Good morning, ladies and gentlemen. Thank you for waiting. At this time, we would like to welcome everyone to closing of Avon Acquisition presentation. Today with us, we have Mr. Roberto Marques, Executive Chairman of the Board of Natura & Co., and Natura & Co. Company CEO, Mr. João Paulo Ferreira, CEO of Natura & Co. Latin America. Ms. Angela Cretu, CEO of Avon, and Ms. Viviane Behar, Investor Relations Director of Natura & Co. The event is being recorded, and all participants will be in listen-only mode during the company's presentation. After Natura's remarks are completed, there will be a question and answer session. At that time, further instructions will be given. We have simultaneous translation into Portuguese. Should any participant need assistance during this call, please press star zero to reach the operator.
We have a simultaneous webcast that may access through Natura's IR website, ri.naturaeco.com/en/, where a presentation may be downloaded as well as a replay facility for this call. This conference may contain forward-looking statements. Such statements are not statements of historical fact and reflect the beliefs and expectations of Natura &Co.'s management. The words anticipate, wishes, expects, estimates, intends, forecasts, plans, predicts, projects, targets, and similar words are intended to identify those statements, which necessarily involve known and unknown risks and uncertainties. Unknown uncertainties and risks include, but are not limited to, the impact of competitive products and pricing, market acceptance of products, product transition by the group and its competitors, regulatory approval, currency fluctuations, production and supply difficulties, changes in product sales mix, and other risks.
This conference may also include pro forma and adjusted information prepared by the group for information and reference purposes only, which has not been audited. Forward-looking statements speak only as of date they are made, and the group does not undertake any obligation to update them in the light of new information or future developments. All information on cost synergies to be captured or targeted should not be construed by investors as projections. Now, I will turn the conference over to Mr. Roberto Marques, Executive Chairman of the Board of Natura & Co. Mr. Marques, the floor is yours.
Good morning to all of you, and thank you for joining us at a short notice on this call to update you on the latest news in the creation of the world's fourth-largest beauty group. Before I begin, allow me to wish all of you a very happy and successful New Year on behalf of all of us here at Natura &Co. We look forward to a year of productive exchanges with all of you. I'm joined on this call by Angela Cretu, the newly appointed CEO of Avon, who I'm delighted to welcome, and by João Paulo Ferreira, our new CEO for the Latin America of Natura &Co. José Filippo, our Group CFO, and Viviane Behar, our Head of Investor Relations, are also with us.
Their positions are all part of the new organization and leadership team that we have put in place and that I will present to you today, along with main updates of what we have done since May of last year, when we first announced the transaction. After that, we'll be happy to take your questions. Let's begin on slide three with the key highlights of today's presentation. For us, 2020 certainly got off to an exciting start as we closed the acquisition of Avon on Friday, January 3rd, after having fulfilled all the required conditions and obtained all the necessary regulatory approvals. I'm so pleased to say these approvals came swiftly, allowing us to close the transaction ahead of schedule. With this, we are taking a new and major step in creating a multi-brand, multi-channel group of iconic brands.
We welcome Avon to our family of companies, which also includes Natura, The Body Shop, and Aesop. Together, we are creating a leading direct-to-consumer global beauty group with unparalleled reach. Our group, as you all know, are also purpose-driven, united to nurture beauty and relationships for a better way of living and doing business, and committed to making positive social, economic, and environmental impact. To make the most out of the scale of our group while preserving the autonomy and distinctive attributes of each company and brand, we have put in place a renewed leadership team and organization, as we'll present shortly, so that we can hit the ground running.
Finally, our initial findings of the integration of Avon into our group allow us to raise our synergy target, and we now expect annual recurring cost synergies in the range of $200 million-$300 million, as was mentioned in the material fact issue this morning. I will detail all of these points in today's presentation. Before getting into this highlight, let me quickly remind you on slide five of the compelling strategic rationale that underpins this transaction. First of all, it's another step in consolidating a purpose-driven group. Avon's strong heritage of social causes and commitment to the empowerment of women resonates with Natura & Co.'s vision of making a positive social and environmental impact as part of our triple bottom line approach. Second, we are taking another major step in building a portfolio of global brands in line with our strategy.
Avon will be a strong pillar to Natura &Co, alongside Natura, Aesop, and The Body Shop. With strong household penetration, brand awareness, and likability, as well as global expertise and capabilities to drive growth for the group. Third, the combination will focus on driving growth by investing mainly in three strategic areas: digital e-commerce, R&D, and brand marketing. Those investments will be enabled by important synergies between $200 million and $300 million on an annual basis, which we targeted to achieve within 36 months. The synergies are principally across Brazil and Latin America. Also, the group that results from today's combination is a truly multichannel direct-to-consumer leader, able to reach more than 200 million consumers through its network of 6.3 million passionate consultants and representatives, its more than 3,000 store, and its growing digital platform.
