tableware, kitchenware and other house articles in eu 2009

CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU

CBI MARKET SURVEY

THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EUPublication date: November, 2009CONTENTS REPORT SUMMARY ..................................................................................................... 2 INTRODUCTION .......................................................................................................... 4 1 2 3 4 5 6 7 CONSUMPTION ..................................................................................................... 5 PRODUCTION ..................................................................................................... 15 TRADE CHANNELS FOR MARKET ENTRY .............................................................. 19 TRADE: IMPORTS AND EXPORTS ........................................................................ 26 PRICE DEVELOPMENTS ....................................................................................... 37 MARKET ACCESS REQUIREMENTS ....................................................................... 40 OPPORTUNITY OR THREAT? ............................................................................... 41

APPENDICES ................................................................................................................. A B C D PRODUCT CHARACTERISTICS ............................................................................. 42 INTRODUCTION TO THE EU MARKET .................................................................. 49 LIST OF DEVELOPING COUNTRIES...................................................................... 50 REFERENCES ....................................................................................................... 52

This survey was compiled for CBI by ProFound Advisers In Development Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

Source: CBI Market Information Database URL: www.cbi.eu Contact: [email protected] www.cbi.eu/disclaimer Page 1 of 52


REPORT SUMMARYThis market survey provides developing-country exporters of tableware, kitchenware and other household articles, with figures and information related to the European Union (EU) market. The emphasis of the survey lies on those products, which are of importance to developing country suppliers. The tableware, kitchenware and other household articles market in individual EU countries is further discussed in separate CBI market surveys, which market can be downloaded from http://www.cbi.eu/marketinfo. Consumption The market for glassware, tableware and household utensils decreased between 2001 and 2004, due to the economic crisis which hit the EU in the beginning of the 21st century. As from 2005, the market recovered to a value of almost 36 billion in 2006. Forecasts are that this market will continue to grow. However, due to the current global economic crisis, the growth in consumption will be limited again, at least in the short run. The tableware, kitchenware and other household articles market covered by this survey, is part of the market for glassware, tableware and household utensils. The largest markets are Italy, Germany, the UK, France and Spain, although these markets are rather mature. Growth markets can be found in Eastern Europe. The EU tableware, kitchenware and other household articles market is characterized by a shift in consumer preferences towards more informal tableware, kitchenware and other household articles. This is one of the reasons why the plasticware market is the largest market for tableware, kitchenware and other household articles in the EU. Besides, many EU consumers want to distinguish themselves, so products need to be unique and innovative, and according to the latest fashion trends. Furthermore, the health trend is leading to consumers increasingly buying products made of natural materials such as bamboo and wood. However, woodware is still by far the smallest product group consumed (and imported) by the EU. Production The production value of the five leading producers of table- and kitchenware in the EU amounted to 7.8 billion in 2007, and is decreasing, specifically in West-European countries. EU manufacturers of tableware, kitchenware and other household articles have faced, and still face, heavy competition, in particular from Asian manufacturers which are able to offer lowpriced products. Therefore, many EU manufacturers have outsourced their production to lowcost countries, like China, in order to keep production costs low. Other EU manufacturers have focused on improving quality and design, to be able to compete in the high end of the market. Many East-European table- and kitchenware manufacturers have profited from becoming EU members. They have gained access to the large EU market and their low labour costs give them a competitive advantage. However, this competitive advantage will disappear in the future, as the EU plans a gradual harmonisation of wages; furthermore market forces will have an effect. Moreover, several East-European producers indicated that competition is also strong in their market, partly because of lower priced products, in particular from China. Trade channels Tableware, kitchenware and other household articles are distributed through many different channels. The different actors in the channels are manufacturers, importers, agents, wholesalers, retailers and consumers. The route a product travels to the consumer can vary in length. The main distribution intermediaries for exporters in developing countries are agents / sales offices, importers/wholesalers and retailers. Retailers gained in importance as a potential trading partner, also for developing countries. By skipping intermediaries, this direct trade with retailers offers a higher margin for the exporter. However, it also involves investment in product design, and you need to have a sound


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU knowledge of the EU market and the latest trends. Current fashion trends are presented in Section 1.3 of this survey. Imports and exports In 2008, the EU imported 12 billion / 4.4 million tonnes of table- and kitchenware. Between 2004 and 2008, these imports increased significantly by 4.3% annually in terms of value, and by 4.6% annually in terms of volume. The supplies from developing countries to the EU increased at a substantial rate, higher than the supplies from intra- EU countries. Furthermore, note that the West-European suppliers also re-export products from developing countries to other EU countries. The leading EU importers are Germany, France and the United Kingdom, together accounting for 43% of the total EU imports. EU countries which showed a very large increase in their imports of table- and kitchenware in terms of value were East-European countries, such as Poland, Romania, Slovakia and Bulgaria. Also the Baltic States of Latvia and Lithuania showed a considerable increase in their imports, but these countries are still among the smallest importers in the EU. Information on specific product groups is provided in Chapter 4 of this survey. Developing countries accounted for 39% of the total supplies to the EU, while intra-EU countries accounted for 55% of the supplies. The leading developing country supplier, which is also the largest supplier of table- and kitchenware to the EU, is China, accounting for 31% of total imports. EU imports from this country increased by 16% annually, both in terms of value and volume during the review period. Other leading suppliers from developing countries were Turkey, Thailand and India, accounting for respective shares of 2.7% 1.4% and 1.3% of the total EU imports. Imports from Turkey and India increased substantially during the review period, while those from Thailand decreased. In 2008, the EU exported nearly 11 billion / 2.2 million tonnes of tableware, kitchenware and other household articles. Between 2004 and 2008, EU exports of these products increased by 2.1% annually in terms of value, but decreased by 3.4% annually in terms of volume. Germany, France and Italy are among the leading three exporting countries accounting for respective shares of 19%, 16% and 15% of the total EU exports. The largest exported product groups are glassware (29%), plasticware (24%) and metalware (23%). Opportunities and threats The current economic crisis forms a threat to the EU market for table- and kitchenware, and therefore also to exporters who aim to supply this market. Reduced consumer confidence and a rise in unemployment are, among others, the main factors leading to a decrease or at least a lower growth in consumer spending. Furthermore, the strong competition in the table- and kitchenware market forms a threat. China, as the main supplier, forms a threat to other developing country suppliers aiming to export to the EU, especially in the low-end market segment. On the other hand, EU companies have positioned themselves in the high end of the market, offering branded products. Most opportunities for developing country suppliers, therefore, can be found in the middle-high market segment, where competition from branded products and Chinese companies can be avoided. Moreover, consumer preferences changed towards more casual products, but with a unique design, i.e. the middle-high market segment. Furthermore, the trend towards the use of natural materials provides opportunities for developing country suppliers, because they are the main suppliers of woodware to the EU. Products made of bamboo, for example, also would provide opportunities.



INTRODUCTIONThis CBI market survey profiles the tableware, kitchenware and other household articles market in the EU. The emphasis of the survey lies on those products, which are of importance to developing country suppliers. The role of, and opportunities for, developing countries are highlighted. This market survey discusses the following product groups: Plasticware Woodware China & porcelain Ceramicware Glassware Metalware Cutlery For detailed information on the selected product groups, please consult appendix A. More information about the EU can be found in appendix B. CBI market surveys covering the market in specific EU member states, specific product(group)s or documents on market access requirements, can be downloaded from the CBI website. For information on how to make optimal use of the CBI market surveys and other CBI market information, please consult From survey to success - export guidelines. All information can be downloaded from http://www.cbi.eu/marketinfo Go to Search CBI database and select your market sector and the EU.



