The Middle Eastern/African middle class is expected to grow from 137 million people with annual consumption of $1.769 trillion in 2009 to 341 million people with annual consumption of $2.793 trillion in 2030, according to the Appliance Industry Review and Outlook 2011: Middle East/Africa. If these projections bear out, the Middle Eastern/African middle class will exceed the middle class in North America, which is expected to shrink from 338 million to 322 million by 2030. However, the Middle East/Africa's projected total consumer spending in 2030 amounts to less than half of North America's estimated $5.837 trillion.
Middle Eastern countries report some of the wealthiest average household incomes globally, and many nations are considered economically developed. Turkey experienced a strong growth rate of 8.1% in 2010, according to the World Bank - double the global growth rate of 3.9%. Turkey's industrial infrastructure and low labor rates make it an ideal manufacturing setting for European companies. Appliances could be produced in Turkey and transported easily into Europe or Middle East nations. Turkey, like China, experienced growth as an appliance manufacturing hub during the 1990s and 2000s with the development of production facilities, tech centers, call centers, and distribution networks.
Saudi Arabia's National Commercial Bank has recently stated that letters of credit (LC), consumer spending indicators, were up 28% in 3Q 2011 compared to STLY. The biggest gaining LC category was "Appliance and Other Goods," up 59% in 3Q 2011 from 3Q 2010.
Global appliance producers are gaining footholds in the Middle East and Africa, where vibrant markets are expected to grow in the coming years. Arçelik, part of the consumer durables business of Turkish conglomerate Koc Group, is the market leader in Turkey in most residential appliance segments and claims to be the market leader in LCD TV and air-conditioners. In 2011, Arçelik entered an agreement to acquire South Africa-based Defy Appliances Ltd. Defy reported 2010 net sales of $345 million and is the market leader in the South African Customs Union. Defy has three manufacturing facilities in South Africa that produce stoves, built-in ovens, dryers, air-conditioners, refrigerators, and chest freezers.
Globalization and transformation were viewed as two cornerstones of Electrolux's strategies in the 2000s. As part of the effort, the company sought to move 60% of its manufacturing operations to low-cost areas near rapidly growing markets. Following through on this strategy, Electrolux recently acquired Egyptian appliance maker Olympic Group. Olympic Group had annual sales of $350 million and an estimated volume market share of 30% in Egypt. The company dominated the water heater market in Egypt with an estimated 70% share, and led the water heater market in Libya and Jordan as well.
"The Olympic Group was a leading appliance maker in Egypt with 7,300 employees behind the manufacturing of washing machines, refrigerators, cookers and water heaters," says Andrew Humphreys, editor in chief of UBM Canon Data Products. "The two companies have had a successful commercial partnership in that region for nearly three decades encompassing technology, component supplies, distribution and brand licensing. This transaction represents the implementation of profit growth that Electrolux has planned for emerging markets.”
Fagor Electrodomesticos manufactures residential appliances under Fagor Group and has a manufacturing facility in Morocco. The company is expanding in the Middle East through retail showrooms for professional cooking appliances, notably in Iran and Turkey.
The Haier Group has put in place a global branding strategy intending to position Haier as a local brand in different markets. Haier established manufacturing operations in Pakistan, making refrigeration appliances for markets in India, Afghanistan, the Middle East, and Africa. Haier operates the largest appliance facility in the Middle East, based in Jordan, serving markets in Syria, Lebanon, Egypt, and Palestinian territories.
More information is available in Appliance Industry Review and Outlook 2011: Middle East/Africa located at http://www.appliancemagazine.com/marketresearch/index.php.
For more information on this report, contact Sandra Baker at +1-215-944-9836 or Sandra.Baker@ubm.com.
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