– acquisition for expansion
The acquisition of the Egyptian Olympic Group creates a leading position for Electrolux in appliances in the fast-expanding markets in North Africa and the Middle East. Electrolux has grown rapidly in Eastern Europe and currently commands major market shares for appliances and vacuum cleaners in the region.
Africa and the Middle East comprise 75 countries with considerable variation in terms of wealth and degree of urbanization. South Africa and Turkey are the largest markets in the region. The population in Africa is growing at an exponential rate, and the number of households is rising even more rapidly because many people are of the age when it is time to find their own home. The degree of penetration is low in most product categories, but is displaying high growth due to the rapid rise in purchasing power. Refrigerators are one of the first products required when the prosperity of a country increases. In Eastern Europe, where Russia is the largest market, both average prosperity and penetration are higher. A large market for replacement products is emerging in several product categories, such as cookers, laundry equipment and refrigerators/freezers.
Multitude of manufacturers and retailers
With a wide geographical distribution and varying degrees of purchasing power, it is difficult for manufacturers and retailers to capture large market shares in Africa and the Middle East. Turkey has several large domestic manufacturers that have also established strong positions in nearby regions. The markets of Eastern Europe are dominated by Western manufacturers, while the retailer network is domestic.
The Group’s position
The acquisition of the Egyptian Olympic Group gives Electrolux a leading position in appliances in North Africa and the Middle East. Electrolux has grown rapidly in the Eastern European markets in recent decades. At present, Electrolux commands 14% of the appliances market in Eastern Europe and is the market leader in Hungary, the Czech Republic and the Baltic countries. In other countries in the region, Electrolux is one of the three largest appliances companies. The 2010 acquisition of a washing-machine factory in the Ukraine has helped strengthen the Group’s competitiveness in Russia and the Ukraine.
With Olympic Group, Electrolux can grow faster
Olympic Group is a leading major appliance company in the rapidly expanding markets in North Africa and the Middle East. Olympic Group, which has been the local partner of Electrolux in the region for a period of almost 30 years, has about 7,100 employees and manufactures such items as refrigerators, cookers, water heaters and washing machines. Integrating Olympic into the operations of Electrolux will facilitate even more rapid growth in the region. In Egypt, for example, with its 80 million inhabitants, GDP per capita has doubled since 2005 and a growing number can afford to purchase their first appliances or change to new appliances.
Fast-growing product categories
In Africa and the Middle East, all product categories are expanding at a high rate, primarily refrigerators, cookers and washing machines. Many Eastern European households can now afford to replace old appliances and even invest in new, more exclusive kitchen products. This trend increases demand for built-in products, a segment in which Electrolux is the leader. The improvement in the standard of living in the region has also ensured that demand for such products as dishwashers and tumble-dryers is rising fast.
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Source: Electrolux estimates.