Natura, Brazilâ€˜s biggest cosmetics group by sales, is planning to set up joint ventures in countries such as the UK, the US and Russia as part of a revamped expansion plan, the companyâ€˜s head has told the Financial Times, using its booming domestic market as a springboard for international growth.
The SÃ£o Paulo-based company, which sources many of its ingredients from the Amazon rainforest, has had its revenues soar in Brazil, which is set to overtake Japan by 2013 to become the worldâ€˜s second-biggest beauty and personal care market after the US, according to Euromonitor.
Alessandro Carlucci, Naturaâ€˜s chief executive, said the company had scrapped its original plan to set up its own operations outside Latin America and was now looking for partner businesses, especially in markets where its strategy of direct selling has proved popular.
We realised that there are things we donâ€˜t know about the culture of other countries, how to do business there he said. â€•Russia, for example, is a promising market where direct selling is popular but we donâ€˜t understand anything about logistics in Russia, about regulations, the language.
He added that the company was more likely to target smaller businesses in these regions, rather than forge links with other cosmetics giants such as Lâ€˜OrÃ©al of France.
The bigger the company is, the more diverse, the less chance there is that they will be able to or want to adhere to our values, he said.
After overtaking US rival Avon in terms of sales in Brazil in 2005, Natura has built a 14.4 per cent share of the Brazilian market, which Euromonitor estimates will be worth about $48.4bn in 2013, almost 30 per cent more than in 2010.
From weekly manicures to an obsession with plastic surgery, Brazilian women take their appearance very seriously. They are estimated to spend over five times more of their annual salary on beauty products than women in the UK, for example.
Natura is also one of the biggest direct sellers in Latin America, with more than 1.3m consultantsâ€– who sell door to door across the region, marketing everything from aÃ§aÃ body oil to shampoo made from andiroba seeds harvested from trees in the Amazon.
Direct selling has not always proved popular in every market, however, leading the company in 2005 to open a shop instead in Paris â€“ its only experiment so far with operations outside Latin America.
Any potential partner would have to share the companyâ€˜s stance on sustainability and preserving the environment, Mr Carlucci added.
The company, which recorded net sales of R$3.9bn ($2.2bn) in the first nine months of this year, has built its brand on using ingredients directly from co-operatives, scientists and farmers in the Amazon, receiving support from the federal government, which is keen to diversify the regionâ€˜s economy away from illegal logging.
Source: The Financial Times