URUGUAY. Former InterBaires and Duty Free Americas senior executive Enrique Urioste has led a fund buy-out of Uruguay’s leading travel retailer Neutral in recent days, The Moodie Report can reveal.

The transaction closed on 2 May. The price was not revealed.

Urioste, one of travel retail’s most respected executives, is being backed by JH Partners, a San Francisco-based private equity firm focused on building sustainable, long-term equity value in consumer and marketing-driven growth companies. It invests in growth-oriented businesses with sustainable competitive advantages and revenues of US$10 to US$300 million.

Neutral Duty Free Shop was established 25 years ago and runs eight border stores in five cities (Artigas, Rivera, Rio Branco, Acegua and Chuy) on the Uruguay/Brazil land border and Departures and Arrivals airport duty free stores at Rosario in Santa Fe, Argentina. It had been owned by brothers Santiago Mesa and Victor Hugo Mesa. Victor Hugo will remain involved as a minority shareholder.

Enrique Urioste: “I met JH Partners in San Francisco and it was a perfect match”


Speaking to The Moodie Report today, Urioste said he was excited and passionate about the new project. Explaining the background to the deal he said: “After several years working for various corporate parties, I found the opportunity to run my own business with Neutral.”

“I met JH Partners in San Francisco and it was a perfect match. Why? Because this is a reputable fund that owns several high-end brands, such as luxury lingerie brand La Perla, skincare house Jurlique, high-end Italian bed and bath linens and homeware company Frette, and they were the former owners of the personal care company BareEscentuals before it was acquired by Shiseido. In addition they are backed by some of the largest US university endowments.

“They’re an investment firm that understands high-end brands and travel retail, but more importantly they are not a private equity fund that just buys and sells. They often hold companies for longer periods than traditional private equity firms – for example they stayed with Bare Escentuals for 19 years before it was sold.”

A private equity mentality with no sense of urgency to divest its acquisitions and which also understand brands and the travel retail channel offered the perfect combination to develop “a unique kind of business in travel retail”, Urioste said.

Urioste said that Neutral is just the beginning of a longer journey. “The idea is to continue looking for new investment opportunities in Latin America,” he said. Targets would not be confined to travel retail, and could include brand companies and domestic retailers, among others, he said.

Urioste has personally invested in the venture as a minority shareholder and becomes CEO with immediate effect. “My primary responsibility is to make this investment successful,” he told The Moodie Report, saying that he was already getting down to business.

“One of the things that both I and the fund saw was that the Uruguay/Brazil border sector was a real retail business. Often there are question-marks over the border channel, which can be more of a wholesale than retail sector. But in this case it is a unique retail environment where people drive to buy not only the duty free assortment but also their weekly household needs – home appliances, clothing and so on.”

Urioste said he identified tremendous upside potential for Neutral. “First, there are many improvements to be made in logistics, purchasing and operations. Second, it’s a company with very good and unique values. It has a very long-term and loyal employee base and a very good management structure, which offers a unique platform for growth.”

Urioste confirmed that Neutral would become a player in future airport tenders in Latin America. Besides the company’s current involvement in Rosario Airport, he pointed out that Neutral had been the long-time duty free retailer at Montevideo Carrasco Airport in Uruguay.

“So we have experience, past and present in running airport duty free, and we will look at any opportunity that is out there,” he said.

Asked how he felt about returning to his home country (he has been based in Miami with Duty Free Americas since 2007) and running his own company, Urioste said: “It’s a great and weird feeling to be home after ten years. Once you leave your country you become a citizen of the world. But it’s a great feeling to be back to your family and your friends, and to your roots.

“In terms of running your own business, it gives you an even bigger sense of passion, potential and dedication”¦ you know you are responsible for your own and other people’s money.”

Urioste promised that he would bring the same values of data transparency to the Neutral operation that he had during his term at InterBaires (where he famously pioneered sharing of immediate sell-through data with suppliers). “We’re working as we speak on providing web access to suppliers to check sales against stock levels,” he said.

“I strongly believe that, as a leading player in the region, we have a duty and responsibility to provide a sense of real and transparent business going on here. So I am going to be as transparent as I can be with suppliers and the press.”

COMMENT: You can’t keep a good man down. After a short absence since leaving Duty Free Americas, the irrepressible Enrique Urioste is back in the business he loves. And most people within the travel retail industry will be as pleased as he is with this latest surprise development.

That’s because Urioste has been one of the true industry progressives and a champion of change in recent years – an aficionado of “˜Trinity’ principles of transparency and partnership who has actually delivered on his promises.

Now he’s back in the region he knows best and with heavy, long-term support behind him. Any student of this industry’s recent history will know that Urioste will be intent on making a difference quickly and upscaling both the quality and volumes of the Neutral business. Watch this space – an important new Latin powerhouse is set to emerge.

Advertisement