1

CONSUMPTION

In the individual country surveys, data from the Prodcom (production) database and CN (imports and exports) database, as supplied by Eurostat, are used to indicate apparent consumption. Apparent consumption is the sum of production and imports minus exports. Variations in inventory are not taken into account. However, negative consumption is sometimes calculated, this being the case when exports are higher than production and imports combined; in that case figures are treated as not available. The Prodcom production data, which refer to production sold, are not complete (meaning that data is not available for all product groups). Because consumption is directly derived from production, consumption data are not complete either; especially regarding the smaller EU countries, information is incomplete. This makes it difficult to present data on total EU consumption. Regarding the individual country surveys, it is made clear what data are available and what data are not. The figures are therefore not accurate enough for decisionmaking and they should be used in conjunction with further market research. As Eurostat data are not reliable for all countries, Euromonitor data on consumer expenditure on glassware, tableware and household utensils1 is used in the EU survey. This group of products includes many more products than the tableware, kitchenware and other household articles products studied in this survey. It also includes products used for the bathroom, toilet, office, indoor decoration, and different sorts of mechanical devices. However, as these data are more complete than the consumption data of tableware, kitchenware and other household articles, it gives a good indication on how the sector has developed in recent years. 1.1 Market size

Due to lack of data for table- and kitchenware, Table 1.1 deals with consumer expenditure on glassware, tableware and household utensils, which can be used as an indication for trends in the tableware, kitchenware and other household articles market studied in this survey. In addition, Table 1.2 presents data on the apparent consumption of table- and kitchenware, for the countries for which data is available. EU consumer expenditure on glassware, tableware and household utensils amounted to almost 36 billion in 2006. Between 2002 and 2006, it grew steadily by an average annual rate of 1.5%. Consumption in most countries increased, except for the UK, The Netherlands and Slovenia. The strongest growth is shown by the East-European countries Romania, Lithuania, Slovakia and Latvia, reporting double-digit growth figures. The leading markets for glassware, tableware and household utensils are Germany, the UK, France and Italy. When looking only at the table- and kitchenware products discussed in this survey (see Table 1.2), these four countries are the largest markets as well, although their ranking is different. In the case of table- and kitchenware, Italy is the largest consumer, followed by Germany, the UK, France and Spain.

1 Glassware, crystal ware, ceramic ware and china ware of the kind used for table, kitchen, bathroom, toilet, office and indoor decoration, cutlery, flatware and silverware, non-electric kitchen utensils of all materials such as saucepans, stewpots, pressure cookers, frying pans, coffee mills, pure makers, mincers, hotplates, household scales and other such mechanical devices, non-electric household articles of all materials such as containers for bread, coffee, spices, waste bins, waste-paper baskets, laundry baskets, portable money boxes and strongboxes, towel rails, bottle racks, irons and ironing boards, letter boxes, feeding bottles, thermos flasks and iceboxes, repair of such articles. Excludes: lighting equipment (consumer expenditure on furniture and furnishings, carpets and other floor coverings), electric household appliances (consumer expenditure on household appliances), cardboard tableware (consumer expenditure on household goods and domestic services), personal weighing machines and baby scales (consumer expenditure on personal care), ashtrays (consumer expenditure on jewellery, silverware, watches and clocks, travel goods and personal effects).


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Statistics from the International Housewares Association (IHA) can be used to compare the European market to other markets in the world. According to the IHA, global sales of houseware products (including table- and kitchenware, but also many other products) amounted to 220 billion ($ 301.5 billion) in 2007; this was a decrease of 9% compared to 2005. Asia accounted for the largest share of these sales (31%), followed by the USA and Canada (29%), and Europe (27%). Within Europe, 89% of the sales were accounted for by Western Europe, and the remaining share by Eastern Europe. Smaller global markets are Latin America (4.1%) and Africa (4.0%). Table 1.1 EU consumer expenditure on glassware, tableware and household utensils 2002-2006, in million2002 2004 2006 Average annual % change 1.5% 1.0% -2.9% 3.0% 2.3% 7.8% -3.2% 2.3% 3.9% 4.4% 9.0% 3.5% 4.5% 3.2% 7.8% 8.7% 3.1% 5.6% 14% -0.5% 19% 4.6% 8.8% 14% 18% n.a. n.a. n.a.

Total Germany UK France Italy Greece Netherlands Spain Portugal Austria Denmark Sweden Ireland Belgium Hungary Czech Rep Poland Finland Slovakia Slovenia Lithuania Bulgaria Estonia Latvia Romania Cyprus Luxemburg Malta

33,799 7,130 7,497 5,635 4,652 1,148 1,616 1,076 794 770 563 581 488 445 302 257 311 264 69 91 40 33 21 16 78 n.a. n.a. n.a.

34,332 7,150 6,836 6,062 4,753 1,358 1,543 1,130 856 852 660 608 517 481 371 288 275 296 82 82 57 33 26 16 105 n.a. n.a. n.a.

35,870 7,406 6,667 6,342 5,096 1,548 1,416 1,179 927 915 793 668 581 504 407 359 352 328 114 90 81 39 30 27 152 n.a. n.a. n.a.

Source: Euromonitor International (2007)

The East-European countries are still growth markets, while most West-European markets show signs of saturation. This is also reflected in Table 1.2, where it can be seen that the three largest markets show a decrease in consumption of table- and kitchenware between 2003 and 2007. Moreover, the other countries, although showing an overall increase in consumption, experienced a decrease in consumption between 2005 and 2007 as well. Furthermore, interesting to note is that although the value consumed in Italy decreased by 0.3% annually on average in this period, in terms of volume consumption increased by 7.8% annually on average, indicating that Italian consumers turned to cheaper products. The same development can be seen for Spain, where the consumed volume increased by 5.1% annually on average in the review period. Euromonitor (2007) explains that, due to dramatic increases in the price of houses in Spain, consumers tried to save money by buying low-cost products. However, since the beginning of the economic crisis in 2008, the housing sector in Spain collapsed, resulting in a fallen value of houses.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Table 1.2 EU apparent consumption of table- and kitchenware, 2003-2007, in million and thousand tonnes, for available countries2003 value 2005 value 2007 value volume Average annual % change in value -0.3% -3.4% -3.0% n.a. 2.4% 1.4% 0.3% -13% n.a. n.a.

Italy 3,116 3,064 3,076* Germany 2,328 2,332 2,031* UK 1,873 1,849 1,660 France n.a. n.a. 1,560* Spain 994* 1,148 1,092 Poland** 204 234 216 Denmark 195 223 197 Portugal 307 370 175 Bulgaria n.a. n.a. 43* Lithuania n.a. 33 33* Source: Eurostat (2009) * estimate, based on information from previous years ** excluding woodware (the smallest product group)

2,300 n.a. n.a. 648* 540 326 62 259 53 11*

Despite the importance of tradition and elaborate social meals in some countries, the EU market has steadily shifted from formal tableware, kitchenware and other household articles to a more informal and casual style. This trend is reflected in the popularity of plasticware, which is by far the largest market in the EU. The success is due to the advantages of plasticware, which is cheap, lightweight, practical and fashionable. The adaptability, modern design and colours of plasticware also attract consumers. Although turning towards a more casual style, consumers still want to distinguish themselves and therefore appreciate a unique and innovative design. Functionality, design and costs are the most important purchase criteria for table- and kitchenware. Regarding knives and cookware, functionality and cost are the most important aspects, while for tableware (glasses and dinnerware), next to cost, design is an important purchase criterion (Housewares market watch, 2009). Because of the current economic crisis, and its effects on consumer expenditure patterns, it is expected that the table- and kitchenware market will show little or no growth in the coming period. Consumers are more careful with replacing their table- and kitchenware, and will only buy what they really need. The sales of luxury products in particular will suffer from the economic crisis, but the effects of the crisis will differ per country. On the other hand, consumers increasingly cook at home instead of going out for dinner, which increases the need for table- and kitchenware. 1.2 Market segmentation

Business segment In general, we can make a distinction between the professional (business) users and the private (consumer) users. Tableware, kitchenware and other household articles sold to professional (business) users is often referred to as restaurant or hotelware. Because tableware, kitchenware and other household articles are used intensively, the catering industry sets high demands on the quality of the products. Products need to be durable, heat-resistant, chip-resistant, microwave and dishwasher proof and have high hygiene standards. The more traditional table- and kitchenware is generally plain, durable and reasonably priced. It should also be mentioned that this market segment is sensitive to changes in fashion. Leading manufacturers in this particular segment include Steelite, Churchill, Royal Doulton, Wedgwood, Rosenthal and ARC International. Consumer segment The private users segment is far more liable to change than the relatively stable professional segment. Changes in lifestyle and trends have been occurring faster, making consumer


