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Responsible
Supply Chain
João Paulo Ferreira
Supply Chain Vice President
Who is
 Natura?
Sales
net sales of US$ 2.1 billion

EBITDA
23,8%

CAGR (2005 – 2009)
18%

Market share - CFT
22.2% market share in Brazil

Direct Sales
1,034,000 consultants

Employees
6260 employees in 8 countries

Investments in R&D
                                                 Highlights
US$ 59 million

Investments in Corporate Social Responsibility
US$ 30 million

Consumers
50 million consumers

Brand strength
4th most valued brand in BOVESPA
14th most valued brand in Latin America
(Interbrand)
reason for being
                                                          to create and sell products
                                                          and services that promote
                                                          well-being/being well



                                                          well-being
                                                          is the harmonious, pleasant
                                                          relationship of a person with
                                                          oneself, with one’s body

                                                          being well
                                                          is the empathetic, successful,
                                                          and gratifying relationship
                                                          of a person with others, with
                                                          nature and with the whole.

  “The secret is working with inventory, to avoid
losing the magic moment when the person tries
            the product and falls in love with it.”
    Ildnéia Cano (left) is a Natura Consultant in Júlia
               Cunha’s (Sales Promoter, right) team.
vision
Through its corporate behavior, the quality
of the relationships it establishes and the quality
of its products and services, Natura will be an
international brand identified with the community
of people who are committed to the construction
of a better world, based on a better relationship
with oneself, with others, with nature of which they
are part of, with the whole.




                 “The things I do for Natura are things I like doing and would do for
                                     myself, because they have value, are genuine.”
                     Beto Von Poser, trained as an engineer, set designer by vocation, and
                                                              Natura supplier for 13 years
beliefs
life is a chain of relationships         commitment to the truth
nothing in the universe exists alone     is the route to perfecting the quality
everything is interdependent             of relationships

it is our belief that the appreciation   the greater the diversity,
of the importance of relationships       the greater the wealth and vitality of the
is the foundation of an enormous         whole system
human revolution in the search for
peace, solidarity and life in all        the search for beauty,
of its manifestations                    which is the genuine aspiration of every
                                         human being, must be free of preconceived
the continuous search for improvement    ideas and manipulation.
promotes the development of
individuals,organizations, and society   the company, a living organism,
                                         is a dynamic set of relationships
                                         its value and longevity are connected to its
                                         ability to contribute to the evolution of
                                         society and its sustainable development
differentiated value                                  corporate
          proposition                                           behavior




                                                                 essence
Transform social and
enviromental challenges into
business opportunities                              channel                     products




                                                         Delivery of
                                                         “Triple Bottom Line”


 Economic                                   Social                                Environmental
 › Strong cash flow generation              › Wealth creation to consultants      › Carbon neutral company
 › Attractive growth and                    › US$ 30 million invested in CSR      › Utilization of refill packaging
       profitability                            1in 2009                          › Sustainable extraction of raw
 ›     Consistent dividend payments         ›   Benefits extended to supplier         materials
                                                communities                       ›   Use of recycled and recyclable
  1   Corporate and Social Responsibility
                                                                                      materials
channel
Channel strength

    Available consultants (in thousand)                                              Channels differentiations
                                                                                             High productivity1
    Brazil                    International             Total                          2.2 times higher than its peers


                                                                        1,034

                     875                                         850
              731                                         719
      632                                                        +21.8%
                                                                                    Low          Business model          Training
                                                                                turnover         that generates          583,000
              +19.8%                                                                                                     consultants
                                               159                                36% on         income and work
                                                                                  average                                trained
                                       119
                                86
                                                                                                                         in 2009
                                       +33.9%


      2007    2008   2009       2007   2008    2009       2007   2008    2009

      CAGR                                                                                    High satisfaction2
                                                                                                         90% in 2009




› Consultants are Natura’s first consumers
› Drive sales through personal relationships
› Channels disseminate Natura's values with consultants acting as agents of social
    transformation
› More than 1 million consultants in 2009
1   Source: Company, ABEVD (Brazilian Association of Direct Sales Companies)
2   HAY Consultant annual opinion poll for consultants satisfaction
products
Ekos
sustainable use
of biodiversity
Chronos
a truly beautiful
woman
Todo Dia
(every day)

caring for body
and mind
Mamãe e Bebê
(mom and baby)

the importance of
the bond between
parents and
their children
company
behavior
The Natura Value Chain
   Mapping of all direct and indirect emissions of greenhouse gases
   throughout the product lifecycle and our business chain.

