Natura

9-807-029
REV: AUGUST 29, 2007

GEOFFREY JONES RICARDO REISEN DE PINHO

Natura: Global Beauty Made in Brazil
Beliefs create strong bonds throughout the whole value chain. — Luiz Seabra, Natura’s Founder and Chairman It was an unusually mild fall day in October of 2005 as Luiz Seabra, Guilherme Leal, and Pedro Passos, the three men responsible for founding and growing the Brazilian company Natura, walked through Red Square in Moscow. They were headed to a nearby business center to monitor focus group discussions designed to help them decide if Natura, the largest direct sales beauty company in Brazil, should invest in Russia. Natura had come a long way since it was founded by Seabra as a small store in São Paulo, Brazil in 1969. Although sales outside Brazil still constituted only 3% of its total revenues, Natura had grown its international operations in recent years. The company had recently established a new direct-selling operation in Mexico, and Venezuela and Colombia were likely to join Natura’s portfolio in coming years. The company had just opened a flagship store in Paris, the very heart of global fashion and home to L’Oréal, the world’s largest beauty company, and was actively seeking other growth opportunities worldwide. Natura’s international development was met with mixed reviews from industry analysts and investment bankers. Some perceived the development as blind ambition on the part of the company’s founders, while others viewed it as a carefully thought-out growth strategy. Even among Natura’s senior executives there were differences in opinion on the optimal business model or regions for expansion. Possibilities for growth included moving to Internet sales, selling products in duty-free shops in airports, and creating retail chains in certain countries. The executives were strongly inclined to keep international investments relatively low until a final decision was made. In 2005, after an initial public offering (IPO) the previous year, Natura