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BRAZILIAN BEAUTY CHAIN CONQUERS THE WORLD

By María Bird Picó

Perhaps the greatest omen of O Boticário's future success was the popularity its perfumes and beauty products gained at the French embassy in Brasilia. Who knows perfume better than the French? And the embassy staff enthusiastically bought these products from a woman whose own enthusiasm and success later prompted her to open the company's first franchise store. “It was an excellent quality test for us,” said Artur Noemio Grynbaum, executive vice president of O Boticário.

That was 1980. Today Curitiba, Brazil-based O Boticário is billed as the world's largest beauty and fragrance products franchise. In Brazil there are now 2,465 O Boticário stores, of which only 46 are company-owned. Abroad the company has 61 shops and sells products in 1,000 other retail spots in 20 markets, among them several Latin American countries and Angola, Australia, Japan, Mozambique, New Zealand, Portugal, Saudi Arabia, South Africa and the United Arab Emirates. The company closed 2007 with sales of $1.4 billion.

The company's beginnings were as humble as its rise has been meteoric; it started out as a small drugstore in downtown Curitiba in 1977. “From the start, our drugstore stood out from the competition,” said Grynbaum. “Our store was air-conditioned, and clients could sit down and have coffee while they waited for prescriptions.”

In between filling out prescriptions, owner Miguel Krigsner started concocting his own line of fragrances, hand cream and shampoo. Sold under the O Boticário brand, they were snapped up by Brazilians unable to afford the only alternative: expensive imports. Word spread quickly around town and then beyond. “Up until O Boticário, we didn't have access to attractive products, since imported goods were very expensive,” said retail consultant Michel Brull, a partner of Gouvêa de Souza & MD, a São Paulo-based retail consulting firm.

The company initially sold through distributors before establishing first its own stores and then franchised ones. Having stores has allowed the company to know its customers better, says Brull. This has also allowed it to maintain better control over marketing. “O Boticário offers Brazilian products in a very attractive packaging and that has been part of its success,” said Brull. “The key has been a high-quality product sold through a cheerful and innovative brand,” said Grynbaum.

At first the company focused on the domestic market, which, is “the world's second-largest market after the U.S. for fragrances and personal care products,” said Brull. But before long, O Boticário began luring overseas customers, first by opening a store at the Curitiba airport in 1979. “Soon enough, demand for our products shot up, and we started receiving product requests from outside Brazil,” said Grynbaum. To meet the rapidly growing demand, in 1982 the company opened a 484,300-square-foot (45,000 square meters) factory and headquarters in Curitiba that now employs 1,200. By 1990 O Boticário had 1,000 franchised stores in Brazil and elsewhere.

The stores measure between 540 and 645 square feet on average and market a 600-item inventory that includes skin creams, cosmetics, deodorants, soaps and sunscreen lotions as well as a special line for teens and younger girls. The average sales ticket is $40.

Interestingly, the company's first foreign stores opened not in a neighboring Latin American country, but in Portugal, in 1986. Japan was next, thanks to a large Japanese community living in Brazil, and several Latin American markets followed. The company's Latin American presence includes Chile, Colombia, El Salvador, Nicaragua, Paraguay, Peru and Uruguay.

The first of four U.S. stores opened in 2004, the same year the retailer launched Malbec, a fragrance for men that became the world's first perfume produced with alcohol made out of wine and aged in oak barrels. The following year the company opened its first stores in Egypt and Saudi Arabia, coinciding with the rollout of Rhea, the first wine-derived women's perfume, spiced up with water of roses. Still, for all this overseas expansion, the Brazilian stores generate 95 percent of overall sales. “Internationally, they are not so strong yet,” said Brull. “The company has taken a few steps back in some countries. But they have good products with good prices.”

National and international expansion is continuing apace. This year the company will open at least 100 stores in Brazil and 25 overseas, Grynbaum says. The company created two clubs for girls and women, offering special promotions and activities. The first, Garota Thaty, was launched in 1993 and boasts a membership of 88,000, ages 13 to 25. The other, Amiga Ma Chérie, caters to girls 8 to 12 and has about 25,000 members. “Our members have developed such a strong attachment to our clubs,” Grynbaum said.

O Boticário has a client-fidelity program with some 4 million registered clients who accrue points for store discounts. The O Boticário Foundation for the Protection of Nature sponsors and organizes conservation projects. So far the company has invested some $5 million on about 900 of these. One of the projects involves the creation of private reserves, including the 2,340-acre Salto Morato Natural Reserve, in Guaraqueçaba, in the state of Paraná. In 1999 UNESCO added this reserve, which protects a significant piece of the Atlantic Rainforest, to its World Heritage list. And the company makes it a practice to test the environmental impact of its product ingredients, says Grynbaum. In Brazil, store employees put on finger-puppet plays at some 4,000 parishes around the country on March 22, a day dedicated to celebrating life. The performances promote literacy and nutrition. Little wonder, perhaps, that the National Retail Federation named O Boticário President Miguel Krigsner the 2006 International Retailer of the Year for his contributions in leadership, creativity and innovation.

Truly, the sweet smell of O Boticário success has wafted across just about every corner of the globe.