Outspoken, eccentric, bold, and charismatic, Reef Owner Fernando Aguerre has made a place for himself and his company in the surf industry by doing things his way, and that usually includes beautiful women in g-strings standing somewhere nearby. Sexist?
No way, he says. He’s just trying to capture the true spirit of surf culture that exists on beaches around the world. One that the rest of the surf industry seems to have forgotten. In this no-punches-held interview, Aguerre says the industry can do a lot more to promote the sport and lifestyle. Here’s what he had to say during an interview held on the eve of Halloween:
Transworld SURF Business: What’s the future of the surf industry?
Fernando Aguerre: The biggest challenge of the surf industry is to renew itself.
In the early 90s, all the renewal was coming from the grunge movement and inner-city influences. There was a hysterical reaction from the industry and people were saying we had to ban those guys from our trade shows.
We didn’t know what to stand for because pastels and neons were gone. Nobody wanted them because they were in K-mart by private labels. It was a very soul-searching time for the surf industry — and they fought.
Finally they did what they couldn’t do any other way — they blended, embraced the grunge, and it became part of us. Now for the last four or five years you can’t see one company that doesn’t have oversized sizes. The legs of our trunks are all over the knees. That length came from those years, as did the assimilation of materials — all the synthetics and meshes and nylons, the things we said was not for us.
I didn’t fight it. I encouraged it because I knew that I was going to take a path of blending with the rest of anti-cultures in America. Plus, surfing was getting to be less and less of an anti-culture in America than it was twenty years ago. We were becoming mainstream.
The challenge is that there isn’t a wave on the horizon right now. It’s like the mainstream is looking for our guidance, but where do we go? We didn’t invent the last wave. The mixture of the inner city, rappers, music, and the lifestyles was something that happened to us.
It was funny because in those years, Reef grew three or four times. We were doubling every year. We weren’t in the clothing business, so we weren’t having those problems.
Transworld SURF Business: When you watch the Drew Carey Show and the characters are wearing Hawaiian shirts, you know we’ve gone mainstream.
Fernando Aguerre: Correct. We’ve got a problem for our culture because we’re a niche marketing industry. You can reinvent your act, but as time goes by, your reinvention is less and less credible.
So what you do is what most companies do — bring in young people, either in your company or in the industry at any level, and that freshens everybody.
Transworld SURF Business: How do surf shops refresh themselves?
Fernando Aguerre: It’s hard because how many lines can a surf shop carry? They already have five or six, but now they have one more, Hurley. But most surf shops don’t need another line. There’s no room for the smaller lines.
A big challenge for the industry is if the little guys don’t grow alone, the big guys will have to buy these brands and build them as Proctor and Gamble does with twenty different toothpastes so there’s competition and consumer options. Either that or we’re going to start looking like dinosaurs.
Two generations of people are wearing Quiksilver right now and soon it’s going to be three. I don’t think that jives with our roots, which is being young. We know our mission is to appeal to those young teenagers. Without those teenagers, all those guys in love with our culture might fall in love with another culture like skateboarding.
The world is becoming global. Twenty years ago a black or Latin guy was foreign to our culture, but now there’re surfers everywhere. All different races, color of skins, and languages are represented. It’s not an Anglo sport anymore. Companies that fail to see this will not reap the rewards. They have to look at the business like an Internet company. It only cares that the person on the other end of the line understands English because English is the language of the Internet.
Transworld SURF Business: Who’s Reef’s target customer?
Fernando Aguerre: Our consumer base is very wide because we make the best sandals, and we have the best image and reputation. We don’t have a prostituted distribution and we don’t sell Nordstroms. The biggest account we have is Pac Sun, which represents five percent of our revenues, so we’re very spread out.
We’re the ultimate core company. The reason we’ve grown so powerful is because we’re a global company. If we were just in America, we’d probably have to prostitute the distribution more than what we wanted to because you have to get the numbers up. It’s what the clothing companies do. They can’t sell in Europe because you have to license your line out and you only make five percent of the revenues. Big deal.
