Mischievous Magic Elves Take a Latin American Nation by Storm

(Bloomberg) -- Forget the Avengers and their mega-movie franchise. The biggest rage in Chile’s holiday season are stuffed Magic Elves almost unknown beyond the borders of the Latin American nation.

The elves are so popular that parents are paying triple the retail price on the black market to avoid temper tantrums this Christmas, or even physically fighting for new supplies in shopping malls.

It has been a marketing master stroke for Santiago-based Cencosud SA, which first sold them in Chile in 2013 to promote the retail giant’s loyalty program. The colorful, smiling soft toys are marketed as mischievous characters that misbehave in the days leading up to Christmas. They come with a note asking parents to help out with creative pranks that lead children to believe they’re magical.

All across Chile, Magic Elves write messages on bathroom mirrors, climb the Christmas tree when everyone is sleeping and scatter toys around the house when no one is looking. It a kind of innocent leprechaun. Parents share the pranks -- and their kids’ reaction-- on social media and children tell each other about the latest mischief from their elves at school.

The success of the marketing strategy comes at an otherwise tough time for Cencosud, founded by billionaire Horst Paulmann. The company’s shares have fallen 34 percent in 12 months, versus a 7.5 percent loss for the benchmark IPSA index, amid concerns it will lose its investment grade. The company announced a new CEO and CFO this year at a time that it’s selling assets and plans an IPO of its shopping malls to pay down debt.

More than one million elves were made just for this Christmas campaign, according to a report in Revista Capital, in a country of 18 million people. That’s still not enough. On Facebook’s Marketplace or on websites such as Mercadolibre, rare elves fetch as much as $50, compared to $8 to $15 at the shop. Now sales have expanded to Colombia and Peru.

Their success "has to do with building a story that parents share -- it’s a family game," creator Bernardita Astaburuaga told Revista Capital. "I never thought it would become Chile’s biggest promotional campaign."

--With assistance from Javiera Baeza and Sebastian Boyd.

To contact the reporter on this story: Laura Millan Lombrana in Santiago at lmillan4@bloomberg.net

To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Eduardo Thomson, Philip Sanders

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