Tuesday, May 4, 2010


[LAIST Tour Begins, Fazenda Tozan, Churrascaria – Nova Pampa, Port of Santos, Deloitte, Embraer, Natura, Gol de Letra, Bom Bril, Agencia Click, Nextel Institute, May 6, Rio, Rio Weekend, Petrobras, PREVI]

Natura has earned its place as the leading cosmetic company in Brazil through its enlightened management practices. Their philosophy emphasizes the idea of harmony, and the use of cosmetics as a moment of self-reflection. Their factory headquarters could easily be mistaken for a California high tech company in Silicon Valley, with its campus style feel. They have exceptional benefits for their employees, living their ideals of respect and the triple bottom line: Monetary, social and environmental benefits. There is an onsite day care, laundry, restaurant, movie rentals, internet and other amenities for the one million employees (80% of whom are women). Shifts begin and end with a 10 minute exercise routine each day.

Natura aims to be carbon neutral, and has a variety of unique initiatives: they were the first cosmetics company to do a “true beauty” campaign using employees and customers in ads rather than models, a strategy later adopted by Dove in North America. They were the first to use organic alcohol in their perfumes. They also aim to be carbon neutral and label their products with water consumption, % certified raw resource usage and even brail lettering, practices that are well ahead of their time in the cosmetics market place.

Natura is a major player in developing the industry. They have the largest perfume plant in Brazil and hire perfumists (which they say are less common than astronauts) who require 10 years of training in order to create new perfume formulas.

In focusing on relationships, their sales model is also fairly unique. The use a direct sales model and word of mouth that would be similar to a highly structured multi-level marketing model with some key differentiators. Rather than force consultants to build tiers underneath them to make money (a model which often collapses in on itself), consultants focus on building relationships with clients and can occasionally introduce new potential consultants into Natura. After bringing in 10 other members, the consultant can potentially become an orientation consultant effectively giving themselves an unbiased merit based promotion. However, each consultant must being to make sales within the first three months or risk losing their consultant status.

90% of their consultants are women and range in age from 18 to 85. The only requirement for employment is to have no outstanding bank debt – There is no educational limitation. The most important quality to work at Natura is belief in the philosophy (Natura is known to do job postings withholding their name and posting only their values).

However, don’t be fooled into thinking that this socially responsible and relationship based mindset makes them any less competitive. Quite the opposite, they enjoy a 40% EBITDA margin and an exceptionally well run production facility. They structure their manufacturing teams in the same model as Toyota, using a team based around production lines in a Total Productive Manufacturing (TPM) system incorporating job rotations. Their manufacturing facility is highly (almost completely) automated, and their inventory management system requires a shockingly low amount of space (rather than have forklifts and operators, the inventory is housed in extremely narrow shelving units managed by an entirely automated system, saving a great deal of real estate). RFID technology is also used to ensure that complex orders are filled to exact specifications as required by their consultants.

Natura is currently focusing on Latin American markets employing different business models for different locations (beginning to employ a bricks-and-mortar store front concept for other geographies) and it’s only non-Latin America presence is in France, but they seem to have their sights set on some of the larger cosmetics markets in the world.

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