1. Extraction and transportation of raw materials
and packaging (direct and indirect suppliers)                         2. Industrial and administrative
                                                                      processes
105,570 ton of CO2e (extraction and transportation of
raw materials and packaging)
                                                                      14,767 ton of CO2e
                                                                      23,606 ton of CO2e (co-makers)

        43%
                                                                        16%

                                                                             Relative Emissions
                                                                             (kg of CO2e/kg of product billed)


                                                                                                        - 16,1%
                                                                                        3,95
                                                                                                3,82
                                                                                                        3,63




     24%
4. Use of products and               3. Product sales     18%
packaging discharge                  (transportation and distribution)                   2007    2008 2009
                                                                                    Challenge: reduce GHG
57,873 ton of CO2e                   43,980 ton of CO2e                             relative emissions by
                                                                                    33% over 5 years
The Natura Value Chain
Stage 1: Extraction and transportation of
raw materials and packaging (direct and
indirect suppliers)                       43%
Related initiatives:

- Sustainable development program that
  includes supplier communities (NGO’s,
  Government). .

- Collaboration with government to
                                             Key results in 2009:
  establish new regulations for accessing
  the Brazilian biodiversity.
                                                 Wealth distribution to suppliers:
                                                 US$ 1.4 billion – 8% growth
- Certification program for natural
  ingredients (Forest Stewardship Council,       Supplier satisfaction: 82%
  Instituto Biodinâmico, Sustainable
  Agriculture Network).                          Certified ingredients: 31

                                                 Use of vegetal material from
- Collaborative product redesign with            renewable origin: 79.2%
  suppliers for reduced LCA

- Vegetalization program and beyond.
  (Ex.: organic alcohol)
The Natura Value Chain

Stage 2: Industrial and administrative
processes.                                  16%


Related initiatives:
                                         Key results in 2009:
- Manufacturing plant in the Amazon
  (Benevides – Pará)                         Distribution of wealth to employees:
                                             US$ 321 million – 12% growth
- Use of PET with inclusion of 30%
                                             Investments in innovation:
  recycled resin.
                                             US$ 59.4 million

- Eco-efficient energy and steam             Water consumption:0.52 liter per unit sold
  generation.                                (increase of 2% since 2007)

                                             Energy consumption: 447.3 kjoule per
                                             unit sold (reduction of 25% since 2007)

                                             Generation of residues: 31.5 grams per
                                             unit sold (reduction of 10% since 2007)
The Natura Value Chain

Stage 3: Sale of products
(transportation and distribution).          18%

Related initiatives:
                                                  Key results in 2009:
- Crer para Ver (Believing is Seeing)
  Educational Program.                                Wealth distribution to consultants:
                                                      US$ 1.15 billion – 15% growth
- Natura Movement: reverse logistics, and             Sales channel:
  education towards citizenship (EJA).                1 million consultants – 18% growth

- Secondary pack optimization program                 Sales channel satisfaction: 88%

                                                      Product launches: 103 – 600 SKUs

                                                      Total collected on the Crer Para Ver
                                                      program:US$ 1.9 million
The Natura Value Chain

Stage 4: Use of products and discharge
of packages.                             24%


Related initiatives:

     - Use of refill.

     - Product Lifecycle Analysis
       (ACV).

                                         Key results in 2009:
     - Environmental Labelling.
                                         Percentage of refills over sold items: 18,4%

                                         Environmental impact per product
                                         quantity:69.5 mPt/kg – (reduction of 5%
                                         since 2007)
our supply chain
Direct Selling – Supply Chain
                                                                 Post Sales
                                                                 CAN, SNAC,
                  Suppliers                                      Credit and Collection
                  > Ingredients from
                  biodiversity sustainably
                  extracted from
                  communities in the
                  forest;




    Production                                CN Order Cycle
    Plants                                     21 days sale cycles



> 66% of renewal for
products less than 2
years old

> 50% volume
promoted
                                                                                 Distribution
> Promotions                                                                     > 1 million POD
leverage: 8-15x
                              Sorting
                              Picking
                              Cajamar & DCs
Our operations



