Natura Cosméticos S.A., Brazil’s leading beauty company, has set up a global innovation hub in the heart of New York’s SoHo neighborhood, and the direct-selling giant is now looking for partners.
This story first appeared in the March 21, 2014 issue of WWD. Subscribe Today.
The dynamic that is fueling its global outreach is the prospect of expanding Natura’s business. Roughly 80 percent of Natura’s slightly more than $3 billion in sales are generated inside of Brazil, and the remaining 20 percent in the rest of Latin America, according to estimates by industry sources. It has been said by market sources that within five years, Natura expects to be doing 10 to 20 percent of its business internationally, outside of Brazil and Latin America.
The company already owns the Australian-based Aesop, which operates in 13 countries and generates about $100 million in sales, according to industry estimates.
In a wide-ranging interview, Alessandro Carlucci, Natura’s chief executive officer, said that 10 years ago, company executives decided that 50 percent of its research know-how should come from outside the group since Natura, based on the outskirts of São Paulo, is competing with global brands with much bigger research and development budgets.
So Natura began reaching out to universities in Brazil and France and opened an innovation hub in Manaus — the capital of the Amazon region — that is hooked to a hub at headquarters in São Paulo and the company’s more traditional 300-person research center.
While Manaus connects Natura with the northern universities in Brazil and taps into communities allowing the company “to leverage the extraction of natural ingredients from Brazil’s biodiversity,” Carlucci sees New York as “a city that connects all the world.
“My personal view is that even for a Brazilian brand like ours that is focused on Latin America, you need more and more with your interpretation to bring things that are happening all over the world. I don’t believe that in 10 years ahead you are going to have relevant companies operating only in one geography. So even to compete in Brazil we need to bring more innovation, and innovation with inputs, with insights from different parts of the world. New York, for us, is a hub from and to the world.”
“It is to stimulate innovation and thinking in a more international way,” added Roger Schmid, innovation adviser, noting that the SoHo operation is more marketing-driven. Speaking of New York, Carlucci added, “It’s a place where we want to develop new concepts, new ideas and even new prototypes in a faster way and connecting, diversifying competencies — designers, formulators, packaging, suppliers.” He noted that suppliers are in short supply in Brazil.
Carlucci then turned philosophical in talking about offering products and services that ease people’s “alienations,” or “the problems that the society is facing in a deeper way.” For example, the phenomenon of antiaging marketing. “It’s not only looking in a scientific way at the skin aging, but also mentally [at it]. What is the reflection and the impact of a woman when she feels that she’s getting old?”
Carlucci then described the process of what he calls “innovation journeys. You take a week, you put [together] different people with two, three, four problems or alienations, and you put these different people — people from Natura, people from the research area, artists, designers — and then at the end of this week, you need to bring 10, 12 potential solutions. If it’s possible, prototype it [as] products and services to solve some of the problems.”
Schmid is the leader of a team of seven in the new West Broadway office. “We have a staff here, and then we have what we are calling a circle of friends, which are people with whom we are closely associated. We have an association with the Media Lab in Boston, we are starting an association with the Fashion Institute of Technology here, and then it goes to freelance designers.” His idea is to dip into the worlds of fashion, art and design.
Natura, which is demonstrably proud of the sustainability of its natural ingredients and ecology-sensitive systems, has invested heavily in the last two or three years in digital technology — “almost the same size of research in products,” Carlucci said. Referring to Natura’s 1.5 million product resellers, he said, “If I can put technology in their hands and they can show videos of products, they can capture the information from their customers.”
He asserted that “direct selling is the original social network, because at the end it’s a person-to-person relationship. It’s a trust process, and there’s nothing more contemporary than trying to see how many stars a product has. In other words, I’m trying to understand the recommendation of that product. If I can leverage direct selling with technology, I can use all the social networks’ potential.”