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU behaviour more unpredictable, especially in north-western EU countries. Segmentation of consumers is therefore becoming increasingly essential. Table- and kitchenware manufacturers nowadays offer a wide range of different styles, targeted at different market segments. Traditionally, manufacturers and retailers segment their market by using the traditional criteria, such as demographics, or disposable income. The EU encompasses a population of 497 million. Around 13% of this population concerns people of the age 15-24, 29% are people in the age category of 25-44, 25% is aged between 45-64, and 17% is 65 years or older. However, as customers are becoming more diverse, segmentations based on these criteria are becoming less conclusive. As a result, other segmentation criteria are needed / used. An example of such an alternative segmentation is proposed by the German GPK. GPK segmentation: Tischwelten 2 The segmentation proposed by the German Federal Association of Cutlery, Decoration and Houseware Retailers (http://www.gpk-online.de). This segmentation is based on a qualitative study of the German market and makes a distinction between seven different segments with regard to lifestyle and characteristic preferences regarding eating and table settings. Because of its qualitative nature, no indication of the sizes of the different segments can be given. The traditionalist Table- and kitchenware articles purchased by traditionalists are generally bought to last a number of years or even decades, and are not replaced as long as the products serve their purpose. This segment was traditionally part of the table- and kitchenware market, as its consumers are considered to be loyal and satisfied. The main problem, however, is that this segment generally consists of older people, who generally do not make large table- and kitchenware purchases anymore. The conservative well-educated The conservative well-educated segment mainly consists of couples with a higher level of education, who had professional careers, and are now enjoying their retirement. They generally live in two-person households (empty nesters) and tend to have an average-to-veryhigh disposable income. The conservative well-educated consumer considers tradition to be of importance and has a liking for unity in design and high-quality materials and workmanship. The modern ambitious The modern ambitious are more likely to be women than men, although the share of the latter is increasing. The average age of this segment is between thirty and sixty years old. This segment is generally engaged in middle and higher category occupations, with a high(er) disposable income. The kitchen and dinner table in the day-to-day situation is convenienceoriented. On special occasions, however, the modern ambitious shows great ambition, with refined cooking and a creative and exclusive table culture. The modern ambitious generally wants to be up-to date and strives for luxurious table- and kitchenware. The conventional modernist The conventional modernists include both women and men, the majority aged between thirty and fifty years. The conventional modernist generally occupies a middle position in business life and has an average disposable income. In short, the conventional modernist can be regarded as a mainstream consumer group. Regarding table- and kitchenware, the conventional modernist is sensitive to quality, attractive designs and accurate pricing. The authentical This segment includes young and average-aged men and women; they have generally attended a higher form of education, and tend to have an average-to-high disposable income. Authenticals can be regarded as critical consumers, who enjoy the fine things in life. When it comes to purchasing table- and kitchenware, they are selective and thoughtful, buying only useable, functional, and high-quality products. They reject trend products which have low life spans, extravagant prestigious brands, and superficial luxurious products.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU The experimentalist Experimentalists include both men and women, aged between twenty and thirty-five. The experimentalists are just starting their professional career; therefore their disposable income is low to average. The experimentalist has a lot of wishes when it comes to table- and kitchenware. These wishes are, however, often deferred in favour of other purchases, like vacations, a car and furniture. They have a preference for trendy brands; however, they are sensitive to blatant plagiarism. The consumer style is impulsive and price-conscious. The hyper This segment includes more men than women. The age centre point lies between twenty and forty years old. The hyper generally lives in a single or two-person household and tends to have an average to higher disposable income. In day-to-day life, hypers can be regarded as trendsetters, since they generally have an extrovert lifestyle and tend to be very outdoororiented. The consumer preferences of the hyper are subject to rapid changes. They have a preference for individual products with classical designs. Their style can be described as retro and eclectic. Hypers generally have a low interest in prestige brands. The style, material and design are of far greater importance. Fair-Trade segment The Fair-Trade segment includes consumers/businesses willing to pay a higher price for a product when it is produced in an ethical and fair way. Fair-Trade products are estimated to account for less than 2% of the tabletop market. Tableware products, in contrast to most food products, do not carry a Fair-Trade logo. Producing organisations are usually certified (by, for example, the World Fair Trade Organisation), or are evaluated through the importer. Due to the economic crisis, sales of Fair-Trade tableware are not increasing, especially not at the retailers. The best opportunity would be to sell Fair-Trade table- and kitchenware in Christmas presents/packages. According to the World Fair Trade Organisation (WFTO), somewhat less than 10% of the total Fair-Trade sales in Europe is accounted for by handicrafts. Note that these total Fair-Trade sales also include non-certified products produced according to Fair-Trade principles. Most handicrafts are sold in the Fair Trade shops (around 3,000) in Europe. The Fair-Trade handicraft sales are growing but rather slowly. The best way to sell Fair-Trade table- and kitchenware in the EU is through an importer in the country of destination. This importer is then evaluated by a Fair-Trade organisation in the country of destination, and takes care of selling the products. Often, these importers also send a designer to visit the producer, in order to develop products which are suitable to sell on the EU market. In general, the UK is by far the leading market for Fair-Trade products in the EU, with a total retail sales value of certified products of 881 million in 2008. The British Fair-Trade market is now larger than that of the USA, and is therewith the largest market in the world. The UK sales value increased by 43% between 2007 and 2008. France and Germany are the second and third largest markets for Fair-Trade products in the EU, with retail sales values of 256 million and 213 million respectively in 2008. Sweden is the fastest growing Fair-Trade market in the world at the moment. Note that in East-European countries, there is no Fair-Trade market yet. 1.3 Trends

The demand for tableware, kitchenware and other household articles in the EU is influenced by a number of trends described in this section. The trends can be divided into demographic trends, social and cultural trends, fashion trends and technical trends.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Demographic trends Ageing population The population of Europe is ageing rapidly. This phenomenon extends to the majority of the EU countries, especially the West-European countries. In 2008, around 17% of the population was aged 65 and over, according to Eurostat (2009). The retired generation (65+) will increase significantly in the near future, as the post-war baby-boom generation ages. By 2030 nearly 25% of the people within the European Union will be above the age of 65.2 These developments have both a negative and a positive effect on the sales of table- and kitchenware. On the one hand, it will have a positive effect on sales of some products, like those with ergonomic designs, for example, easy-grip handles. Ekco, for example, emphasizes the good grips of their kitchen items. On the downside, the generally thrifty elderly will have a preference for timeless, classical designs over fashionable, replaceable products. They generally spend less on table- and kitchenware than other demographic categories. Household size and formation New household formation, which is an important engine for growth in the table- and kitchenware market, is not expected to rise substantially in the near future. While the absolute number of households has increased, the average household size is decreasing, as people are having fewer children, divorce rates are growing, and marriage rates are dropping. Living together has become more important in Europe, and people often already live together before getting married. The trends towards a growing number of smaller households will impact the sales of table- and kitchenware, with both a negative and a positive effect. On the negative side, the smaller households generally do not have the need for large sets of table- and kitchenware. The demand for formal tableware is also forecasted to decline, as small households generally rely on quick, convenient, ready-made meals. This development will also affect the sales of cookware and other products used while preparing dinner. On the other hand, the sales of products which are not influenced by the number of members within the household will increase, as the total number of households will increase. Examples of such products are kitchen knife sets, bins, buckets, and kitchen utensils, carving knives, salt and pepper shakers, and so on. According to Key Note, the demand for products which are microwave- and dishwasher-safe is also likely to grow. Labour-saving products will also benefit from this development. The trend towards smaller households will also encourage the sales of small(er) pack sizes and individual items. According to Euromonitor, this will offer manufacturers the opportunity to increase the unit prices. Furthermore, according to Euromonitor, the number of marriages is an important sales driver in the table- and kitchenware market, especially in the premium-end of the market, due to the importance of these products as wedding gifts. However, as marriage rates are declining, the traditional backbone of the industry is disappearing. Social & cultural trends Social diversity The modern consumer can no longer be clearly defined. Consumers are becoming more diverse, both in social and in cultural terms. This is due to a number of developments. Firstly,

2

Wolfgang Lutz, European Demographic Data Sheet 2006 (Vienna and Washington, DC: Vienna Institute of Demography, International Institute for Applied Systems Analysis, and Population Reference Bureau, 2006).


