Refrigerators opened in a new way – Newspaper Kommersant No. 214 (7415) dated 11/18/2022

The traditional leaders of the Russian household appliances market represented by Bosch, LG, Samsung, Electrolux have begun to lose positions over the past six months due to the suspension of imports and production in the country, giving way to Chinese and Turkish brands. As a result, these manufacturers are the leaders in almost all segments, although the demand for products of domestic brands is growing, which has risen in price, but is still inferior in quality to foreign analogues. In the future, experts admit, the variety of brands on the market may increase. But in the event of the return of world leaders, the Russians will still return to them, if the prices do not turn out to be prohibitive.

Change of nationalities

The outbreak of hostilities in Ukraine has reshaped many segments of the Russian market, primarily consumer. Serious changes are taking place, in particular, in sales of household appliances. Leaders represented by Bosch, LG, Samsung, Electrolux and a number of others stopped direct deliveries. As a result, over nine months, the share of leading brands in money in sales of large household appliances fell several times.

As Alexey Pogudalov, commercial director of Holodilnik.ru, explained to Kommersant, referring to data from independent analysts, if in September 2021 LG was the leader in refrigerator sales with a share of 16.1% (in money), then a year later it was only about 10, 1% of the market. Shares of Bosch and Samsung have fallen, sales of Whirlpool, Indesit and others are declining (see infographic). At the same time, the Chinese Haier became the leader of the segment with a share of 23.5%, the positions of the Turkish Beko and the Belarusian Atlanta improved. M.Video confirms that the Haier brand has taken the first place in sales of refrigerators, having risen from third place in a year, Beko entered the top five. Marvel Distribution explains: “In the history of the Chinese manufacturer, at some stage there was a fairly deep integration with the Liebherr premium brand, which helped development.” At the same time, Atlant, Biryusa and Nordfrost became the most purchased brands of refrigerators in the Citilink network in terms of units, and Atlant, LG, Nordfrost in terms of money.

In the segment of washing machines, according to Holodilnik.ru, Haier also became the leader in terms of money in September, having increased its share from 9.8% to 25% over the year. Next comes the Haier Group-owned Candy and Beko brands. In 2021, LG and Samsung were the leaders here. According to “M.Video”, Haier was only the second, but the share is close to the leader of LG, in third place is Candy. Beko moved up from sixth place to fourth. In Citylink among washing machines, Candy, Indesit and LG are in the top 3.

In the segment of cookers and ovens in Holodilnik.ru, Haier (replaced by Bosch) is again named the leader, having more than quadrupled its share to 15.1%. Close to him in the second position is the Slovenian brand Gorenje, owned by the Chinese Hisense (13.8%, which, according to M.Video, became the leader in microwave ovens). Also in the top are the Belarusian Gefest and the Russian brand Darina. “The recent leaders Bosch and Electrolux are losing their positions, but remain visible in the market,” Alexey Pogudalov clarifies. He adds that brands that do not have their own productions are growing noticeably, for example, Weissgauff, LEX, Maunfeld, Kuppersberg.

In small household appliances, Chinese Xiaomi, Deerma, Dreame, Roborock and others took the leading positions “even before the well-known events”, so the departure of Western vendors did not have a strong impact on the segment, Marvel Distribution notes. Tefal and Russian Polaris, Bork, Redmond compete with Chinese technology. Citylink says that in their network StarWind, Hyundai and Kitfort became the leaders in sales in units, in money – StarWind, Philips and Kitfort. In general, according to Marvel, for the small equipment market, sales for nine months even grew by 5% year-on-year to 156.7 billion rubles.

workshop grip

Chinese and Turkish companies are capturing not only the market, but also production facilities. Brands that have suspended operations in Russia are declaring plans to enter: Bosch intends to sell a plant near St. October). The buyers are still unknown. But the capacities of the American Whirlpool (Indesit, Whirlpool, Hotpoint) in the Lipetsk region have already been acquired by the Turkish Arcelik (Blomberg, Beko, etc.; see Kommersant of June 28).

Haier, according to Alexei Pogudalov, plans to expand the facilities launched in 2019 in Naberezhnye Chelny (washing machines, refrigerators and TVs). Kommersant’s source on the market specified that we are talking about launching a second plant in the same cluster. Turkish Vestel, which mothballed its plant in Aleksandrov in 2016 (see Kommersant on November 2), is exploring the possibility of restoring production. Back in 2020, the Chinese company Midea opened a refrigerator factory in Tatarstan, and in 2023 it promises to start producing washing machines (according to Kommersant, the company also launched the assembly of microwaves in Kaliningrad and plans to expand the production of other types of equipment). Hisense can buy out mothballed capacities, Mr. Pogudalov adds, without disclosing details. Earlier, Marvel Distribution said that Hisense is one of the contenders for the acquisition of the Bosch plant. Haier, Hisense and Midea did not respond to Kommersant’s requests.

