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Avon’s Brazilian Growth May Warrant Second Facility
By: Fernanda Bonifacio
Posted: June 22, 2010, from the July 2010 issue of GCI Magazine.
Hand sorting on one of Avon’s current São Paulo production lines.
After 50 years of manufacturing from a single plant in São Paulo, Avon Brasil is carrying out studies to investigate the need and potential for a second industrial complex in the country. The plan also takes into consideration the expansion of outsourcing contracts for certain lines currently manufactured by outside vendors.
“Although we’re still investing in increasing our production capacity and improving the present plant’s equipment, we’ve started to assess the opening of a new plant to support our growth”, said Luis Felipe Miranda, president, Avon Brasil.
The company is already preparing for the inauguration of a new distribution center, also located in São Paulo. At an investment of $150 million, the new distribution center will occupy an area of 70,000-square meters, and is expected to supply around 70% of the volume of orders once it opens in the second half of 2010.
The capital investments are directly related to the good performance of the Brazilian subsidiary in Avon’s global ranking. In the third quarter of 2009, Brazil surpassed the U.S. in sales for the first time, growing 22% over the same period of 2008 (the U.S. decreased 8%). In the fourth quarter, Brazil remained a sales leader, thanks to a 12% growth. However, cumulative figures from 2009 show Americans still purchased more than Brazilians—$1.864 billion compared to $1.817 billion.
The direct sales channel in Brazil increased 18.4%, and was valued at $12 billion in 2009.