Owner of brand Phebo expects to gross R$1bn this year

09/19/2022

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Christopher Freeman and Sissi Freeman — Foto: Leo Pinheiro/Valor

One of the oldest companies in Brazil, Granado has optimistic plans for the coming years after getting through the pandemic without any problems. The Rio de Janeiro-based personal care brand plans to double production by 2030, open new company-owned stores, and consolidate its recent presence abroad.

With revenues estimated at R$1 billion in 2022, the company controlled by Christopher Freeman grew 23% from January to August year-on-year. The revenue in these eight months, R$590 million, was even higher than the R$350 million obtained between January and August 2019, before the pandemic.

Created in 1870 by Portuguese citizen José Antônio Coxito Granado as a kind of pharmacy, the company was bought by Mr. Freeman in 1994. Ten years later, in 2004, the English businessman acquired the Phebo brand from Procter & Gamble. Today, Phebo’s traditional glycerine soaps represent the group’s main business. Together with Phebo, Granado commercializes around 800 products.

Besides the soaps, other items are consolidated in the market, such as the antiseptic powder (whose registry was approved by doctor Oswaldo Cruz in 1903), and the liquid soap for children, which has 40% of the segment’s sales. More recently, the company has bet on new niches, such as perfumes and household items, and has launched a pet line.

“The moment is very positive. Brazil is a huge market because Brazilians take more baths than the world average and it is still a bar soap country, unlike Europe. In fragrances I also always saw a niche, although the competition with foreigners has grown,” says Mr. Freeman.

About 70% of Granado’s revenue comes from wholesale sales, where the beauty and personal care sector is led by global brands such as Palmolive, Dove, Nivea and Lux, according to Kantar data for 2021. The remainder corresponds to sales in own stores – in Brazil and abroad – and via website. The configuration allowed the company to go through the pandemic without major mishaps. In 2020, Granado expected to grow 15% and to gross R$670 million, and grossed R$617 million even with the social isolation measures.

“Retail is a small part of our revenue. In this sense, we benefited in the pandemic because we didn’t lose sales share in supermarkets and pharmacies, which didn’t have to close,” says Sissi Freeman, Granado’s head of sales and marketing.

She acknowledges that, despite growing, sales through the website were not able to fully absorb the losses in the stores during the pandemic. Today the site’s sales are comparable to those of four physical stores. The most popular items are room diffusers, gift kits, and perfumes.

“We have never sold so much perfume online before. Generally, people want to smell the scent. But in the last three months, Époque Tropical represented 28% of sales on the site,” says Ms. Freeman.

Launched at the end of 2021, the perfume sold out a few times after going viral on social networks. A TikTok user compared Époque Tropical to a fragrance from the London brand Joe Malone. Ms. Freeman assures, laughing, that the marketing was spontaneous.

Right hand of her father, Sissi Freeman is responsible for Granado’s repositioning, expanding the portfolio without losing sight of the brand’s values. Since the inauguration of the first concept-store, in 2006, in downtown Rio de Janeiro, the entrepreneurs have gradually increased the pace and will end 2022 with 90 unities in the country, five of them dedicated to brand Phebo.

A new store in Lisbon, planned for the end of October, is not included. The Portuguese branch will be added to the other three units in Europe, all in Paris, where the international distribution center is installed. The company is also present in department stores in France, England and is preparing to arrive in Belgium. The international sales are still shy, representing around 1%, but the growth perspective already influences the perfumes development, main bet on the external market.

As most of the raw material is imported, production suffered with lockdowns in China and the war in Ukraine, which raised freight prices. For the first time, product prices were increased twice in the year: 10% in January and 5% in July. “A lot of what we buy is paid in dollar. We believe so much in the international strategy because we see the importance of having revenue in foreign currency,” explains Ms. Freeman.

Despite the difficulties, father and daughter say that the profit margin is at 15% and project it over 20% for 2023. Contributing to the optimism is the payment of a debt generated by the construction of the factory in Japeri, State of Rio de Janeiro, opened in 2015. The investment estimated between R$400 million and R$1 billion, eroded the company’s profit, destined for the payment of creditors. The balance, according to Christopher Freeman, was “strengthened” with the purchase of 35% of the shares by Puig, a Spanish company that owns brands such as Carolina Herrera and Paco Rabanne, in 2016.

*By Paula Martini — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/