New and expanding production facilities are designed not only for the Russian market, but also for deliveries to neighboring countries, Aleksey Pogudalov believes: “In Russia, the price of labor, energy resources, and some materials, such as metals, are lower. In combination, this gives an advantage. But the shortage of imported components or the complexity of their delivery may become an obstacle.

The construction of a plant producing 500-600 thousand washing machines and 500-600 thousand refrigerators per year could cost about €50-70 million “Marvel Distribution” technicians Dmitry Levin: “It is more difficult to evaluate the re-equipment of a mothballed plant, since it is necessary to study each case: somewhere you need to change the air conditioning and heating system, which is very expensive, somewhere it is enough to move the machines.” He adds that in the supply of components for production, “everything comes down to logistics.” The components are made mainly in China, so “there is no problem with their purchase, the main thing is to bring them.”

In my place

A new trend is the interest in domestic and Belarusian brands, which are not yet among the leaders, but increase sales. M.Video notes that sales of Atlant, Darina, Gefest, Flama, Elikor and Vityaz equipment increased by 1.5–2 times.

In free-standing electric and gas stoves in unit sales, the Belarusian brand Gefest took first place, the Russian Darina (Tchaikovsky gas equipment plant in the Perm Territory and also contract manufacturing in China) – the second, Flama (Kanaevsky gas equipment plant in the Krasnodar Territory) – fifth. In refrigerators, the Belarusian “Atlant” entered the top five (also in demand in freezers and washing machines), Pozis (Plant named after Sergo, Tatarstan), a significant share of Kraft (contract manufacturing in China, Russia, Turkey) got into the top ten. In kitchen hoods, the leading group traditionally includes Elikor (a plant in Kaluga).

But, Alexey Pogudalov clarifies, very often brands from the Russian Federation and the CIS use external production, for example, Redmond, Vitek, Hi, Novex, Tuvio, Vionic, Bork and Kitfort and a number of others, for the most part, produce equipment under contracts in China. The same category includes retailers’ own brands, the number of which is also growing. For example, M.Video launched Novex and Hi. The equipment is “produced at the facilities of partner factories, including in Russia, Belarus, Turkey and China.” Yandex plans to produce kettles, refrigerators, coffee machines, etc. under the Tuvio and Vionic brands (the company does not specify where the production will be located; see Kommersant of August 23). Ozon introduced TVs under the Hartens brand (the Kvant plant in Voronezh; see Kommersant on April 13). Sberbank promises Sber TVs (assembly in Belarus at Vityaz; see Kommersant of November 2).

The increased demand for Russian brands is confirmed by Ozon. According to the marketplace, in the first half of the year, Russians bought Atlant, Elikor and Flama equipment almost twice as often as in January-June 2021. In the segment of small household appliances, according to the results of the first half of the year, Redmond is the leader in pieces on Ozon. “Most often, Russians buy domestic brands for the kitchen: gas stoves, electric and induction hobs, refrigerators and hoods. Also, Biryusa chest freezers, which are also bought for commercial needs, are consistently in the top sales,” Ozon says. Wildberries among Russian brands note an increase in demand for Kitfort, Lumme and Vitek.

The interest of buyers has grown due to the departure of well-known brands and problems with spare parts, says Dmitry Levin: “At the same time, Russian large household appliances have not become better or cheaper, on the contrary, they have risen in price and do not yet claim large market shares.”

Appreciation

The current state of the market can be called an intermediate stage, primarily because parallel imports have not yet unfolded in full force. However, Alexey Pogudalov believes that in large household appliances, especially those localized in the Russian Federation, the scheme will not have a significant impact, since as a result it “becomes uncompetitive in terms of cost.” “Parallel imports carry something that is not mass-produced here in these categories – refrigerators with two hinged doors, freezers that differ in location, high-tech washing machines 60×60, dryers, etc.,” the expert explains.

Dmitry Levin believes that, as a result, primarily Western equipment will lose its positions, and large Asian brands “are unlikely to really leave and give up their shares.” In his opinion, such brands as Haier, Hisense, Gorenje will remain market leaders in the coming years. Perhaps, the expert adds, the new Turkish owners at the facilities of Whirlpool “will be able to create a worthy A-brand, there is a modern production base for this.”

With the resumption of supplies of equipment from Europe, the USA and Korea, the success of the former market leaders in returning customers will depend on prices that are formed taking into account exchange rates and transport costs, Anna Builakova, an analyst at FG Finam, notes. With a significant increase in prices and the absence of a commensurate increase in incomes of the population, it may be difficult for departed brands to return customers, she said. Companies offering democratic prices, for example, manufacturers from the CIS countries or Asia, can steadily occupy the niche of departed Western suppliers, Ms. Builakova admits. However, the analyst emphasizes that if returning brands can compete with new suppliers on price, brand awareness will play in favor of choosing a Western manufacturer.

Timofey Kornev