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issue: December 2005 APPLIANCE Magazine

European Report
Fagor/Brandt Maps Its Strategy


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by Paul Roggema, Europe Correspondent

In April of this year Spain’s white goods market leader Fagor acquired French appliance maker Elco Brandt.

The new group is estimated to be Europe’s fifth-largest white goods manufacturer with a turnover of about
2 billion euro (approx. U.S. $2.4 billion) and 11,000 employees, almost double the previous size of Fagor. The group has 16 plants producing 7 million appliances annually under 12 brands.

Brandt has seen several changes of ownership. In 2001, when parent company ELFI Group went into bankruptcy, Brandt was sold to Israeli holding company Elco. Elco is said to have paid about 50 million euro (approx. $60 million) for Brandt. Fagor in turn paid an estimated 162.5 million euro (approx. $195 million) for the company. The takeover was no surprise, since Fagor already had a 10-percent share in Brandt. Fagor parent company MCC Group helped to finance the deal, although 55 percent of the financing was external.

So what has been happening since Fagor took over?
“The actual takeover started June 15, and since then several teams have been determining synergies,” Pablo Mongelos, Fagor’s CEO, tells APPLIANCE. “The main change we have already made is a joint central purchasing department for both companies. The building of the new, merged organization will start (at the) beginning of next year. We are studying and comparing our most important assets, our brands, as well the strategy and the culture of both Fagor and Brandt.”

Production efficiency will also be assessed, Mongelos says. “Of course, the issue of relocation of production to low-cost sites also affects our company; we already produce in Poland and Morocco.”

As the 12 current Fagor and Brandt brands are re-evaluated, Fagor is designing a new brand map and brand strategy, taking into account the dynamics of the markets its serves.

“It is common knowledge that the European markets are very fragmented,” Mongelos says. “Especially in cooking, consumer taste varies per country. For example, the French want their pyrolytic ovens and top-loading washers. The Germanic countries are very quality-oriented and are willing to pay more for features such as high spin speeds.”

The retail picture must be taken into account as well as Fagor weaves a new marketing plan.

“For us, it is important to be present in the markets where we are leading: Spain, France and Poland,” Mongelos says, “But this takeover clearly gives us a much better presence in the globalizing European and worldwide marketplace.”

 

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