                                        France




   Mexico




            Colombia


               Peru
                           Brazil

                 Bolivia




                            Argentina

                  Chile
Main numbers
›   Manufacturing Plants: 4

›   Hubs: 1

›   Distribution Centers: 10

›   Points of delivery: 1 million

›   Units sold: 384 million

›   SKUS: 1,200

›   Kilometers traveled: 1.6 million

›   Total orders/year: 12.8 million

›   Employees: 3,000

›   Raw materials and packaging suppliers: 200

›   Co-makers: 20
New initiatives
›   WWF Program Defenders of the Climate: reduce absolute GHG
    emissions by 10% (scopes 1 and 2) between 2008-2012;

›   Co-makers collaborative environmental program;

›   Supplier relationship program: QLICAR (quality, logistics,
    innovation, competitiveness, service, and relationship);

›   New international manufacturing network: 28% reduction in
    CO2 relative emissions from international flows;

›   New boilers - ethanol and biomass;

›   Enlargement of the Amazon Industrial Unit: increased number
    of benefitted families;

›   Introduction of biopolymer plastic;

›   Water footprint;

›   New picking technology to increase inclusion of disabled
    employees;

›   New distribution network: 25% reduction in CO2 relative
    emissions from distribution;
biodiversity as
strategy
Opportunities
› Innovation - Union
  between scientific and
  traditional knowledge

› Value creation for
  stakeholders

› Competitive advantage

› Positive environmental
  impact
Sustainability of
supplier communities

› Access agreements for genetic
  resources & traditional knowledge
  that includes sharing benefits in
  non-monetary ways (e.g. certification,
  technology transfer packages) as well
  as % of net revenues

› Financial support for sustainable
  local development projects,
  preservation of biodiversity and building
  local institutions

› Program for rural supplier
  qualification – BioClicar
  supplier partnership that includes support
  to production and harvesting and links
  to third-party processors
the chain of
relationships
                                      Certification Bodies




                                            › Value addition




                           › Forest
                           management                              › Ethnobotanic
     Traditional           plan                                    › Studies        Academic
     Community             › New concepts                          › Scientific     Community
                           › Innovative          In the            approach
                           products           chain’s heart


                                            › Production Process
                                            › Ethical integrated
                                            supply chain




       Governments
       › Legal framework
       cooperation                             Suppliers
Location of the Communities,
        Number of Families and Raw materials
         MALVAS       CAMTA                  IRATAPURU                              VER AS ERVAS                     CAMPO LIMPO
         (Ecuador)    Cupuaçu, Açai          Brazil nut,                            Breu Branco,                     Flatsedge, Capitiu
         Palo Santo   palm, Passion fruit,   Breu Branco,                           Cumaru, Flatsedge
                      Cacao                  Copaiba                                and Jambu
                                                                COFRUTA
                                                                Murumuru                                   COTIJUBA
                                                                palm                                       Flatsedge,
                                                                                                           Ucuuba             BOA VISTA
                                                                                                                              Flatsedge, Capitiu,
                                                                                                                              Tower tree
   25

                                                          32
                                                                                                                              COOPAESP
                                                               102 16                                                         Babaçu
                                                                          14
                                                         100         23
                           500
                                                                               35                          PALMEIRA DO
                                                         70                                                PIAUÍ
RESEX MÉDIO                                                                                                Buriti palm
JURUÁ
Andiroba,                                                                            50
Murumuru palm                 226
                         50                                                                                ONÇA
                                                                                                           Guarana

                                                                                            300
                                                                                                           COOPROCAM
                                                                                          32               Urucum, Sapucainha
   RESEX CHICO                                                                            140
   MENDES             RECA
   Jatoba, Dragon’s   Cupuaçu, Brazil                                                                 CABRUCA            Supplier of raw materials and
   blood              nut, Açai palm,                                                                 Cacao              access provider (Genetic
                      Cumaru                                                                                             Resource and/or Traditional
                                                                                                                         Knowledge)

