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Inside Brazil: Beauty Sales Grow 18% in First Half of 2009

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

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According to data from Natura’s quarterly report, the Venezuela operation, which was still in the process of development, recorded a loss of $2 million. The company has also registered negative results in other non-Brazilian countries where it operates—Peru being an exception. New capital investments in Chile, Argentina, Mexico, Colombia, the Netherlands and in the company’s Natura Europe subsidiary will total $26.7 million in 2009. Brazilian operations accounted for 93% of sales April–June.

Franchising Remains Viable Option for New Beauty Brands

According to the Brazilian Association of Franchising (ABF), franchising remains a viable option for companies looking to enter or expand participation in the Brazilian beauty market. Beauty is one of the industries that has shown the greatest growth rates in the Brazilian franchising channel. In 2008, it increased 25.8%, reaching revenues of $4.3 billion.

“This is the second most distinguished segment in number of franchises in Brazil, second only for food. It has more than 12,000 outlets throughout the country,” said Sergio Barbi, director, ABF.

Second largest franchisor in Brazil’s beauty sector, L’Acqua di Fiori operates more than 1,100 stores and aims to open 100 new outlets by the end of the year. According to company communications director Carlos Mesquita, the initial investment for opening a new franchise varies between $40,000 and $50,000, and the profit margin is approximately 114%.

Mahogany, a traditional fragrance brand, also contributed to the channel’s growth. It adopted a franchising system in 2005, and now has 63 stores and is investing to reach 110 points of sale in 2010.