10 Large Brazilian Companies that Failed
The 80’s were the beginning of a downfall for the Brazilian economic scenario. This crisis was extended to the new millennium with the crash of major companies like Varig and VASP. Find in this article a little bit of the history of these companies and what has led them to crash.
Mappin
Mappin was a retail store headquartered in São Paulo city. Its official name was casa Anglo-Brasileira S/A. Its origins date from 1774, in England, and it was brought to Brazil by the brothers Walter and Herbert Mappin.
Its first branch in Brazil was inaugurated in 1913 and Mappin is considered to have anticipated the shopping mall concept in Brazil as it was the place where the Brazilian elite would gather. It was famous for its campaigns and it was the first Brazilian store to establish the concept of “crediário”, which is the issuance of a boleto with all the installments to be paid.
This payment option is still available at retail stores like Marabraz and Casas Bahia.
Failure
Mappin ceased its activities in 1999, along with Mesbla stores that had been incorporated to the group in 1996. Extra Hipermercados acquired one of the branches, but closed in 2003 under the argument that it was not profitable.
In 20120, the brand was acquired by Lojas Marabraz and is expected to get back to business 2013.
Lojas Arapuã
With the famous jingle “Arapuã – ligadona em você”, Lojas Arapuã was one of the major players in the Brazilian retail market during the 90’s. It had as its major competitors Casas Bahia and Ponto Frio and it was once considered to be the greatest appliances retailer in Brazil.
Failure
Lojas Arapuã declared bankruptcy in 1998 and was given two years to pay for its debts. The store owed about BRL 1 billion but paid only BRL 200 thousand. For this reason, Arapuã’s crash was decreed in 2003, but the former retail store did not agree with the decision and the case was forwarded to the Superior Court.
In 2008, the retailer that had more than 250 stores changed its business scope and created a chain-store for low price clothing, with an annual billing of BRL 28 million.
Redes G. Aronson
Redes G. Aronson was a retail store headquartered in São Paulo. It was specialized in the sales of appliances. The store was owned by Girsz Aronson, known as the king of the retail.
The store was initially specialized in children’s items, under the name “Gurilândia”. It was only in the 70’s, with the purchase of a stove’s store, that G. Aronson started to expand its business and became the famous retail store.
Failure
G. Aronson broke in 1999 with a debt of BRL 65 million. At the time, Girsz Aronson pointed out insolvency and a considerable reduction of the purchase power of the population as the main responsible for its bankruptcy.
Lojas Brasileiras
Lojas Brasileiras were a traditional retail store headquartered in São Paulo in 1944. With 63 stores in 20 of the Brazilian states, it had two thousand employees.
Failure
Also in 1999, Lojas Brasileiras crashed after a series of losses dating from 1996. It had as successor Lojas Marisa, a clothing store belonging to the same family.
TV Tupi
TV Tupi was the first TV broadcaster in Brazil and South America and the fifth in the world. It was the absolute leader in the 60’s, forcing its competitors to improve their programming in order to reach the audience.
Failure
By the end of 70’s, due to administrative problems and to the overpowering growth of Rede Globo, Rede Tupi started to lose its strength, until it crashed in 1980. The end of TV Tupi was very dramatic, with its workers asking publicly for an opportunity to move on with their activities.
Transbrasil
Founded in 1955, Transbrasil was one of the three major airlines in Brazil. It started to expand its business scope in the 80’s, when the company first started to operate international flights. However, even though prices were frozen, costs went on rising, occasioning huge losses.
In the 90’s, Transbrasil focused on its international destinations such as Miami, New York, Amsterdam and London, leading the company to the acquisition of new airplanes.
Failure
By 1998, international flights started to be canceled and in the domestic scenario Transbrasil was losing its place. With the death of Omar Fontana, Transbrasil’s founder, the company completely collapsed and in 2001 it did not have enough credit to afford fuel costs, leading to the cancelling of all its flights.