                                                         32                                                              Supplier of raw materials
                                                                 7                                                       only
                      APROCOR                       50
                                                                                    CTM/Proter
                      Passion fruit                                                 Sweet passion fruit,
                                                                                    Cow-foot leaf,                       Supplier of access only
                                                                                    Yerba Mate                           (Genetic Resource and/or
                                                                                                                         Traditional Knowledge)
                                                                TURVO
                                                                Surinam cherry,                                      N   N=number of families
                                                                Chamomile, Melissa,
                                                                Lemongrass, Mint,
                                                                Carqueja
Distribution of wealth to
supplier communities (US$)

                                         2007      2008       2009

         Supply                        375,498   973,122   1.378,000

         Use of image                   16,669     4,455      7,000

         Funds and support             328,315   292,097    568,000

         Benefit sharing from the      141,180   493,920    528,000
         access to genetic resource
         or traditional knowledge

         Families benefited (number)     1,684     1,895      2,084
Ecological                        36 native species
and Socio-Economic                + 38 exotic

impacts                                                  Amazon
                                                         Industrial Unit
                                                         + Suppliers
     34 providers
    2,084 families




     50 million                                                56 raw
    consumers                                                  materials




                    8 Countries
          1 million consultants               812 products
Conclusions
Supply Chain
    from Natura‘s lenses


›   Inclusion of social and environmental drivers
    improves supply chain decision making framework


›   It is possible to drive outstanding value out of a
    sustainable supply chain


›   Collaboration and Service pushed to new limits


›   Enhanced professional supply chain skills required
thank you!   João Paulo Ferreira
             joaopauloferreira@natura.net

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Natura: The Challenges in Building a Sustainable Supply Chain

