Business Monday

Hasbro’s toys and games post strong growth in Latin America

STRATEGY PLAYER: Augusto Brambilla leads Hasbro’s Latin America operations from the company’s offices in the Miami area.
STRATEGY PLAYER: Augusto Brambilla leads Hasbro’s Latin America operations from the company’s offices in the Miami area. FOR THE MIAMI HERALD

For decades, kids in Latin America have been playing with toys and games made by Hasbro, the international toy giant.

“We started doing business in Latin America in the 1980s though a mix of distributors and direct-to-retail,” said Augusto Brambilla, Hasbro’s Miami-based senior vice president and general manager for Latin America.

Over the years, the company has expanded its distribution and sales operations, and now sells popular brands like Nerf, Transformers, Baby Alive, PlayDoh, the Avengers and scores of others to kids all over the region.

“We handle a mix of brands with a presence in all segments —boys, girls, preschool and games,” Brambilla said. “Our brands address all segments, categories and socio-economic levels of the population.

“Our strategy is supported by robust movie entertainment. Last year we had Transformers 4, Spider-Man, Captain America and Guardians of the Galaxy. This year, we have Avengers: Age of Ultron, Jurassic World and Star Wars: The Force Awakens. We develop and distribute a great line of toys and games in the entire region related to all these movies.”

The company also produces and distributes its own TV series through Hasbro Studios. They include series like My Little Pony, Transformers, Equestria Girls and Littlest Pet Shop that air on Latin American networks.

Hasbro manufactures and sells its own products, as well as many partner brands like those owned by The Walt Disney Co., such as Marvel and Star Wars.

Hasbro’s Latin American headquarters has 30 employees, and there are about 250 more in the region. The headquarters covers the entire region, overseeing all functional areas such as sales, marketing, finance and operations.

It also has a licensing office in charge of expanding Hasbro brands in different retail segments, such as apparel, back to school, publishing and health and beauty.

“We are evolving from being a toy company to becoming a company that leverages its brands across different areas,” Brambilla said. “Our strategy is guided by extensive consumer insights, so we know what our customers want.” Moreover, its products are reinforced by storytelling produced for different languages by Hasbro in TV series, movies, books and digital media.

The company has steadily expanded its presence in Latin America. In 1991, Hasbro opened its first office in the region in Mexico, followed by Chile in 1996. After 2006, Hasbro invested in additional offices in Brazil, Colombia and Peru and has an export market unit in Miami that handles other Latin American and Caribbean markets.

Hasbro uses partners in Argentina, Brazil and Mexico to make some products — mostly games — but most of the company’s toys and games are manufactured in Asia (especially China). The company also has plants in Massachusetts and Ireland.

The biggest markets for Hasbro in Latin America are the two biggest countries: Mexico and Brazil. “But countries such as Chile, Colombia and Peru are becoming more relevant for us,” Brambilla said. The company also expects significant growth in several other nations. “Talking specifically about 2015,” he said, “we expect to continue growing, but we can’t ignore the reality that currency devaluations are occurring in parts of the region, which make our products more expensive.”

Hasbro operates in a highly competitive industry, fighting for market share with large toy and game manufacturers like Mattel and Lego. The company also goes against strong local manufacturers in several countries that have brand recognition among retailers and, in come cases, are traditional local names.

Despite these challenges, Hasbro is optimistic about Latin America and the Caribbean. Citing statistics from Euromonitor, a market intelligence firm, Brambilla said the global toy and game industry is expected to post a compound annual growth rate of 3 percent between 2014 and 2018, with Latin America exceeding that figure and growing by 5 percent per year.

In fiscal year 2014 (which ended Dec. 28, 2014), Hasbro reported total net revenues of nearly $4.3 billion, with international sales representing nearly half.

“Latin America accounted for 23 percent of our international net revenues last year,” Brambilla said, “and revenue growth for the region was 14 percent.” Latin America’s net revenues last year were more than $463.5 million.

In effect, this outpaced growth in Europe (up 6 percent) and Asia Pacific (a 10 percent increase).

“Since 2007, the Latin America region has been growing significantly above global and [other] regional industry expansion,” Brambilla said. “This means we are gaining significant market share across the region.”

Hasbro has been focusing on emerging markets, and has seen these net revenues grow from 6 percent of the company’s total in 2012 to about 16 percent last year. “One of our key strategies is to increase our presence in emerging markets, including Latin America,” he said.

Hasbro also stresses community action in the region, providing free toys to children and employee volunteer work.

“Hasbro strives to make an impact on the lives of thousands of children where we live and work,” Brambilla said. Each Hasbro employee is given four hours of paid time each month to volunteer in any activity that benefits children and their families — at hospitals, schools and community centers: “Community is one of our core values.”

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Hasbro Inc.

Business: A global toy and game company, Rhode Island-based Hasbro manufactures and sells its company-owned or controlled brands, including Nerf, Monopoly, My Little Pony, Play-Doh and Transformers, as well as partner brands like Marvel and Star Wars (both owned by The Walt Disney Co.), Spider-Man, The Avengers and Sesame Street. Hasbro also produces digital media and provides storytelling to children through TV programs and films. Its product line reaches all market segments: boys, girls, preschool and games. The company’s first big toy hit was Mr. Potato Head, which came out in 1952 and is still manufactured today in several versions.

World headquarters: Pawtucket, Rhode Island.

Hasbro Latin America: 5200 Blue Lagoon Dr. in Miami-Dade.

CEO: Brian Goldner

Regional management: Augusto Brambilla, senior vice president and general manager for Hasbro Latin America.

Founded: 1923

Founders: Brothers Hillel and Henry Hassenfeld founded a textile remnant company in Providence that evolved into Hasbro.

Employees: About 30 in the Miami office, and approximately 250 in Latin America. Hasbro has 5,200 worldwide and 2,700 in the U.S.

Net revenues: 2014 total was nearly $4.3 billion, with international sales accounting for more than $2 billion.

Ownership: Traded on the Nasdaq (symbol: HAS).


Source: Hasbro