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Água de Cheiro plans to double the number of stores in two years with an investment of R$ 15 million

Acquired by the Narsana Group in a judicial auction at the end of 2016, the Minas Gerais brand with 30 years of tradition was restructured and given a new start on the Brazilian market.

Água de Cheiro has once been one of Brazil’s leading perfumery and cosmetics companies. The nation’s first beauty franchise started as a family business in 1976 and was one of O Boticário’s main competitors in the ‘80s with 900 stores spread throughout the country.

Fabio Figueiredo, Director at Água de Cheiro

Fabio Figueiredo, Director at Água de Cheiro

There have been plenty of ups and downs in the company’s journey, which now begins a new chapter thanks to Beauty Franchising. The beauty arm of the Narsana Group holds the license for brands such as Forum and Everlast and has had the control of the Brazilian operations of Argentinean alfajor cookies chain Havanna since 2006. Purchased by the holding company at the end of last year in a judicial auction for only R$ 6.6 million, Água de Cheiro had accumulated a debt of over R$ 70 million, leading itself to bankruptcy.

The former franchiser (Henrique Pinto, founder of construction company Tenda and holding Globalbrás), failed to maintain an efficient supply chain for reasons that are unknown to us. The Narsana Group acquired the brand and prepared its restructure and reintroduction into the Brazilian market, more organized and ready to live up to the name and history of Água de Cheiro”, says the company’s Director, Fabio Figueiredo.

The company’s restructuring strategy relied on two main aspects: products and prices aimed at lower-income and middle class consumers and the addition of new brands into the stores. The product offer will feature Brazilian labels such as Marcelo Beauty and Ana Hickmann, as well as imported brands with a strong appeal in Brazil such as Gabriela Sabatini and Jennifer Lopez. “Our goal is to introduce new consumer trends targeted at middle-class customers in areas of Brazil that are not currently served by other companies,” says Figueiredo. He claims that the core activity of the business will continue to be its own-brand products and highlights fragrances Água Fresca, Absinto, Attractive and Hydros as flagship brands.

In addition to a new logo, the franchise stores will also gain a more modern and relaxed design, with spaces starting at 30 m2 and an eclectic product mix. “Fragrances, cosmetics and treatment lines are all part of the brand’s positioning we will deliver to our customers,” says Figueiredo. The average sale price is expected to be around R$ 70.

With investments estimated at R$ 15 million over the next few years, Beauty Franchising plans to double the number of stores by 2019, going from the current 194 to 400 outlets and prioritizing middle-class shopping malls. The franchise fee was established at R$ 30,000 and the total investment required for opening a franchise can vary from R$ 150,000 to R$ 250,000, with estimated return in 24 to 36 months.

Água de Cheiro’s relaunch in the market will not be a smooth road and the company will face challenges including regaining customer trust and facing a fierce competition with other brands operating in this market. “The company has gone through difficult times and compromised its image with the closing of several stores and lack of communication,” says the executive.

Nevertheless, Figueiredo is optimistic about the challenge. He states that it is important to invest heavily not only in production but also in advertising so that previous customers know that the brand is still there, new customers become drawn towards it, and the brand perception shifts from that of a gift shop to a beauty destination. “We are relying on a traditional brand that has enjoyed success in one of the world’s largest fragrance and cosmetics markets worldwide,” he says.

Renata Martins

Portfolio

© 2017 - Brazil Beauty News - www.brazilbeautynews.com

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