Electrolux AB (ELUXB), the world’s second- biggest appliance maker, introduced a $100,000 kitchen range to target an untapped $5.3 billion market for rich foodies with a penchant for professional catering gear.
The Grand Cuisine range will be a niche business bolted on to Electrolux’s 90-year-old catering equipment division and targets a market valued at 4 billion euros, Chief Executive Officer Keith McLoughlin said in an interview today in London.
“This brings a halo effect from a brand standpoint to Electrolux,” said McLoughlin, against a backdrop of USB- equipped oven, vacuum packers and blast chillers. “We’re talking very high net worth people with two or three homes. It’s clearly intended to build and reinforce the brand.”
Electrolux is broadening its top-end offering as Europe’s wider appliance market may shrink by as much as 2 percent this year, the CEO reiterated. Demand in North America is set to be somewhere between flat and 2 percent growth. Some 50,000 homes annually will be potential Grand Cuisine customers, and Electrolux is looking for a three-year payback on its investment, the CEO said, declining to give specifics.
Electrolux already has a presence in the ultra-luxury segment, with the bespoke Molteni brand, starting at 21,000 euros and rising as high as 200,000 euros. Some 20 Molteni stoves are sold annually. Grand Cuisine will remain a small part of Electrolux, yet a profitable one, said McLoughlin, a 56-year- old American who took over as CEO in early 2011.
Samsung, LG Gadgetry
While Whirlpool and other competitors like Miele & Cie. don’t have a catering-equipment line, Samsung Electronics Co. and LG Electronics Inc. (066570) are making in-roads among younger appliance buyers in the U.S. who are accustomed to their gadgetry in other areas.
“Samsung and LG have taken advantage of their brand recognition particularly among younger consumers particularly in consumer electronics,” McLoughlin said. “They’ve brought some unique and fun interface technology and good designs, and they’ve penetrated some markets. If you’re in the cooking business, how much electronics do you want. They may be able to put a TV in a refrigerator, but look how many they’ve sold.”
So far, Chinese manufacturers have made few inroads into export markets, the CEO said.
London, Stockholm and Venice are three major markets being targeted by Grand Cuisine, said Alberto Zanata, who as head of Electrolux’s professional products division has overseen the addition of the Grand Cuisine unit to the ranks of engineers that until now specialized in catering equipment for chefs.
Workers at the Pordenone site, 50 miles from Venice, have adapted to Grand Cuisine specifications and design, where the combination oven sports a USB port for uploading recipes as well as a steam generator for sous-vide cooking.
“We expect this business to be a positive contributor, a good high-margin profitable business, but it’s not going to be that big relative to what we’re used to,” McLoughlin said.
Elsewhere, the Swedish manufacturer is having to respond to weakening markets by closing some of its 50 sites, and factories in North America and Europe will be affected, McLoughlin reiterated today. Its mass market brands include Frigidaire and Zanussi.
“The global macroeconomic picture isn’t great,” the CEO said. “We’re fine-tuning and making sure that we have the most competitive asset base that’s needed to win in the market place.”
Electrolux, whose bigger rival is Benton Harbor, Michigan- based Whirlpool Corp. (WHR:US), has gained 56 percent this year after pushing through price increases in North America and Europe, making it the best-performing stock in the period on the OMX Stockholm 30 Index. (OMX) It fell as much as 3.3 percent today and was down 2.4 percent at 171.6 kronor as of 2:18 p.m. in Stockholm, valuing the company at 53 billion kronor ($8.04 billion).
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