Brazilian cosmetics group Natura has announced that it is buying UK-based direct-selling cosmetics business Avon. When Natura bought The Body Shop in 2017 (formerly owned by L’Oréal group), it was widely agreed to be a good fit; bringing it into its ethical stable of personal care products, which includes our home-grown Australian Aesop brand (bought in 2013). Now with Avon, we see the fit with Natura’s expertise in direct selling – Natura sells products through representatives and in more than 3.336 stores in more than 100 countries across the world.
Buying Avon is an all-stock offer of about US$2bn and Natura shareholders will hold 76% of the combined company, which will have annual revenue of over US$10bn.
And what does that deal mean? Natura & Co. will become the world’s fourth-largest cosmetics company. Headquartered in São Paulo, Natura focuses on several categories: bath, body care, face care, hair care and perfumes. Common to the formulations are vegetable ingredients from the Brazilian biodiversity, harvested in partnership with local communities. The company has a strong commitment to sustainable development since its creation and its objective by 2020 is to generate a positive environmental, social and economic impact. Natura has also become the world’s largest certified B Corp company and the first publicly traded company to receive this certification in December 2014. For Natura Brasil, innovation is one of the cornerstones of the implementation of this sustainable development. In 2016 the company devoted 50 million euros to it and launched 255 products, reaching an innovation index (percentage of revenue from products launched in the last two years) of 54.3%.
Avon has been struggling to modernise its global business over the last few years, as the internet has impacted on its home-selling model/door-to-door style. The customer base has withered yet the potential of the brand is the investment opportunity Natura is interested in to reinvent Avon. In Brazil, Natura is Avon’s biggest competitor. If you can’t beat ‘em, join ‘em. Enough said.