Finally, the new combined entity creates a strong platform to accelerate the group's internationalization, enhance its presence in core markets in Latin America, and gain a strong household presence across key categories with a very complementary product portfolio. Let's also briefly look at some of the key numbers of the group on slide six. By joining with Avon, Natura & Co. becomes the world's fourth-largest pure-play beauty company, with combined growth sales of $10.9 billion. Leveraging its iconic brands, common passion for relationships, and its multichannel capabilities, the expanded group will bring beauty to over 200 million consumers across the world, anytime, anywhere, every day. We are a leader in direct to consumer, with multiple touchpoints on a daily basis through a truly multichannel network global footprint. Together, we have 6.3 million consultants, over 3,000 stores, and a presence in 100 countries, not to mention a growing digital presence.
In line with our commitment to a better way of living and doing business, let me mention just two numbers. We have preserved over 1.8 million hectares of rainforest. Avon Foundation for Women, which was founded in 1955, has donated more than $1 billion to women's causes. As you see on the pie charts on the right-hand side of the slide, the group has a more diverse revenue basis. With the transaction, it gains a stronger presence outside of Brazil, which now represents less than 1/3 of total sales from 44% previously. Conversely, we increase our share in Latin America outside of Brazil, where we see strong growth opportunity, and our footprint also becomes more global with a significantly bigger share in Asia Pacific and Europe, Africa, Middle East.
As you know, Natura &Co and Avon are both purpose-driven forces, and united them will give us a stronger voice to advocate for our causes as shown on slide seven. This notably includes taking action against the climate crisis, fairer and sustainable sourcing by building ties with local communities, female empowerment, and ending animal testing in the beauty industry. In that respect, I would like to highlight here Avon's recent announcement that it has stopped animal testing in China, thus make this the first global beauty company selling in China to stop all animal testing across all its brands. These are initiatives that resonate strongly with Natura & Co. and are closely aligned with our principal approach to business. Let's now look in greater details at what we have done since the announcement of the transaction last May to ensure that the combination gets off to a fast start.
Over the past few months, we maintain a strict arm's-length relationship between Natura &Co and Avon until the final regulatory clearances were obtained and closing was achieved, which happened this past Friday. That did not prevent the integration planning team that was established for working hard so that we can hit the ground running and accelerate implementation from day one. Slide nine details some of those efforts and the positive outcomes they have produced. First of all, we create two integration planning workstreams to identify efficiencies. The first focused specifically on Latin America and looked at such areas as manufacturing, distribution, digital IT, and sourcing. The second work stream was focused on group-wide efficiencies in such areas as R&D, sustainability, and organization design. This has allowed us to confirm and even, again, raise the synergies we identify, as we will see shortly.
At the same time, along with several other top executives, we conduct several market visits. This led us, for instance, to visit Avon's R&D facility in Suffern, New York, as well as various aspects of the organization in Brazil, Latin America, Europe, Africa, and Asia. This has given us a much clearer view of the strength of which we can build as integration gets underway in order to accelerate growth. We also went through a very rigorous process of talent mapping and alignment of cultures with the support of a leading international consultancy. This has further strengthened my confidence that we have a deep bench of top talent with industry knowledge of which we can rely for this next growth chapter. The first look under the hood, so to speak, allow us today to present a new increased synergy target, as you see on slide 10.
As I mentioned on May 23rd when I presented the acquisition, synergies are obviously one of the catalysts of this transaction, driven by a powerful industrial logic, but they are not a goal in themselves. Rather, they are means to free up resources that can be reinvested in core capabilities that will accelerate our growth. For us, uniting Natura and Avon is clearly a growth combination. At the time of the announcement of the transaction, we told you we had estimated synergies in a range of between $150 million-$250 million on an annual basis. Today, thanks to the initial work of our integration planning teams, I'm very pleased to report that we are raising that estimate to a range of between $200 million-$300 million annually. The synergies will be largely achieved across the Brazil and Latin America footprint and can be broken down into three major buckets.
The first of those is sourcing, which should generate annual synergies between $100 million and $140 million. As you know, procurement is already one of the main areas of synergies within Natura & Co., we see strong potential to enhance that through optimized purchasing of raw materials, freight, and warehousing, advertising, and catalogs, and also back-office functions. The second bucket is manufacturing and distribution, where we see synergies between $40 million - $70 million. We will achieve this by optimizing our distribution center footprint, reducing the complexity of our overall plant organization, and consolidating such activities as cargo, thus improving service level to our consultants and representatives. Administrative expenses are another opportunity for cost savings of $60 million -$ 90 million to better integration of areas such IT, data centers, and networks. Again, we expect those synergies to be fully captured within 36 months.
We estimate a one-time cost to achieve the synergies of about $125 million, which will be incurred between 2020 and 2022. The capture of these synergies will contribute to enhance our medium-term profitability, and most important, allow us to reinvest in the strategic areas. Beyond the cost synergies that I have just detailed, we also see a number of top-line catalysts that will allow us to unlock additional revenue in Latin America, as shown on slide 11. The first one, of course, is a stronger consultant and representative base in Latin America, where the combined group will have more than 4.1 million consultants and representatives in key markets where we both operate.