  • 1. Responsible Supply Chain João Paulo Ferreira Supply Chain Vice President
  • 3. Sales net sales of US$ 2.1 billion EBITDA 23,8% CAGR (2005 – 2009) 18% Market share - CFT 22.2% market share in Brazil Direct Sales 1,034,000 consultants Employees 6260 employees in 8 countries Investments in R&D Highlights US$ 59 million Investments in Corporate Social Responsibility US$ 30 million Consumers 50 million consumers Brand strength 4th most valued brand in BOVESPA 14th most valued brand in Latin America (Interbrand)
  • 4. reason for being to create and sell products and services that promote well-being/being well well-being is the harmonious, pleasant relationship of a person with oneself, with one’s body being well is the empathetic, successful, and gratifying relationship of a person with others, with nature and with the whole. “The secret is working with inventory, to avoid losing the magic moment when the person tries the product and falls in love with it.” Ildnéia Cano (left) is a Natura Consultant in Júlia Cunha’s (Sales Promoter, right) team.
  • 5. vision Through its corporate behavior, the quality of the relationships it establishes and the quality of its products and services, Natura will be an international brand identified with the community of people who are committed to the construction of a better world, based on a better relationship with oneself, with others, with nature of which they are part of, with the whole. “The things I do for Natura are things I like doing and would do for myself, because they have value, are genuine.” Beto Von Poser, trained as an engineer, set designer by vocation, and Natura supplier for 13 years
  • 6. beliefs life is a chain of relationships commitment to the truth nothing in the universe exists alone is the route to perfecting the quality everything is interdependent of relationships it is our belief that the appreciation the greater the diversity, of the importance of relationships the greater the wealth and vitality of the is the foundation of an enormous whole system human revolution in the search for peace, solidarity and life in all the search for beauty, of its manifestations which is the genuine aspiration of every human being, must be free of preconceived the continuous search for improvement ideas and manipulation. promotes the development of individuals,organizations, and society the company, a living organism, is a dynamic set of relationships its value and longevity are connected to its ability to contribute to the evolution of society and its sustainable development
  • 7. differentiated value corporate proposition behavior essence Transform social and enviromental challenges into business opportunities channel products Delivery of “Triple Bottom Line” Economic Social Environmental › Strong cash flow generation › Wealth creation to consultants › Carbon neutral company › Attractive growth and › US$ 30 million invested in CSR › Utilization of refill packaging profitability 1in 2009 › Sustainable extraction of raw › Consistent dividend payments › Benefits extended to supplier materials communities › Use of recycled and recyclable 1 Corporate and Social Responsibility materials
  • 9. Channel strength Available consultants (in thousand) Channels differentiations High productivity1 Brazil International Total 2.2 times higher than its peers 1,034 875 850 731 719 632 +21.8% Low Business model Training turnover that generates 583,000 +19.8% consultants 159 36% on income and work average trained 119 86 in 2009 +33.9% 2007 2008 2009 2007 2008 2009 2007 2008 2009 CAGR High satisfaction2 90% in 2009 › Consultants are Natura’s first consumers › Drive sales through personal relationships › Channels disseminate Natura's values with consultants acting as agents of social transformation › More than 1 million consultants in 2009 1 Source: Company, ABEVD (Brazilian Association of Direct Sales Companies) 2 HAY Consultant annual opinion poll for consultants satisfaction
  • 13. Todo Dia (every day) caring for body and mind
  • 14. Mamãe e Bebê (mom and baby) the importance of the bond between parents and their children
  • 15.
  • 17. The Natura Value Chain Mapping of all direct and indirect emissions of greenhouse gases throughout the product lifecycle and our business chain. 1. Extraction and transportation of raw materials and packaging (direct and indirect suppliers) 2. Industrial and administrative processes 105,570 ton of CO2e (extraction and transportation of raw materials and packaging) 14,767 ton of CO2e 23,606 ton of CO2e (co-makers) 43% 16% Relative Emissions (kg of CO2e/kg of product billed) - 16,1% 3,95 3,82 3,63 24% 4. Use of products and 3. Product sales 18% packaging discharge (transportation and distribution) 2007 2008 2009 Challenge: reduce GHG 57,873 ton of CO2e 43,980 ton of CO2e relative emissions by 33% over 5 years
  • 18. The Natura Value Chain Stage 1: Extraction and transportation of raw materials and packaging (direct and indirect suppliers) 43% Related initiatives: - Sustainable development program that includes supplier communities (NGO’s, Government). . - Collaboration with government to Key results in 2009: establish new regulations for accessing the Brazilian biodiversity. Wealth distribution to suppliers: US$ 1.4 billion – 8% growth - Certification program for natural ingredients (Forest Stewardship Council, Supplier satisfaction: 82% Instituto Biodinâmico, Sustainable Agriculture Network). Certified ingredients: 31 Use of vegetal material from - Collaborative product redesign with renewable origin: 79.2% suppliers for reduced LCA - Vegetalization program and beyond. (Ex.: organic alcohol)
