Electrolux Eyes Asia Pacific and Australasia Electric Wine Cooler Markets with its Vintec Acquisition

Although it failed to obtain US antitrust approval within the agreed deadline to acquire the GE appliances business in late 2015, Electrolux AB has been actively hunting for acquisitions as well as developing connected appliances in order to improve its global competitiveness. Its Australian subsidiary integrated BeefEater Barbecues Pty Ltd, acquired in late 2015, aiming for growth in the niche barbecue range market, especially in Australia and New Zealand. In June 2016, Electrolux declared it would acquire Vintec, marking a unique investment in the niche wine cabinet market. Vintec mainly produces and sells wine cabinets, instead of wine coolers. It should be noted that Euromonitor International’s definition of electric wine coolers includes both electric wine coolers and wine cabinets, as long as they are electrically powered. These acquisitions sent a positive signal to the industry and investors that Electrolux is intent on seeking synergistic businesses with the potential for profitable growth – particularly in niche product categories, which, in both mature and developing markets, could, in time, become staple household appliances in the same way as dishwashers or automatic washer dryers.

Top Five Players by % Retail Volume Share in Asia Pacific Electric Wine Coolers Market in 2015

APAC Cooler Share

Source: Euromonitor International

Note: [Euromonitor International’s category definition of electric wine coolers includes both electric wine coolers and electric wine cabinets, but Vintec sells only temperature-controlled wine cabinets. In addition, Euromonitor International’s region definition of Asia Pacific excludes Australasia countries.]

Top Five Players by % Retail Volume Share in Australasia Electric Wine Coolers Market in 2015

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Source: Euromonitor International

Note: [Euromonitor International’s category definition of electric wine coolers includes both electric wine coolers and electric wine cabinets, but Vintec sells only temperature-controlled wine cabinets. In addition, Euromonitor International’s region definition of Australasia includes Australia and New Zealand only]

Vintec is relatively less well known in the appliances industry, but has two very reputable electric wine cabinet brands in Vintec and Transtherm, especially in Australasia and Asia Pacific. Regarding the brand split in both volume and value terms in 2015, the Vintec brand held about 90%, and the Transtherm brand about 10%. The Vintec Club, established as a private organisation for consumers of Vintec and Transtherm electric wine cabinets, has grown to more than 10,000 members through hosting private wine tastings, special wine offerings and dispensing expert advice on wine cellaring, collection and service. Also, in a very successful Australian wine industry marketing promotion, Vintec has for the past four years been offering a 50-60% discount on its wine cabinets if consumers purchase more than a certain value of Penfolds wines and other prestigious brands in the Treasury Wines portfolio. Both strategies indirectly promoted the sales of its electric wine cabinets. In addition, the elegant design of Vintec wine cabinets, which impressed Electrolux, and its guarantee of “Made In Europe” (mainly in France and some in Denmark), leveraging France’s world reputation as the most prestigious Old Wine market, contributed to its second place in the Asia Pacific electric wine cooler market retail volume share ranking in 2015, and first place in that of Australasia.

Vintec’s Australian operations, accounting for 80% of its 2015 global sales volume, will be integrated into the Electrolux ANZ business, while the other branch in Singapore, contributing 7% of its global sales volume, will be integrated into the East Asia business of Electrolux. Almost 13% of its global sales volume is handled by its official distributor Versaru in Thailand, with 0.3% of its global sales volume managed by its exclusive importer Yesh MiYain Ltd in Israel. Australia accounted for more than two thirds of Vintec’s global sales revenue in 2015, with the rest of the world contributing the remainder. Electrolux’s electric wine cooler sales are relatively stronger in Latin America, Western Europe, Eastern Europe and North America. The acquisition of Vintec strengthens Electrolux’s presence in Asia Pacific and Australasia, especially in Australia, Singapore and Thailand, where Vintec held market leadership in electric wine cabinet retail volume sales in 2015.

Top Five Players by % Retail Volume Share in Global Electric Wine Coolers Market 2015

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Source: Euromonitor International

Note: [Euromonitor International’s category definition of electric wine coolers includes both electric wine coolers and electric wine cabinets, but Vintec sells only temperature-controlled wine cabinets.]

After the acquisition of Vintec, Electrolux will become the number two player in Asia Pacific and market leader in Australasia in retail volume terms in electric wine coolers, and will narrow the market volume share gap with the top four global players. What matters to Electrolux is that it gained a strong base in Asia Pacific and Australasia, which are projected to be the two fastest-growing regions for electric wine coolers in the 2015-2020 period.

Regional Electric Wine Coolers Market Growth Prospectus

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Source: Euromonitor International

Note: [Euromonitor International’s category definition of electric wine coolers includes both electric wine coolers and electric wine cabinets.]

The strong projected retail growth in demand for electric wine coolers in Asia Pacific is based on low market penetration (such as in China and Thailand) and driven by growth of off-trade (eg via grocery retailers), as opposed to on-trade (eg through foodservice outlets such as bars and restaurants), wine consumption, which is projected to record CAGRs of 7% in volume and 9% in value terms in 2015-2020, the fastest among all regions. Australasia is projected to see a 2% volume CAGR and a 3% value CAGR in off-trade wine consumption in 2015-2020. The higher value CAGRs in Asia Pacific and Australasia indicate that consumers are not only drinking more wine, but also better wine, which needs electric wine coolers to preserve the taste and quality of the wine. The wine drinking trends in Asia Pacific are benefiting from the publicised health benefits of wine, while the availability of New World wines, especially from Australia and New Zealand, make wine drinking more affordable, and especially popular among expatriates and local affluent consumers who are wine lovers or investors.

However, in certain markets, such as Australia, Thailand and Singapore, Electrolux needs to be aware of the stronger projected volume CAGR of on-trade wine consumption than that of off-trade wine consumption in 2015-2020, driven by fast-growing foodservice channels (such as bars and restaurants), where wine drinking is increasingly perceived to be high class and therefore popular for social networking. This means that stronger sales volume growth of commercial electric wine coolers to businesses (which Euromonitor International data do not cover) is projected compared to retail sales volume growth in 2015-2020.

In conclusion, with the acquisition of Vintec, Electrolux has added two premium brands to its brand portfolio and will be able to strengthen its electric wine cooler global market presence, especially in Asia Pacific and Australasia, leveraging both off-trade and on-trade wine consumption growth. The synergy with Vintec is also aligned with Electrolux’s overall product focus to deliver “remarkable consumer experience and great tasting food”. From the Vintec perspective, it not only gains a global network of production and distribution, but also strong financial and marketing resources from Electrolux to market the Vintec brands’ wine cabinets globally.