According to the US-based market research company cosmetics and toiletries sales increased 14 per cent in 2007 putting the country ahead of market leaders France and Germany for the first time.
Kline also predicts further double digit growth for the country's cosmetics and toiletries market over the next five years.
The year's sales totalled BRL 22,822m ($11.69bn) driven by a burgeoning middle class, increased consumption of consumer goods and significant GDP growth, according to Kline's data.
International players led growth Some of the world's largest players led the growth beating smaller local companies into second place, said Sergio Rebelo managing director of Kline's affiliate Factor de Salucao in Sao Paulo.
"The movement was led by companies such as Avon, which managed to increase sales by more than 26 per cent after years of poor results in Brazil due to fierce competition," he said.
Rebelo cited Avon's restructuring strategy and a media push as reasons behind the company's success.
However, commenting on the performance of one of Brazil's leading companies Rebelo said: " 'The Brazilian Star' Natura lost some of its shine and was unable to maintain the huge growth rates it enjoyed over the last few years with sales up only 9.5 per cent in the domestic market."
The success of Avon is likely to be one of the reasons why Natura suffered over the year as both companies operate in the direct sales channel, Danilo De Paula from Factor de Salucao told CosmeticsDesign.com.
Furthermore, De Paula noted that the number of new product launches released by the company was particularly small in 2007.
In addition, the report highlighted similarly strong results from L'Oreal, Beiersdorf and Unilever.
These international companies operate in the mass market retail channel which has undergone significant recent growth due to an increasing middle class, explained De Paula.
Hair care wins for Brazilian companies The outlook was not all doom and gloom for domestic players however and De Paula highlighted a number of Brazilian hair care companies that had grown rapidly throughout the year.
This, he felt, was due to their expertise on the specific characteristics of Brazilian hair types, an arena which the international players have yet to fully capitalise on.
Nevertheless looking to the future De Paula said that international companies with higher R&D budgets were likely to lead future growth, especially as innovation is key to success in the market segments tipped for growth - skin care and color cosmetics.