Of that total, as you see on the graph on the left-hand side of the slide, there are almost 500,000 consultants who had already bought into the combination before it was formalized by selling both Natura and Avon products. There is a strong opportunity to significantly increase the number of consultants and representatives who sell both brands. The graph on the right-hand side of the slide shows the combination significantly extend our reach into Latin America households. Of the households currently penetrated either by Natura or by Avon in the region, 25% are Natura only and 40% are Avon only, while 35% are already reached by both brands. That means that 65% of households that we reach with only one brand today could be penetrated by both brands. In addition, Avon operates alone in another 10 markets in Latin America, representing further growth potential for Natura.
This gives us a very powerful growth opportunity in Latin America. Another major growth opportunity, highlighted on slide 12, is what we call upsell and cross-sell opportunities, also in Latin America. Our family of brands reaches across a broad spectrum, both in terms of price positioning and channels. As you see on the left-hand side of the slide, Avon has greater mass appeal. The Body Shop and Natura are positioned in the mass-prestige segment, and Aesop is clearly in the prestige segment with premium pricing. We are able to reach consumers through multiple channels: through direct selling, which represents about 25% of Latin America C&T market, and online and physical stores, which accounts for the remaining 75%. This represents a great opportunity to continue the multi-channel development of each brand of the group. The combination also builds on the respective strength of Natura & Co.
Avon to develop a complementary portfolio and better position the group for category leadership, enhancing value for consumers, consultants, and representatives across Latin America. Indeed, the combined group will have leadership in fragrance and body care with Natura, a leading position in color and skincare with Avon. Alongside the core beauty categories, the combination also takes Natura & Co into fashion and home, a category with development potential. Beyond Brazil and Latin America, the group also enjoys very strong positions in leading markets across the globe and in emerging markets and has upside opportunity in other key markets.
In slide 13, the chart shows you some of the markets in which the group holds top three positions, and you see, for instance, that in fragrance, we are number one in Brazil, Latin America, Russia, the Philippines, and Turkey, number two in South Africa and Poland, and number three globally. In skincare, we are number one in Brazil and Latin America, number two in Australia, and number three in the Philippines. In color, we are number one in Brazil and the Philippines, number two in Latin America, and number three in South Africa, Russia, and Poland. The preceding slides have shown you that we already have quantified our target cost synergies and clearly identified some clear top-line opportunities in Latin America.
Now on slide 14, you also see a number of additional growth opportunities across the group that we can benefit from over time and that have yet to be quantified. Just to name a few, these include use Avon platform to expand Natura brand internationally, leveraging Avon industrial and distribution platform to service our other brands as part of the group, developing our multi-channel approach across all brands, gaining a greater foothold in the China market, creating value for our consultants and representatives thanks to our more robust portfolio and value proposition, and improving consultant and representative productivity through enhanced technology and services. Let's now take a look at how we have organized ourselves to write Natura & Co.'s next growth chapter. We are building a powerful group of beauty companies. We are doing this with a clear philosophy, as presented on slide 16.
We strongly believe in two complementary concepts: autonomy and interdependency. These aren't just words. We walk the talk every day through an agile and decentralized business model. We aim to empower each business and brand and preserve its identity while getting the most out of the group through transfer of knowledge. We have already set up a lean network structure with what we call networks of excellence, bringing together representatives of each business to share best practice in areas like digital, retail, sustainability, and innovation. Now, with Avon, we intend to take this one step further, creating a new network of excellence in direct selling, sharing best practice on the commercial models between Natura, Avon, and also The Body Shop. Fundamentally, what we aim to achieve is to have clearly differentiate brand identities and cultures within a group that shares common values.
To achieve this fine balance and drive Natura &Co's next growth chapter, we have put in place a new organization and management team that we present on slide 17. I will continue to serve as Executive Chairman of the board, and now also as the Group CEO of Natura &Co, supported by a very talented group operating committee with vast international experience, including four CEOs for each one of our businesses. With the addition of Avon to the group, as announced in May, we have introduced a change in our organization and have put in place four businesses that reflect our group's strategic priorities at this stage. First, Latin America encompasses responsibilities for the P&Ls of Natura, Avon, and The Body Shop in the region, and Aesop in Brazil, as well as the responsibility for innovation and stewardship of the Natura brand globally.
Second, Avon, responsible for the P&L of all the market clusters in Europe, Africa, the Middle East, and Asia. This role will also be responsible for Avon brand innovation and stewardship globally. Additionally, we see the potential for this unit to be responsible for the Natura brand international expansion outside of Latin America. Third, we'll continue to focus with The Body Shop transformation. Finally, Aesop, remaining our fastest growing business within the group. By grouping together the Brazilian and the Latin America operation of all of our brands and businesses, we'll be able to leverage Natura's deep knowledge of the region to accelerate growth. Of course, we have put João Paulo Ferreira, who you all know as the head of this important business, as the CEO, Latin America of Natura & Co.
