Birkenstock: Fleeting Revival or Permanent Staple?
With the declining prevalence of COVID-19 in our daily lives, you might have noticed a new pandemic spreading throughout the University of Sydney. Granted, it’s much easier to spot than a virus. Just take one look at the footwear of students racing across Eastern Avenue, and you’ll be sure to catch a glimpse of wide buckled straps, cork soles and matte leather - Birkenstocks are everywhere. But the popularity of the Birkenstock isn’t confined to USYD - rather it’s become a global phenomenon. Once decidedly unfashionable sandals beloved by grandparents and for orthopaedic needs alike, Birkenstocks have managed to capitalise on the demand for casual comfort and style, presenting an attractive investment opportunity. In 2022, the Asia-Pacific region led by Australia already contributed 10% to the company’s $2.1 billion AUD annual revenue. Yet amidst an industry increasingly ruled by fast-fashion trend cycles, how long will this Birkenstock revival last?
Birkenstock: Practical, Orthopaedic Origins
Birkenstock was founded in 1744 by Johann Adam Birkenstock, capitalising on the wave of new industrial manufacturing processes in Europe to design footwear with flexible arch support and contoured insoles for improved foot health. However, the brand’s popularity remained dormant until the early 1920s, whereupon Carl Birkenstock’s novel "Podiatry-The Carl Birkenstock System" convinced affluent Europeans of the benefits of quality footwear. By the 1970s, Birkenstock had expanded to the US market, introducing their most popular sandal style ‘Arizona’ as a transition into more fashionable designs and experienced spikes in popularity during the 1990s led by popular figures such as Kate Moss and Gwyneth Paltrow, and early 2010s.
Nowadays with global headquarters, production and logistics across Germany, Birkenstock footwear is sold in approximately 90 countries worldwide. Unlike the majority of other successful fashion items however, Birkenstock’s gradual rise to popularity has followed an economic ‘bubble up’ theory. Instead of traditional ‘trickle-down’ formulas whereby mass-market brands are influenced by high end designer fashion, inspiration is sourced from the ground up.
Barbie, Tiktok and comfort over fashion
What then, has catapulted Birkenstocks back into the public consciousness these past few years? Unless you’ve been off the grid since January, you would remember the scene in the Barbie (2023) movie whereby a brown suede Arizona Birkenstock is presented as containing “the truth about the universe”. Such exposure, paired with the pink Arizona pair Barbie wears at the end of the movie have placed the footwear in the centre of popular culture and instigated skyrocketing economic value. Indeed as recorded by virtual dressing room company 3DLOOK, Google searches for "Birkenstock sandals for women '' increased over 300% since the "Barbie" premiere.
The rise of the Boston style Birkenstocks is a further contributor to the brand’s latest resurgence, spurred on in part by their popularity on TikTok. For the past two years, the suede taupe Bostons have been one of the brand’s most profitable products, with sales on average doubling every year since 2020 and almost impossible to source in stores.
Such impressive media coverage and widespread popularity led Birkenstock to file for an initial private offering (IPO) in September 2023 for a proposed flotation onto the New York Stock Exchange, with projections for their market value to reach almost $8 billion USD. It was the third-largest US listing so far in 2023 on October 11th, and backed by private equity firm L Catterton generated significant stock market attention. Birkenstock current chief executive Oliver Reichart who took leadership in 2013 claimed that investors would be able to capitalise on a ‘generational opportunity’ post-IPO, claiming the brand transcends trend cycles to embody “a way of thinking, a way of living”.
To invest or not to invest?
But what makes this recent spike of interest any different from previous ones? Predicting the longevity of fashion items is an often insurmountable task. Similar footwear brands such as Dr. Martens which once thrived with a reputation for quality, durable boots and loafers have experienced significant financial devaluation post their IPO. Indeed, from an initial £3.7 billion valuation in 2021, shares for Dr. Martens have dropped almost 60%, including a significant 10% drop in the past 6 months.
