World Kitchen Withdraws from India Distribution Partnership with TTK Prestige
World Kitchen’s sally into the Indian homewares market in partnership with local market leader TTK Prestige has ended after less than two years. This followed disappointing sales amid a darkening economic environment and an enduring preference for metal homewares among Indian consumers.
Sales fall woefully short of expectations
Indian company TTK Prestige and US-based World Kitchen have terminated an agreement they reached early last year that had seen the former distribute the latter’s homewares brands in southern India. World Kitchen is best known for its Corelle, Corningware and Pyrex brands, while TTK Prestige is the leader in the Indian homewares market, growing its share from 3.9% to 6.6% between 2007 and 2012.
This agreement also made provision for TTK Prestige to manufacture some World Kitchen products in India at some stage. However, sales fell well short of expectations. Sales of around Rs50 million (US$748,000) had been anticipated during the first year, but they only came in at around a fifth of this.
Real Value Sales of Homewares in India: 2007-2012
Source: Euromonitor International
Strong Economic Headwinds Make for a Bumpy Ride
At first glance, the rapidly expanding Indian middle-class looked ripe for the picking. The proportion of Indian households with an annual disposable income of at least US$25,000 jumped from 7.8% to 17.3% between 2007 and 2012. In spite of this, the performance of the Indian homewares market has been rather stolid in recent years. Value sales were worth just over US$1.7 billion in 2012, having exhibited a real compound annual growth rate (CAGR) of 1.8% over 2007-2012.
Moreover, 2012 saw a significant slowdown in Indian economic growth, which has continued into 2013. The annual rate of real GDP growth slowed from 7.7% to 3.8% between 2011 and 2012. As if this was not enough, the foreign exchange value of the rupee has fallen precipitously during 2013 to date. This has made imported products much more expensive to Indian consumers, likely throttling already weak sales of World Kitchen’s brands.
Indian Consumers Continue to Exhibit a Strong Preference for Metal Homewares
However, World Kitchen faced a more fundamental problem than economics in India. The Indian market is unusual in that the bulk of homewares in India are made of metal, with this format accounting for 74.7% of value sales in 2012. This compared with figures of 52.4% in China, 45.5% in the US, 45% in Japan, 40.2% in Germany and 31.6% in the UK. Indian consumers generally consider homewares made of metal to be of good quality and easy to maintain.
Although sales of items made from plastic and ceramic materials are increasing, they are doing so only very slowly. TKK Prestige and World Kitchen may have been betting on the westernisation of the Indian middle- class to accelerate this trend, but that hope has been derailed, at least in the short term. TTK Prestige has been looking into similar pacts with global players to market its premium homewares brands in India, but it is now likely to hold off, at least until the economy starts to pick up.