From The Editor's Desk
Natura’s Avon acquisition creates the first Latin American beauty powerhouse
Natura has been fast expanding its footprint in recent years, in particular by broadening its exposure to the global market with the complete acquisitions of The Body Shop and Aesop taking place in 2017 and 2016, respectively, both deals gave the Brazilian player an all-important reach in the global market.
But in an interview with the Financial Times at the beginning of 2019, Natura’s executive chairman, Roberto Marques, said that the goal was to continue with its global growth strategy.
Last month the company achieved that with the acquisition of competitor direct sales player Avon Products for $2 billion in stocks, creating a combined annual turnover of $10 billion and making it the 9th largest beauty business in the world, just behind Nivea-maker Beiersdorf.
What the deal means globally
The Natura business and brands have developed very much around the Brazilian and Latin American markets, although it has developed a retail presence in both the USA and Europe in recent years.
So the company has continued to develop its global footprint through acquisitions, with the acquisition of Avon Products giving the business a footing in areas of the globe where it has previously been underrepresented.
Euromonitor International experts have pointed out that in particular Avon has an established presence in both the Middle East and Africa as well as the Russia market. In Russia Avon is already a major player, while in Africa and the Middle East, Natura may have an improved positioning for fragrances.
Likewise, Euromonitor has pointed out that Natura’s stronger presence in the China direct sales market, may prove to be a means for Avon to rebuild its business there, after it was damaged by allegations of corruption back in 2014.
Latin American market
In Latin America the move will put the seal on its presence in the Brazil market, where Natura already derives more than half its total sales from.
Added to the fact that Avon is already a major player in Brazil, and the newly expanded Natura business will significantly increase its position as the number one player in its domestic market, extending its lead over competitor Grupo Boticario.
With respect to Latin America as a whole, the acquisition also makes the business much more dominant in the highly competitive direct beauty sales landscape throughout the region.
After Brazil, the next most important market in the region is Mexico, where the likes of Marky Kay and Vorwerk have contributed to making the competition in the direct beauty sales space difficult, but with the acquisition of Avon it is now the leading player in that specific area.