Footing a graft bill
Corruption is the most nimble of epidemics — its reach extends to the most unlikely of places. Flip-flop maker Havaianas was sold for £850m to three Brazilian banking groups last week so its owner — one of Brazil’s most-powerful families — could put the cash towards paying off a graft and bribery fine.
Not long ago, dear reader, I told you that Brazil’s Petrobras scandal was just the beginning and that the country was lost in a morass of corruption. Now it would appear that even the humble flip-flop is not impervious to the knavish rapture that has set into (almost) every sector of its economy.
Havaianas is arguably the world’s most conspicuous footwear brand and Brazil’s most famous export — after Gisele Bündchen, of course. About 300m pairs are sold a year. As flipflops go, they’re basically at the top of the hierarchy. Rivals include Ipanema, Crocs, Rip Curl and Quiksilver — none of which have been able to emulate the expansion (over 120 countries) and cult following of the brand.
Havaianas actually started as functional footwear worn by plantation workers across the country. They were largely sold out of the back of vans and in street markets, and only came in one colour: blue. Their inspiration is said to come from Japanese zori sandals worn by geishas.
The formula for the rubber used to make Havaianas is regarded as one of Brazil’s tightly guarded trade secrets. It’s their version of Coke. Or Cadbury.
The sandals are reportedly made from a mix of domestic and imported rubber that shrinks and hardens with extended wear. One of the firm’s slogans is that the flip-flops “do not lose their shape, the straps don’t come loose, and they don’t smell”.
Havaianas’ shift from a no-frills, utilitarian staple to a global phenomenon really only began in the 1990s, when domestic competitors started to encroach on its market share. Execs took a decision to take the brand global by rebranding it as a fashion accessory — one that encapsulates the fun-loving sprit of Brazil.
Havaianas were first exported in 2000, initially to Portugal and Australia, and later to Japan. The company brought out new ranges and its colour profile was extended, all while keeping a consistent global marketing message that suggested aspiration.
And, just like that, the company’s modest origins were a thing of the past and Swarovski crystal-encrusted Havaianas could be bought at Saks Fifth Avenue and Harrods.
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A false step
The sale of Alpargatas — that’s the company that makes Havaianas — comes just 18 months after the Batista family’s J&F bought the footwear company from Camargo Corrêa, a construction company that is also ensnared in Brazil’s corruption saga.
The Batistas were fined £2.5bn in May after brothers Joesley and Wesley Batista confessed to bribing 1,900 government officials.
By the way, these are the very brothers who run JBS, the world’s biggest beef exporter. It was one of the companies at the centre of the Latin American nation’s meat scandal in March this year. (The 60 Minutes interview with Anderson Cooper on “Operation Car Wash” — the name given to Brazil’s corruption scandal — is well worth watching.)
Brazil might officially be out of its recession, but the consequence of this scandal will be far-reaching. It started as an investigation into money laundering and has evolved into one of the largest corruption investigations ever — bigger than Watergate even.