For us, it’s different because Reef has the possibility to remain core because we’re core all over the world.
If we’re only core in one country, we wouldn’t have the economies of scale to support 250 surfers around the world and run spread ads in every surf publication, have a huge presence in every trade show, and do all the other things we do.
Transworld SURF Business: But do you still have growth opportunities?
Fernando Aguerre: For us the challenge is to branch into the girls’ market, which we’re doing very successfully. Women spend more money than guys. I was just reading an article on the Internet yesterday that said guys look at information and visit places on the web, girls shop.
We made some girls’ sandals and many unisex styles before, but we finally did a dedicated line of girls’ sandals last year and followed up with footwear this year.
Transworld SURF Business: So it’s pretty new?
Fernando Aguerre: It’s new, because we decided to give it its autonomous identity. We have an independent sales manager and some independent sales reps who are girls. We have a different team of athletes, product developers, and designers. So the whole thing is treated as it should be, as a completely different animal, but sure, it has the Reef name.
Transworld SURF Business: How big is that division?
Fernando Aguerre: Probably a third of the company. That divsion explains probably two thirds of the company’s growth last year. And we haven’t seen ten percent of the potential.
Transworld SURF Business: If so much of your growth is coming from the women’s market, will we see a change in your ad campaign?
Fernando Aguerre: No. There are two types of women in the world. There’s a small group of women that live in America who might feel that our ads are offensive or in poor taste. Then there’s a vast majority of women around the world who don’t care.
It’s kind of a contradiction if you take offense to our adds, and still buy girls’ magazines like Seventeen, Teen, or Mademoiselle because they’re all glorifying youth and beauty. You can’t get a Victoria’s Secret catalog with out seeing breasts popping out of girls’ underwear.
I’m not putting a girl in there saying, “Give it to me.” I’m not Black Flys. There’re different ways to depict women. Black Flys did a good job and it was good for them.
For me it’s a different story. The fact that we’ve been doing it for eight or nine years successfully and our models still pull longer lines at trade shows than Kelly Slater or Rob Machado is a witness to the effectiveness of the campaign.
Transworld SURF Business: Is there a time when you have to change it? Will it still be good for a couple more years?
Fernando Aguerre: I think we should ask Hugh Heffner. I think sex is a very important component of life. I was raised Catholic and as a Latin, and in different type of environment.
The American culture has a different set of ideals. Sex is almost obscure. Violence is almost better than sex. You see a lot more violence than sex in movies.
I think to a large extent that’s the success of MTV because when it was started, it was a sex channel for everybody. As opposed to the Playboy channel, you had to pay for it and make sure that your dad, girlfriend, wife, or kids didn’t know you’re watching it. There’s something bad about watching sex.
It’s very funky how things are in America. I was watching the Playboy channel the other day and you don’t see a guy naked, but you see two girls kissing. I don’t have anything against homosexuality, but it’s not the rule — it’s the uncommon sexual orientation. But it’s okay for two girls to give oral sex to each other, to kiss each other’s breasts, to kiss each other on TV, but you can’t see a guy naked. It doesn’t make any sense.
Transworld SURF Business: What percentage of your sales is international?
Fernando Aguerre: It’s 60 percent international, 40 percent domestic. In pairs, it’s 70 percent because you sell cheaper overseas. And I think it’s going to get bigger.
Transworld SURF Business: So the U.S. is your biggest market?
Fernando Aguerre: Yes, my single biggest market. I sell to 100 different countries, including everything from Israel, to Argentina, Brazil, Germany, and Poland.
Transworld SURF Business: Is there one market that could be bigger than the U.S.?
Fernando Aguerre: I think if our mission is to sell two-dollar sandals, we could probably be bigger in Brazil. But our mission is the same there as it is here.
We are a niche company that sells medium- to high-end goods at medium prices with a lot of emphasis and heavy investment in advertising and marketing, with a limited distribution.
