Updated: Sep 8, 2022
Brazilian cosmetic giant Natura&Co has suspended its plans of going list on the New York Stock Exchange, for the Russian/Ukrainian war and interest rates soared bringing violent volatility to global stock markets. The group had acquired a 76% stake in Avon for $2 billion to accelerate its presence in the Chinese market.
On March 23rd Beijing time, Brazilian cosmetic giant Natura&Co has suspended its plans of going list on the New York Stock Exchange, for the Russian/Ukrainian war and interest rates soared bringing violent volatility to global stock markets.
Previously, Natura&Co reported its results announcing a reversal of losses in 2020 and consolidated net revenues of R$40.1 billion (about $7.98 billion) in 2021, achieving a net profit of R$1 billion (about $199 million).
As the seventh largest cosmetics group in the world and Brazil’s largest cosmetics company, Natura&Co set a goal: it aims to surpass L’Oréal Group, Unilever and Estée Lauder Group to reach the No.1 in the global cosmetic companies in the future.”
Joo PauloFerreira, CEO of Natura&Co, has said, “On the way to become the top global cosmetics company, the Chinese market is inevitable for Natura&Co Group’s growth.”
As a bunch of uncertainty in the global market due to the pandemic. the Chinese market is much more stable due to the management of the pandemic in China. The Chinese market has a large population and the penetration rate of cosmetics is still lower than that of developed countries such as Europe and the United States. Judging on the factors such as the rapid growth of the Chinese skincare market and the high market potential, many cosmetic giants tends to accelerate the extend of the Chinese market.
It is reported that the group had acquired 76% shares of Avon for $2 billion in May 2019 to accelerate the presence of the Chinese market. And the acquisition of Avon was completely completed on January 3, 2020 for nearly R$13.4 billion (nearly $2.78 billion). The acquisition of Avon is an important step for Natura & Co to occupy the Chinese market.
In recent years, Avon relies much more on the Chinese market. It is understood that Avon has sold its majority stake in Japan and the U.S. business one after another over the years. It was successively withdrawn from markets such as South Korea, Vietnam and Ireland. For example, in 2015, Avon sold its North American subsidiary to private equity firm Cerberus Captial Management LP for $170 million. In May 2018, Avon sold its Japanese operations (Avon Japan) to Ginza Stefany, a Japanese subsidiary of South Korean consumer goods and beauty products company LG, for $96 million. In September 2018, Avon also announced that it would consolidate its US operations into Suffern, New York. At the same time, Avon has repeatedly stated that the Chinese market will be an important market for Avon to rise.
At one time, a Chinese economist analyzed that the reason that Natura&Co Group acquired Avon is that Avon had developed in the Chinese market for many years. That means it has certain advantages in channels, customer resources and brand influence. With the advantages of Avon in the Chinese market, Natura&Co Group could increase the extend of its other brands in the Chinese market. Previously, the group has entered China with its two brands The Body Shop and Aesop. They are currently sold in China through Alibaba’s Chinese cross-border e-commerce platform Tmall Global. Among them, The Body Shop Ginger Shampoo has total sales of 20,000+ units with monthly sales of 4,000+ units. It was priced at $15.6 in Tmall’s The Body Shop overseas flagship store, making it the highest selling product in the store.
If Natura&Co Group’s brands achieve growth in the Chinese market, it can support its expansion in the Chinese market.
Roberto Marques, CEO of Natura&Co Group, said to the public, “After the termination of the listing plan in the United States, the next step of Natura&Co Group is mainly to vigorously develop the Chinese market and accelerate the development of Avon’s transformation.”
However, as the extend of the Chinese market for Natura&Co Group, only relying on Avon is far from enough. In August 2020, the CEO of Brazilian cosmetic group Natura&Co Group said that the company was seeking to increase its business in China. He also revealed that the group was currently communicating with the relevant authorities in Shanghai to expand the market share of its brands in China under the condition that no animal testing is conducted.
Natura&Co, founded in 1969, is a global personal care cosmetics group base in Sao Paulo, Brazil. It owns Brazilian skincare brand Natura, British organic skincare brand The Body Shop and Australian organic skincare brand Aesop. In addition to its own brand Natura, Aesop and The Face Shop are brands acquired from other groups. In the year following the acquisition of The Body Shop, Natura&Co released financial data for fiscal year 2017 with net sales increasing by 24.5% and net profit soaring 117.5% for the year.