Brazil's Havaianas flip flop to World Success
Brazil's Havaianas flip flop to World Success
SAO PAULO, Brazil, March 18 (Reuters) - Jack Nicholson may or may not walk away from the Academy Awards ceremony with a golden Oscar for best actor, but as far as one Brazilian company is concerned, he's already a winner. Nicholson, nominated for the lead role in the movie "About Schmidt," and 60 other Oscar contenders will get two pairs of trendy Havaianas sandals the day after the Hollywood extravaganza -- courtesy of Sao Paulo Alpargatas (Sao Paolo:ALPA4.SA - News), maker of the colorful, rubber flip-flops since 1962.
Thanks in large part to that kind of savvy marketing, the Brazilian company has turned what started out as poor man's footwear into a global fashion must-have.
In a country desperately trying to bolster its slow-growing economy through exports, Alpargatas has become a model to emulate, a company that tapped the high-end market abroad with seemingly the most low-end of products.
"They are clearly an example of success other companies can follow," said Jose Augusto de Castro, the director of Brazil's Foreign Trade Association. "It's proof that you can enter and conquer a market through marketing."
Already all the rage in countries like Australia and France, the sandals will get a further vote of confidence from the U.S. fashion elite this spring and summer with photo spreads in magazines like Elle, Jane and Vogue.
"Almost everybody leaves the store with a pair, and hardly anybody has just one pair. They're extremely popular," said Janet Irwin, owner of La Bella Shoes in Long Beach, California.
"There are other brands, but everyone seems to go toward the Havaianas. They have such great colors," she said.
To be sure, many Brazilians were surprised last year when they saw photos of models strutting down a Paris catwalk in designer duds by Jean-Paul Gaultier -- and a pair of Havaianas.
In Brazil, Havaianas are one of the few common denominators in the big and diverse country, a product that transcends the divide between rich and poor. From the Amazon natives in the steamy jungles to the fashionable elite of urban Sao Paulo, just about everyone sports the V-strapped thong sandals.
"You might be in a house where the maid is cleaning up in a pair of Havaianas and the owner is watching TV in her own pair. It's a very democratic product," said Angela Tamiko Hirata, Alpargatas' director of foreign trade.
But it was not until the mid 1990s that the company decided to brighten up its colors and market the sandals to Brazil's middle- and upper-income classes. Their success abroad has only served to enhance their fashion appeal at home.
$3 AT HOME, $80 ABROAD
Since Havaianas were introduced 41 years ago, Alpargatas claims to have produced 2.4 billion pairs of them -- enough to circle the globe 50 times if lined up heel to toe. Two of every three Brazilians buy a pair every year, the company says.
Although the sandals have remained true to their simple design, the colors and designs are increasingly varied and continue to change along with the season's trend.
The company recently introduced a "Trekking" slingback model, and a raised-heel design for a night on the town.
But they are, after all, just a pair of flip flops, and to most Brazilians the idea of foreigners paying up to $80 for a pair embellished with crystals or beads in a boutique or department store seems insane compared with the local price tag of $3. To Brazilians, even the basic sandals in the United States or Europe, at $10 to $15 or 20 euros, seem outrageously priced.
The gap was a result of careful planning by Alpargatas.
"No one knew Havaianas abroad. So I positioned them in the high-end market, because if I tried to compete on the low-end, they would be just another flip flop and we would have to compete in terms of price," said Hirata.
That meant she would sell fewer pairs of sandals, but it would also keep her out of constant competition with other producers of cheap sandals.
"People buy in large quantities and they'll drop you for one cent in difference when it comes to price," she said.
Instead, Alpargatas wanted to establish itself abroad for the long term, and to do so meant it had to develop its brand.
So far, the strategy appears to be working.
Although she won't spell out the company's global aims, Hirata said it plans to sell 150,000 pairs of Havaianas in France this year, up from only 2,000 three years ago. In Australia, Alpargatas hopes for a dramatic increase in sales to half a million pairs, from a modest 1,900 in 1999.
Kerri Sengstaken, whose firm StyleWest handles marketing and distribution for Havaianas on the U.S. West Coast and in the Midwest, says they hope to sell 1 million pairs in high-end boutiques and department stores like Nordstrom (NYSE:JWN - News) this year.
"That's a very low number based on the power of this market, but for a brand that no one had heard of two years ago, that's a very good number," she said.
Alpargatas also plans to launch an even cheaper line of sandals for export solely to meet growing demand at major discount chains like Wal-Mart and Target.
GOOD FOR THE PEDICURE, OR CAMP
The increased sales abroad are part of a larger goal at Alpargatas, which also makes athletic shoes for the Brazilian market. It hopes to increase its exports as a percentage of total sales to 15 percent in 2004, from 1.5 percent in 2001.
But such expansive growth isn't fueled only by clever marketing, Hirata claims. "You have to have a good product. If not, no one is interested," she said.
Unlike other low-end sandals that are stamped out from larger sheets of plastic-like material, Hirata says Havaianas are made using a secret rubber recipe and an anatomically designed mold.
Havaianas wearers have been known to gush over their comfort and minimalist simplicity.
Marie Lehman of Hillsborough, California, says she ordered seven pairs to put in gift bags for her daughter Sloane's 13th birthday party. In the store, near San Francisco, children's sandals are priced at $8 and adult models go for $10.
"It's a really catchy thing. You can wear it to your pedicure for women. You can take it to camp if you're a kid. And the girls just really like to wear it," she said. "It's stylish and it's comfortable. And what about that price!"
Taiwan, like Brazil, has been struggling to bolster its exports. Alpargatas has achieved a remarkable feat -- it has successfully tapped a high-end market in the "First World" with the lowest of low-end products. As traditional industries struggle to survive in the post-industrial Information Age, Alpargatas' success story provides a model that traditional industries on Taiwan might do well to emulate. As the Reuters article notes however, it was not shrewd marketing alone that resulted in Alpagatas' exponential growth. One must first have a well-designed, superior product. In order to promote a product as a "value-added" product, one must first add the value. Otherwise no one is going to be interested.
-- Bevin Chu
Explanation: Brazil's Havaianas flip flop to World Success
Illustration(s): Patented in 1964. Patent Drawings
Author: Carlos A. DeJuana
Publication Date: March 18, 2003
Original Language: English
Editor: Bevin Chu, Registered Architect