– penetration increasing rapidly
From having built up a profitable and sizeable operation in Brazil over a short period of time, Electrolux is now advancing with its growth strategy in other markets in the region. The acquisition of the Chilean appliances manufacturer CTI has afforded Electrolux a market-leading position in key product categories in Chile and Argentina.
Latin America is a highly urbanized region for a growth market and displays a relatively high rate of expansion in terms of purchasing power and number of households. Brazil represents about 40% of the Latin American market for appliances. Other major markets include Mexico and Argentina. Growth in the region is driven by rising purchasing power of households, which primarily demand more basic cookers, refrigerators and washing machines. The rapidly emerging middle class in, for example, Brazil and Argentina has also resulted in higher demand for products in the premium segments. In 2011, the market in Brazil was characterized by a certain degree of price pressure and mix deterioration as a result of rapid consolidation among retailers.
Consolidated market
The Latin American market is relatively consolidated. In Brazil, the three largest manufacturers account for about 70% of sales of appliances. As a result of high import duties and logistical costs, the bulk of products sold in Latin America are produced domestically. The trend of consolidation has also been strong among retailers in the region. In Brazil, three of the largest domestic retailers – Casas Bahia, Globex and Pão de açúcar – merged in 2010. The new company, Grupo Pão de açúcar, has a dominant position in the market. Sales of household products are often conducted through campaigns and purchasing decisions are made in stores where a large part of the manufacturers have their own sales staff in place.
The Group’s position
Brazil is the largest market in Latin America for Electrolux and the Group is the second-largest manufacturer of appliances in the country. The Electrolux brand holds a strong position in all segments thanks to innovative products and close cooperation with the market-leading retail chains. The acquisition of the Chilean appliances manufacturer CTI has strengthened Electrolux leading position in the region and makes Electrolux the market leader for core appliances and small domestic appliances in Chile and the largest manufacturer of refrigerators, freezers and washing machines in Argentina. In the vacuum-cleaner segment, Electrolux has long held a leading position in the region. The Group has also established a fast-expanding business in the small appliances segment.
Acquisition for growth
CTI was established back in 1905 and currently employs 2,200 people in Chile and Argentina. Manufacturing ranges from refrigerators, freezers, washing machines, cookers and ovens to tumble-dryers and heat pumps. The company has established strong relationships with retailers in Chile and Argentina and has extensive distribution and a well-structured aftermarket business. Electrolux is planning further investments in production capacity and distribution with the aim of expanding activities to other Latin American countries.
Fast-growing product categories
The market for washing machines is demonstrating immense growth potential as purchasing power and demands for energy and water efficiency increase in the region. Electrolux continuously launches new products adapted to varying needs in the segment, such as the innovative Ultra Clean washing machine in Brazil, see Innovative products.
Product penetration in Brazil |
Market value – Latin America |
Source: Electrolux estimates.