Moreover, despite such advantageous projections, Birkenstock’s post IPO share value fell 12.6% , dropping from the anticipated range of $44 to $49 to a share price of $40.02 in the days succeeding its flotation in mid-October. Many analysts have warned that the company’s lowered valuation is indicative of the difficult market conditions for a footwear brand to enter into; with investors worried about the economic backdrop amidst high inflation and declining consumer confidence. Beyond the market outlook, Birkenstock’s product base largely lacks diversification - apart from the Boston and adapted thong-style Gizeh Birkenstocks, the brand holds limited potential for innovation.
However, the case for Birkenstock’s durability (literally and financially) is still compelling. Over half of 2022’s annual sales came courtesy of buyers in their 20s and 30s, with 72% of the total customer base being female. In our post-pandemic zeitgeist of increased emphasis on comfort over the traditional (painful) markers of fashionable female footwear such as high-heels, Birkenstock appears to have cemented itself as a staple product. The brand itself has referred to this shift as the impact of modern feminism, championing the abandonment of delicate footwear as a feminine ideal.
This lifestyle shift is paired with the undeniable quality and longevity of the Birkenstock product. A poll of US customers revealed on average they own 3.6 pairs in Birkenstock’s recent float brochure, and the quality has remained stable across the past 250 years. Over 95% of its products are assembled in Germany, and their three-part structure including the sole, the footbed, and the “upper” strap that goes over the foot are collectively able to be easily replaced without damaging the shoe’s overall integrity. Fashion analyst Louise Deglise Favre articulates it best, claiming “Birkenstock has been able to turn the organic endorsements of models and celebrities into a lasting fashion trend, thanks to the quality and comfort of their products”.
Australians in particular, resonate strongly with Birkenstocks - from a cultural perspective the nation’s laidback, casual lifestyle and longstanding affinity for beach footwear meets much of the shoes’ criteria. Indeed, eBay Australia recorded that in 2022, consumers looked for Birkenstocks over 7 times per hour on average - or more than once every 10 minutes.
Ultimately, whilst some level of initial devaluation for Birkenstock on the NYSE seems inevitable amidst the impending global recession, the company’s newfound dominance is undeniable - so grab yourself a pair if you don’t already have some.
With the declining prevalence of COVID-19 in our daily lives, you might have noticed a new pandemic spreading throughout the University of Sydney. Granted, it’s much easier to spot than a virus. Just take one look at the footwear of students racing across Eastern Avenue, and you’ll be sure to catch a glimpse of wide buckled straps, cork soles and matte leather - Birkenstocks are everywhere. But the popularity of the Birkenstock isn’t confined to USYD - rather it’s become a global phenomenon. Once decidedly unfashionable sandals beloved by grandparents and for orthopaedic needs alike, Birkenstocks have managed to capitalise on the demand for casual comfort and style, presenting an attractive investment opportunity. In 2022, the Asia-Pacific region led by Australia already contributed 10% to the company’s $2.1 billion AUD annual revenue. Yet amidst an industry increasingly ruled by fast-fashion trend cycles, how long will this Birkenstock revival last?
Birkenstock: Practical, Orthopaedic Origins
Birkenstock was founded in 1744 by Johann Adam Birkenstock, capitalising on the wave of new industrial manufacturing processes in Europe to design footwear with flexible arch support and contoured insoles for improved foot health. However, the brand’s popularity remained dormant until the early 1920s, whereupon Carl Birkenstock’s novel "Podiatry-The Carl Birkenstock System" convinced affluent Europeans of the benefits of quality footwear. By the 1970s, Birkenstock had expanded to the US market, introducing their most popular sandal style ‘Arizona’ as a transition into more fashionable designs and experienced spikes in popularity during the 1990s led by popular figures such as Kate Moss and Gwyneth Paltrow, and early 2010s.
Nowadays with global headquarters, production and logistics across Germany, Birkenstock footwear is sold in approximately 90 countries worldwide. Unlike the majority of other successful fashion items however, Birkenstock’s gradual rise to popularity has followed an economic ‘bubble up’ theory. Instead of traditional ‘trickle-down’ formulas whereby mass-market brands are influenced by high end designer fashion, inspiration is sourced from the ground up.
