Natura confirmed on May 22nd, 2019 the acquisition of Avon in a stock exchange operation that gave rise to the Brazilian holding Natura & Co. Together they will have annual revenues of about US $11 billion and more than 40,000 employees worldwide. The new company will be formed by 76% of Natura and 24% Avon shareholders. The deal valued Avon at $ 3.7 billion and the new group at $11 billion. The new company will allow Natura Group to access more than 100 countries. Together they will be the 4th largest beauty company in the world, behind L'Oréal, Estée Lauder and Shiseido.
After months of negotiations, we learned on April 25, 2019 that Avon's United States operations had been sold to LG Group's LG Household & Health Care. Natura had surveyed this purchase in September, 2018, and had confirmed (March 2019) to be in negotiation for the acquisition of Avon's North America division, with US headquarters and closed capital, and the worldwide operation, based in London and listed on their stock exchange. If the deal were to take place at the time, Natura would become the world leader in direct sales, incorporating Avon's more than 250,000 Avon dealers in North America. However, Natura would have to borrow for the acquisition of the two divisions, a move similar to buying The Body Shop, which was not well-evaluated by investors. Even so, Natura followed with interest the incorporation of Avon's worldwide arm. Therefore, the Brazilian holding company, Natura & Co, is today made up of the companies Natura, Avon, Aesop and The Body Shop.
In a statement to the market, Natura said that "The combination creates a group of excellence in cosmetics, multi-brand and multichannel, integrating 6.3 million consultants of Avon and Natura, 40 thousand employees, 3,200 stores and one growing digital strength, to bring beauty to more than 200 million consumers. "
Brazil is Avon's largest market, accounting for almost a quarter of sales. Natura leads the direct sales market in Brazil. According to the research group Euromonitor, Natura's market share in the country is 31%, while Avon is almost 16%.
In a conference call with investors, executives at Avon and Natura announced that they intend to accelerate the group's internationalization, reinforcing its presence in key markets in Latin America, with a diversified product portfolio.
Avon has a strong presence in Latin America, as well as Russia, the Philippines, Poland, the United Kingdom, Turkey and South Africa - 46% of revenue in 2018 came from Asia, Europe and the Middle East and 54% from Latin America.
Questions? We have many!
Since the evening of May 22, 2019, after several news items confirming the acquisition, the market and the consumers of the brands were able to celebrate together with Natura and Avon the union of the companies. I worked for more than 20 years in the Brazilian branch of Givaudan, in the commercial area, serving accounts for Natura for 17 years and Avon’s for 12 years. I can say that I know the values of each company well and, as a Brazilian, it is impossible not to be proud of this huge step Natura has taken. During years of partnership with Natura, I was able to feel its intrinsic values of respect for diversity, the establishment of solid policy regarding the correct use of social-biodiversity, and the depth of its criteria for sustainability, fair values in negotiation, creativity, and Brazilianity. I talked to several people in the perfumery industry and a positive reaction seems to be unanimous.
Those who, like me, have always admired Avon and realized its value and contribution to the global perfumery, and feel, at this junction, an opportunity for the brand to regain its past shine and to contribute to the beauty market, as the beloved brand that it has always been, to the point of being considered, by many local consumers, as a "Brazilian company." Now we can say: Avon is also Brazilian!
Independent and Autonomous
In a statement, announcing the arrival of Avon, Natura said "Natura and Avon's structure, brands and product portfolios will remain independent and autonomous." They will take advantage of "what is best in both companies, to benefit our consumers, consultants and the public, and make more investments."
"We always looked at Avon with respect and admiration. For more than a century it was a pioneer in direct selling and female empowerment. Avon, like Natura, was already a social network before it even existed."
According to the statement, the merging of brands will increase the power to create social, environmental and economic value, promote diversity and combat the threat of climate change. "We do not want to build only a large company IN the world, but a global group of beauty with purpose and striving to be better FOR the world."
Animal Testing - a controversial issue in this union
In Brazil, Natura was one of the first industries to extinguish this practice in 2006. The commitment to the "cruelty-free" cause, which means products are developed without cruel treatment of animals, earned the company the Leaping Bunny seal issued last September 2018 by Cruelty Free International.
Avon was one of the first major cosmetics companies in the world to suspend product testing on animals 30 years ago. It joined the traditional list of "humane" companies of the animal defense organization People for the Ethical Treatment of Animals (PETA). But in 2012, the company commitment was removed, and today it is the target of an NGO petition to stop testing on animals. According to PETA, some formerly cruelty-free cosmetic manufacturers, including Avon, quietly changed their policies and were outsourcing animal testing to sell their products in some countries, as in China.
Mergers and acquisitions happen all the time. One thing is the speech we hear, and the other is practice. In general, the culture of a purchasing company usually stands out from that of the purchased company. Certainly Natura's culture must prevail and must change the Avon culture. It is up to us, however, to follow this closely to see what will happen, if Natura's politically correct speech will prevail.
My experience with these brands
I started being account representative for Natura in the 90s, when its success trajectory gained greater visibility through its products and business behavior. At that time, Natura had only around 250,000 direct sales representatives (consultants), about 800 employees, and had factories and offices spread around São Paulo. It outsourced some lines due to its growth and still had yet to build its Cajamar Unit. It had no catalog of presentations and product pictures - just a suggested list of prices, but they knew the value of its products, its consumer, as well as all its stakeholders (people or companies that could be influenced by their actions.)
Natura knew then, and now more than ever, that its consumers, suppliers, representatives, employees, and others who are touched by its brand, should understand the sustainability cause and seek transparency. As a supplier for so many years, I can testify that I have never worked with a company that "pushed" its suppliers so much, encouraging them to follow their positive agenda and values, preparing and training them (in the fullest sense of "sharing" information,) through workshops and meetings that help to explain that it is possible to create products that bring less negative impact on the planet.
It is very difficult not to get excited when talking about Natura, a Group that makes a Brazilian proud. It is with this Natura that Avon will deal. With the strong sustainable values in its DNA; A DNA that brought to life brands such as Ekos, which introduced a sustainable vocabulary to the mouths of Brazilian and Latin people, bringing new ingredients from the various Brazilian biomes to the palette of perfumers, such as priprioca, breu branco, açaí, cumaru, among so many, teaching what social-biodiversity is, and how each ingredient, product, supplier, and consumer can contribute to a better planet. The company also dared to put real people, consumers of the brand, as their models of beauty, of "real beauty." I remember thinking at the time: "It is a pity that Natura is not global, to carry such a beautiful message." It is with this Natura that Avon will share its immense global knowledge, its capillarity, its experience and respect by pioneering beauty in the homes of people in more than 100 countries, that advocates women's causes. Its technology in Anew / Renew, for example, allows almost all women to get access to cutting edge cosmetic treatment lines.
I always knew of the affection of Brazilians for Natura and Avon. However, it was only when I created my Youtube channel (www.youtube.com/helenaugustoperfumes) that I learned, through close contact with my own stakeholders, the love Brazilians have for them, almost as great as the one they have for fragrances, as they know that together they can do much more and take our Brazilianity to the rest of the world.
Time can help Natura resolve all questions, as the exchange of shares between the two companies needs to be approved by the shareholders of both companies as well as by authorities to combat market concentration. Completion of the operation is expected by the beginning of 2020.
To conclude, Natura asks us: "In this year when Natura celebrates its 50th Anniversary, we want people like you to feel proud to be part of our history." I am. What about you you?