  • 19. The Natura Value Chain Stage 2: Industrial and administrative processes. 16% Related initiatives: Key results in 2009: - Manufacturing plant in the Amazon (Benevides – Pará) Distribution of wealth to employees: US$ 321 million – 12% growth - Use of PET with inclusion of 30% Investments in innovation: recycled resin. US$ 59.4 million - Eco-efficient energy and steam Water consumption:0.52 liter per unit sold generation. (increase of 2% since 2007) Energy consumption: 447.3 kjoule per unit sold (reduction of 25% since 2007) Generation of residues: 31.5 grams per unit sold (reduction of 10% since 2007)
  • 20. The Natura Value Chain Stage 3: Sale of products (transportation and distribution). 18% Related initiatives: Key results in 2009: - Crer para Ver (Believing is Seeing) Educational Program. Wealth distribution to consultants: US$ 1.15 billion – 15% growth - Natura Movement: reverse logistics, and Sales channel: education towards citizenship (EJA). 1 million consultants – 18% growth - Secondary pack optimization program Sales channel satisfaction: 88% Product launches: 103 – 600 SKUs Total collected on the Crer Para Ver program:US$ 1.9 million
  • 21. The Natura Value Chain Stage 4: Use of products and discharge of packages. 24% Related initiatives: - Use of refill. - Product Lifecycle Analysis (ACV). Key results in 2009: - Environmental Labelling. Percentage of refills over sold items: 18,4% Environmental impact per product quantity:69.5 mPt/kg – (reduction of 5% since 2007)
  • 23. Direct Selling – Supply Chain Post Sales CAN, SNAC, Suppliers Credit and Collection > Ingredients from biodiversity sustainably extracted from communities in the forest; Production CN Order Cycle Plants 21 days sale cycles > 66% of renewal for products less than 2 years old > 50% volume promoted Distribution > Promotions > 1 million POD leverage: 8-15x Sorting Picking Cajamar & DCs
  • 24. Our operations France Mexico Colombia Peru Brazil Bolivia Argentina Chile
  • 25. Main numbers › Manufacturing Plants: 4 › Hubs: 1 › Distribution Centers: 10 › Points of delivery: 1 million › Units sold: 384 million › SKUS: 1,200 › Kilometers traveled: 1.6 million › Total orders/year: 12.8 million › Employees: 3,000 › Raw materials and packaging suppliers: 200 › Co-makers: 20
  • 26. New initiatives › WWF Program Defenders of the Climate: reduce absolute GHG emissions by 10% (scopes 1 and 2) between 2008-2012; › Co-makers collaborative environmental program; › Supplier relationship program: QLICAR (quality, logistics, innovation, competitiveness, service, and relationship); › New international manufacturing network: 28% reduction in CO2 relative emissions from international flows; › New boilers - ethanol and biomass; › Enlargement of the Amazon Industrial Unit: increased number of benefitted families; › Introduction of biopolymer plastic; › Water footprint; › New picking technology to increase inclusion of disabled employees; › New distribution network: 25% reduction in CO2 relative emissions from distribution;
  • 28. Opportunities › Innovation - Union between scientific and traditional knowledge › Value creation for stakeholders › Competitive advantage › Positive environmental impact
  • 29. Sustainability of supplier communities › Access agreements for genetic resources & traditional knowledge that includes sharing benefits in non-monetary ways (e.g. certification, technology transfer packages) as well as % of net revenues › Financial support for sustainable local development projects, preservation of biodiversity and building local institutions › Program for rural supplier qualification – BioClicar supplier partnership that includes support to production and harvesting and links to third-party processors
  • 30. the chain of relationships Certification Bodies › Value addition › Forest management › Ethnobotanic Traditional plan › Studies Academic Community › New concepts › Scientific Community › Innovative In the approach products chain’s heart › Production Process › Ethical integrated supply chain Governments › Legal framework cooperation Suppliers
  • 31. Location of the Communities, Number of Families and Raw materials MALVAS CAMTA IRATAPURU VER AS ERVAS CAMPO LIMPO (Ecuador) Cupuaçu, Açai Brazil nut, Breu Branco, Flatsedge, Capitiu Palo Santo palm, Passion fruit, Breu Branco, Cumaru, Flatsedge Cacao Copaiba and Jambu COFRUTA Murumuru COTIJUBA palm Flatsedge, Ucuuba BOA VISTA Flatsedge, Capitiu, Tower tree 25 32 COOPAESP 102 16 Babaçu 14 100 23 500 35 PALMEIRA DO 70 PIAUÍ RESEX MÉDIO Buriti palm JURUÁ Andiroba, 50 Murumuru palm 226 50 ONÇA Guarana 300 COOPROCAM 32 Urucum, Sapucainha RESEX CHICO 140 MENDES RECA Jatoba, Dragon’s Cupuaçu, Brazil CABRUCA Supplier of raw materials and blood nut, Açai palm, Cacao access provider (Genetic Cumaru Resource and/or Traditional Knowledge) 32 Supplier of raw materials 7 only APROCOR 50 CTM/Proter Passion fruit Sweet passion fruit, Cow-foot leaf, Supplier of access only Yerba Mate (Genetic Resource and/or Traditional Knowledge) TURVO Surinam cherry, N N=number of families Chamomile, Melissa, Lemongrass, Mint, Carqueja
  • 32. Distribution of wealth to supplier communities (US$) 2007 2008 2009 Supply 375,498 973,122 1.378,000 Use of image 16,669 4,455 7,000 Funds and support 328,315 292,097 568,000 Benefit sharing from the 141,180 493,920 528,000 access to genetic resource or traditional knowledge Families benefited (number) 1,684 1,895 2,084
  • 33. Ecological 36 native species and Socio-Economic + 38 exotic impacts Amazon Industrial Unit + Suppliers 34 providers 2,084 families 50 million 56 raw consumers materials 8 Countries 1 million consultants 812 products
  • 35. Supply Chain from Natura‘s lenses › Inclusion of social and environmental drivers improves supply chain decision making framework › It is possible to drive outstanding value out of a sustainable supply chain › Collaboration and Service pushed to new limits › Enhanced professional supply chain skills required
  • 36. thank you! João Paulo Ferreira joaopauloferreira@natura.net