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU ageing and increasing life spans lead to a greater diversity of ages. Secondly, growing immigration, combined with growing tourism and the easier availability of foreign spices and herbs, generate a greater variety in cooking and eating habits. According to Key Note, the popularity of ethnic dishes has led to increased demand for cooking and eating utensils, such as woks. Besides, womens increased participation in the labour market, mostly in Northern Europe, has greatly influenced their financial independence and their disposable income. This development is due to a number a factors, such as the increased educational level of women, the gradual improvement of child care facilities and, primarily, the swiftly changing attitudes regarding women's roles, according to the Dutch Social Cultural Planning Bureau (SCP). The increase, however, also meant that the time left over for cooking is often short, resulting in an increased demand for easy-to-handle utility products, which are microwave- and dishwasher-proof. Finally, the growing social diversity is also triggered by the increasing individualization, which is one of the most significant social trends in Europe. The European consumer of today wants to distinguish him- or herself from the mass, and consumption is a means of doing so. This translates into an increased demand for unique and innovative products. Health awareness There is also a growing trend towards health and wellbeing. Todays stressful society has had a positive effect on the sales of health-related products. In the table- and kitchenware market, this trend has a significant impact on food preparation methods. Low fat or even fat-free cooking methods, for example steaming, increasingly substitute less healthy cooking methods like frying and roasting. Low-fat cookware like grills, steamers and woks, has become more popular. Hygiene is also considered to be very important, leading to increased demand for antibacterial plastics, like storage boxes and chopping boards. In addition, because of the health trend, people are replacing plasticware products by woodware products, as these are perceived to be more natural (also refer to the paragraph on fashion trends). Hobby Cooking The growing trend towards more practical and more functional tableware, kitchenware and other household articles does not mean that the consumer is not interested in food and food preparation. On the contrary, the popularity of TV cooking shows, and interest in cooking magazines, has increased. Manufacturers have latched on to this development and introduced new product lines in collaboration with these TV chefs. In the United Kingdom, for example, Jamie Oliver has designed china ovenware for Royal Worcester and a series of cookware for Tefal. The retail business also has joined this development and more and more specialised cook stores have emerged, for example Oil & Vinegar, which offers an extensive range of culinary products, in combination with a limited range of table- and kitchenware. Fashion trends One of the most noticeable trends in the tableware market is the move away from formal to casual dining. Consumers are increasingly abandoning the traditional matching sets in favour of fashion-led pieces. Because of the shift towards more casual products, table- & kitchenware are increasingly influenced by fashion developments. Manufacturers follow this trend by encouraging consumers to make frequent replacement purchases. According to sources at the Birmingham Autumn Fair, trends in the tableware, kitchenware and other household articles market are likely to change significantly every twelve to eighteen months. In general, the table- and kitchenware sector is a very trend-sensitive one, meaning that manufacturers should change their product collection quite often. In general, producers should refresh their product collection twice a year, while in very trend-sensitive markets, a product collection should be changed along with the four seasons. Colour is an important aspect which is subject to change. Note that the trend-sensitivity is higher in high-end market segments, whereas in the lower segments price is the most important aspect. So, the frequency with


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU which your product collection needs to be changed, also depends on the type of consumers which you target. According to Euromonitor, the increasing importance of design has been stimulated by the growing popularity of DIY (Do It Yourself) and home makeover programmes. In terms of colour, trends generally begin in womens fashion and extend themselves via mens fashion into home textiles, and into DIY products. From here, the influence impacts table- and kitchenware. Shape is influenced by architecture, especially at the premium-end of the market. On the practical and functional side of the market, shape is influenced by lifestyle trends. Asian influences According to Reddot online (http://en.red-dot.org/1913.html, August 2008), due to globalisation, the interest in other cultures has increased, but at the same time also regional cultural identities become more important. Asia is playing a strong role at the moment in the tableware market, and products are designed to reflect traditional Asian crafts. Colours which are used are China red, gold and black. White is also one of the dominant tones at the moment, especially for porcelain and crockery. The trend of Asian style tableware, coloured red, white and black, was also clearly present on the Maison & Objet trade fair in September 2008. Furthermore, also influenced by Asian designs, rectangular and square porcelain plates and bowls are a strong trend, in combination with soft colours like celadon green and mustard (TableWareMall, 2009). Natural materials A producer present at Maison & Objet indicated that wood and bamboo products are popular at the moment (regarding ethnic products). This was also reflected at the Tendence trade fair in July 2009. As indicated on the Tendence website, the 2009 trends are natural and bold colours. Natural products are those made out of natural materials (such as bamboo, paper and wood), but also products reflecting natural colours such as white, sand and stone. Colour Colour is an important aspect of table- and kitchenware products, and preferences often change along with the four seasons. On the Tendence website can be read, for example, that coming autumn and winter, the dominating colours will be white, beige, silver-grey and gold, in combination with accents of violet, claret and lilac. The use of bold colours is also a trend, including green, pink, lilac, as well as products with neon shades and glittering metallic surfaces. Furthermore, as described before, the trend of Asian-style products is also reflected in colours drawn from this culture. Likewise, the trend of using natural materials also leads to natural colours being in fashion. Mix and match Consumers increasingly want to create an individual style, leading to companies offering different product lines, so that consumers can combine the products in their own way. This is also reflected in the trend of combining different types of products, also referred to as mix and match. An example of this is to use conventional white plates with, on top, something more unusual, in terms of colour or material (TableWareMall.com, 2009). Technical trends The busy lifestyles and the trend away from family meals, together with the increasing popularity of microwaves and dishwashers, have triggered demand for easy-to-use products adapted for use in these appliances. According to Key Note, the popularity of microwaves has led to the introduction of plasticwares specifically designed for microwave cooking. Because the table- and kitchenware market is very mature and stable, replacement spending is one of the key triggers in the market. Manufacturers therefore try to innovate their products with new features and designs, in order to motivate consumers to buy new products.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU 1.4 Opportunities and threats

+ The EU is a large market for table- and kitchenware. West-European countries consume particularly large quantities of table- and kitchenware products. Italy, Germany, the UK and France are the leading markets and therefore provide opportunities for developing country suppliers. However, the East-European countries, although still small, are the growth markets in the EU. Because of those countries, the EU market for table- and kitchenware is growing, even though the largest markets seem to be mature. - In the short term, the economic crisis forms a threat to the European market. Consumers are cutting back on their expenses, and tend to buy products only when really needed. Furthermore, already during the review period, consumption by the largest EU markets (especially Germany and the UK) decreased significantly. + Consumer preferences are changing towards more informal tableware, kitchenware and other household articles. This trend is most noticeable in countries which still have more formal eating and cooking traditions, like France, Italy and Spain. This offers mainly opportunities for exporters who aim to enter the middle and lower-end of the market and offer new products which tap into the trends presented. + Because of the trend towards smaller households, an opportunity for developing country exporters would be to offer smaller pack sizes and more individual items. - However, the ageing population, the smaller households, and the declining number of marriages, could lead to lower consumption in the future. + Consumers are increasingly interested in woodware products, which follows from the health trend. This is an opportunity for developing country producers, as woodware is an important product group for them. + Countries in Asia can take advantage of the trend towards Asian style table- and kitchenware, by producing products which reflect influences from their own culture. + There is an increased demand for easy-to-handle utility products which are microwave- and dishwasher proof. Developing country supplies which are able to tap into this trend can grasp opportunities in the European market. + The Fair-Trade market segment could provide opportunities for developing country suppliers. The EU is an important market for Fair-Trade products, although only WestEuropean countries. The best opportunity would be to sell Fair-Trade table- and kitchenware in Christmas presents/packages. - However, note that the market specifically for Fair-Trade handicrafts is increasing only slightly. Due to the economic crisis, retailers in particular face difficulties in selling their Fair-Trade table- and kitchenware. +/- According to an industry source, exporters in developing countries are currently too strongly focused on mass production of standard goods (especially in China). However, European consumers constantly demand new products, and new designs. So, in order to be competitive on the European market, exporters should be able to regularly offer a unique and new design. Exporters should pay attention to ongoing trends in the market. 1.5 Useful sources production data per country and product Eurostat - http://epp.eurostat.ec.europa.eu code: click on statistics, and then under the heading Industry, trade and services click on Manufactured goods (Prodcom). Euromonitor - http://www.euromonitor.com market information on many EU countries. Click on Industries and then on Housewares to get a country list. Complete reports can be bought; summaries are available on the website. Federal Association of Cutlery, Decoration and Houseware Retailers - http://www.gpkonline.de market segmentation method Tischwelten 2. CPIV - Standing Committee of the European Glass Industries - http://www.cpivglass.be information about EU glassware production, consumption and some news on price developments, as well. IHA - International Housewares Association - http://www.housewares.org gives some interesting information on houseware developments in Europe. However, there is no