Varig Brasil
Established in 1927, Varig was one of the first airline companies in Brazil. Between 1950 and 1970, Varig was known as one of the major private airline companies in the world.
Operating international flights to America, Europe, Africa and Asia, Varig was known for its exquisite service in all its three classes, still mentioned nowadays as the airline company providing the best meal in Brazil.
Failure
Despite its positive expansion, in 1996 (again in the 90’s!) Varig started to have financial problems from which it has never recovered. Debts acquired during the expansion period in the 70’s and 80’s associated to the stability of the prices for airline tickets in the 90’s started the crashing process.
There was also a major administrative failure: instead of looking for solutions for the problem, Varig focused on the purchase of new airplanes and on the opening of new routes. Competition was also turning aggressive with the unstoppable growth of TAM and Gol airlines, this last one adopting the low cost model, winning the Brazilian consumers with its low cost tickets.
After 15 years of losses and with an estimated debt of more than BRL 7 billion, Varig was sold to Varig Logística. In July, 2006, more than five thousand employees were dismissed without receiving their benefits guaranteed by law neither their four months of delayed payment.
Varig’s official bankruptcy was decreed in 2010. The company, which has never received the BRL 4 billion owed by the federal government, could have avoided its crash if the federal government had paid its debts.
VASP
VASP was a Brazilian airline company headquartered in São Paulo. Founded in 1933, its first flight was operated between the cities of São Paulo and São José do Rio Preto, in São Paulo state.
In 1990, VASP was privatized and its new CEO started an aggressive international expansion, including Asia, USA and Europe. The company has also increased its fleet, but was unable to sustain its growth and ceased from paying its salaries, leasing and other debts.
Failure
In 2004, the Department of Civil Aviation has suspended the operation of eight of VASP’s airplanes. Due to security reasons, some other airplanes were also prohibited to fly until they would meet technical requirements (Airworthiness Directives) established by the manufacturer.
With an obsolete fleet and with a negative image, VASP was losing its place in the Brazilian aviation scenario, especially after Gol has entered the market. In 2004, VASP was operating only 18% of its programmed flights, what led the company to a market share of only 8% and, two months later, of 1,39%.
VASP crashed completely in 2005, when the Department of Civil Aviation repealed its authorization to operate. Its airplanes still remain abandoned in several airports throughout the country.
Rede Manchete
Also known as TV Manchete, Rede Manchete was a TV broadcaster founded in 1983. Some of its greatest successes were its soap operas such as Pantanal, the Carnaval and the exhibition of Japanese TV series (Super Sentai). It was also the TV broadcaster to discover Xuxa, the famous Brazilian personality that currently works for Globo.
Failure
Manchete’s first crisis started in 1992, when it was sold to the entrepreneur Paulo Octávio, who was then a congressman. The TV broadcaster attempts to recover the success achieved by the soap opera Pantanal turned out to be a great failure.
The TV broadcaster went through a recovery process between 1995 and 1997, but in 1998, with a soap opera that was not reaching good results and due to the global economic crisis generated by the Asian crisis in 1997, the debts were only increasing until they could no longer be paid.
With an ever-increasing number of failures, in 1999 (again!) TV Manchete crashed and was replaced by RedeTV!
Lojas Buri
With stores in São Paulo city and in the countryside, Lojas Buri was a chain of domestic merchandise retail stores. It had as a major competitor Casas Bahia and during its heydays achieved the mark of 200 stores.
Very successful in the 70’s and 80’s store was also a credit provider, operating under the crediário system, also adopted by Mappin. It had as one of its poster boy the TV presented and entrepreneur Silvio Santos.
Failure
Due to the growth of its direct competitors (Casas Bahia, G. Aronson and Mappin), Lojas Buri started to gradually lose its place in the market and its stores started to be shut down.
In 1992, it was sold to Gloxed Utilidades S.A, group owning the brand Lojas Ponto Frio, that has renamed 110 of the acquired stores, consolidating its brand in São Paulo and Paraná state as well in other cities of the Central-west region.