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RIO DE JANEIRO (Reuters) - In her apartment in a tough Rio de Janeiro suburb, Geni Monteiro Coimbra pauses as she ponders a teasing dilemma -- the tutti-frutti or the strawberry lipstick?
After a quick consultation with her local Avon lady, strawberry wins the day, and the 46-year-old Brazilian housewife signs off on a cosmetics bill of 50 reais ($27).
The sale wrapped up, Heloisa Almada Contreira marches on to the next of her 80 or so clients. She says she's selling about 1,700 reais ($930) worth of beauty products a week, around 25 percent ahead of last year's sales.
"For them, it's a necessity," said Almada Contreira, 51, who has been selling for the U.S. cosmetics giant in the low-income area of Baixada Fluminense for more than 13 years. "Brazilian women can't go without their make-up."
The global financial crisis last year halted five years of strong economic growth in Brazil that had pulled millions out of poverty and created a new class of consumers.
A year on, these new consumers are emerging relatively unscathed from a recession which only had a small impact on jobs and income.
Consumer confidence and demand for credit have returned to near pre-crisis levels and the government says the economy is set to grow 1 percent this year, even as several other major economies struggle to emerge from recession.
With Brazil's economy, the world's 10th largest, relatively closed to trade, its vast internal market of 190 million people is proving key to the recovery.
Nowhere is their spending power more evident than in the beauty industry, whose explosive growth has made Brazil a battleground for brands such as Avon Products Inc and L'Oreal.
Brazilians' obsession with beauty, from body waxes to perfumes to looking good in bikinis, helped lift beauty and hygiene sales last year by 27.5 percent in dollar terms from 2007 to $29 billion, according to Euromonitor International.
That makes it the third-largest market in the world, trailing only the United States and Japan, despite much smaller average incomes. In the first six months of this year, sales were up 18 percent from a year ago, keeping Brazil on course to overtake Japan in 2010.
On the front lines is a 2.2 million strong sales force selling to friends, neighbors, and door-to-door from city slums to remote towns in the Amazon rain forest. On Almada Contreira's street alone, there are four cosmetics sellers in an area where most people earn little more than $400 a month.
"We are democratizing luxury," said Avon's Brazil chief Luis Felipe Miranda. "In the Amazon, we use small boats and planes to deliver products. It can take six or seven days."
The company has 1.1 million "Avon ladies" in Brazil, a fifth of its global total. Its Brazil sales rose 23 percent in the second quarter, against an 8 percent fall in North America, and it will next year open a 70,000 square meter (17-acre) distribution center in Sao Paulo state, its largest anywhere.
It faces stiff competition from home-grown cosmetics powerhouses such as Natura, the country's biggest, and O Boticario, the world's largest perfume and cosmetics franchise network that started as a small drugstore in 1977.
Natura's revenue has doubled in four years, helping its share price to nearly double in the past year. With no sign of demand slowing, it added 138,000 sellers in the past year to take its total to just short of 800,000.
"These new C and D economic class consumers are entering the market and asking for more sophisticated products -- this is the main source of growth," said Jose Vicente Marino, Natura's vice president of business.
Behind the industry's bumper growth is a powerful combination of rising consumer clout and a culture that worships beauty and cleanliness.
Brazilians, most of whom live in a sultry climate with plenty of dust and dirt, often have more than one bath a day.
They splash on more deodorant than any other nation, an essential strategy in a culture of kisses and hugs. Brazilian women think little of spending a tenth of their income on their hair, which they see as the most potent weapon of seduction.
Joao Carlos Basilio da Silva, president of cosmetics industry group ABIHPEC, said steady incomes and the relatively cheap price of most products had helped it weather the crisis.
"The crisis is in credit, not in incomes," he said.
"If a worker has 10 more reais ($5.5) in their pocket at the end of the month, it doesn't cover a pizza, but you can have a ball with products like shampoo, soap or deodorant."
Still, beauty doesn't come cheap to many Brazilian women.
On a recent day, a steady stream of women with frizzy hair arrived at the Beleza Natural salon in a poor northern Rio suburb, each spending about 60 reais ($33) to have their locks relaxed and smoothed into a more desirable state.
"People don't stop drinking or smoking in a crisis and this is my addiction -- so I spend this much whether there's a crisis or not," said Priscilla Amora, 27-year-old nurse.
She said she spends up to a quarter of her around 600 reais ($330) monthly income on beauty products. "It's worth it, don't you think?" she asked, patting her freshly primped hair.
The Beleza Natural (Natural Beauty) chain has sprouted in recent years to 10 branches serving 70,000 clients a month who clamor for its hair-relaxing treatment. Its customers are mostly black, poor women whose frizzy hair can count against them in Brazil's job market and in the quest for boyfriends.
"They want to be happy," said Anthony Talbot, Beleza Natural's director general. "Life isn't easy, especially for those with low income."
Like other Brazilian beauty companies, Beleza Natural is also looking abroad for growth. Brazilian products are in vogue oversees, helped by the high standards demanded at home and the country's image as a source of pure, natural ingredients. Brazil's wide mix of races also means there is a product for virtually every skin or hair type.
Exports of hair products alone rose 35.7 percent in 2008 to $161.4 million, ABIHPEC said, and are up more than tenfold since 1999. Beleza Natural's foreign expansion plans are not yet defined, but the target market is clear.
"Wherever there is curly hair, we will go," said Talbot.
($ = 1.82 reais)
Editing by Philip Barbara