How to Take a Brand From Local to Global

For most of its first two decades, Farm Rio was little known outside its native
Brazil. But since entering the US in 2019, the dressmaker has made a splash in
contemporary womenswear, with sales reaching $50 million in its new market last
year. Next up: Europe.

10 June 2022
BoF PROFESSIONAL

KEY INSIGHTS
 Farm Rio enter the US in 2019, and has since grew its sales to $50 million in the
market.
 Its success can be attributed to a multi-pronged distribution channel that entails e-
commerce, stores and a robust wholesale network.
 For Farm Rio, wholesale serves not only as a source of stable cash flow but also a
way to put up free advertising.

In New York City, where black is always the new black, it’s impossible to miss
the bright tropical prints of Farm Rio.

Colourful and often voluminous, the dresses made by the Brazilian label have
become an increasingly common sight on the streets of Manhattan and Brooklyn
since the brand entered the US market with a SoHo store in 2019.

Farm Rio’s novelty is precisely its greatest strength outside of Brazil. Since 2019,
its US sales grew from zero to $50 million, fuelled by a strong aesthetic and a
multi-pronged distribution strategy that includes stores, e-commerce, and most
critically, a robust wholesale network that includes Neiman Marcus and
Nordstrom, among others.

Even during the pandemic, Farm Rio products sold “unusually well,” said Lana
Todorovich, chief merchandising officer at Neiman Marcus. “The vibrancy of
those prints was something our customers were craving during the pandemic …
and certainly now post-pandemic.”

Farm Rio has accomplished what countless brands aspire to achieve: Make the
leap from hometown hero, whether that’s Nashville, Copenhagen or Rio de
Janeiro, to international sensation. It’s no easy feat. Even for a brand that’s as
popular in its home country, and as well-capitalised as Farm Rio — its parent
company, Grupo Soma, generated $880 million in sales last year — the barrier to
global expansion is high. Before it could set up shop in North America, Farm Rio
had to account for a vastly different customer base and steep competition from
established American brands.
Farm Rio campaign. (Farm Rio)

To immediately make a splash, the label dusted off an old retail strategy: physical
stores and wholesale.

“The hardest part was, how do we create brand awareness with a great product
but in a market that’s so saturated,” said chief executive Fabio Barreto. “Without
deep pockets, we thought a lot about how we can leverage partners that already
have an audience that’s loyal to them.”

International Growth

Farm Rio was founded in 1997 by Marcello Bastos and Katia Barros. In 2010, it
merged with fellow womenswear brand Animale to create Grupo Soma, now
among the biggest apparel groups in Brazil. The brand began planning for its US
debut in 2018, according to Barreto.

Seasonality was an early hurdle. In Brazil, summer weather is year-round. For

Farm Rio, making the jump to the US market worthwhile meant creating fall,
winter and spring products too, to ensure consistent sales. It took the company a
year and a half to research the market and prepare for the launch.

Without deep pockets, we thought a lot about how we can leverage

partners that already have an audience that’s loyal to them.

“When we were first studying the US market, some people would come to us and
say we’re too colourful or too much, but we’ve found exactly the opposite,” said
Barreto.

The hard work paid off. Sales in the US grew at an average annual growth rate of
more than 200 percent. After the first year, the label’s US business was able to
turn a profit last year and is now in line with the group’s overall EBIT (earnings
before interest and tax) margin of 15 percent.

In the next five years, Farm Rio plans to open between 25 and 40 new stores in
the US, on top of its existing location in New York City and another in Miami
that opened in 2020. E-commerce currently makes up about 50 percent of US
sales, according to Barreto. Wholesale accounts for 45 percent, and stores for the
remainder.

Farm Rio is eyeing expansion in Europe too. It’s already testing the waters
through a shop-in-shop partnership with Le Bon Marche in Paris and will open a
pop-up in London’s Liberty department store later this month.
Farm Rio’s price point in the accessible luxury category — dresses cost
between $200 and $300 — also contributes to its popularity among customers,
according to Shea Jensen, general merchandise manager at Nordstrom. For
consumers who gravitate toward mass brands, Farm Rio might be a reasonable
splurge, while luxury-oriented shoppers may be drawn to the brand for its relative
affordability.

The Power of Wholesale

Farm Rio had an advantage when entering a new market: its 25 years’ worth of
experience and knowledge of the ins and outs of the industry. Unlike the digital
native start-ups that invested everything toward reaching customers directly on
social media, Farm Rio knew wholesale has to be part of the business model too.

“If you just spent a lot of money on Instagram, you’re just going to burn a lot of
money,” Barreto said.

Wholesale, meanwhile, serves not only as a source of stable cash flow but also as
a way to put up free advertising. After all, retailers like Neiman Marcus and Saks
Fifth Avenue reach millions of consumers. Being on their floors meant Farm Rio
also had access to them.

“We thought about a strategy where we would partner with players in the market
that would present the brand to their audience with their curation on it, and
wholesale played a huge role in that,” said Barreto.

If you just spent a lot of money on Instagram, you’re just going to

burn a lot of money.

Farm Rio launched in the US with an exclusive partnership with Shopbop. Later,
it inked deals with Saks Fifth Avenue, Nordstrom, Anthropologie and Neiman
Marcus, as well as digital platforms including Net-a-Porter, Stitch Fix and Rent
the Runway. Farm Rio offers an exclusive component in many of these
relationships. Nordstrom, for instance, is its sole footwear account in North
America.

But wholesale alone isn’t enough. As department stores struggled to

compete with digital newcomers in the 2010s, many of their vendors suffered
too, unable to produce new collections with their money held up by the likes of
Barneys and Lord & Taylor.

That’s why its own stores have played a crucial role in Farm Rio’s efforts in
building brand awareness. Buyers at Neiman Marcus, in fact, discovered the
brand walking past the Farm Rio store in SoHo, drawn in by its vibrant racks and
tropical buildout.
Farm Rio inside Neiman Marcus. (Neiman Marcus)

The team was “drawn to the [more than 400] prints as well as the responsibly
produced fabrics,” said Todorovich. “They were like, ‘We have to carry it.’”

Current Farm Rio bestsellers at Neiman Marcus include the “Good Vibes” tie
shoulder mini dress, a Monstera-print romper and the “Banana Taste” cotton
blouse.

In addition to wholesale and retail, Farm Rio invests in collaborations — it has an

ongoing partnership with Adidas — and influencer marketing, as well as some
ads on Instagram and Google. The key, according to Barreto, is balance.

“We wanted to have a multichannel approach [because] the customer is

everywhere,” he said. “They’re not only online but they’re walking in the streets
and they’re going to department stores.”

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