JP has been CEO of Natura since 2016. He has been instrumental in driving the company's growth, the revitalization of its relationship selling model, and the digital transformation. I'm very pleased to be able to count on his proven execution capabilities in this next phase. Now I'm happy to pass the floor to him for a few comments.
Thank you, Roberto. Good morning to everyone. Natura & Co is taking another decisive step in creating a leader in the direct-to-consumer space. Latin America is the perfect place to leverage the strength of our combined businesses. As you know, over the past few years, Natura has successfully revitalized its relationship selling model with a strong advance in digitalization, combined with the development of a multi-channel approach and a strong product innovation pipeline. As a consequence, we have built leading position in the main markets of the region, which makes Latin America our, so to speak, home market, a very strong platform on which to build and grow all of our brands. Our four companies have a broad and complementary product portfolio in core categories and operate across all channels in the region.
Working together, we will be able to use Natura's vast market knowledge and footprint to combine our strengths and accelerate growth. I very much look forward to working with Avon, The Body Shop, and Aesop to consolidate and grow our already very strong presence in Latin America. Let me now hand back to Roberto.
Thank you, JP. We have also appointed Angela Cretu as CEO of Avon. Angela has been with Avon for over 20 years and has extensive experience in senior executive roles. Most recently, since 2016, she was Group VP of Central Europe, responsible for over 18 countries. I'm very pleased to welcome her to our management team, and I know she will be a terrific CEO for Avon, building on the efforts in the past year and a half to modernize the model and value proposition, driving pricing and productivity improvements, and put representatives back at the heart of everything Avon does. Her recognized management skills, international perspective, and industry experience will be a major asset to take Avon and Natura forward outside of Latin America. Please welcome Angela and give her a very warm welcome to our group. Now let me pass to Angela to say a few words.
Thank you so much, Roberto, and hello to everyone. I'm thrilled to be with you today and be joining Natura & Co at this exciting time in its history. Avon has an extraordinary legacy on which to build, and I have a true passion for Avon, its employees, representatives, and customers, built to over more than two decades at the company in a broad variety of roles and countries.
This is an incredible company, which makes a positive impact on the lives of our representatives and customers through the power of beauty, and we have so much potential ahead, I'm convinced the best is yet to come. Avon is on a transformation journey, and I'm greatly looking forward to working with its talented teams to continue Avon's Open Up strategy and deliver the next era of growth, while also driving the international expansion of Natura and furthering our combined purposes of promoting economic empowerment of women around the world. It's an honor to help lead the organization in this new chapter, which we believe will provide enhanced growth opportunities for our employees and representatives, as well as improving the lives of our millions of customers. I feel privileged to be part of the team that is building a leading direct-to-consumer group.
Like our new family, Natura & Co, we are purpose-driven at heart. Together we will build the best beauty company for the world. Thank you very much. I look forward to exchanges with you in the future as we progressing on this journey. Roberto, back to you.
Thank you so very much, Angela. Great to have you with us. David Boynton will remain CEO of The Body Shop, where he has driven its transformation since its acquisition and has made excellent strides in rejuvenating and modernizing the brand while enhancing efficiency. Michael O'Keeffe, CEO of Aesop since 2003, also remain in his current position, driving the high growth of his unique and prestigious brands. With the support of the rest of the group, transforming it into a true triple bottom line business. The group leadership team will also include a newly created position. Silvia Lagnado has been appointed Sustainable Growth Officer and will drive the group's portfolio stewardship, R&D and innovation, long-term digital and IT platform, as well as sustainability and communication.
Silvia was until recently Global Chief Marketing Officer and Executive Vice President of McDonald's. She has also been a board member of Natura for the past four years, a position from which she's now stepping down. Her appointment to the executive team will be effective as of February of this year. The group operating committee is completed by José Filippo, who is with us on the call as Chief Financial Officer. Paula Fallowfield, who becomes the Chief Human Resources Officer. Josie Romero is appointed Chief Operations Officer, responsible for the Latin America supply chain as well as global manufacturing, international logistics, global procurement, shared service, and back office. Itamar Gaino who becomes Chief Legal and Compliance Officer. Robert Chatwin, who continues to be our Chief Transformational Officer for the group.
Also a very warm welcome to Kay Nemoto, who will become the Chief of Staff of this group operating committee, reporting to me. This is a very talented, diverse, and international team, and I'm super proud and privileged to be working with them on this exciting next step in Natura &Co journey. To help guide this next chapter in the Natura growth story, we have also expanded our Board of Directors, adding and welcoming three new members who were previously part of Avon's board, as shown on slide 18. The new directors are Nancy Killefer, who served as a Senior Partner at McKinsey & Company until her retirement in August 2013. She has been a member of Avon board since 2013. Andrew McMaster Jr., who served as Deputy Chief Executive Officer and Vice Chairman at Deloitte from 2002 until his retirement in May 2015.
