Brazil’s Dollar Dilemma

SÃO PAULO — Footwear manufacturers at the Couromoda show, held here last week, said they’re still pursuing the U.S. as a main export market, but their multi-year struggle with the inflation of Brazil’s currency against the U.S. dollar has made selling stateside a daunting task.

“The dollar is the biggest challenge for Brazilian producers,” said Luiz Carlos Passarini, U.S. market representative for Pampili, a producer of girls’ shoes. “Today, with this rate, we can sell but can’t grow.” (The current exchange rate is hovering at $1 to 1.80 Brazilian reals.)

The U.S. made up 18 percent of Brazil’s total export revenue last year, followed by Argentina at 15 percent and the U.K. at 7.5 percent. By volume, the U.S. fell to third in 2011, representing just 10 percent of the total pairs sold. It was passed for the first time by Argentina and Paraguay.

Milton Cardoso, president of the Brazilian Footwear Industries Association, or Abicalçados, said an exchange rate of $1 to 2.15 reals is what the industry needs for healthy export options. Abicalçados will also lobby the government this year for a variety of tax breaks.

In the meantime, Brazilian manufacturers said they will focus on issues other than price, such as boosting marketing efforts in the States, strive to get their full collections into U.S. stores, and play up the “Made in Brazil” label.

“The key [to selling] in the U.S. is differentiating our product from the Chinese-made [product] in every way possible,” said Angelo Daros, VP of U.S. operations for Grendene SA, producer of rubber sandal brands Rider and Ipanema. “We have the look and appeal of Brazil on our side, and our research shows us ‘Made in Brazil’ is well-received by the American buyer.”

Strong distributor relationships will be key for other manufacturers.

Werner Calçados, which has been producing women’s shoes in Brazil for the past 42 years, has been sold in the U.S. for the last decade under the Sergio Zelcer brand via distributor Spanish Leather. But this year, the company’s entire line will launch as “Werner, by Spanish Leather,” according to Werner Arthur Müller, the firm’s commercial director.

“We’ve waited 10 years to make a big move with our entire collection in the U.S.,” Müller said. “To me, the good distributor relationship is the key. It will open the doors that we couldn’t open on our own.”

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