Bloomberg News

Flip-Flop Maker Havaianas Draws World Cup Demand Without FIFA Blessing

June 10, 2014

Brazilian Havaianas

Brazilian Havaianas on sale in Sao Paulo, Brazil. Photographer: Miguel Schincariol/AFP via Getty Images

Ask Ingmar Korstanje, a tourist arriving in Brazil this week from the U.S., about the official 2014 World Cup flip-flop maker and he says the answer is easy: Havaianas.

He’s wrong.

While Havaianas are better known, flip-flop maker Amazonas won the contract to produce as many as 1.5 million FIFA-branded sandals in a tropical country where casual slip-ons are de rigeur footwear.

“That does not make a lot of sense,” Korstanje said in a June 8 interview from Detroit. Havaianas is “so popular.”

Tourists like Korstanje are the reason Havaianas may reap most of the benefits from the soccer games starting this week even without being a World Cup sponsor. Sao Paulo-based Alpargatas SA (ALPA4), the maker of the Havaianas brand, joins companies including Nike Inc. (NKE:US) and Fiat SpA (F) that are forgoing FIFA sponsorships to focus on clever ads to generate World Cup buzz.

Official FIFA sponsors aren’t getting the same benefits as they once did because companies now have more ways to reach soccer lovers through smartphones and social media, said Sarah Wood, co-founder of Unruly, which tracks videos online and helps companies get their content watched and shared.

Producing an ad that goes viral can be worth more than a sponsorship, she said. A formal sponsorship can cost millions of dollars; FIFA received $404 million in international marketing rights last year.

‘Most Noise’

“You don’t need to be the biggest sponsor anymore to make the most noise,” Wood said in a telephone interview from London. “If the goal is to generate conversation and engage football watchers, it’s far more effective to invest in smart marketing and creative content that people want to share.”

Of the top 11 most-shared soccer ads online, only six are international sponsors, according to an Unruly ranking. A World Cup-related video by singer Shakira by non-sponsor Danone’s dairy brand Activia took the top spot as of June 6.

Grupo Amazonas, a Brazilian company that produces rubber for shoe soles and introduced its own flip-flop brand outside Brazil three years ago, is hoping the partnership with soccer world governing body FIFA will help win contracts and licensing deals with other companies. FIFA is selling its Amazonas-made flip-flops for 39.90 reais ($18), compared with 31.90 reais for Havaianas’ soccer-themed offerings.

Armadillo Mascot

The Havaianas sandals are sold with player numbers and country names and colors, while the official FIFA shoes feature the group’s logo. Fuleco, the World Cup’s three-banded armadillo mascot, also appears on some of the FIFA-backed footwear.

“It’s very powerful when you say you’re the official FIFA World Cup maker,” Frederico Pucci, Amazonas’ export manager, said in a telephone interview from Sao Paulo. “It gives us a lot of power in order to sell more and gives more credibility to the company throughout the world and in Brazil.”

Amazonas’ goal is to gain market share in Brazil for its recycled and biodegradable sandals, which will decompose five years after being buried, he said.

“I don’t see anyone competing very well in that market yet,” Pucci said. “It’s a middle- to high-end market but also very trendy, eco and nicely designed.”

So-called ambush marketing -- in which companies piggyback off sporting events without official sponsorship -- is a growing challenge for organizations like FIFA, according to Jeff Greenbaum, a managing partner at New York law firm Frankfurt Kurnit Klein + Selz, PC, which works with official sponsors and other companies engaged in campaigns around the World Cup.

‘Extremely Sophisticated’

“Marketers have become extremely sophisticated with associating themselves when they’re not even sponsors,” he said. “How can you be a company right now in Brazil and not be talking about the World Cup? This is the tension.”

A press official for Alpargatas declined a request to be interviewed, saying the company didn’t want to be associated with the World Cup in any way.

Smart move, Greenbaum said.

“What they don’t want to do is create the impression in the media that what they are doing is ambush marketing,” he said. “The last thing they want to do is get the attention of FIFA.”

While only official sponsors can refer to the World Cup or FIFA in their advertising, “no one” owns soccer, said Unruly’s Wood. There’s nothing stopping companies like Alpargatas and Danone (BN) from evoking the games through color choices and content.

Alpargatas rose 0.3 percent to 11.93 reais at 2:13 p.m. in Sao Paulo trading.

Smirking Romario

Near the front of many Havaianas stores and stands, the company displays soccer-inspired offerings, which it has sold for several years, for countries including Italy, Spain and Brazil. The number 10 appears prominently because it was worn by superstars including Argentina’s Diego Maradona, who played in four World Cups, and Brazil’s Pele, a soccer icon.

An ad on Alpargatas’s website shows Romario, a former Brazilian national team striker, buying a pair of Brazil-themed flip-flops and asking that each sandal be bagged separately. While watching a game at home, buddies ask why he is wearing only one. As Romario smirks, the camera pans to a package landing on Maradona’s doorstep in Buenos Aires.

FIFA has a team monitoring advertisers to ensure no one illegally uses trademarks such as World Cup or “Brazil 2014,” the group’s press office said. Typically, campaigns to alert advertisers about what’s permissible are enough. FIFA has sued others that take their ads too far.

“If anyone could use the official trademarks for free and create a trade association with FIFA World Cup 2014, there is no reason to become an official business partner,” FIFA said in an e-mailed statement. “FIFA has an obligation to take action against any unauthorized reproduction of their brands in a commercial context.”

In the end, the FIFA logo doesn’t count for much with Detroit’s Korstanje, 41, the president of a beauty-supply distributor. A Netherlands fan, his sandals shopping list for friends and family runs to about 10 pairs.

“I do plan to bring back a good number of Havaianas,” Korstanje said.

To contact the reporters on this story: Tariq Panja in Rio de Janeiro at tpanja@bloomberg.net; Jessica Brice in Sao Paulo at jbrice1@bloomberg.net; Christiana Sciaudone in Sao Paulo at csciaudone@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net Jessica Brice, Jay Beberman


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