He has been the Chair of Audit Committee of Avon Products Board since 2018. Don Cornwell, former Chairman and Chief Executive Officer of Granite Broadcasting Corporation and Chief Operating Officer for the corporate finance department at Goldman Sachs. He joined Avon Board of Directors in 2002 and has been acting as Lead Independent Director since 2016. As I mentioned before, Silvia Lagnado will be stepping down from our board to take up the executive position as Sustainable Growth Officer, and her replacement will be announced in the near future. With the designation of the three new members of the new appointment to come, Natura &Co Board of Directors will count 13 members, nine of them independent, combining global diversity, broad experience, and industry expertise. The three founders of Natura will remain as Co-Chairmen of the Board, and we will continue to benefit from their vision and knowledge.
Slide 19 shows you the new shareholding structure. Avon current shareholders will have about 27.93% of the combined company, while Natura & Co's shareholders will hold the remainder. It's important to note that this ratio is slightly different from that which we communicated last May of 24/76. This is because the holders of the preferred class shares decided to exercise their right to convert their holdings into ordinary shares. This has a beneficial effect both on liquidity, as it increases free float, and on the company's capital structure and balance sheet, as we do not have to raise debt to acquire these preferred class shares. The company's free float will increase to about 57% from 41% previously, and Natura controller shareholders will hold a stake of close to 43%.
As you might know, we'll have a very exciting moment in a couple of hours when we do the bell-ringing ceremony on the New York Stock Exchange as we list our ADRs in addition to our listing on the São Paulo B3 market. In the final part of the presentation, let me focus on the key takeaways of the new group we have built on slide 21. First of all, we have four empowered businesses and iconic brands, each with a clear growth trajectory. Second, we have a global, balanced, direct-to-consumer, and increasingly multi-channel footprint. Third, we have a robust and fast-growing digital platform. Fourth, we'll generate efficiencies by leveraging the group's scale and know-how through our agile model. Fifth, we have a unique product portfolio across several segments and price points. Sixth, we have strong CAGRs compared to global peers.
Now, for your benefit, on slide 22, we provide a timeline of upcoming events for our group. Following today's call and bell-ringing ceremony on the New York Stock Exchange, our next appointment with you is on March 5th, where we'll present Natura & Co Q4 and full year 2019 earnings. Natura & Co and Avon still will be reporting separately, but we will provide a combined 2019 pro forma financials. We then, on April 24th, will hold our annual shareholders assembly and an investor day in São Paulo, during which we'll update you on the synergies and integration and provide guidance. On May 7, as you see on the slide, we'll disclose our Q1 earnings with our first combined results. In the fourth quarter, in October or November, we'll hold an investor day in New York to present the group strategic planning for the next five years.
Again, we'll have several opportunities to speak with you in the coming months. Let me conclude on slide 23 by emphasizing a few key highlights of today's presentation. We are building a group that is purpose-driven at heart, a group that has unparalleled direct-to-consumer reach, and a group that balances autonomy and interdependence to get the best of both worlds, preserving each company's unique features and culture while at the same time leveraging the scale and knowledge of the group. We have a clear ambition. We are creating the best beauty group, not in the world, but we are trying to create the best beauty group for the world. Thank you very much for your attention. Now, together with Angela, JP, and Filippo, we are happy to take your questions.
Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by the one key on your touch-tone phone now. If you wish to be removed, please press the pound sign or the hash key. Once again, if you have a question, star one. Our first question comes from Thiago Macruz from Itaú.
Hi, guys. Good morning. In the presentation, you touched base on several potential revenue synergies. You've mentioned consultants selling both brands, the potential increase in household penetration, and even the upsell of the portfolio itself. You did not quantify it. Is it reasonable to assume that this could be more relevant than the costs and SG&A savings you described? If yes, when do you think is the timing to generate these revenue synergies? Thank you.
Macruz, Roberto here. Good morning. Happy New Year, and thanks for the question. I would say those are pretty real, and we are quantifying as we speak. We're not ready to disclose that. We think at this point, the team felt pretty good about increasing the guidance on the synergies that comes from the cost opportunity, and the way we're going to operate in Latin America. I'll turn to JP to talk about some of the concepts, again, to clarify on the potential value creation on the revenue side, but that's an ongoing work right now with the teams, which of course now with Avon coming on board and with the new organization in Latin America, we're going to be able to refine. In due time, we're going to be able to share some of those numbers with all of you. I'll ask JP to make further comments here.
Hi, Thiago. Well spot. We are pretty excited with the top-line synergies opportunities. As Roberto said, we are refining those calculations, and moreover, the path to achieve them. It's not trivial. It requires a combination logic that we're still developing. Hopefully we're going to be able to share some of those details with you by our Investor Day late in April. The concept behind, as you said, has to do with the fact that consultants and representatives already work with multiple brands. We would rather have them working with our brands, rather than our competitors. That's one. The fact that through this network, we already enter a significant number of households across Latin America, but not necessarily with our both brands or even our four brands.
There are opportunities to use the fact that those doors have already been opened to the group to introduce another category or another brand. More to come in a few months.
