5 Forças da natura

EXECUTIVE SUMMARY
Growth slows in beauty and personal care in Brazil
The Brazilian beauty and personal care market saw a moderate performance in 2011 when compared with the growth rates observed in the period 2006-2011. On the demand side, there was an overall slowdown in the economy, with a significant proportion of consumers’ disposable incomes destined to pay off debts acquired in the past, along with rising food prices and an overall increase in the cost of living in major urban centres. On the supply side, the weak performance of major direct sellers and disruption in distribution systems, allied with growing competition, marked a year which surprised most observers.
Leading direct sellers face major disruptions
Both the leading direct selling companies in Brazil – Natura Cosméticos and Avon Cosméticos – presented a weaker than expected performance in 2011. According to trade sources, both companies faced structural problems. Natura faced problems mainly due to factory expansion and the poor implementation of new information systems, whilst Avon had problems mostly related to its transfer to a new distribution centre in Cabreúva.
The leading beauty specialist retailer presents healthy growth
Botica Comercial Farmacêutica (O Boticário) performed well in 2011, presenting strong double-digit growth in the year. In recent years O Boticário made important investments in production capacity and new distribution centres. Continued product innovation and heavy marketing spend supported its recent growth, and also mean a positive outlook for the company.
Health and beauty retailers gains share of distribution
Whilst grocery retailers lost share of distribution within the beauty and personal care market between 2006 and 2011, health and beauty retailers increased its share from 31% in 2006 to 32% in 2011. Two main reasons explain this trend. On the one hand, O Boticário quickly expanded the beauty specialist retailers channel with new franchised stores. On the