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The Major Appliances Millionaires Club, created from the latest consumer appliance research edition, published on Passport on 8th November, is exclusive to companies that sell more than one million major appliance units a year.
In 2010, the latest research shows that 40 companies broke the million unit mark in 2010, up by a third from nearly a decade ago and up two on 2008. Euromonitor International looks at the key movers and shakers and those hardest hit in 2010, and provides insight into the latest rankings and prospects for change over 2011.
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There has been no change in the rankings of the world’s top five major appliance companies in 2010, although the gap in unit volume terms is narrowing between the top four companies, Whirlpool, Electrolux, Haier and Bosch. Those citing doom and gloom for the North American appliance market in 2009 were proved wrong as volumes have increased by 1.9% in 2010, reversing a three-year negative trend on the way and in the process helping Whirlpool to maintain top spot.
However, stimulus packages have been a key driver of unit volume growth and it remains to be seen if volumes can continue this growth trajectory over 2011, which is a key reason for Euromonitor International’s conservative growth forecast for the region. Whirlpool, on the back of this positive performance and growth in Brazil through a similar stimulus package, managed to strengthen its lead over second-placed Electrolux.
Of the top four, Haier registered the strongest growth of 13%, a performance driven by growth in its core market of China and the rural subsidy programme in place over 2009, which expanded domestic coverage over the course of 2010.
Both Electrolux and Bosch have alleviated declines in 2009, posting a recovery in line with growth in Western Europe of 0.9%. Electrolux’s global position will be strengthened if the acquisition of Egypt’s Olympic Group goes ahead in 2011. This will propel Electrolux into second place in the Middle East and Africa, up from its current position of 10th.
As the recession took hold in 2009 it heavily impacted the developed markets and thus the global shares and rankings of companies whose core markets are in North America and Western Europe. In 2010, economic and appliance recovery has been fastest outside these developed markets, in Africa, Latin America and Asia-Pacific.
For example, Western Europe registered growth of 1% in unit volume terms. On the surface, this appears positive, but when excluding the region’s only real organic growth market, Turkey, that figure declines to just 0.3% (see Euromonitor International’s comment “Western Europe: A long road to major appliance recovery”).
Flat sales for Western Europe generally could well continue into 2011, affecting the global market share of Bosch, Electrolux, Indesit and Candy, whose unit volume growth of between 2-5% in 2010 has been dwarfed by companies with a strong exposure to emerging markets, such as Vietnam, Egypt, India, Argentina, Chile, China and Brazil, which have all posted double-digit volume growth in 2010.
Source: Euromonitor International.
On the back of double-digit growth, thanks primarily to the rural subsidy programme, GD Midea managed to move up the rankings from ninth in 2009 to sixth in 2010, while Haier strengthened its position as the world’s third largest major appliance company by unit volume. Going into 2011, one of the big challenges for Haier and Midea will be to develop stronger positions outside their home market as the rural stimulus package will end after December 2010.
Samsung, in part thanks to its strong brand presence in emerging markets, especially the Indian market during 2010, managed to improve its global ranking in 2010 and rise to sixth, up from seventh place in 2009. This provides further evidence that the real losers in the top 10 have been those with limited exposure to the emerging markets.
GE and Indesit were the hardest hit in the top 10, with GE dropping from sixth to eighth place and Indesit from seventh to ninth.
A slowdown in North America and potentially Eastern Europe for both companies could see them drop further down the rankings in 2011, although the likelihood of them being replaced in the top 10 is remote as 11th placed Arçelik’s unit volumes for 2010 were nearly five million lower than those of Indesit in ninth, even though the company continues to benefit from a strong growth curve in its core market of Turkey.
|Global Major Appliances Millionaires Club 2010: Top 25 Companies|
|Company (GBO)||Global Ranking 2008||Global Ranking 2009||Global Ranking 2010||% Unit Volume Share 2010||Actual Unit Volumes (‘000) 2010||% Unit Volume Growth 2009-2010|
|Bosch & Siemens Hausgeräte GmbH||3||4||4||5.8||23,679||5.4|
|GD Midea Holding Co Ltd||10||9||6||3.5||14,141||15.3|
|General Electric Co (GE)||6||6||8||3.3||13,449||1.2|
|Indesit Co SpA||7||7||9||3.2||13,295||2.2|
|Controladora Mabe SA de CV||16||13||13||1.5||6,127||3.8|
|Sanyo Electric Co Ltd||14||14||14||1.5||6,069||10.0|
|Galanz Enterprises Group Co||15||15||15||1.4||5,840||10.1|
|Fagor Electrodomésticos, S Coop||13||16||16||1.2||4,981||2.3|
|Hisense Kelon Electrical Appliance Co Ltd||20||19||18||1.0||4,030||20.1|
|Candy Hoover Group Srl||18||18||19||0.9||3,823||2.4|
|Henan Xinfei Electric Appliance Co Ltd||21||21||20||0.8||3,468||8.5|
|Miele & Cie KG||19||20||21||0.8||3,467||6.7|
|Hefei Meiling Group Co Ltd||25||25||22||0.6||2,510||23.7|
|Zhongshan Vatti Gas Appliance Stock Co Ltd||24||24||24||0.6||2,414||8.7|
Source: Euromonitor International.
What seems increasingly important is that millionaire companies need to look carefully at where best to strengthen their positions during a period of tentative recovery in emerging markets through organic growth or potential M&A activity and production decentralisation.
Specifically, the global economy may see markets in 2011 fall back into a double-dip recession (see Euromonitor International’s comment “The all too real risk of a double dip”), which could potentially cause further investor panic in turn harming first- and second-tier emerging markets.
It will be important, therefore, to look at the medium and long-term picture and, in particular, product portfolios for high-value developed markets as they begin the tentative recovery and low-cost emerging markets that are still significantly behind the development curve.
Certainly, there are a number of emerging markets, especially in Latin America, Africa and Asia, which have a strong enough economic platform from which to build sustainable growth over the long term.
Crucially, for manufacturers that have significant financial muscle – and that includes most of the top 10 in the Millionaires Club – further macroeconomic instability in 2011 should be viewed as an opportunity to make market share gains in a number of hot markets.