Vipal: Aiming for the Top Three

Already represented in more than 90 countries, 2006 saw Borrachas Vipal’s exports grow roughly 30 per cent as the retreading materials and repair company took steps to increase its presence in the main European markets. Going forward, Vipal’s willingness to utilise its strong production capacity should not be underestimated. Early indications are the Brazilian company is making headway in its plans to become a top-three player in the European retreading materials market.

The Brazilian retread market, the second largest in the world, covers approximately 8.5 million units, 90 per cent of which are cold retreads. Here, on home turf, Vipal controls a commanding lead in terms of market share, holding roughly 43 per cent. Such a figure is streets ahead of the well-known European market leaders’ South American subsidiaries (Marangoni do Brasil, for example, has a market share of around 6 per cent).

A pan-European strategy

Initially, Vipal exported its range of tyre retreading and repair materials directly from Brazil to distributors. However, the company reports that this strategy led to a “perceptible difficulty in expanding the market.” Product lead times and the difficulties inherent in relating to all the different needs of a fragmented market were seen as the main barriers. Speaking to Tyres & Accessories, Vipal Europe Manager Alessandro B. Campos said Vipal’s strong point has always been selling its solutions as: “high quality products at competitive prices.” And it is for this reason that Vipal managed to experience the relative success it did in spite of these “natural” barriers.
That’s why in 2004 Vipal took the decision to open a branch in Europe. This was followed by further market research into potential countries and regions, logistics solutions and partners. In 2005 the process of building up stock began, firstly in Valencia with Vipal Europe mainly servicing the Iberian region, UK, France and later Slovenia; while the Slovenian branch serviced the Balkans, Hungary, Slovakia, Germany, Czech Republic and Poland. During this “key” year Vipal recognised that this reorganised European setup meant it was better able to service the market as well as adapt to its varied logistic requirements.
In order to build on this, Vipal set up another team with the responsibility to administrate, commercialize and expand Vipal’s market share in Europe (including Turkey) in 2006.
Vipal Europe is based in Valencia, Spain and its commercial team goes out from here to meet customers right across Europe. With warehouses located in Spain and Slovenia, the company can reportedly supply more than 80 per cent of its clients in less than four days from order confirmation – clients that are further afield can be serviced within a week.
“Without a shadow of a doubt the speed in sales, supported by two distribution centres added to the ever present commercial team and quality at competitive prices [led to] significant growth of more than 70 per cent,” Alessandro Campos explained.
The impressive 70 per cent growth figure includes sales to end consumers and to distributors (exported directly from Brazil) and is calculated in relation to the previous year. This year further growth of at least 25 per cent is forecast, which would place Vipal third overall in terms of market share, says Campos.

Looking east

While Vipal’s strategy and intentions are clearly focused on generating results across Europe, recent training events have seen the material and repairs supplier invest in its Eastern European presence. From 5 – 9 March it held a series of training sessions in cooperation with distributors in Bulgaria. The main purpose was to train delegates on ECE 109. The course took place at Vipal’s Bulgarian partner’s premises (Gumi Nira Trans), and a total of 20 plant workers, salesman and even administrators were trained. As Gumi Nira Trans’ sales territory stretches into Romania, both Bulgarian and Romania delegates were in attendance.
Vipal’s aim in doing this is to show the wider market that the sale of retread products alone is not enough: “We believe that in our market we have three main strategies: Price leadership; Differentiation – in products and technologies; And thirdly – our kind of approach and relationship in customer and technical services and marketing support,” said Campos.
For Vipal price leadership means offering a competitive price, but not entering into price wars that are not comparable with the quality of its products. And so, accordingly, the company places itself within a kind of economical but quality conscious market segment. “That’s why we have been supporting our customers and distributors [such] as the Bulgarian company, we strong believe in differentiation and customer service,” continued Alessandro Campos.
“We understand we are new in the market against companies that have more than 10 years in Europe, but as we did in South America after no more than 15 years, [we can] achieve leadership in Europe. With more experience acquired in other markets, the high skill level of workforces, training as we held in Bulgaria just testifies how quickly we are growing.” said Maria Locatelli, International Business Director.
Gumi Nira Trans owner, Nina Gradinarova, added his perspective: “We would like to thank Vipal for the training in Bulgaria. [It] was very important for our workers, salesman and our Romanian customers. Mr Frederico Schmidt is a highly professional technician and provided all information and training in a very clear way. The time between theory and practical was balanced. The Vipal products training to our salesman was very important to us. We hope that this training is just the beginning in the long journey in this way.”
In addition to cooperating with partners in Bulgaria and Romania, Vipal has also taken steps to extend its presence in Poland. Between 9 and 13 May the Automotive Technology Fair TTM 2007 was held in the city of Poznan, Poland. Vipal’s local distributor in the region, Markgum, exhibited and presented the latest news of the Vipal tyre repair line. The fair presented the latest offers in equipment, accessories and spare parts for the automotive industry, including a large area dedicated for vehicle diagnosis and servicing stations. The exhibition is widely known in the region and Vipal’s branch in Europe participated by supporting the distributor.
Founded in 1973 in the Brazilian city of Nova Prata, Vipal’s two factories produce around 12,000 tons of materials and repairs per month, enough for almost a million tyres each month. Vipal currently has seven distribution centres located in the main states of the country with additional international centres in the US, Spain, Slovenia, Mexico, Argentina, Chile and Panama.
In addition to important customers in countries like the UK, Germany, Italy, Bosnia, Serbia and Portugal, Vipal’s activities in Bulgaria and Poland add to the list of customers it has in other areas, including Russia and Ukraine.