A Real Toy Story

What first attracted Famosa Group to Mexico in 2010?

The Company was founded in Spain in 1957, and Famosa was born from the alliance of a number of toymakers in Toy Valley, in Alicante, Spain. The group formed in order to remain competitive in the market due to difficulty finding funding, changing technologies, and the emergence of plastic toys. More than 50 years later we continue to be Spain’s premiere toy manufacturer, leading the industry in Spain and Portugal and being firmly established in more than 50 countries, including France, Italy, Mexico, and the US. When we enter new markets, we grow through distributors first; hence, here in Mexico we established partnerships with other toy manufactures a few years ago. In Mexico, we had solid numbers with our distributors. However, in the Ride Ons and Outdoor category, importing bulky products from Spain was expensive due to transportation costs and, considering that the potential business in the US and Mexico was huge, we decided to open a factory in the city of Monterrey. We saw this not only as a base to expand in Mexico, but as a way to reach the US market.

How much of your production in Mexico is for export?

Right now, about 30% of the volume manufactured in Mexico is exported. The problem that we have been facing is that we do not have enough capacity, which is a good problem to have. The factory has more than doubled in volume over the last two years; therefore, we are evaluating some other possibilities of investment or partnerships that could help us satisfy the needs of the Mexican and North American markets.

What are the biggest challenges in transitioning from distribution networks to operations based in Mexico?

The challenge is to understand the market. We are a Spanish company and in Spain we are market leaders. Here, we have been growing and things have not been that easy. You have to understand the cultural differences, to know why a product’s success in Spain may not be always replicated in the Mexican or US markets. In order to be more successful in our export business from Mexico, we do market research in the US to understand the consumer and what is required compared to what we are manufacturing in Mexico or Spain in order to adapt the products. One of the challenges is not just cultural differences but regulatory issues for products such as battery-operated ride-ons, which mean that we need to manufacture to different specifications in the US than we do in Europe.

What have you done right to be so successful in understanding these cultural differences?

It requires constant communication to present business cases that make sense. Last year was good for the toy industry worldwide, with a growth rate of around 7%. In Mexico, we grew more than 10% and Famosa is gaining market share, entering new categories like plush, developing new products in nurturing, mini dolls, ride-ons, and particularly in the outdoor category, where we became market leader with more than 48% of the market share. What has been changing in the toy industry is the importance of licensed products; that is to say, products that use characters from movies, books, TV shows, or even computer games and apps. In Mexico, especially in the outdoor and ride-ons category, we work with licensed products. We have important partnerships with Disney and Nickelodeon, which are major licensees here in Mexico. Licensed products are definitely a considerable driver of growth for the toy sector. In 2015, there are significant licenses worldwide, such as Star Wars, Frozen, and Paw Patrol, which are driving the change in the way the market moves.

Has the rise in computer games and other kinds of devices for kids changed your approach to product development?

The time kids spend playing is now shared with TV and computer games; therefore, this is changing the way the toy industry moves since more products now have to be made around the entertainment. That is why at Famosa we are developing new TV series PINY and Mutant Busters, which will be launched in 2016 accompanied by apps kids can play after watching the series. There will also be licensed products such as clothes, bedding, school supplies, and of course a complete line of toys. At Famosa, we will continue creating products that foster children’s imagination.

What is the importance of your facility for Nuevo Leon?

We have more than120 employees there. We are located in Parque Industrial Kalos in Apodaca, and we have been working closely with the community there. We try to ensure that most of our employees live around the area and we work constantly with the authorities to ensure they know we are investing and creating jobs in the region. Apodaca was ranked as the happiest city in Mexico last year and we believe that Famosa had a part to do with it.

Has the government been supportive in terms of setting up your operation there?

Yes, and since we opened the factory we have been growing without any issues. Our decision was to create more jobs in an easy way so that we can react faster; in this industry you have to go with the momentum and for that we need to react quickly. Flexibility has been one of the strengths for setting up the business here. The industry in Mexico is developed and the country has the talent to manufacture what we need.

What are your goals for the near future as International General Manager?

My objective for the next two to three years is to develop our subsidiaries and grow in new markets. Our expansion plans are going in the right direction. The idea is to develop products keeping in mind that they must have international appeal. We must be able to launch products that can be equally successful, for example, in Russia, Brazil, Mexico, or Spain. We need a truly international marketing team that fully understands and gathers feedback from all the countries in which we are present.