Not long ago, Tupperware seemed to be a brand with a limited future.
Tupperware’s background is selling products at relatively high prices through direct selling, or the party plan concept, rather than retail stores, a system dating back to the 1970s. In recent times it has come under pressure from mass-produced containers, usually manufactured in Asia, and marketed in retail stores at low price points.
Neil Saunders, CEO of Conlumino, analysing the company’s last quarter financial results, says with another sequential improvement in its sales number, “Tupperware continues to show signs of progress”.
Away from the established western markets – namely in North America and Europe – emerging regions continue to be the mainstay of growth with sales up by 11 per cent on a local currency basis.
“Within this group China (up 18 per cent), Indonesia (up 12 per cent), Middle East and North Africa (up 97 per cent), and South Africa (up 52 per cent) all posted strong performances.
“Across most of these geographies, Tupperware continues to benefit from the growing number of middle class consumers and increased interest in home products.
“That said, across most emerging markets sales are dominated by relatively simple food preservation products which are sold via catalogues,” observes Saunders.
“Tupperware has identified this as an opportunity for growth. One of its ongoing initiatives is to increase the support and training of representatives in these regions so that more sales are made via parties and demonstrations – both of which are proven to result in the sale of higher priced products and in higher average order values. This, in our view, should help these regions to continue delivering even as they become more mature.”
Tupperware’s total sales actually fell 11 per cent in the latest quarter. However that was purely the effect of exchange rate losses, with sales up seven per cent when measured in local currencies – up from four per cent a quarter earlier.
Saunders says Tupperware’s development of Experience Centres are a positive move. These centres, which launched in Canada earlier this year and are now being introduced to the US, are physical locations in which the Tupperware sales force can be trained and where consumers can visit for demonstrations of products in a professional environment.
“The aim behind the centers is both to increase brand exposure and to ensure a strong local presence in key markets in an era when many transactions are becoming remote and disintermediated. Initial results are encouraging.”
Saunders says it is to Tupperware’s credit that it has recognised, that the way consumers buy and behave is changing.
“However, rather than shifting its entire business model – which would mean the risk of moving away from relationship based selling – Tupperware is updating existing practices and procedures. This, in our view, is a sensible strategy.”