Barbie, Tiktok and comfort over fashion
What then, has catapulted Birkenstocks back into the public consciousness these past few years? Unless you’ve been off the grid since January, you would remember the scene in the Barbie (2023) movie whereby a brown suede Arizona Birkenstock is presented as containing “the truth about the universe”. Such exposure, paired with the pink Arizona pair Barbie wears at the end of the movie have placed the footwear in the centre of popular culture and instigated skyrocketing economic value. Indeed as recorded by virtual dressing room company 3DLOOK, Google searches for "Birkenstock sandals for women '' increased over 300% since the "Barbie" premiere.
The rise of the Boston style Birkenstocks is a further contributor to the brand’s latest resurgence, spurred on in part by their popularity on TikTok. For the past two years, the suede taupe Bostons have been one of the brand’s most profitable products, with sales on average doubling every year since 2020 and almost impossible to source in stores.
Such impressive media coverage and widespread popularity led Birkenstock to file for an initial private offering (IPO) in September 2023 for a proposed flotation onto the New York Stock Exchange, with projections for their market value to reach almost $8 billion USD. It was the third-largest US listing so far in 2023 on October 11th, and backed by private equity firm L Catterton generated significant stock market attention. Birkenstock current chief executive Oliver Reichart who took leadership in 2013 claimed that investors would be able to capitalise on a ‘generational opportunity’ post-IPO, claiming the brand transcends trend cycles to embody “a way of thinking, a way of living”.
To invest or not to invest?
But what makes this recent spike of interest any different from previous ones? Predicting the longevity of fashion items is an often insurmountable task. Similar footwear brands such as Dr. Martens which once thrived with a reputation for quality, durable boots and loafers have experienced significant financial devaluation post their IPO. Indeed, from an initial £3.7 billion valuation in 2021, shares for Dr. Martens have dropped almost 60%, including a significant 10% drop in the past 6 months.
Moreover, despite such advantageous projections, Birkenstock’s post IPO share value fell 12.6% , dropping from the anticipated range of $44 to $49 to a share price of $40.02 in the days succeeding its flotation in mid-October. Many analysts have warned that the company’s lowered valuation is indicative of the difficult market conditions for a footwear brand to enter into; with investors worried about the economic backdrop amidst high inflation and declining consumer confidence. Beyond the market outlook, Birkenstock’s product base largely lacks diversification - apart from the Boston and adapted thong-style Gizeh Birkenstocks, the brand holds limited potential for innovation.
However, the case for Birkenstock’s durability (literally and financially) is still compelling. Over half of 2022’s annual sales came courtesy of buyers in their 20s and 30s, with 72% of the total customer base being female. In our post-pandemic zeitgeist of increased emphasis on comfort over the traditional (painful) markers of fashionable female footwear such as high-heels, Birkenstock appears to have cemented itself as a staple product. The brand itself has referred to this shift as the impact of modern feminism, championing the abandonment of delicate footwear as a feminine ideal.
This lifestyle shift is paired with the undeniable quality and longevity of the Birkenstock product. A poll of US customers revealed on average they own 3.6 pairs in Birkenstock’s recent float brochure, and the quality has remained stable across the past 250 years. Over 95% of its products are assembled in Germany, and their three-part structure including the sole, the footbed, and the “upper” strap that goes over the foot are collectively able to be easily replaced without damaging the shoe’s overall integrity. Fashion analyst Louise Deglise Favre articulates it best, claiming “Birkenstock has been able to turn the organic endorsements of models and celebrities into a lasting fashion trend, thanks to the quality and comfort of their products”.
Australians in particular, resonate strongly with Birkenstocks - from a cultural perspective the nation’s laidback, casual lifestyle and longstanding affinity for beach footwear meets much of the shoes’ criteria. Indeed, eBay Australia recorded that in 2022, consumers looked for Birkenstocks over 7 times per hour on average - or more than once every 10 minutes.
Ultimately, whilst some level of initial devaluation for Birkenstock on the NYSE seems inevitable amidst the impending global recession, the company’s newfound dominance is undeniable - so grab yourself a pair if you don’t already have some.
