After Natura buy Avon, Boticário also sights international expansion

Closely accompanying the movement of its main competitor, Natura, which announced last month agreement to buy Avon globally, the Boticário group also outlines plans for its international performance. Despite being in 15 countries with two brands – O Boticário and who said Berenice? – The Paranaense company, which billed R $13.4 billion in 2018, admits that its external presence is still shy in relation to strength in the domestic market. According to André Farber, vice president of franchises of the Group and responsible for the international arm, Boticário knows that a relevant performance out there will depend on acquisitions. With the strategy "the Dropper", only managed to reach a total of 80 stores abroad – a fairly limited number compared to the 4000 units in Brazil. Therefore, according to Farber, the group is open to opportunities for external acquisitions. "We have plans to make the international (segment) grow," he said. For now, Grupo Boticário has its own offices to play the operations of Portugal – by far the most relevant abroad, with 64 units – and in Colombia. In the other 13 markets in which it operates, it closed partnerships with local entrepreneurs. In some cases, Farber admits, the expansion occurred almost by chance. It was through a partnership invitation that O Boticário landed in Dubai, in the UAE, eight months ago, where he already has two units. Eyes open Although it still grows well above the performance of the economy in Brazil – last year, revenue advanced 7%, against 1% of gross domestic product (GDP) –, O Boticário has observed Natura's movements closely. His rival acquired the Australian Aesop (in 2012) and the British Body Shop (in 2016). Last month, he closed a contract to acquire Avon worldwide, except the United States and Japan. Contrary to what had occurred in the first two acquisitions, Natura will also gain momentum in the country with Avon, becoming the industry's isolated leader. Although it has been gaining breath in the last two years, Natura still has a market dominance of 1 percentage point lower than it exhibited in 2013. The Boticário group, in turn, saw the participation jump from 8.9% to 11.6%, in the same period, according to the Euromonitor consultancy. Although the Paranaense company has not yet gone shopping outside, it has acquired Vult, a line of makeoffs geared to classes C and D, last year. For Itaú BBA's retail analyst, Thiago Macruz, both Natura and Boticário managed to establish themselves in highly profitable markets – the first in direct sales and the second in franchises. He affirms that the performance in these segments, when successful, allows the expansion without the need for large capital contributions. In the first case, the commercialization is made by dealers, while in the second the investment at the physical point of sale is the responsibility of partners. By acting in "mega cash generators" channels, according to Macruz, companies have financial conditions to carry out large acquisitions. For him, the search for consecrated businesses out there is a better way than organic expansion. According to him, Natura was only able to assemble a relevant operation of direct sales in Latin America – in other regions, the brand was not very far alone. The same challenge is true for O Boticário. "These companies need other brands overseas," he says. Dubai Grupo Boticário works on creating more attractive sales point models to convince consumers to buy more. With almost complete coverage in Brazil, with 3,750 stores, and little growth in the network, the group has in Curitiba a concept store in a shopping center that should be replicated in other places in the country and in countries where it is present. This model has already been adapted and taken to the first open stores in Dubai, United Arab Emirates. In addition to the transformation of the units, the Paranaense group bets on the expansion of direct sales to maintain its pace of revenue increase.