total and the CEO knows the names of every single counsellor in major positions (approximately 200 counsellors). The company has been organizing monthly top seller awards in Lima since last year, and the prize for the winner is a Mercedes Benz sedan. Some receive overseas trips as a prize, but Mercedes Benz is a regular prize every month and even I was shocked to hear that. I watched a video clip of award ceremony which is a fairly big event in Lima. Carmen, the CEO, stood on the stage with a great energy and it encouraged the employees even more.

 The second key factor is an attitude to adapt to new changes. Although Santa Natura is a small company, it makes efforts to continuously change its sales and marketing in line with new environments. I was only visiting for market research but the CEO was so enthusiastic to explain how the company is changing. When I asked detailed questions, she would call other employees at the company for more detailed explanation. She also said that the Santa Natura is confident in the quality of its products and ingredients but has issues with containers as Peru does not have good technologies to make high-quality containers. She was so serious when she was telling me about the poor design and quality of containers which often affects the actual product quality. We also had discussions on eco-friendly products and the eco-friendly cosmetics market as well as Korea's sheet mask market as she was interested in those.

 After my meeting with the CEO at the office, I visited the company's factory which was an hour away from the office. The chief production manager of the factory was the eldest son of the CEO. It was a manually operated factory in a much smaller scale than Amorepacific's factories, but the workers were strictly following the rules for safety and hygiene. I was also impressed that the company had a clear philosophy in its production process. I could not take pictures of the factory as it was not allowed. The factory was divided into health products manufacturing building, packaging building and cosmetics ingredients mixing building. The CEO said she would love to visit Korea and see the production process of cosmetics factories. She had recently visited a factory in Europe and became ambitious to run a factory with automated system in the future.

 Although there is still room for growth in terms of the size and innovation, I believe Santa Natura has sufficient growth potential considering the positive feedbacks from locals and increased interest in naturalism cosmetics or foods in Peru. Carmen said she would like to encourage Peruvian women to be more interested in beauty and expand her business while taking a leading role in the cosmetics industry. Carmen and I will continue to build a good relationship and interact with each other on the industry trends. As I conclude the column, I would like to send my words of encouragement to Carmen who is passionate to promote the safety and excellence of naturalism cosmetics products to the women in Peru.

¡Adios!