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Inside Brazil: Direct Sales Grow 14% in 2008

By: Fernanda Bonifacio
Posted: June 5, 2009, from the June 2009 issue of GCI Magazine.

IFF’s new creative center outside of São Paulo will, according to the company, help it study and understand the preferences of consumers and how they affect and are affected by global trends.

Door-to-door business in Brazil has largely been unaffected by the global economic downturn. A retail model built mainly on personal care products, and accounting for 88% of the sector’s total income, direct sales grew 14% in 2008, and recorded revenues of $8.5 billion—on the efforts of approximately two million resellers throughout Brazil, more than 1% of the country’s population.

According to Lírio Cipriani, president, ABVED (Brazilian Association of Direct Sales), one of the reasons for the sector’s success is the fact that its operations haven’t been impacted by the shortage of credit.

Direct sales can also benefit from turbulent periods due to the increased percentage of unemployment. It has proven to be an interesting option, especially for women, either as the sole source of income or to supplement other earnings. Sometimes, the same resellers work with many brands at the same time. “I’ve met people in the northeast of Brazil who represented up to seven companies,” said Cipriani, whose forecast is for the channel to surpass $9 billion in 2009.

One of the main direct sales players, Avon recorded a sales growth of 20% in 2008. According to the company’s Brazilian president, Luis Felipe Miranda, Brazil is Avon’s second market, only behind the U.S. “We are investing around $70 million to build Avon’s largest distribution center in the world,” he says. “It will be built in the state of São Paulo, and its opening is scheduled for 2011.”

By the end of the second quarter of 2009, Avon will also launch its hair coloring line, the only item missing from the company’s portfolio in the Brazilian market.