It’s our best year in India, amid the global crisis6 min read . Updated: 03 Dec 2010, 09:42 PM IST
It’s our best year in India, amid the global crisis
It’s our best year in India, amid the global crisis
New Delhi: Rick Goings, chairman and CEO of Tupperware Brands Corp., the $2.4 billion ( Rs10,824 crore) global plastic kitchenware company, was unusually ebullient during his current India visit. With a growth rate of 52%, it’s been Tupperware India’s best year in the country since it first arrived in 1996; sales touched a new high last month. Trendily clad in his trademark black turtleneck, black trousers and a chunky Prada belt, Goings, who looks younger than his 64 years, says the explosive growth is pushing him to visit India more frequently. Formerly with direct selling company Avon products Inc.‘s beauty products, the ex-navigator of the US Navy shares Tupperware’s India experience and plans for other key markets. Edited excerpts.
What is driving Tupperware’s growth in India?
Three things have come together for us in India even though we struggled for the first few years. Now we have got the product right, the size and scale right, and the right leadership team. We have tweaked a lot of products to suit India. A water bottle mould created here has been exported to the US and other markets. I must say, our compound topline (revenue) growth has been north of 40% per year for the last four years. The good news is we are willing to throw that back in investments. We just opened a new factory (in Dehra Dun). The first one (in Hyderabad) was outsourced.
Was there a need to own a plant in India?
We are in more than 100 countries, but we own only 17 factories. It has a lot to do with product quality. It is a multi-million dollar investment here. The Indian consumer is looking for quality.
But she is still price-conscious.
The Indian consumer wants high quality product but, like no other place in the world, wants price value. So I have told the Indian team to do fewer, but better products.
Are the Indian operations profitable?
I can’t share the numbers for competitive reasons but it is a very nice double-digit profit. Or we can’t re-invest. We must be the largest direct selling firm in India. I can share one number. They (the India team) showed me the long range forecast—10 years—which talks about reaching half-a-billion-dollar mark in revenue.
Which are your biggest markets?
Mexico is number one and Germany is number two. India would top the growth markets. It has been our biggest year in India…this is when the crisis is going on. How will they do when the economy is better?
The US has not fared badly either. We are traded on NYSE and are extremely profitable. Our pre-tax earning will be 13.5%. The share price last year was $36, and now it is in the high 40s. Our dividend was 20% last month.
You have changed tack in India and resorted to advertising in newspapers and brand placements in films which is unusual for a direct selling company.
Those were local initiatives to enhance the speed of communication. But we don’t spend much on that. There was a study that showed 78% of the people do not believe the ads that they see.
But advertising seems to have worked for you.
No, we don’t fall back on advertising to push business. It is not a sustained strategy although association with films make the sales force proud.
Would you engage a brand ambassador in India?
We don’t want to link our product with one person. In the US, Brooke Shields was working for us for a couple of years. My neighbour is Tiger Woods (Goings and Woods live in the same gated community in Florida). I have known him since he was 19. But, imagine if our brand was tied to somebody who, all of a sudden, had issues…We have used some personalities from time to time but it is never permanent.
Globally, Tupperware is run largely by women-only sales force. It’s believed you understand women well.
Yes, women make 99% of Tupperware’s sales force. In India, it is 100%. We have not opened it to men. I spend a lot of time trying to understand, but you guys are very complex. Women can multi-task. I have seen women at the airport—holding a child, pushing another in a stroller, talking on the mobile phone and checking in. However, the guy next to her, who is by himself, cannot find his ticket.
For many years in business it was taught for a woman to be successful she needed to act like a man. And we know she doesn’t.
You have been with Tupperware for the last 18 years. Do you see a change in what consumers want?
The first change is compression. Earlier, we launched a product in one place and, over the next 20 years, rolled it out in others. Now you better be rolling it out next year. The consumer knows about it from TV and Internet. Also, my generation had patience. This generation wants instant gratification. Third, there is a rapid liberation of women. Imagine a Muslim country like Indonesia is my fastest-growing market today.
Why did Tupperware fail in a developed market like the UK?
England is the only country we ever got out of. We haven’t been there in seven years. Actually, we were targeting the A and B (the affluent socioeconomic category) consumer with a sales force from D and E (the lower income strata). D and E do not sell to A and B. And we weren’t going to dumb down our product line. So, the best way was to withdraw from the market. However, now we are planning to go in with the young urban professionals in their 20s and 30s. You may also see Tupperware in Apple Stores—not for selling but just for image.
Your designs and products are patented.
Patents last for only 17 years. We still do the patents. However, that is not a strategy. In our kind of product line, you better not count on the law to give you the competitive advantage. You better count on innovation so that you yourself make your last product obsolete. We try to have 25% of our sales every single year come from new products. Competition is very quick to do knock-offs. So the question is: do I pay $5 million to the lawyers to litigate, or the same money to our new product development people. Lawyers don’t build a company, so I give it to product innovation people. The strategy is not to waste all our resources on litigation.
Will you introduce your beauty brands in India?
No. These were brands acquired because of the consumer pattern in Latin America where the use of Tupperware kind of products was not that high. The whole category would be a billion dollars while they spend $22 billion on beauty products, mostly on fragrances and colour cosmetics. So we said for us to be really big, and for our women to earn money, they cannot just sell Tupperware. We did acquire direct selling companies in cosmetics. They were national and not global brands.
What do the next five years in India look like?
Keep growing at 30% every year and very clearly be among the top three markets in the world. India is a dominant part of the portfolio. There is shift in the world from New York and London…right now it is Asia. For the next 100 years it is clearly Asia.
Apparently you are good with languages. Have you learnt Hindi yet?
I am still working on English (laughs). I also know Spanish and German. No, I haven’t learnt Hindi, but I have practised transcendental meditation for 34 years now. I learnt it from Maharishi Mahesh Yogi. And my sail boat—I have sold it now—was called Namaskar. I was raised a Protestant, but I am much more Buddhist than anything else.
What is the mood in your home market in the US?
There is resentment that the president (Barack Obama) hasn’t focused on his own economy. I liked what he said here in support of India’s demand for a permanent UN Security Council membership. The real concern is that he is someone who is inexperienced, naïve, arrogant and has all the power. That is a very bad combination. He has never had to balance a budget. He better change course. That is not saying that I cared much for (the) previous administration.