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU specific information on tableware, kitchenware and other household articles; the information is broader. Villeroy and Boch at Ambiente 2009 - http://www.villeroy-boch.com/en/us/home/thecompany/press/tableware/singlenews.html?no_cache=1&tx_ttnews%5Btt_news%5D=1706&tx_ttnews%5BbackPid%5D=7 85&cHash=2d444ba414 this website presents their new products and trends.



2

PRODUCTION

This chapter presents a general overview of the production of tableware, kitchenware and other household articles in the EU. The production statistics used refer to production sold and are derived from the Eurostat Prodcom database. However, the Prodcom production data are not complete, especially not regarding the smaller EU countries, and should therefore be interpreted with care. 2.1 Size of production

According to the available data, presented in the table below, total EU production of tableware, kitchenware and other household articles by the five leading producers amounted approximately to 7.8 billion in 2007. The lions share of total EU production is manufactured in the original EU-15. However, production in Western Europe is decreasing steadily, while in East-European countries, manufacturing is increasing. Between 2003 and 2007, production by the four leading EU manufacturers decreased by 3.9% annually on average. In contrast, production by Poland increased by 10% annually in the same period. Over the last few decades, the tableware, kitchenware and other household articles industry has become increasingly competitive, mainly due to the pressure of low-priced imports coming from Asia and Eastern Europe. Moreover, the perception of the products changed because of retailers, like Ikea, positioning table- and kitchenware as fashionable accessories sold at competitive prices. Grocery multiples are also continuing to tap into the table- and kitchenware market. They generally also sell low-priced table- and kitchenware and, often private-label (Unity Marketing, 2006). Table 2.1 EU production of table- and kitchenware, 2003-2007, in million and thousand tonnes, for available countries2003 value 2005 value 2007 value volume Average annual % change in value -2.3% -3.7% -3.9% -9.7% -4.0%** 10% -3.6% -4.3% 20%** -17%**

Italy 3,906 3,706 3,553 Germany 2,111 1,999 1,813* France 1,017* 877 866* UK 1,189 928 790 Spain n.a. 817 753 Poland 351 523 519 Portugal 468 500 404 Denmark 143 122 120* Bulgaria n.a. 18 26 Lithuania n.a. 4.4 3.0* Source: Eurostat (2009) * estimate, based on information from previous years ** average annual change between 2005 and 2007

2,366 n.a. 166 n.a. 296 214 212 9.7 26* 0.9*

Italy is the largest EU producer of table- and kitchenware, showing an average annual decrease of 2.3% in the review period. Production in Italy mainly consists of plasticware (51%) and metalware (30%). The production by Germany, the second largest producer, decreased at a stronger rate, of 3.7% annually on average in the review period. German production mainly consists of china & porcelain (32%), plasticware (30%) and metalware (24%). Furthermore, France mainly produces metalware, and the UKs main production group is plasticware. Next to producing plasticware, Poland also produces a significant amount of glassware, in contrast to most West-European countries. The plasticware and metalware industries however, are the most important ones within EU table- and kitchenware production. Woodware is by far the smallest product group produced in the region.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU The newer EU countries face different challenges. Becoming an EU member means access to a large, well developed market, without any Customs burden, in which they still have a competitive advantage due to their lower labour costs. At the same time, EU membership should bring economic growth and a higher standard of living. This means that the internal markets for table- and kitchenware will grow as well. In the long run, however, the competitive advantage in labour costs will be gradually lost, due to progressive wage harmonisation within the EU. It is expected that total EU production of tableware, kitchenware and other household articles will continue to decline, because many manufacturers will be forced out of the market, because of increasing imports from low-cost countries. This is especially true for manufacturers operating in the medium and low-end market. The EU also has many manufacturers producing for the high-end market, which are world famous for their quality and design and will not easily be competed out of the market. However, to reduce costs they move production to lowcost countries. The expected increase in production in East-European countries will not be large enough to offset the transferring of production to low-cost countries. Moreover, EastEuropean countries also face competition from Asian countries like China. 2.2 Trends

The developments described above have led to a pressure on prices, making it increasingly difficult for EU manufacturers to compete in the market, and has triggered them to take action. Manufacturers were pressed into competing on prices at the middle and lower end of the market, or on quality and design at the high-end of the market. Outsourcing To cope with increasing competition, several EU manufacturers outsourced their production to Asia, especially to China, Taiwan and Thailand. There they could combine their state-of-the-art technology with a low cost-base. In this way, they could maintain an efficient, high-quality production system, but at a low cost. Outsourcing a part of their production to cheap(er) contract manufacturers, offers the EU manufacturers the chance to focus their attention on marketing their products. An example is Waterford Wedgwood, which closed two of its factories in the United Kingdom, with the loss of over 1,000 jobs, as the manufacturer shifted production of its mid-priced table- and kitchenware range to China. This relocating of production resulted in considerable declines in total UK table- and kitchenware production. However, a recent switch has caused the outsourcing to China to be partly reversed. The latest trend in production is that the production of technically more complicated products is moved back to Europe again, to countries like Hungary, Romania and Turkey. In these countries, wages are still relatively low compared to West-European countries, while the quality is generally higher than in developing countries like China. Moreover, in terms of delivery, EastEuropean countries are seen as more reliable than developing counties, and transportation time is shorter and therefore faster and cheaper. However, manufacture of products for the low-end market is still being outsourced. Target premium-end market (quality) Some EU companies have started to withdraw production from the low-cost countries, as the latter cannot deliver the high quality needed to compete at the premium-end of the market. According to Euromonitor, many EU manufacturers tried to position themselves at the premium-end of the market, where the margins are higher, especially since competition increased in the low-end segment. However, because of this development, also the high-end segment became crowded, again leading to more competition. On top of that, due to the global economic crisis, consumers spend less on luxury products. Mergers and acquisitions Achieving economies of scale was another answer to the increasing competitiveness. Mergers and acquisitions are a popular means to acquire the scale necessary to survive in the


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU globalizing world. Small companies with insufficient production were taken over. This provided an ideal way for the bigger companies to increase their market share in the mature EU tableand kitchenware market. SEB SA and Newell Rubbermaid are both examples of manufacturers which have pursued a growth by acquisition strategy for years. However, the latter has recently changed its strategic focus to organic growth, meaning that the company aims at growing in itself, fuelled by innovation behind strong brands. Brand extension Another notable development is brand extension. Waterford Wedgwood, for example, extended their product line into linens, jewellery, writing instruments and other giftware. Because of the increasing competition, manufacturers are searching for ways to differentiate their products from their competitors. Branding, together with advertisements, is an effective way of achieving this. 2.3 Opportunities and threats

