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Developing Economies Provide a Source of Growth to the Kitchen Appliances Market
The global economic slowdown continues to squeeze consumer purchases, but the Kitchen Appliances market continued to grow in 2011, with stalling demand in several significant markets offset by surges in developing economies. Volume levels are also increasing in a similar fashion.
The global market expanded by 7.1% in 2011, to reach a value of $157.6 billion, indicating a compound annual growth rate (CAGR) of 4.1% in the period 2007-2011.
Growth in this period was primarily driven by Asia-Pacific and the Middle East and Africa, who achieved the largest CAGRs in 2007-2011. Asia-Pacific contains the two of the largest kitchen appliances markets, Japan and China. The Chinese government has been subsidizing rural communities’ purchases of appliances, although this subsidy is due to end in the near future.
Price competition has triggered deflation in several key markets, and raw materials costs, such as steel, plastics, copper and aluminum, have also increased. Competition has been fierce in mature markets with overcapacity in the lower-price segments, such as Western Europe.
With the onslaught of the Eurozone Crisis, companies continue to see developing economies as a source of growth, with several multinationals expanding their operations to capitalize on the burgeoning markets. There is plenty of opportunity in Latin America and Asia-Pacific, where rising incomes fuel demand for appliances. Asia-Pacific’s demand is chiefly for appliances catered for smaller living spaces, as urbanization and population growth continue.
Conversely, in the North American and Western European markets, where kitchen appliances have already achieved extensive product penetration rates, economic uncertainty has fueled further purchase considerations. Energy efficiency is also becoming a priority, as governments consider environmental issues and consumers become more astute with their budgets. There are moves towards higher technological integration and progress as budget segments become more competitive.
Kitchen Appliances are considered consumer durable goods, and therefore rely on disposable income to replace or purchase. Slowdowns in developing economies, as well as stagnating developing ones are a cause for concern. Commodity prices have seen a degree of volatility, which will lead to higher costs for manufacturers. Generally, the trend is upwards as developing countries gain more disposable income, demand will continue to rise. Economies such as Russia and Turkey have demonstrated significant growth rates.
Asia-Pacific was the largest segment in 2011, accounting for 40.2% of revenue. The Americas was the second largest, accounting for 30.6% of revenues in 2011. China proved the largest market in terms of value and volume in 2011, with revenues totaling $36.8 billion, and volumes achieving 269 million in 2011.
Globally, Cooking Appliances are the largest segment, accounting for 35.8% of the sales. Refrigeration accounted for 34.0%, with Washing Appliances accounting for 24.4%. Dishwashers compromised 5.7% of total sales