Latin America is not only the fastest-growing region for Avon anywhere worldwide. It is also its largest region, beating North America.
BY JOACHIM BAMRUD
U.S.-based Avon, the world's largest door-to-door seller of cosmetics, is growing strongly in Latin America helped by double-digit sales increases in top markets like Brazil and Mexico as well as in other key markets such as Venezuela and Colombia.
"I have to humbly recognize that the results for 2007 and the first two quarters for 2008 were very solid," says Charles Herington, who became executive vice president of Avon Latin America in March 2006 after a 25-year career that included heading up the Latin America divisions of AOL and Revlon and the region south of Mexico for KFC, Pizza Hut and Taco Bell. “In Latin America we operate 15 markets [and] it is truly energizing when all of the markets are contributing, all are growing. All of Latin America [has] grown at a substantial scale.”
Avon is scheduled to release its third quarter results this week. During the first half of the year, Avon generated Latin America sales of $1.9 billion, an increase of 29 percent. No other region in the world grew as much in the same period, according to a Latin Business Chronicle analysis of Avon's second quarter SEC filing Strong markets like China and Central/Eastern Europe grew by 24 and 23 percent, respectively, while the North American market posted a 2 percent decline in sales. The impressive results this year come after a strong 2007, when Latin America sales grew by 20.2 percent to $3.3 billion. Latin America is also the most profitable area for Avon.
Operating profits in the first six months this year reached $308.1 million or 52 percent more than the same period last year. The Latin American profits were more twice the size of Avon's profits in North America. 67 percent higher than those of Central and Eastern Europe, Avon's third-largest market in the world.
While Latin America typically accounts for 5 to 7 percent of revenues for most U.S. multinationals, it's far more important for Avon. Last year, Latin American revenues accounted for 33 percent of Avon's total revenues worldwide. Latin America sales were 26 percent larger than those of North America and larger than those of Western Europe, Middle East, Africa, Central and Eastern Europe and China combined, according to a Latin Business Chronicle analysis of Avon's latest quarterly SEC filing.
The impressive growth has been spurred by a combination of factors, Herington says. They include strong economic growth in Latin America, a significant investment in advertising, a long...
Keywords: Brazil, Colombia, Distribution, Mexico, Outlook, Venezuela