+ Total EU production of table- and kitchenware is decreasing, which is the result of both increased competition due to low-priced products from Asia, and increased prices of energy which in turn raised production costs. This means that the EU increasingly imports tableand kitchenware, or outsources production to low-cost countries, indicating opportunities for developing country manufacturers and exporters. + Many developing country manufacturers are able to produce tableware, kitchenware and other household articles at much lower costs than the EU countries. As long as they can maintain the quality of their products and are reliable in their supply, this represents an opportunity for DC exporters. - In the short and medium term, East-European countries have a competitive advantage in labour costs with respect to other EU countries; they have easy access to the large EU market compared to non-EU countries and are obviously much closer to the EU market. Therefore, currently, the East-European countries are strong competitors to developing country exporters. - Moreover, at the Maison & Objet trade fair it appeared that East-European products (especially glassware) are perceived to be of a higher quality than products from for example China, stressing the strong competition from East-European countries. + In the long run, the competitive advantage of a cheap labour force in Eastern Europe will disappear, due to wage harmonisation within the EU, thereby leading to more opportunities for exporters in developing countries. However, especially for new member states, such as Romania and Bulgaria, this will take a long time. - China also forms a threat to other developing country suppliers. Already a large share of table- and kitchenware is imported from China (see Chapter 4), which is able to produce at very low costs. - The mergers and acquisitions going on in the EU table- and kitchenware market could be threatening, as larger companies will be dominating the market, making it more difficult for small-scale exporters to enter the market. - Developing country exporters who aim to enter the high-end of the EU market face serious competition from already established European manufacturers, which are constantly improving their quality and designs, and have well-known brands. As an overall conclusion: the table- and kitchenware market is highly competitive. The best opportunities at this moment would be in the middle-high market segment, which excludes the high-end branded products, and avoids competition with Chinese manufacturers which target the low-end market. However, in order to target this segment, exporters need to invest in product design and adapt their products according to the new fashion trends in the market (see chapter 1). Developing country manufacturers need to be able to make their products unique. This can also be done through Fair-Trade certification and corporate social responsibility (CSR) for example.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU 2.4 Useful sources Eurostat - http://epp.eurostat.ec.europa.eu production data per country and product code: click on statistics, and then under the heading Industry, trade and services click on Manufactured goods (Prodcom). Euromonitor - http://www.euromonitor.com market information on many EU countries. Click on Industries and then on Housewares to get a country list. Complete reports can be bought; summaries are available on the website. Unity Marketing - http://www.researchandmarkets.com Tabletop Market Report 2006 A Consumer Insights Study of the Dinnerware, Glassware, Flatware and Tabletop Decorative Accessories Markets. about Standing Committee of the European Glass Industries - http://www.cpivglass.be the EU glassware production, consumption and some news on price developments as well.



3

TRADE CHANNELS FOR MARKET ENTRY

Trade or distribution channels can be described as the path of goods followed from manufacturer to consumer. As goods move from manufacturer to consumer, they may have to pass through various intermediaries. This chapter discusses the characteristics of the European tableware, kitchenware and other household articles trade channels. Note that trade structures can vary widely among different sectors. The trade channels described below do not necessarily apply to every product group. Refer to the individual country surveys covering the market, to find the most appropriate channels. 3.1 Trade channels

Tableware, kitchenware and other household articles are distributed through many different channels, partly because they come in many different price ranges and functional varieties. Figure 3.1 shows the basic links between the various kinds of sales intermediaries, agents, importers, wholesalers and retailers. The thick lines indicate the most important trade flows. Figure 3.1 Trade and distribution channels for tableware, kitchenware and other household articlesDomestic manufacturer Foreign manufacturer

Exporter

Agent

Importer

Wholesaler

Retailer

Consumer

Main distribution flow Secondary distribution flow Table- and kitchenware in the EU is distributed through a variety of different channels, as can be seen in Figure 3.1. As the market is becoming increasingly competitive, many retailers try to lower their costs and business risks by minimising inventory and shortening order lead-time, or shortening the chain through direct sourcing from the manufacturer. The shortening of the distribution chain, combined with the increasing popularity of buying groups for the better organised retailers, implies that an increasing share of the table- and kitchenware tends to go directly from the manufacturer to the retailer, and then to consumers. In this way, the profit margin of the producer also increases, as intermediaries are skipped. In the business-to-business markets, the route is somewhat different. The catering industry (i.e. restaurants and hotels) generally purchases its table- and kitchenware at specialist wholesalers, which give a high level of service and low prices, in return for a large volume of


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU business. Many large-scale table- and kitchenware manufacturers have their own sales offices in their main sales markets. ARC International has, for example, 30 sales offices around the world. Intermediaries Smaller manufacturers, which do not have the financial means to maintain sales offices in many different countries, often have agents, who have the legal authority to act on behalf of the manufacturer. The agent receives a commission from the manufacturer. The level of commission depends on a number of factors, including the turnover rate of the product concerned and commitments undertaken (e.g. participation in local trade shows, advertising and promotional activities). Roughly speaking, an agents commission generally ranges between 3% and 15% of turnover. Most agents represent more than one manufacturer, although competition is normally avoided. Agents usually have a thorough knowledge of distribution structures and consumer behaviour. An example is the Belgian wholesaler, Billiet Trading Company, which is the agent in the Benelux for different manufacturers like Aeternum and Arcos. Wholesalers are also important when it comes to distribution, especially for the (smaller) independent retailers. Their importance, however, varies per country. Most importers / wholesalers offer extensive product ranges of different brands, which can range from 15 thousand up to 20 thousand articles. The wholesaler purchases from the manufacturers. The wholesaler takes legal title to the products, as well as physical possession of them and stocks at his own risk. The mark-up of the wholesaler is approximately 20%. The main benefit of a wholesaler is that the retailer can buy different products of different brands in much lower quantities. The wholesaler therefore serves as a focal point for manufacturers as well as retailers, by buying the production in bulk then splitting it into manageable proportions. Many table- and kitchenware manufacturers also import and sell table- and kitchenware to complement their product range. Because of their function of buying and selling table- and kitchenware, as well as handling the administration of import and export procedures, wholesalers can supply considerable information and guidance to a manufacturer. So, developing a successful working relationship with your wholesaler can lead to information on appropriate designs and on the latest market trends, use of materials and quality requirements. The independent retailers are sometimes organised in buying groups. Buying groups are individual dealers/wholesalers/retailers who unite and cooperate as a single buying and marketing force. Membership of such a group by an individual company offers the opportunity to source around 50% to 90% of its requirements at a considerable discount. By becoming a member of such an organisation, the individual retailer aims to reduce his costs. The original function of the buying groups is therefore to reduce costs by centralising buying and logistics. Participating in a buying group can, however, involve a restriction of choice if the group aims at maximising the volume of the order which is placed with the manufacturers. In addition, the role of buying groups in the form of independent retailers is under pressure. An important buying group in The Netherlands is GEPEA. The EK Groeinkauf eG, which has 2,500 members, is an important buying organisation in Germany. As an example, GEPEA finds its suppliers through trade fairs in Italy, Germany and China. Note that Maison & Objet in France is more oriented to its local market. GEPEA imports either directly, or through export corporations or agents for example. They have containers in a number of places in the world, which can be filled with products from different producers in the surrounding area. Companies can also sell directly to end-consumers. There are many variations on this theme, such as through manufacturer-owned brand stores, like the Wedgwood stores and Zwilling J.A. Henkels A.G stores. The latter has 25 company-owned retail stores, 13 of which are in Germany, 6 in European countries outside Germany (Denmark, The Netherlands, Switzerland) and 6 in China. Furthermore, e-commerce offers a direct link between a manufacturer and the


