BackIndia is a strategic and critical market for Kohler
Head of maker of plumbing products for kitchens, bathrooms speaks on his firm’s expansion into smaller cities, towns
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Hyderabad: Kohler Co., the privately held US maker of plumbing products for kitchens and bathrooms, has invested $100 million in India over the last five years on manufacturing facilities and showrooms.
Despite slowing real estate growth, high interest rates and inflation, India is still Kohler’s fastest growing market and offers sizeable potential, said president and chief operating officer David Kohler, 45. “This is our most important strategic new market in the world and we think it is critical to our success long-term," Kohler said in an interview on Friday. The Wisconsin-based firm is now eyeing expansion into smaller cities and towns, said the Kellogg School management graduate. Edited excerpts:
How big is the Indian bathroom accessories market, and what is your share? How is it growing?
It’s about ₹ 4,000 crore—the size of the market. We don’t share (information about) market share as we are a privately held company. But this is our fastest growing market in the world. It is faster than China… We don’t share those numbers (growth figures) but it is growing significantly in double digits. At the moment, it is roughly growing twice the overall market growth.
How do you plan to increase your market share?
Well, we are going to continue to invest and grow this market. We have significant investment as a company with our manufacturing plants in India. As a total, we have invested well over $100 million in India. So we are going to continue to invest to manufacture in India. This is our most important strategic new market in the world and we think it is critical to our success, long-term. So we are going to invest at a level to put us into a leading position in India over time... In addition to that, our strategy is to really continue to expand our showrooms across India, not only in tier-I cities, but also tier-II and beyond. We are also going to continue to bring the best designs in the world for the Indian market, besides making sure we are doing designs that are specific to how Indian consumers live and the design trends here. We are starting to do development of products for India, from India. The majority of our line today is designed and engineered outside India.
Has this push into tier-II and tier-III markets already begun? Is there a market in smaller towns and cities for a niche brand like Kohler?
Well, as we fully saturate our geographic presence in tier-I, then we will move into tier-II. We think the economy of India is a rapidly developing economy and the middle class is increasing and there is a significant market at the luxury end. And we very much think there is an opportunity not only in tier-I but eventually in tier-II cities as this country continues to expand, for our business.
The Indian real estate market isn’t really doing well; there is a slowdown in Europe and North America. How is your business faring in such conditions?
We are actually continuing to grow our business well in India, in projects as well as retail. We learned though that this year some projects have gotten delayed. We have seen that, we have felt that, in our business as projects have slowed. But, overall, we still believe very much in the fundamentals of this market, the demographics and the growth opportunity. We work with generally the best developers in India. Companies here in Hyderabad like Phoenix, GVK, Lanco—some of the best companies in India. And these companies are continuing to invest and build infrastructure and hotels and apartments and commercial space in India... As we see per capita incomes increase here, our opinions of the importance of India have not changed whatsoever.
High inflation has been persisting for a long time now, and also the high interest rates in India; aren’t these a matter of concern in your line of business?
Both are a matter of concern. The high interest rates have certainly slowed the property markets, and that is a real issue. Inflation has also been a factor for all manufacturers and producers in India; gas and other commodities and input prices have created cost pressure on all manufacturers. Those have been two drags for the economy to deal with.
Kohler is a well-known bathroom accessory brand in India, but you also have furniture, cabinet and tile brands in your portfolio. Do you plan to bring these to India?
Over time, we definitely believe almost all the business at Kohler will have some presence here in India. So our furniture brand Baker Furniture already sells in India and (we) will continue to expand that. There is great interest in India for some of our other brands like Kallista, a high-end plumbing brand, Ann Sacks tiles and stone. We also have world championship golf resort destinations in the US and in Scotland. We have no plans right now for a golf resort destination in India but. may be, over time, that will be here as well.
Can you share some interesting trends about the Indian market. How does the Indian consumer and his/her preferences vary from those in Europe and North America?
There are some real similarities and differences. The first similarity is that the Indian consumer is very demanding, very discerning; they know the best brands in the world; they have a good sense of quality and design, and they want the best design and quality, and brands that the world has to offer. Beyond that we found some unique aspects and design trends within the Indian market. Showering is very important in the Indian market; it’s less of a bathing or a bath culture and more of a showering culture. The showering products and showering space is critically important in India. In addition to that, as you know, the Indian consumer loves gold, and gold is very popular. So you can see a large line of new gold faucets with this special finish capability. The Indian consumer also knows that they want quality and things to last a long time. So you need a pretty finish; but at the same time, it has to be durable, and it has to last forever because they want value for their money… There is an interesting blend here in India for contemporary design as well as traditional classic design.
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