Groupe SEB invested heavily in expanding its business in emerging markets in 2011, increasing its stake in Chinese-based Supor, acquiring Colombia’s Imusa and Maharaja Appliances in India. China is now Groupe SEB’s largest market by volume sales, mainly as a result of the Supor brand. The company’s other key brands include Tefal and Moulinex. Groupe SEB has also been building its own retail network with the Supor LifeStore and Home & Cook chains.
SEB commands a 5.3% share of global small appliance sales. The company is relatively diverse in its geographical presence. In 2011 and 2012, most of its investment has been targeted at Asia Pacific, with the company entering the Indian market for the first time in 2011 with the purchase of Maharaja Appliances Ltd. Meanwhile, Vina Electric Fan Co Ltd gave SEB a boost in the Vietnamese market, taking its ranking from 22nd to sixth in small appliances. The global small appliances market is set to post a 4.5% CAGR over the forecast period. This performance will be driven by Asia Pacific, where absolute volume growth will dwarf that of all other regions. Asia Pacific, driven by China, is expected to register a 6.8% CAGR over the forecast period. SEB was active in the Chinese market over the review period but became a major player with the Supor purchase in 2007. In 2011, SEB increased its stake in Supor from 51% to 71%.
The outlook for small appliances in Western Europe is also positive, with a predicted CAGR of 2.4% over 2006-2011. In volume terms, Western Europe remains SEB’s single largest regional market. Eastern Europe is another major interest for the company, with volumes in the region expected to post a 3.1% CAGR, driven by the Russian market.
SEB is well placed in Latin America with a very strong 17% share of the region’s biggest and strongest growing market, Brazil. The Brazilian market for small appliances is anticipated an 8% CAGR over the forecast period. SEB was the leading player in small appliances in 2011. The company markets Arno, Moulinex, Samurai, T-fal and most recently Imusa (acquired in 2011) in the Latin American region. It is also active in major appliances in Latin America with the Arno brand, which is present in the Brazilian washing machine category. The Imusa acquisition boosted SEB’s presence in Colombia, pushing it from a 9% share in small appliances to over 11% in 2011.
SEB pursues low-cost production strategy
SEB has of late been pursuing a low-cost base production strategy and now produces 24% of its products in Asia Pacific. Additionally, the company outsources 28% of its production, mainly in China. Some 37% of its production continues to take place in Western Europe. The company’s Western European plants mainly target mature markets. The group’s own industrial network includes 29 plants.
Development of its own retail network has been a major priority for SEB. Its key retail chains include Supor LifeStore and Home & Cook. In January 2012, SEB opened its 1,000th Supor LifeStore. This is SEB’s largest retail chain, although it also operates stores in Brazil (22 at the beginning of 2011) and Colombia (Tiendas de Hogar), inherited from the Imusa purchase (12 as of 2011). This has allowed for aggressive growth since the opening of the first LifeStore in 2006. The Home & Cook chain, or the Tefal chain as it is known in Turkey, also sells online in some markets, including the UK, from the website www.homeandcook.co.uk.
As SEB has found thus far in 2012, conditions have been deteriorating in many of its major markets, not just in Europe but also including Brazil. The world economy is entering a delicate phase where growth is slowing not just in mature markets but in emerging economies too. Maintaining growth rates will be a challenge and SEB may need to look inward to focus on containing costs with a view to keeping margins steady rather than sustaining its 2010/2011 growth rates.