How Tupperware Is Locking In Growth
Tupperware (NYS: TUP) , the household name once known primarily for storing dinner leftovers and schoolchildren's lunches, has been experiencing a bit of a growth spurt lately. The maker of plastic storage containers and other consumer goods has done this by expanding from American living rooms out into the global arena, where it is expanding its self-styled business format to emerging markets in Asia and other parts of the globe.
Tupperware experienced a bit of a hiccup recently, when it missed estimated revenue targets by $13.5 million. The miss precipitated a downgrade by Morgan Stanley to "equalweight" from "overweight," but the really important stuff for investors to know is that Tupperware is growing. A lot.
Markets outside of the U.S. are growing the most
The company reported great gains outside of the U.S., where the company now does about 90% of its business. For Tupperware, emerging markets are where it is going great guns. In India, for example, Tupperware saw sales go up by 66%, and Indonesia and China increased by 47% and 24%, respectively. Brazil's sales rose by 61%. How is the company accomplishing these feats of explosive growth? In a recent interview with Nightly Business Report, Tupperware CEO Rick Goings talked about the marketing and innovation that has contributed to the success of the company in countries that are just exploring the concept of being middle class.
According to Goings, Tupperware made a few basic changes to its format, such as modernizing the Tupperware party in order to appeal to younger women on a career track, as well as changing and expanding the product line. The company now offers much more than plastic food storage, having branched out into beauty products, appliances and baby products and supplies. Despite the problems in Europe, the company brings in approximately 33% of its income from that arena, and Goings notes that unemployment there has actually helped them recruit more dealers.
Another thing in Tupperware's corner is favorable demographic trends mixed with brand strength. As consumers look to trim costs, eating at home has become more standard. Close competitor Rubbermaid (NYS: NWL) , for example, began losing market share to Sterilite in the 1990s, a phenomenon that precipitated its merger with Newell. More recently, other consumer goods companies such as Kimberly-Clark (NYS: KMB) and Procter & Gamble (NYS: PG) have found that recessionary times caused them to lose market share as consumers traded down to non-branded products, particularly when these companies tried to raise prices.
Tupperware's business format is a very successful one, particularly when applied to new and developing markets. The combination of consumer participation through personal sales, brand loyalty, and the perception of quality in the product line will help steer Tupperware through thick and thin, making it attractive to both consumers and investors.
There are other companies like Tupperware that are taking the world by storm by taking advantage of the huge emerging markets around the globe that are hungry for just what they have to offer. Find out how these companies plan to dominate the world by getting your copy of this free report today.
At the time this article was published Fool contributorAmanda Alixowns no shares in the companies mentioned above.The Motley Fool owns shares of Tupperware Brands. Motley Fool newsletter services have recommended buying shares of Kimberly-Clark and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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