Electrolux AB (ELUXB) is a leading player in the field of appliances. They are far ahead of competitors when it comes to luxury kitchen appliances. They have recently launched the Grand Cuisine range which is aimed at the top end of the market that requires professional catering gear even at home. It is a large market estimated to be worth $5.3 billion and this new $100,000 kitchen range is sure to get the approval of even the most expensive chefs. Keith McLaughlin, CEO of Electrolux is very clear about the strategy of taking the new range forward. It will be part of the portfolio of their catering equipment division and positioned as a niche product.
Electrolux Luxury Kitchen Range For High Net Worth Buyers
McLaughlin believes that a product like this adds value to the brand Electrolux. The product is aimed at very high net worth buyers who own two or more homes. This is a conscious, strategic move by the company as they are staring at a shrinking appliance market in Europe. Even the North American demand may grow by 2% at best. By broadening its top end offering the company hopes to retain its profitability. They are projecting a sale of 50,000 units of Grand Cuisine in a year which should help them recover the entire investment in three years. Electrolux has a separate ultra luxury brand Molteni that creates bespoke products. Under the brand they sell products that start from a price range of 21,000 Euros and goes up to 200,000 Euros. Only twenty odd Molteni stoves are sold annually. Grand Cuisine will remain under the Electrolux brand and is expected to generate profits for the company.
The Korean Brands Have Made Inroads in the Appliances Market
Traditional competitors of Electrolux like Whirlpool and Miele & Cie don’t manufacture any catering equipment but Samsung and LG Electronics the Korean giants have made inroads into the segment and younger appliance buyers who are exposed to their gadgetry in consumer electronics are opting for the Korean brands. They have managed to combine some fun interface technology in kitchen appliances and created attractive designs. It has helped their entry in some markets but there is a limit to how much electronics you can put in a cooking appliances. Putting a TV in a refrigerator doesn’t make much sense and it is evident in the number of such appliances they have been able to sell.
The Reworking of Strategy has Helped the Company Stock Gain 56%
Alberto Zanata, head of Electrolux’s professional products division is positive about the Grand Cuisine. The division so far specialized in catering equipment for chefs. The new range is being produced at the Pordenone site near Venice and necessary modifications were made to adapt to the production of combination oven with a USB port and a steam generator that allows uploading of recipes and sous-vide cooking. London, Stockholm and Venice are three major markets being targeted by Grand Cuisine initially. It is planned as a relatively small start as it is a high margin product. Electrolux, on the whole is reworking its production infrastructure to adjust to the weakening markets. Some of their factories in North America and Europe are being downsized or closed as they rework their focus on their mass market brands Frigidaire and Zanussi in order to increase the share of high end brands and products in their total sales. All these activities have had a positive impact on the company’s stock which has gained 56% this year boosting the company’s valuation to an all time high figure of $8.04 billion.