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New Consumer Appliances Research: Key Highlights in 2016 Edition

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Euromonitor International’s Consumer Appliances 2016 edition is now live on Passport, with the latest research revealing changes in regional and category performances compared to 12 months earlier. Globally, the consumer appliances market is expected to grow by 2% in retail volume terms in 2015, a slowdown compared to 2014, driven by massive declines in Eastern Europe and Latin America. Two of the BRICs, Russia and Brazil, are projected to display significant sales slowdowns in 2015.

What is the data in major appliances telling us?

•Volume sales of major appliances are projected to increase marginally by 1% in 2015, while small appliances will grow by 3% in volume terms.

•Compared to 2014, major appliances sales growth will be affected by negative sales growth in Eastern Europe and Latin America. Russia and Brazil are projected to post a dismal 2015, recording 28% and 6% volume declines respectively over 2014 in the case of major appliances. Russia faces massive demand declines as a result of local currency devaluation, which has led to a substantial increase in the average unit price of imported goods. This, in turn, has resulted in a significant reduction in consumer activity, decreases in income and a subsequent reduction in consumer purchasing power. Falling oil prices, geo-political tension and western sanctions have exacerbated the Russian economic situation. Similarly, Brazil’s GDP is expected to see negative growth in 2015 according to Brazil Central Bank. There is a strong culture among Brazilian consumers of acquiring durable goods in instalments, and due to inflationary controls, credit offerings have been adversely impacted by higher interest rates.

•Meanwhile, the Middle East and Africa will remain the top growth region in major appliances, with volume sales up by 4% in 2015. Notably, United Arab Emirates will continue to see robust sales growth, up 7% in volume terms. Asia Pacific will remain the second biggest major appliances market, thanks to emerging countries, including India, Indonesia and Vietnam. China, conversely, is likely to round up the year with flat growth and the next few years’ growth will be muted by shrinking consumers’ purchase post government subsidy programs. Japan is struggling with prolonged economic depression and is the only country expected to see negative growth in the region.

•Though still a small niche in volume terms, the shift to premium categories driving demand for products with higher price positions. Convenience is a key concept within home laundry appliances in 2015, with automatic washer dryers and automatic tumble dryers leading growth. Increasing interest in dual-function and space-saving features is resulting in the growing popularity of automatic washer dryers, with this category posting the highest volume growth in 2015 and expected to record the highest volume CAGR over 2015-2020. Despite their high price positioning, which is almost double that of automatic washing machines, consumers are keen to replace automatic washing machines with automatic washer dryers. Due to an increasing trend towards wine consumption in the likes of China and Vietnam, electric wine coolers/chillers is retaining its growing popularity globally.

What is the data in small appliances telling us?

•Small appliances’ volume sales growth rate looks set to drop by two percentage points between 2014 and 2015 due also to negative growth in Eastern Europe and Latin America. The Middle East and Africa is expected to post the highest volume growth of 6% in 2015, with United Arab Emirates leading growth. As it is home to a diverse population, different eating habits are boosting demand for small cooking appliances, as is increasing awareness of health concerns, such as diabetes and obesity.

•Still on the theme of convenience aligned with major appliances, robotic vacuum cleaners is expected to post the highest forecast growth among all vacuum cleaners, with sales up at a 10% volume CAGR over the next five years, and robust demand from Asia Pacific countries, including China and Thailand.

• Health trends are expected to take centre stage within small appliances, with soaring demand for the likes of light fryers and juice extractors. 45% of global light fryers volume sales are expected to be generated in China in 2015, with Brazil in second place. Chinese consumers are gradually employing more diversified cooking methods in pursuit of healthier diets. In Brazil, rising obesity has become a national issue that is widely covered in mass media, and the government is looking to encourage healthier lifestyles. In turn, manufacturers are promoting low-fat recipes, which is helping to promote sales of light fryers.

• Made available within consumer appliances on Passport for the first time this year, electrical facial cleansers is likely to be the star product among small appliances globally in 2015. A comparatively new product to most markets, and with just a handful of competing brands, electrical facial cleansers’ development and growth will accelerate with increased interest in beauty-related products. The category is expected to post the highest volume growth within small appliances in 2015, as well over the next five years, with a 12% volume CAGR forecast. 75% of total sales are expected to come from the US and China collectively in 2015.

Trade statistics insights

•Despite the reshoring of production plants that has taken place, especially from China to manufacturers’ own countries of origin or to countries where labour costs are cheaper, major appliances’ production will still be led by Asia Pacific in 2015, driven by Vietnam and Indonesia. South Eastern Asian countries are also becoming hot production spots for manufacturers, due to the benefit of labour costs, as well as advancing speed of economic development. A mix of expansion and relocation has also boosted production volumes in Turkey, which is the second largest country globally in terms of major appliance production in 2015.

•More than half of global production volumes are expected to be for refrigeration appliances and air conditioners in 2015, reflecting large retail sales volumes globally. 73% of refrigeration appliances in the world are produced in Asia Pacific, mainly in China and India. Most air conditioners sold are produced in Asia Pacific, which portioned 92% with China alone.

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