Birkenstock may not be the German word for sandal, but it might as well be. Because all over the world, the name has become synonymous with a sandal with two leather straps and a cork sole. Fashion is whimsical. But Birkenstocks are timeless.
Founded in 1774, the company was run by the same family until 2013, when professional managers came and completely restructured the company. Even after these changes, the newly named Birkenstock Group was still owned by the founding family, then in its sixth generation.
In early 2021, the family sold a controlling majority of the company to L Catterton, a private equity firm that also owns Bernard Arnault and his luxury conglomerate LVMH. Although no details were given, it was reported that the stake valued the company at $4.9 billion (€4 billion then, €4.48 billion today).
Now, shortly before its 250th birthday, another change is imminent for the company. As early as September, Birkenstock dared to make the leap onto the trading floor in New York.
Current estimates value the company at 6 to 10 billion dollars (5.45 to 9.1 billion euros). With such sums, the new owners apparently want to cash in and get fresh capital for future investments. An initial public offering (IPO) seems obvious, even if it means giving up some control.
Ever since the new Barbie movie hit theaters, the world has been seeing ‘pink’ – and Birkenstock is on boardImage: Warner Bros/Entertainment Pictures/ZUMAPRESS/picture alliance
Always in fashion
Birkenstock has long been associated with hippies, healthy eating and sock-wearing Germans. But somehow they have become a must-have for people all over the world. Today they are sold in over 100 countries. Recently they have collaborated with luxury brands Dior, Valentino, Jil Sander and Manolo Blahnik.
More people working from home could be behind the surge in comfortable shoe sales. And in recent weeks, Margot Robbie’s decision, in the blockbuster Barbie Wearing a pink pair gave the brand new color and a big boost.
But no matter how mainstream they are, they still make a statement. You’re an “anti-fashion shoe that says I don’t care about fashion,” according to Allyson Stewart-Allen, CEO of International Marketing Partners, a London-based marketing consultancy. What we wear shows others who we are and what our values are.
Birkenstock has become synonymous with sandals with leather straps and metal bucklesImage: Timothy Rooks/DW
Birkenstock in figures
On the German website, prices for men’s sandals range from 40 euros to 260 euros for a pair with a sheepskin lining. Children’s sandals start at 30 euros. They come in a variety of colors and materials. Some are made of classic leather and cork, others are made of synthetic material, still others are vegan.
However, the company makes more than just sandals. It also produces a whole range of other shoes, boots and sneakers. And now Birkenstock also offers socks, cosmetics and even beds and mattresses.
Allyson Stewart-Allen isn’t surprised. Birkenstock is more than just sandals, it’s a lifestyle brand. “If you’re a fan, then you’re a fan of what the brand stands for, not just the functionality of the shoe,” the branding and marketing expert told DW. Not to mention the sustainability they stand for.
It would even make sense if they branched out into fragrances, outerwear, or services like tours or hiking adventures. After all, they are known for their hiking and outdoor activities and could capitalize on this themselves or through collaborations with like-minded companies. But Allyson Stewart-Allen warns against getting too carried away: “They should stick to what they’re good at and not get distracted,” she argues, “and focus on making shoes.”
Birkenstock sandals are now available in all sorts of colors and designs Image: Soeren Stache/picture alliance/dpa
Does the company remain true to its German roots?
Birkenstock sales have increased dramatically since 2014. At that time, the company generated 273 million euros, according to the statistics service provider Statista. In 2020 it was already 730 million euros. The latest figures presented by the company show sales of 1.24 billion euros for the past year.
Solid production numbers are hard to come by, with estimates running at around 30 million pairs of shoes a year. But the fact is: the company is expanding its production capacities. A new factory, costing 120 million euros, is due to open in autumn in Pasewalk, a town north of Berlin near the Polish border.
To support this growth, the company has created around 3,300 new jobs since 2013 and now employs around 5,500 people, 95 percent of them in Germany, as the company reports.
Made in Germany is extremely important for the company. Even the name is German, says Stewart-Allen. If the shoes were made elsewhere, it would damage the credibility of the company. German quality “is part of what Birkenstock sells. It’s part of the brand, it’s an integral part.”
The quality feature ‘made in Germany’ makes Birkenstock successful worldwide Image: Arno Burgi/dpa-Zentralbild/ZB/picture alliance
challenges for the future
On the way to the future, however, the company cannot only rely on its heritage. A big problem for the company is cheap imitations, be they similar shoes or outright fakes.
Another problem is addressing customers directly. Currently, a large part of the production goes to wholesalers who sell the shoes themselves. Birkenstock has a few retail stores and sells its products online. The e-commerce business can provide the company with information about its customers and help build customer relationships.
So far, the IPO is not set in stone. The same applies to the number of shares to be placed, the schedule and the final issue price. For Birkenstock, this large cash inflow means the company can expand its manufacturing capacity, expand its outlets, and potentially last another 250 years. But the company may not have the patience of a family-owned company for long-term planning when short-term profits are golden.
The article has been adapted from English.