Avon to set up new plant down south

Direct selling company Avon India, which caters to women beauty and personal care products to accessories like handbags, jewellery and watches, is planning to set up its second manufacturing unit in India with an investment of $8 million in the next three years. The company currently has a manufacturing plant in Dehradun with an annual production capacity of 50 million units.

“South has a great potential in the direct selling space and Andhra Pradesh alone has an 18 per cent share of the overall market in India. Given the growing demand from customers and the increasing logistics costs, we are scouting for a new location in south,” Ujjwal Sankar Mukhopadhya, managing director of Avon India, told Business Standard.

Avon, which started its India operations in 1996, has quadrupled its revenues over the last three years.”We aim to continue growing at the same 40 per cent in the next few years,” he said after launching their first Avon Beauty Zone (ABZ), a one-stop point for its sales team, in Hyderabad.

According to the IDSA’s (Indian Direct Selling Association) annual survey report for 2010-11, the Indian direct selling market is expected to grow at 20 per cent to reach Rs 10,800 crore over the next four years, from the current Rs 5,230 crore. The robust growth has been contributed by 28 per cent growth in the organised and 17 per cent growth in the unorganised segments of the industry.

According to Mukhopadhya, Avon’s three-year growth and the overall industry growth projections are the key factors for its rapid expansion. Avon is planning to add 20 ABZs to its 10 sales networks across the country over the next three years with an investment of Rs 50 crore. It also has plans to double its sales team to 200,000 representatives.

“This year, we will add 300 SKUs (stock-keeping units) to our current 1,100-SKU portfolio, and hope to triple the sales to 60 million units in three years to become the number two player,” he said. Currently, Avon ranks third in the Indian direct selling market after Amway and Oriflame.

Globally, the $10-billion company has presence across 100 countries through 6.4 million independent sales representatives. India ranks among the Top-10 markets for Avon globally.