Birkenstock has taken over the distribution in the USA, its biggest market after Germany, through a new company, SAC International, which has been created to acquire shareholdings in foreign distribution operations as well. This move represents a revolution within the German family-owned conglomerate, whose multiple brands – including Alpro, Birkies, Betula, Footprint, Papillio or Tatami - have been working in foreign markets only through distributors and agents.
The three Birkenstock brothers – Alex, Christian and Stephan – have taken on equal shares SAC International, with Christian and Stephan being represented by two long-time Birkenstock managers, Karl-Berndt Bremer and Berndt Hillen. The three brothers are also equal shareholders in Birkenstock Orthopädie, the umbrella organization in Vettelschoss for all the upstreams operations of the Birkenstock group, whose origins date back to 1774. Even before its establishment, SAC International’s current managers had already started to make contacts with potential foreign partners, especially in Asia, for joint ventures or other types of cooperation, but the focus is now the U.S. market.
SAC International has formed a new U.S. company, Birkenstock USA, which has acquired all the shares of the former Birkenstock Distribution USA at an undisclosed price, described to be fair by market standards. Birkenstock plans to do more marketing and advertising in the USA, where its sales grew by about 10 percent in 2006 and by 12 percent so far this year to reach a high level that company officials don’t want to disclose. The increase could have been higher without certain bottlenecks in deliveries.
The acquisition of the distribution in the USA is expected to result in a smoother supply chain and in better production planning for a product range that is optimally suited for the market, establishing partnerships with selected retailers. Another important plus for Birkenstock will be the fact that it will be able for the first time to share customer data with the U.S. distribution company.
Going through the recently established distribution center of Birkenstock in Hebron, Kentucky, deliveries of Birkenstock products to U.S. customers should soon be consolidated with those of Footprint, Tatami and other brands whose distribution in the USA has been handled lately by companies separately owned by Alex and Stephan Birkenstock. They have been operating from different offices in various parts of the USA, but the merchandise has been going through warehouses in the same city in Kentucky. Only Betula and Papillio will continue to be distributed independently. Papillio is sold by Kanner Corp. and Betula by a former employee of Birkenstock Footprint and Sandals, the former U.S. import company that was sold by Margot Fraser to her 60 employees upon her retirement in 2001-02.
Fraser set up her distribution company in 1969, three years after Birkenstock made its first shipments to the USA, and today the brand has some 3,000 accounts in the country, including major retailers such as Famous Footwear. It took some time for Birkenstock’s employees to accept the sale of the shares. They did so in principle last May after discarding the option of selling to an institutional investor. The terms of the deal could not be determined.
All except three members of the former U.S. team have remained with the new company, which will continue to be run by Gene Caunde out of Novalto, California. They have agreed on an ambitious new business plan that calls for a significant increase in U.S. sales for all the Birkenstock brands, which will benefit from new synergies among them, although the sales teams will remain separate.