Thank you. Thank you, JP. Just conceptually speaking, I know you guys still don't have an estimate for the size of these synergies, but they could be as relevant as the other ones, right? The size of it could be significant. This is my final question, guys. Thank you very much.
Oh, definitely, Thiago. Definitely very significant.
Our following question comes from Robert Ford from Merrill Lynch.
Good morning, everybody, and congratulations on the transaction. JP, how do you think about leveraging the consultant footprint across both the Natura and Avon brands? Roberto, how quickly can hedging it sort of be configured for and deployed across Avon?
Hi, Bob. JP speaking. Well, harmonizing the IT technology infrastructure will take some time. This is one of the work fronts we have people dedicated to at this moment. Hopefully sometime in certainly next year, we're going to be able to start leveraging that, but we'll try and shorten that period. As soon as we have more details, I'll share those with you.
Hey, Bob. Roberto here. In regarding to some of the international expansion of the Natura brand, as you know, we just started a pilot in Malaysia, where we want to make sure that we refine the right positioning, the right go-to market, validate the brand portfolio with Natura. The idea is to work between Angela, JP, and Silvia now, the growth officer, to really quantify what are the key markets, what are the opportunity, the complementarity that you can see in terms of price positioning and reach and household penetration. Define some of the markets that we believe there might be opportunity to accelerate the launch of the Natura brand. By the way, not just the Natura brand, right? We also want to include it into this strategic conversation, even The Body Shop.
As you know, The Body Shop has a presence in direct selling in two markets, U.K. and Australia. It's doing extremely well in those markets in direct selling. There might be an opportunity, even from a portfolio perspective, to look at not only at Avon and Natura, but Avon, Natura, and The Body Shop.
That's very helpful, Roberto. When it comes to social selling and maybe enabling Avon consultants to some of the social selling tools, how quickly can that be rolled out?
Good question, Bob. The good news is that, again, if you look at the Open Up Avon, and the work that Jan has started with the team over the last two years, there's a lot of focus on this idea of the multi-channel and the increase in digitalization. We believe now leveraging already the capabilities of Natura and where Natura is, our goal is actually to accelerate that, the social selling, and use now not only the 1.7 million consultants from Natura in Latin America, but actually the 6.3 million consultant representatives, making them become micro-influencers and using our social selling tools really to create this very powerful network. As you and I always talk about it becomes like a dream coming true now with this enormous amount of people globally that we can reach out.
That's very helpful. Thank you.
Our next question comes from Tobias Stingelin from Citigroup.
Yes, thank you very much. Happy New Year. Congratulations again for closing so early. The first question is just to kind of understand, you raised the synergy guidance on the cost front, and you kept your expenses guidance unchanged. Can we just have a view about how we expect to see this evolving over the next 36 months? Should we see kind of the expenses front-loaded and the synergies back-loaded? I don't know if you can elaborate a little bit on that, just to allow us to understand a little bit how it will happen. That's the first question. The second question, I would like to take the opportunity since we have Angela on the call, just to get a sense about what will change, what will be different, what are the key challenges that she sees for the business?
I know that the area is pretty wide, but maybe if she can speak a little bit about the challenges or where we should be focusing on over the next few months. The final question is just I think it's a good news that the conversion did not take place, so the debt at the end of the day should be the same, no incremental debt. The leverage story should be on track as well. Should we also assume, even if the company kind of remains on track with the leverage, should we assume that there will be no M&A over the next few months? I would say you have a lot on your plate, so just wanted to confirm that, please. Thank you.
Hi, Tobias, Roberto here. I'll start, and then I'll invite Angela to make some comments about her perception and experience. In regards to the cost to achieve, we still feel pretty good about the numbers that we communicated. You're right, to some extent, it is a little bit more front-loaded. Not the entire number will happen in year one, but I think we're going to see a little more heavy capture of those costs to achieve the synergies in year one and year two. Then the benefits really, as we communicated, really fully capture in 36 months. We feel pretty good about that. Again, the good news is that this work has been validated now with a cross team between both companies, Natura and Avon, that gave us the confidence to actually increase the guidance on the synergies.
On the M&A side, we have our hands full now, right? We want to make sure that we properly do this integration, that we deliver on the expectations, kind of the same way we did at The Body Shop. Right now, that's our focus. We want to make sure that we have flawless execution in the elements that we are communicating. That's the way kind of drove this organization design. Again, we're thrilled that we have Angela here, and I'll invite her to make some of the comments regarding Avon.
Sure. Thank you, Roberto. The Open Up strategy is a very strong platform for us to build our next chapter of growth. It's a multi-year transformation, and we have already seen significant positive shifts into the economic value added. Going forward now, we need to focus on the growth. By creating a meaningful social selling framework, empowering our representatives, not only with better tools for them to connect with their customers in a multi-channel environment, but equally creating a better earning for them through the power of the brands that we build and the power of our portfolio. Sharing best practices in between the brands, I think that will be a tremendous value added. The other pillar of growth for us is brand relevance and digitalization.