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU consumer. Other variants are door-to-door selling and party-plan selling (organising a party with the aim of selling products). A manufacturer famous for its party-plan selling is Tupperware. However, this route is somewhat underdeveloped in the distribution of tableware, kitchenware and other household articles. Retailers In the last few decades, the European tableware, kitchenware and other household articles retail market has undergone many changes, as an increasing share of products is sold through branch-foreigners (foreign shops with a number of branches located in the EU countries). In addition, the traditional retail formats are under pressure from new formats. Grocery multiples, like super- and hypermarkets and new retail formats, like IKEA, made their way into the tableand kitchenware market. As a consequence, there is increasing competition amongst the retailers. The retail channels are discussed in turn below. Houseware specialists This category contains a great variety of retail formats, including independent specialists, interior design specialists, DIY (Do-It-Yourself) specialists and furniture specialists. With the exception of the independent specialists, houseware specialists are becoming increasingly important for the dynamics of the market. This is largely due to the trend towards lifestyle solutions, where consumers are presented with a package of products, rather than isolated product categories (Euromonitor, 2006). This trend is normally conducted and stimulated by interior design specialists and its development has led to the creation of different market niches, each aiming at a specific consumer group. Interior design specialists have become all-round retailers, not only selling furniture, but also the matching accessories including table- and kitchenware, especially ceramicware, china & porcelain and glassware. According to Euromonitor, these products help to enhance the main product portfolio. Furthermore, these products increase in-store traffic, encourage consumers to stay longer in the outlets and thereby boost sales. Due to their low-unit costs, these products are cheaper to stock and easy to dispose of through special offers. Formats such as Ikea, Habitat and Interio, show that market success is increasingly dependent on creating a particular lifestyle image. It will be increasingly difficult for the independent specialists to survive in this increasingly competitive environment. They are, however, still of significant importance, especially in countries with a less developed retail structure, like for example East-European countries. Department stores & variety stores Traditionally, department stores were one of the few retailers located in city centres which used to offer a wide range of table- and kitchenware. The growth of new formats, like IKEA, has put increased pressure on their market position. As a result, the department stores tried to reinvent themselves and came up with new concepts, like the store-in-store concept, whereby the shops offer space to various designers. Despite the struggle to create a new identity, department stores still account for a substantial share of table- and kitchenware sales. Most department stores offer a wide range of both major brands and private labels. They are generally situated in the mid- and high-priced segment of the market. Leading department stores in Europe are Karstadt/Quelle and Galeria Kaufhof in Germany, John Lewis and Allders in the UK, El Corte Ingls in Spain, Le Printemps in France and Bijenkorf and Vroom & Dreesman in The Netherlands. Most of these stores are restricted mainly to their country of origin. Variety stores are one of the most important formats for the sales of table- and kitchenware. Traditionally, the variety stores offer a wide range of cheap products at inner-city locations. However, due to fierce competition from supermarkets/hypermarkets and discount stores, it is no longer viable to concentrate solely on cheap products. Consequently, variety stores also need to redefine themselves. Leading variety stores in Europe include Woolworth GmbH & Co


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU and Strauss Innovation in Germany, Marks & Spencer in the United Kingdom, Monoprix/Prisunic and Tati in France, Upim and La Standa in Italy and Blokker, Marskramer, Novy, Xenos and Hoyng in The Netherlands. Note that Woolworth has gone into receivership in the UK, but not in Germany. Grocery multiples Hyper- and supermarkets are increasingly tapping into the table- and kitchenware market. They generally tend to stock low-priced basic products. There is, however, a difference between hyper- and supermarkets. Hypermarkets sell a more comprehensive range of tableand kitchenware, whereas supermarkets mostly offer a limited range, such as mugs and other small household products, which are mostly private-labelled. Both formats cater to an increasing share of shelf space for non-food articles like compact discs, table linen, napkins, candles, pots and pans, cutlery and other kitchen utensils. According to an article in TDC Trade, this is mainly because non-food products offer better margins than the standard grocery lines. Furthermore, supermarkets and hypermarkets mostly position table- and kitchenware as impulse purchases through cross-merchandising with core grocery items. For example, woks are displayed next to prepared stir-fry vegetables, sauces and noodles. It is expected that the importance of the grocery multiples will increase, as consumer lifestyles become busier and demand for convenience rises. Discounters Discounters are another important format for retailing table- and kitchenware. These retailers often operate from low-rent locations. Low-price with no-frills is the most important driver in this concept. Discounters are playing an increasingly important role. The economic downturn in the first halve of this decennium has been a significant trigger for the success of this type of format. Discounters are very popular in Germany, where Aldi and Lidl take a significant share of the retail market. According to Euromonitor, these discounters carry a limited total of 600 to 1,200 products, whereas in a hypermarket the product range can reach 30,000 products. The discounters generally have special weekly offers regarding non-food items like table- and kitchenware, sold at extremely competitive prices. Other Next to the above-mentioned formats, there is a variety of other formats selling table- and kitchenware, such as mail order, Internet sales, door-to-door selling, party plans and company-owned outlets. The market share of these formats, however, tends to be limited. Several manufacturers like Richard Ginori and Waterford-Wedgwood are selling their products directly through the Internet. Also, licensed third-parties selling through the Internet is becoming common practice. However, companies like Tupperware still sell mainly through door-to-door selling and party plans. The company became known world-wide with the socalled Tupperware parties, through which the products were sold extensively.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Figure 3.2 Distribution of table- and kitchenware by format

Broad

Grocery multiples Carrefour (F) Albert Heijn (NL) Kaufland (G) Alcampo (SP) Furniture stores Conforama (F) Divani & Divani (I) Porta (G) Merkamueble (SP) MFI Furniture (UK)

Department stores KarstadtQuelle (G) Galeria Kaufhof (G) John Lewis (UK) Allders (UK) El Corte Ingls (SP) Vroom & Dreesman (NL)

Product Mix

Variety stores Woolworth (G) Marks & Spencer (UK) Monoprix/Prisunic (F) Tati (F) Upim (I) Blokker (NL)

Directly-owned Waterford-Wegdwood (UK) Richard Ginori (I)

Category killer IKEA (All) Narrow

Specialists Habitat (F) Allders at Home (UK)

Mass

Premium

Source: Based on information derived from different sources, including KeyNote, Euromonitor and company sites

Distribution channels for exporters from developing countries Traditionally, exports originating in developing countries transit through a set of intermediaries like agents and importers and, in some cases, stock-keeping wholesalers, who in turn market the exported products to wholesalers or retailers. These long distribution lines are mostly caused by the distance between the exporter and his export market and, in most cases, the relatively small size of the production in developing countries. Furthermore, a lack of information concerning the export market makes exporting a hazardous venture. The disadvantages of working through a large number of intermediaries include poor knowledge of market trends, inability to gain competitive advantage by adapting the product to specific customer needs and, of course, the margin lost at each stage of the distribution chain. The most important channels for developing country exporters are discussed below. Agents / sales offices Agents usually have a good knowledge of distribution structures and consumer behaviour. Most agents represent more than one manufacturer. Some foreign manufacturers have their own sales office in Europe or elsewhere. This is advisable if a manufacturer wants to make sure that his products are properly advertised and distributed. However, only the larger companies, which cover a substantial part of the market, maintain their own offices. The


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU problem of working through an agent is, however, that the manufacturer is totally dependent on the agent and has to rely on the quality of the agent's knowledge, commitment and selling ability. Importers/wholesalers Importers/wholesalers are familiar with local markets and can supply considerable information, assistance and guidance to the overseas manufacturer, examples being the administration of import and export procedures and holding of stock, in addition to the primary business of buying and selling. Furthermore, they have strong relationships with suppliers and buyers all over the world. These intermediaries have long-established links with their customers and are in a better position (than foreign processors) to know the requirements of the local market and of individual end-users. Retailers Most large retailers, for example IKEA, buy tableware, kitchenware and other household articles directly from foreign suppliers. This may involve intermediary activity by a selling agent on behalf of the manufacturer or a buying agent on behalf of the (multiple) retailer. In the country of origin, most buyers prefer the lines between manufacturer and themselves to be as short as possible. Short communication lines create better control over production and deliveries. It is particularly significant when a fashion trend takes hold, involving fierce competition between retailers offering lower prices. According to sector specialists, retailers increasingly provide opportunities to developing country exporters. As retailers often organise themselves in buying groups, they are able to buy larger quantities. Furthermore, due to the current economic crisis, buyers demand smaller orders, so retailers also offer opportunities in this sense. However, targeting retailers directly requires investment in product design, and the ability to transport the products to Europe. A wholesaler or importer often has its own design department and an exporter can produce a tailor-made product for these players. Yet, when targeting a retailer, you have to develop and design your own product range. 3.2 Price structure

