Vulcabras, owner of the 35-year-old Brazilian Olympikus brand and joint venture partner of Adidas Group for Reebok in Brazil, Argentina and Paraguay, should have been featured among the major players in the global athletic footwear market, although its business is confined for the moment to the Latin American market.
The Olympikus brand alone generated sales of about 1.2 billion Brazilian reais (€522.4m-$676.4m) last year. Vulcabras sold around 15 million pairs of shoes in Brazil alone, giving it an estimated market share of 15 percent in volume, compared with only 7 percent for Adidas and 5 percent for Nike. Officials of Vulcabras said they could not disclose the volume that they are making with Reebok, but said its market share is smaller.
The Vulcabras group produces the vast majority of its 19.9 million pairs of sports shoes at its own factories in Brazil and Argentina. It employs more than 40,000 people, 10 percent of them in Argentina, and it recently decided to boost its manufacturing capacities by 30 percent, thanks to the protection of the anti-dumping charges recently instituted by the Brazilian government on all kinds of shoes imported from China, including athletic footwear. These measures will represent a major competitive advantage for this company against the international sports brands.
Company officials claim that the quality of its products, developed at a state-of-the-art facility employing 800 people at Parobé, is similar to that of Chinese and Vietnamese manufacturers. Vulcabras recently put out an interesting new shock absorption system for Olympikus running shoes. The company develops 90 percent of the Reebok shoes it sells in Latin America, including the recently introduced EasyTone range, and it will do the same with its Zig Tech line from next year, after importing it temporarily from the Far East. Its products looked good at Francal, the big Brazilian shoe show held in São Paulo earlier this month, where Vulcabras had the biggest booth, measuring more than 1,300 m².
Respectively, sports shoes and sports apparel represented 67 and 12 percent of Vulcabras’ net revenues of R$1,526 million (€664.3m-$860.2m) last year. The balance referred mainly to Azaleia, a brand that the company took over along with Olympikus in 2007, before renegotiating its agreement with Adidas. The operating margin declined last year to 26.1 percent from 16.6 percent in 2008 due to temporary economic problems and import pressure from China prior to the new anti-dumping measures, but the net profit grew by 187 percent in the fourth quarter and continued to improve in the first quarter of this year, when its sales of sports shoes increased by 29.7 percent in volume.
The domestic market accounted for 86 percent of the total turnover last year. Olympikus, which sponsors the Brazilian Olympic Committee and the very strong Brazilian Volleyball Federation, among other properties, may widen its distribution in connection with the Olympic Games that will be played in Rio de Janeiro in 2016. If it decides to do so, some of its production will be outsourced in Asia or in other countries.
The internationalization of the brand may taken place even sooner, in relation with the 2014 Fifa World Cup, which is also due to be staged in Brazil. Since a year ago, Olympikus has also been the sponsor of the important Flamengo football team, resulting in sales of 1.2 million jerseys last year, and it spent more than R$100 million (€43.5m-$56.4m) to advertise its trademark in connection with the recent World Cup in South Africa.
