MEXICO CITY — Grupo Boticário, Brazil’s largest fragrance maker, will roll out 100 shops of its flagship O’Boticário perfumery chain and flesh out its Quem disse, Berenice and Box divisions to profit from Brazil’s growing beauty market.
At the same time, the four-unit group hopes to inaugurate a new perfumery and skin-care factory in Camacari in Bahia state in the second half of the year. The site, part of a $450 million plan to build new research and manufacturing facilities, will help the firm churn out 465 million items per year, up from 280 million currently.
The group’s expansion comes at a time when Brazil’s economy is forecast to grow 1 percent in 2014, down from a 2.3 percent gain in 2013 and staggering growth rates in recent years.
Grupo Boticário’s chief executive officer Artur Grynbaum expects revenues will grow 10 percent in 2014. However, that’s down from last year’s impressive 16 percent jump to $3.6 billion.
“This year and next will be harder for Brazil’s economy,” Grynbaum said in an e-mail.
Meanwhile, the company continues to move forward. “We are fine-tuning the machines and hope to start making test products late this summer,” an O’Boticário spokesman said, adding that the launch will help the group meet consumer demand for the next 20 years.
According to the spokesman, the bulk of O’Boticário’s (“pharmacist” in English) shops will be franchised as well as those opened by Quem disse, Berenice, which will install 13 doors to lift its count to 130. Beauty Box, a new multibrand perfumery chain, will also open an unspecified number of doors to boost its franchise beyond 17. Direct seller Eudora will also be muscled.
All said, O’Boticário, which retails some 1,100 self-branded fragrance, skin-care and body-care products, will operate 3,690 shops by 2015. The enterprise is mainly present in Brazil but also has doors in France, Portugal, Japan, Mexico and across Latin America.
Brazil’s beauty sector is hoping things will get better after this month’s round of general elections, however. The first vote, held Oct. 5, set the stage for a runoff on Oct. 26.
“A couple of bad years doesn’t mean we are not going to continue growing,” said a Grupo Boticário executive. “In 2009, at the height of the global economic crisis and a difficult domestic market, we opened a new research center. We believe this is just a temporary downturn.”
Brazil’s leading trade association, Abihpec, is also upbeat. It recently forecast Brazil’s beauty industry, the world’s third-largest, will grow 11.8 percent, to $19 billion, this year.
Meanwhile, São José dos Pinhais (Paraná State)-based Grupo Boticário is in the last phase of the four-year, $450 million capital expansion plan. The scheme includes the Camacari site and a $293 million expansion of its São José dos Pinhais factory with a makeup line. Additional R&D and distribution centers have also been built.
“In the past five years, we spent almost 1 billion real [$414 million] in infrastructure,” Grynbaum said. “Now we are going to focus on upgrading the consumer experience….”
That “experience” seems to be bearing fruit. This year, Euromonitor ranked Grupo Boticário as Brazil’s largest fragrance supplier as consumers embraced its growing brand portfolio, now comprising about 100 items.
The researcher said the group beat archrival Natura to command 28.8 percent of the perfumery market, with sales leaping 10 percent thanks to “aggressive price promotions and intensive TV commercials.” Natura currently holds 27.7 percent of the market.
Euromonitor said O’Boticário’s recent fragrance launches, notably Make B Eau de Parfum and unisex Coffee Passione, helped boost its fortunes.
This year, O’Boticário also introduced Rio, Eu Te Amo, billed as the world’s first fragrance evoking the scent of a city, this time Rio de Janeiro, as it sponsored the film “Rio, I Love You.”
Make B is also the name of O’Boticário’s premium makeup label, complemented by Intense and Capricho, the latter of which caters to the teen market. Other top brands include Malbec, Floratta and Native Spa.
With an eye to the future, Grynbaum said Grupo Boticário has enough cash for expansion, partly because it can access inexpensive funding from Brazilian development bank BNDES.
He added that there are no plans for an initial public offering in the foreseeable future.
“We don’t have plans to go to the stock exchange in the short or medium term,” Grynbaum said. “We meet the company’s [financing] needs with our own resources or with BNDES.”