For the brand relevance, it's time for us to re-excite, reignite the customers' love for Avon and bring back the soul of the company, creating, again, an exciting personal, gratifying social shopping experience for the customers around the world. We do see a tremendous potential together by leveraging our assets, leveraging our synergies, refueling the brand and the earning model, and get a winning growth chapter ahead.
Perfect. Thanks so much. If I can just follow up, to what extent is this different from what you have been doing before? Just want to get a sense if, let's say, the plan that was in place until a few weeks or months ago, I would say, is still the same plan. Is it working? I'm just kind of trying to understand to what extent something might change.
We do keep the same direction. The Open Up strategy is a very solid platform. It's just that it takes many years for us, first of all, to simplify, synergize, fuel, find resources to fuel the growth going forward. Right now, we are properly equipped to start working on our front-end strategy and enable our representatives and customers to reconnect with the brand, with the portfolio, through better digital tools and equally better brand proposition.
Perfect. Thank you again.
Our next question comes from Richard Cathcart from Bradesco.
Hi, guys. Good morning. Thanks for the conference call. Just a couple of questions. The first one around, Avon had some guidance that they issued, I think it was in November, financial guidance about how they were expecting the Open Up strategy to impact revenue, profits, et cetera. Just wondering if you're kind of maintaining that guidance and kind of building it into the group financials. The second question is just around the accumulated tax losses at Avon. Just wondering if you can comment about the potential use of that, kind of can you use it? How much can you use? Kind of when could that be realized? Thank you.
Hey, Richard. Good morning. Roberto here. Your first question. Again, as Angela said, one of the things that got us excited about this deal is that we felt the direction of Open Up Avon is the right direction. To Angela's point, one of the things is that, if nothing else, we're going to be able to accelerate some of that plan that probably would be a multi-year plan by now having the fuel for growth that comes from the synergy, that have the expertise and the acceleration of the digitalization, the social selling, and the multi-channel that comes from the experience of Natura in Latin America. Again, I would say the direction is probably the right one.
It now, I would say, get turbocharge and gets accelerated by this combination, both in terms of being able to get the funds and the fuel for the growth, also some of the capabilities that we can accelerate coming in the areas like multi-channel and digitalization. In terms of the targets, again, as I think we put it on the slide, we want to make sure that now we can have a deep dive into the plans, into the budget, and we'll come back with some of that guidance in the April conversation at the Investor Day.
Our next question comes from Irma Sgarz from Goldman Sachs. Irma, do you mind please restating your question?
Yes. Hi, good morning. Can you hear me?
Yes, we can. Please proceed.
Yeah, the question is regarding the opportunities that you have laid out for cross-selling and filling out white spaces. How do you think about the aligning or separation of commercial strategies as well as product development across specifically the Avon and Natura brand in the markets where those two brands are overlapping or competing, for example, in Brazil and other Latin markets? How do you think about separating those commercial strategies? The second question, which is sort of connected to that, is if you can provide a little bit more detail to the extent that you have it, on how you're thinking about sort of the next step of communicating with your consultant base where you have overlap on the benefits of the merger and how the commercial structure is going to be handled going forward.
Hi, Irma. Hopefully, you guys can hear us. Sorry for some of the technical difficulties. We'll at least try to finalize some of the Q&A here. In terms of overlap, hopefully, again, on the slide 12, we try to provide some good sense in terms of the complementarity. Avon tends to be a brand that penetrates more households, has a different price positioning than Natura and also The Body Shop, which tends to be a little more masstige versus Avon. We think that there is different targets, different potential consumers.
The ability for us to penetrate more households is very clearly, and as we're mapping, especially in Latin America, internationally, again, it's going to be a work between both organizations, also with the help now, this newly created role of Sustainable Growth Officer under Silvia's leadership, to really try to map what are the right opportunities from a portfolio perspective in terms of helping the representatives and the consultants from an earnings perspective, but also in terms of complementarity. Let me invite JP also to make some comments more specific about Latin America.
Hi, Irma. Well, let me remind all of you that all the commercial structures, brand management, product development functions will remain separate. The brands are different and should remain different. Having said that, to be able to achieve those synergies you refer to, it will require a combined strategy. It will not happen by chance. Which means that we need to be much sharper on the role of each brand and on the incentives given to the different sales forces and consultants and representatives. That is the element we are currently working on. It's going to take a few months to be able to have a clear combined strategy that will allow each of the brands to be much stronger in the position they are to occupy.
Great. Thank you.
Our following question comes from Ruben Couto from Santander.
Good morning, everyone. Can you talk a little bit more on the cross-category opportunities? You have a clear dominance in fragrance in emerging markets, and is the third player in the world. In color, it seems that you face a stiffer competition outside LATAM. Can you share with us your initial assessment of the situation? Is it a matter of product, sales channel strategy? Just the addition of Natura products to the rest of the world could be enough to contend for the top three position. Should we expect an increased focus on the category compared to the others going forward? Thank you.
