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16 October 2003
International cosmetics manufacturers Avon and Oriflame are building factories in Russia to take full advantage of their position as leaders on the direct sales segment of the Russian market.
In late September, American Avon and Swedish Oriflame both celebrated the laying of the cornerstone at their new factories outside of Moscow. Avon will spend around $40 million on its new factory in the Naro-Fominsk Region, while Oriflame is setting up shop not far from Krasnogorsk to the tune of $35 million. They will begin production in 2004 and 2005 respectively. Both companies plan to produce hundreds of millions of dollars in products. Avon plans to sell $500 million by 2007, and Oriflame also sees this level of sales as a distinct possibility.
Avon made $142 million, and Oriflame about 150 million euros. These were important thresholds. Once sales surpassed them, the companies began to see Russia as strategically promising. Their goal at present is to take full advantage of the current growth trend on the Russian cosmetic market, in particular the rapid growth of direct sales.
The companies also began planning the projects at the same time, last winter, possibly as both achieved similar success on the Russian market.
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