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Natura counts on Latin America as Brazilian market becomes stagnant

By Michelle Yeomans+

11-Dec-2013

The direct sales cosmetics player is now counting on its Latin American units to drive growth, as it experiences stagnant revenue from its core Brazilian market.

According to CEO Alessandro Carlucci, as investments start to kick in and brand recognition grows and costs fall, the company believes Argentina and Mexico will generate more profits for it.

We are very enthusiastic and there are good signals of recognition of preference of brand and we are seeing significant growth rates in both the top and the bottom line,” the newspaper Rio de Janeiro reported Carlucci as stating.

Hair products and deodorant are the core segments currently driving demand for the all-natural based company.

Decline in Brazilian spending affecting company profits

Natura saw sales in Brazil grow just 5.5% in the third quarter versus the 40% for the rest of cosmetic companies in Latin America. The drop in Brazilian consumer spending is said to be down to the economy contracting 0.5% in the third quarter.

In addition to this, reports say the cosmetics player has also been facing fierce competition from local and international brands like Avon, which is seeing more success due to innovative and more-expensive products.

According to Carlucci, Natura's strategy now is to beat its' competitors by getting consumers to buy more frequently.

The CEO says it is counting on the likes of its' sustainable Ekos line of products, and making efforts to deliver orders more efficiently and offer customers myriad payment options, including the use of credit cards, which was first introduced about three weeks ago.

Direct selling could be a weak link, say analysts

According to Euromonitor's non-store manager of beauty and personal care, Marlous Kuiper, whilst Natura still has a somewhat competitive edge in Brazil, it has not been proactive in launching a global beauty brand with a Brazilian flavor onto the market.

And as a result, this has lead to disappointing revenue growth over this quarter.

Natura’s problems were also exacerbated by increased competition from specialized beauty retailers like Botica.

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