Hi, Ruben. Roberto here. When we look at the slide 13, I think is the one they're referring to, I think the good news is that we have a very strong foothold in some of the categories, especially in Brazil and Latin America. It's always important to have a strong region where you have an important dominance in leadership position that becomes like a catalyst for the expansion. Outside of Latin America, as you pointed out, we do think that there is opportunity to better manage the category, both from a product development, but also as JP and Angela mentioned, in terms of how we play with the different brands, the strength of the brands, especially in colors and skincare in a couple of markets.
We are very bullish that our opportunity, especially with the representatives of Avon, to potentially bring some of those portfolios, some of the brands to enhance that presence, the penetration, provide more earnings opportunities at a different price level in different categories, especially as we think about skincare and color. Again, I would not forget to bring The Body Shop into that equation because they bring a lot of expertise and great products in skincare, for example. It will be a combination. Again, to JP's point, it's going to take a couple of months for us to sort out exactly the role of those brands in each one of the geographies. We feel pretty bullish about increasing some of those presence and participation in some of those geographies while continue to enhance our presence in Latin America.
That's clear. Thank you. A second, a quick one. Do you have any update on that potential relocating of the company's tax domicile, like an opportunity here to optimize the company's combined tax structure? Thank you.
Yeah, listen, this is always something that our team will continue to look at. At this point, we are very much committed to where we are. As part of a continue to see what's the right footprint for us now that we became more global, will be an ongoing work and work stream that the team will continue to carry on. We don't have anything at this point to share.
Perfect. Thank you, everyone.
Our last question comes from Joseph Giordano from JP Morgan.
Hi. Good morning, everyone. Thanks for taking my question. Happy New Year. I have the first one is a question on the cultural aspect. How are you guys going to tackle the challenge of uniting two companies that historically been enemies, right? The second one I think goes to Angela as well. It's on the revenue turnaround for Avon. Looking back at the Open Avon plan, we would expect the revenue to start stabilizing in 2019, but apparently this was not what happened. What was your diagnostics, and how can Natura help to change this going forward? Thank you.
Hey, Joseph. Roberto here. I'll invite them, JP and Angela, to talk about the culture and the integration. One is, again, those two companies were born with a lot of the same values, right? Purpose-driven, a lot of respect, leaders in direct selling. We think this is much more a complementary of companies that actually add to one another than eventually enemies. Yes, we were competing in a couple of geographies, but at the same time, we think that the combination will actually enhance each company's different culture and being able to learn from one another. Let me invite here perspective from JP and then Angela on that as well.
Hey, Joseph. Let me start just telling you that we have not been enemies. Natura has admired Avon for its whole life. This is where we learned direct selling from. We've been working together in many countries, in the associations, direct selling associations, beauty associations. Many professionals of one company have migrated to the other through all the years. It's a case of historical admiration to start with. When you talk about culture, let me step back and talk about values, as Roberto mentioned. Including in this deck, we are stating the values of the Natura & Co. for our companies, right? We all work towards those values, which are expressed, manifested in different ways, using the strength of each brand, of each channel, and our global footprint. Right?
Now, when it comes to specific behaviors, you should expect different behaviors for the different companies, given the business imperatives. Avon has a couple of things to do at this point in time. The Body Shop is facing other challenges. Natura is in a new phase of transformation, Aesop as well. You should expect different behaviors. What you shouldn't expect is that we follow different values. Yes, when you think about Latin America, in a few months' time, perhaps more than 50% of our associates will be working for all the four brands, which makes this idea of a united nations of companies, pretty exciting. We are pretty confident this is going to work.
All right. About the Open Up strategy, the challenges, and how we go forward. Please mind that this has been one of our most intense transformations of all times, end-to-end, multifaceted transformation. Trying to rebooting the direct selling, open up value, open up access, creating the simpler, lean organization. All these changes with this high intensity, obviously, have given us, on one hand side, a much more solid profitability. On the other hand side, challenged revenue growth. Our aim is to stabilize after all these changes that have already given us such a stable foundation, and step by step, start growing back the number of representatives and accelerate the growth of the revenue across all the geographies.
Perfect.
This concludes today's question and answer session. I would like to invite Mr. Roberto Marques to proceed with his closing statements. Please go ahead, sir.
Thank you. Again, thank you all for joining.
Okay. It appears there are no more questions, so we'll now end.
I just, again, want to thank everybody for joining the call this morning. Appreciated all the questions and the interest. I want to just say again, we are super excited about this combination, about creating this fourth-largest pure-play beauty group in the world. What really excited us is this potential and aspiring goal, not just to be the best beauty group in the world, but trying to create the best beauty group for the world, combined with causes that direct to consumer and really trying to make and create this positive social, economic, and environmental impact. I look forward to continue to have the dialogues with all of you over the next couple of months. Welcoming again, JP, Angela, and the entire leadership team, and wish you all a Happy New Year.
It's going to be a great year for all of us. Thank you so much again. Have a good day.
This concludes the Natura & Co. audio conference for today. Thank you so much for your participation. Have a good day.