We don’t have a mission to sell 20-million pairs sandals. We sell three-and-a-half-million pairs of sandals a year right now. I think America can be much bigger, but at the same time we’re growing 30 percent in America and more than 30 to 35 percent overseas this year. So it’s a great year. Everything is growing.
Transworld SURF Business: What are the goals of the company?
Fernando Aguerre: The goals of the company are to remain the leader in the sandal business and to increase our market share in sneakers. To get better. We have a tough job because we’re a surf company marketing shoes when most of the shoe companies are marketing shoes from the skate side.
But that’s not true all over the world. Again, that’s one of our strengths. Southern California is not the East Coast. And America is not Spain, Brazil, Italy, Argentina, South Africa, or Tahiti. You name a country and I sell there.
Transworld SURF Business: Who are your biggest competitors in the market place?
Fernando Aguerre: Everybody is a competitor to me. I mean, every clothing company can make a line of sandals and potentially hurt me. And they’ve tried.
We’re a specialist. If you want to fight me in sandals, you’re going to fight Hollyfield for a heavyweight world title. You’d better be well prepared because we have a past history of learning these things.
But I don’t look down at anyone. Globe started three years ago, and they’re kicking ass. Hey, making sandals is not rocket technology, and neither is footwear.
We can only wipe out if tomorrow Quiksilver or Billabong or Hurley decide to put together a serious footwear program. Not if they decide to go to a factory sample room in Taiwan and put their labels on the product, which is what most of the players do.
That’s why we’re having a ball, because we don’t do that. We have our own factory, our own designers, our own technology, and compounds. But what you see right now is the footwear guys looking at it and going, “Hey shit, we’ve got all these consumers buying our sneakers, let’s make sandals.” It doesn’t work like that.
Transworld SURF Business: What do you do to stay ahead of the pack?
Fernando Aguerre: For us to be a viable and dynamic company year after year, we have to upgrade our marketing. That might mean not changing the elements, but changing the butts and riders.
Look at the format over the last ten years and I’ve changed it four times. I’ve even changed the logo, but people still want to see the butt and the rad new kid on the block.
I don’t own money to anybody. We’re self financed, we carry our own receivables, we have good factories that deliver on time, and we know when to air freight and when to ocean freight. We do those business fundamentals well.
Transworld SURF Business: What issues are the surf industry missing right now?
Fernando Aguerre: One is that we’re coastal companies. I don’t care if there’s a Boardrider’s Club in Paris or that I sell in Moscow — our culture is a coastal culture.
Unless you’re able to move the surf culture inland — not like fifteen years ago when we sold to every department store and then they all knocked us off — but actually moving our hardcoreness inland we’re going to miss a lot of kids. Of course for the fake shit, there’s Wal-Mart and K-mart, but there’s also a lot of people who like the real thing and for the real thing we need to broaden our culture.
Another one is what happened in Huntington Beach this summer. We need to protect our ocean more. If we continue on this path of the ocean getting worse and the beaches getting closed, people are going to get scared away from our lifestyle.
Listen, we got reamed by the Ozone layer deal. People used tospend hours and hours in the sun and love our lifestyle. It’s not the same now. People go to the beach, wear hats and sun block. A lot of people think that the sun rays are harmful, which to some extent they probably are more harmful than they were.
If those two components don’t take a better direction, we’ll face devastating consequences. What would happen if all of Southern California, and not just Huntington, was unhealthy to human beings? I don’t think we have really realized how important all this is. We need to protect ourselves. Even out of selfishness, as business people, we should be doing more than what we’re doing.
As president of the ISA for the last four years, I realized this is a very selfish industry. The nature of our sport is selfish. This is my fucking wave; I don’t want you here. The less people there, the better.
But at the same time we live in constant sin and contradiction because we want it to be uncrowded and the only thing we do is promote the shit out of it. So we add more people. So this is like the guy who’s bitching that there’s more violence and he has a gun shop.
So we need to decide what the fuck we want. If what we want is to grow as an industry, okay, fine, then let’s work for the cleanliness of the ocean.