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"Global expansion is one of the strategic priorities of Famosa"
We interview José de la Gándara, CEO of Famosa
15/03/2011
Famosa was established in 1957 and is known worldwide for brands such as Nenuco, Nancy, Barriguitas and Pinypon, among others. The entrance of Sun Capital as a shareholder was the final point in the operational and financial reorganization started by Vista Capital with the aim of "achieving stability to face new challenges in the next years", as the CEO of Famosa, José de la Gándara, says. Also, De la Gándara assures that the company "has established as strategic priority to grow outside Spain, without neglecting the leadership in the local market”.
Famosa has a privileges position in the Spanish market and is also an international referent.
Famosa is one of the most experienced companies in the market; it was in fact established in 1957, when several family doll companies from Onil (Alacant) understood that the technological change that was coming up with the introduction of plastic materials could only be faced united. This was how Fábricas Agrupadas de Muñecas de Onil Sociedad Anónima was born. Since then, the company has grown, has become international and has acquired other important toy companies, such as Feber, reaching a leadership levelled with big toy multinationals.
Half a century of business is an important hallmark.
From its beginning there are a lot of relevant moments in a history as rich as Famosa’s. The launching of some brands in the 60’s and 70’s, such as Nenuco, Nenuco, Nancy, Barriguitas and Pinypon, gave birth to important business lines. Also, the move of a good part of manufacturing lines to China or the acquisition of Feber meant an important change in he company structure, as well as the creation of subsidiaries and the entrance of risk capital shareholders. Each step has been giving shape to the company as a Spanish multinational.
In 2010, the investment company Sun Capital acquired Famosa assets, until then in hands of Vista Capital. How was this operation done, and what are the changes and benefits?
Basically, the entrance of Sun Capital as a shareholder meant the ending point of the financial and operational reorganization that Vista Capital started. These changes have given our company the necessary stability in order to face next years challenges.
How is the company structured?
Our firm counts with more than 500 people in several countries. The products manufacturing is based in China, where we have a serious team of engineers and quality controllers, as well as in Alacant and Monterrey (México) factories. Our headquarters are in Madrid: there we have the financial, human resources and marketing areas.
Which are the companies policies? What are your goals and strategic plans?
Our mission definition is “Famosa offers to children between 2 and 7 excitement in the shape of toys that make their whole development easier”. Our strategic priority is to grow outside Spain, of course without neglecting our leadership in the local market.
Could you explain some facts about the company internationalisation?
Global expansion is one of the strategic priorities of Famosa. We are already present in more than 50 countries, although with our own whole organization only in Portugal, France, Italy and Mexico. These and other key markets mean approximately half of our revenues.
These last Christmas were the firsts without ads in the Spanish public television. How did you restructured your advertising budget and what were the results?
Our presence in the Spanish TV was already low in 2009, which lead us to stimulate creativity, wit and other formulas to communicate our message to the consumer. In fact, we haven’t missed the absence of advertisements in 2010 in the public TV, except for the fact that television ads are now more expensive for everybody.
We finished 2010 with a good level of impacts in the first half of the year and for the product we needed to communicate, a little more than last year, in fact, and we preferred to use less TV and favour other options. Although television is the main media in this market, Famosa trebled the budget for advertising at point of sale and magazines. Also, public relationship initiatives and events were a great standpoint for our brands. We are achieving as well exceptional results for our online communication, as the visits and time permanence in Nenuco, Nancy, Pinypon, Barriguitas or Feber webs can prove.
How were in your opinion the Christmas results and sales, for Famosa and for the whole of the toy market?
Results were excellent for Famosa, during the Christmas campaign (+3,7%) as well as in the whole year (+6,6%). Also, the market share went up to 8,8%. We had very positive results in the countries where we are present. The effort done by the whole company team during 2010 has been greatly rewarded.
The exercise for the toy market was seen at first as difficult and expectations were of falls in sales of 2%-4%, but finally strong promotions have avoided these negative results. If we don’t take into account the increase of two points in VAT done in July, we can see that toy market revenues were somewhat weaker in Christmas (-0,6%) as well as in the whole of the year (-0,7%).
Sales seasonality is still the main note in the toy business. What strategies should be taken in order to increase sales during the whole year?
These years of economical crisis have taught us to develop products and brands with more game value, as well as more affordable prices during the year. These initiatives have helped to increase consumer visits to toy shops outside the Christmas season.
To approach seasonality is difficult, and especially expensive for a manufacturer alone, given the consumer and cultural habits of our society. I would like to note how the Spanish Toy Makers Association (AEFJ) is working to outline a short, medium and long term strategy. I’m sure that the AEFJ will soon gives us all good news and plans about all these issues.
Licenses play a key role in the toy industry. What is the importance and business volume of licenses for Famosa? What are the most important trends and future evolution?
The recent data published by NPD shows that licensed toys have grown 3.3% up to a total toy market share of 34%. It now represents 30% of the total revenue of Famosa, and it was even more some years before, so it’s a key business for our company.
Famosa sells two kinds of licensed products: on one hand, through our own development and manufacture we have brands as Ferrari, in the Feber line, or novelties such as The jungle on wheels, of Disney, which we will launch in May; on the other hand, we also handle with care the product distributed by third parties with license, such as the Disney Phineas & Ferb line, which we don’t distribute ourselves.
In collaboration with AIJU and within the project Juegorama, Famosa has published the 1st Study of Games and Toys in Nowadays Society. Could you give us some details referring the report conclusions and goals?
The 1st Juegorama de Famosa was conceived in order to get to know and publish the most relevant changes in society about how, how much, where, with whom and with what do our children play compared with how we played thirty or forty years before. Juegorama will continue to unveil new studies focused in issues related with games and toys.
Conclusions were many and very different: kids now have less playtime compared to their parents, due partly to more extracurricular activities, grandparents have now a leading role in how children learn to play; nowadays kids play less outdoors and new play centres such as toy libraries appear; balls and dolls still are top preferred toys, only beaten at older ages by videogames; the majority of the 1.200 parents interviewed believe that toys are useful to entertain, have fun, learn and share.
Internet is more important everyday. What could be the role of online sales for the toy market?
Online buys and sales are present in our everyday lives, but in not yet for the toy industry, and I don’t think they will be relevant in a while. Anyway, online sales importance will continue to grow medium term, and each toy maker will have to establish its position whether through direct consumer sales or through distributors in order to focus and support this kind of business. Famosa has asked an external consultant to evaluate details, advantages, inconveniences, and mostly opportunities that online sales could bring.
What are the main trends for the Spanish toy market?
I’m a positive person and as such I think that toy companies are evolving “well” within the economical crisis, compared with other fields. Last years haven’t been easy, and the few next ones won’t be either. The constant increase in commodities costs have increased final prices and have made it more difficult to communicate our products to our final target. Also, promotional initiatives of manufacturers and distributors are cutting down margins in a dangerous way.
The industry must continue with investments in development and innovation, not only for the Spanish market, which is already very mature, but also to strengthen export results. Distribution channels in Spain are strongly delimited and in my understanding this is how they will be in the following years.
Which are the goals and future short, medium and long term projects of Famosa?
Our growth should be made through an increase in global presence and of course we should also focus on the Spanish market share. We have a great team (more than 500 people), we know how to build brands and, what is really harder, to keep them along time, which is fundamental in order to face future challenges.
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