Different prices and margins apply throughout the various trade channels. Prices increase significantly along the value chain. In addition, the table- and kitchenware market consists of a wide variety of products. It includes cutleries, metalware, plasticware, woodware, glassware, ceramicware and china & porcelain. Therefore, it is not feasible to define or give advice on prices for individual products in this survey: the manufacturers will have to research the different market segments, distribution channels and criteria (i.e. brand) before attempting to access the EU market. In general, prices at the final consumer destination (i.e. wholesalers and department stores) do not vary much across Europe. Table 3.1 describes three different mark-ups, low, medium and high. The effect of low, medium and high margins on the retail price, based on the same CFR for three different products is shown in the table. A multiplier of between 2 and 3 on the manufacturers or importers price should be used to calculate an appropriate final consumer price. The height of this multiplier is influenced by several factors, among them: Degree of risk (highly innovative, new brand, etc.) Volume of business (turnover) Functions or marketing services rendered (advertising, etc.) General economic conditions (booming or depressed business) Competition Exclusiveness Velocity of stock turnover


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Table 3.1 Calculation schedule: prices and marginsFOB Manila C&F Rotterdam/Amsterdam Import duties charges on C&F basis* Handling charges, transport, insurance and bank service Subtotal: Importers/wholesaler's margin (20/30/40%) Subtotal: Retailer's margin (40/50/60%) Net selling price Value added tax (VAT) 19% of net selling Gross selling price (consumer price) ratio consumer price/FOB ratio consumer price/C&F * Between 0 and 11% of C&F value Low Medium 90.00 90.00 100.00 100.00 pm* pm* 6.00 106.00 26.50 132.50 88.33 220.83 41.96 262.79 2.92 2.63 6.00 106.00 45.43 151.43 151.43 302.86 57.54 360.40 4.00 3.60 High 90.00 100.00 pm* 6.00 106.00 70.67 176.67 265.00 441.67 83.92 525.58 5.84 5.26

The multiplier has decreased in the last decade, caused by factors like increasing competition at all levels in the distribution chain, further retail concentration and sales chain integration. When selling directly to a retailer, the price margin for the exporter is higher than when selling to a wholesaler for example. To give an idea, when using the traditional trade channels, the producer price is around 1/5th to 1/7th of the consumer end price, whereas it is 1/3rd to 1/4th of the consumer end price when selling directly to retailers. 3.3 Useful sources Exim Info - http://www.eximinfo.com A list of European importers of houseware, kitchenware and tableware can be purchased from Exim Info. Select Houseware & Kitchenware on the left side of the screen and then choose Directory of 550 European Importers of Houseware, Kitchenware & Tableware. FEC Federation of the European Cutlery, Flatware, Holloware and Cookware Industries http://www.fecinfo.org information on key manufacturers in the EU. In order to obtain more information on the EU market, it is worth to contacting importers/wholesalers or visit their websites. Some websites are presented below. In addition, a list of trade channels is presented in the individual country surveys.

Important table- and kitchenware importers/wholesalers in the EU: ARC Distribution France - http://www.arc-intl.com Sandra Rich Gmbh - http://www.sandrarich.de Kela - http://www.kela.de Pengo Spa - http://www.pengospa.it Koopman International BV - http://www.koopmanint.com Edelman BV - http://www.edelman.nl Billiet Trading Company - http://www.billiet.be



4

TRADE: IMPORTS AND EXPORTS

Trade statistics given in this chapter are derived from Eurostat, which bases its statistics on information from the Customs and from EU companies. It is worth noting that, in the case of intra-EU trade, not all transactions are registered, such as those made by smaller companies and transactions from non-EU sources (see remarks on trade statistics in Appendix A). On the other hand, figures for trade between the EU and the rest of the world (Extra-EU) are accurately registered and are, therefore, more precisely represented in these statistics. Nevertheless, these statistics must be treated with extreme caution and are only intended to give an indication of trade flows in the international tableware, kitchenware and other household articles market. Please note that figures on glassware are unreliable for the years 2004 and 2006, and are therefore replaced by figures from 2003 and 2005 respectively, in order to give an accurate picture of the trend in imports and exports over the years. Furthermore, the figures on the imported and exported volume of glassware in 2008 are inconsistent or unavailable for several countries, which means that the actual volume in 2008 is likely to be higher. 4.1 Total EU imports

The EU imported 12 billion / 4.4 million tonnes of table- and kitchenware in 2008 as it can be seen in Table 4.1 below. Between 2004 and 2008, these imports increased significantly by 4.3% annually in terms of value, and by 4.6% annually in terms of volume. This increase only holds for imports from intra-EU countries and developing countries, as imports from extra-EU countries decreased by 1.7% annually on average for the same review period. The supplies from developing countries to the EU increased at a substantial rate, higher than the supplies from intra-EU countries. These developments are in line with the decreasing production of table- and kitchenware in the EU, which leads to an increase in imports, in particular from developing countries, since the latter are able to produce at relatively low costs. Furthermore, note that the West-European suppliers also re-export products from developing countries to other West-European countries. In 2008, developing countries accounted for 39% of the total supplies to the EU, while intra-EU countries accounted for 55% of the supplies. The leading developing country supplier which is also the largest supplier of table- and kitchenware to the EU is China, accounting for 31% of all imports. EU imports from this country increased by 16% annually, both in terms of value and volume during the review period. Other leading suppliers in developing countries were Turkey, Thailand and India, accounting for respective shares of 2.7% 1.4% and 1.3% of the total EU imports. Imports from Turkey and India increased substantially during the review period, by 21% and 5% respectively, while those from Thailand decreased by 4.1% annually. The second largest supplier is Germany, accounting for 11% of the total EU supplies, and showing an average annual growth rate of 8.4% in terms of value and 12% in terms of volume for the reviewed period. After Germany, other leading suppliers to the EU were Italy, France Belgium and The Netherlands, accounting for respective shares of 8.2%, 6.8%, 5.1% and 4.8%. Annual imports from all these countries increased in terms of value between 2004 and 2008, with France showing a substantial increase by 14% in terms of value and 46% in terms of volume.


CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Table 4.1 EU imports of tableware, kitchenware and other household articles 2004-2008, million / 1,000 tonnes2004** value volume 2006*** value volume value 2008 Average Volume**** annual % change in value

Total EU, of which from Intra-EU Extra-EU ex.DC* DC*

9,886 6,061 764 3,062

3,696 2,087 162 1,446

10,926 6,327 708 3,892

3,818 11,702 1,832 6,411 146 713 1,840 4,578

4,416 2,254 159 2,003

4.3% 1.4% -1.7% 11%

Source: Eurostat (2009) *Developing countries ** Includes glassware figures from 2003 *** Includes glassware figures from 2005 ****The imported volume of 2008 is actually higher, as for some countries the imported volume of glassware is inconsistent for this year.

The leading EU importers are Germany, France and the United Kingdom, together accounting for 43% of the total EU imports. Imports by Germany and France showed an increase (in terms of value) during the review period, by annual average rates of 3.4% and 5.4% respectively, while imports by the UK decreased by 0.8% annually. EU countries which showed a very large increase in their imports of table- and kitchenware in terms of value were EastEuropean countries, such as Poland (17%), Romania (30%), Slovakia (18%) and Bulgaria (17%). Also the Baltic States (Latvia and Lithuania) showed a considerable increase in their imports, but these countries are still among the smallest importers in the EU. 4.2 EU imports per product group

This section discusses the total EU imports per product group falling under the tableware, kitchenware and other household articles covered in this survey, and developments therein. For information on imports by the individual EU member states, please refer to the CBI surveys covering the tableware, kitchenware and other household articles market in the individual EU member states. The EU imports of table- and kitchenware for 2008 consisted of, metalware (27%), plasticware (26%), glassware (19%), cutlery (10%), china & porcelain (9.7%), ceramicware (6.3%), and woodware (2.2%). Imports of all product groups increased in value terms during the review period, with the strongest increase in imports of plasticware (6.4% annually). The only decrease observed is in the imported volume of cutlery (7.0% annually). Metalware Metalware is the largest product group within tabl

tableware, kitchenware and other house articles in eu 2009

Documents

household articles market

large eu market

eu cbi market survey

eu tableware

market forces

plasticware market

market entry

european union eu market