Homegrown consumer durables major Crompton Greaves Consumer Electricals Ltd has decided that kitchens will drive its next growth phase. The company has forayed into the built-in appliances segment with the launch of 38 models in the chimney, gas hob, built-in oven, built-in microwave and dishwasher categories. It has also launched its Crompton Signature Studio network of retail outlets across the country. It appears that the kitchen is a strategic space for Crompton.
According to Nitesh Mathur, Crompton’s vice president for new business, the company has identified the kitchen space as its new arena. Within this space, it has identified the built-in appliances segment as under-served to the extent of 40 per cent. Crompton’s entry into built-in appliances will be disruptive, he says.
Mathur, who is spearheading Crompton’s new foray, has had successful stints in leadership positions at BSH Household Appliances and Franke Faber, with both entities having a dominating presence in the Indian cooking appliances industry including built-in.
“We have found that most of the existing players in this category are not addressing the market suitably, either due to their MNC legacies or by virtue of being just importers. There are unmet needs, which can be addressed only by a player who is close to the ground and can see the gaps in product features and service. We see built-in appliances as white space,” Mathur says, explaining why the kitchen is a strategic space for Crompton.
Mathur says that Crompton is leveraging its core competencies in air, pumps, motors and electronics, to develop appliances that satisfy the requirements of users. “We have added several innovations to chimneys, hobs and ovens, most of which are new to the market. These include BLDC tech, and intelligent auto-clean, gesture control, auto switch-off and auto-on functions. Besides, we have been able to drastically reduce decibel levels in the chimney by redesigning its internal architecture. For three of these innovations we have filed for patent registration.”
In the built-in business, Crompton is targeting an addressable market of Rs 2,200 crore. The market itself is split into five segments: luxury, super-premium, premium, mass-premium, and entry. Crompton has positioned itself in the super-premium, premium, and mass-premium segments, by offering unique features and aesthetics for each price point.
While the three premium segments, according to Mathur, account for nearly 70 per cent of the market, luxury has one per cent (Siemens, Gaggenau, Miele) and the entry segment is about 29 per cent (Hindware, Elica). “We will be contending mostly with Faber, Elica, Kaff and Hafele in these segments.”
“Our market research has revealed that the chimney, which is the most basic appliance for the kitchen, has a penetration of just 3-4 per cent in the country. The other appliances are even less penetrated. We aim to take this penetration to double digits within the next 5-10 years with our customer-centric approach.”
This fact is validated by the growth witnessed by market leaders in the cooking and built-in appliances industry. While their six-year CAGR has been 23 per cent, peak turnovers have not gone beyond Rs 400 crore.
The market has also undergone consolidation in the last couple of years. In 2021 Whirlpool of India, the refrigeration and home appliance specialist, raised its shareholding in built-in appliances maker Elica PB to 87.25 per cent, by acquiring an additional 38.25 per cent for a consideration of Rs 428 crore. This acquisition has given Whirlpool a third strategic pillar, after refrigeration and laundry.
Crompton itself had acquired an 81 per cent stake in small kitchen appliance and cooking equipment manufacturer Butterfly Gandhimati in 2022, for a consideration of Rs 2,076 crore. Butterfly is a Rs 1,000 crore operation, and its portfolio includes mixer grinders, table-top wet grinders, pressure cookers, stainless steel vacuum flasks, LPG stoves and non-stick cookware. The acquisition accords Crompton a stronghold in the kitchen equipment segment and complements its play in the overall kitchen space.
The retail rollout for Crompton’s built-in business has started. The company has launched a series of Crompton Signature Studios across metros and tier I cities. These exclusive outlets will be channel partner owned and managed, with Crompton providing the marketing, supply chain and logistical support. By July end, 30 such outlets will be operational in Mumbai, Bengaluru, Delhi NCR, Hyderabad, Kolkata, Chennai, Pune, Ahmedabad, Cochin and Coimbatore. As of June end, Mathur informs that 16 outlets were already in place.
Additionally, the company is also expanding its footprint through a shop-in-shop presence in multi-brand environments, such as kitchen retailers, appliance dealers and modern retail outlets. It is also ready to launch its digital presence on prominent e-commerce portals. Once the initial retail rollout is complete, the company will commence its multi-channel marketing campaign.
Currently, its appliances are being contract manufactured in Turkey and China. Crompton plans to set up a greenfield facility in India once it breaches the Rs 350 crore turnover mark. “That would be the inflexion point for us, as the volumes will provide us the required economies of scale.”
Mathur said that Crompton will be able to achieve built-in appliance turnovers of Rs 350-400 crore in the next three years. “We should be able to capture a market share of 10 per cent in the next three years.” With its own revenues of Rs 200 crore in the small appliances segment as well as Rs 1,000 crore of Butterfly, and backed by robust overall growth in the appliance space, Crompton expects to clock combined kitchen-related turnovers of Rs 2,500 by 2025. This game plan does confirm that kitchen is a strategic space for Crompton.