Electrolux 2008 Annual Report Download - page 24

Electrolux is a leading global supplier of complete solutions for professional kitchens
and laundries. The Group’s high rate of innovation and widespread service network
are important competitive advantages.
Professional Products
Innovation and design are increasingly important within Electrolux
Professional Products. Approximately 3.5% of own product net
sales in Professional Products is invested annually in product
development in order to maintain a high rate of innovation and
follow customer needs. The Group currently holds almost 500
patents for products for professional kitchens and laundries.
Widespread service network
The products sold to professional users are subject to a good deal
of wear, and downtime is costly for users. Maintenance and ser-
vice comprise a large share of the operation in this business area.
Electrolux has an extensive, global service network, which is an
important competitive advantage.
The expertise and knowledge that has been acquired within
Professional Products and Consumer Durables is mutually benefi-
cial. Consumers are inspired by visits to restaurants with open
kitchens and want products with professional appearance for
their own kitchens. Innovative product solutions developed within
Professional Products are transferred to Consumer Durables.
Own production, fewer product platforms
Labor costs normally account for less than 10% of total costs for
professional products. The products are often large and complex
and the users expect support faciiities to be near-by. This means
that production facilities must be close to the end-user market, so
competition from producers in low-price countries is limited.
Products made in-house have accounted for a growing share of
Group sales in recent years. As in Consumer Durables, the num-
ber of product platforms within Professional Products is being
reduced.
Professional food-service equipment
Trends
Buyers of professional kitchen equipment have widely varying
requirements, which means that producers must be able to supply
flexible solutions. End-users are focusing increasingly on criteria
for hygiene and energy-efficiency, and on access to a widespread
service network. The importance of design is increasing steadily,
as in many restaurants the kitchen is on display for guests.
Market and retailers
The market for professional food-service equipment amounted to
approximately SEK 125 billion in 2008. Market demand decreased
in 2008, due to general uncertainties in the economy. Growth
continued in Asia, but at a slower rate than in previous years.
Approximately half of all food-service equipment is sold in North
America, where consumption of prepared food has a long tradi-
tion. The large restaurant chains are increasing their market
shares in the US, and are also expanding rapidly in growth regions
such as China and Eastern Europe. This offers substantial growth
opportunities for producers of food-service equipment who sell to
restaurant chains.
The market structure in Europe is dominated by small indepen-
dent restaurants. It is half the size of the North American market.
Producers are also more fragmented, and often specialize in a
single product or sector. The on-going harmonization of laws and
regulations within the EU favors large producers who can more
easily adapt their operations to stricter criteria.
Electrolux position
Brands
Electrolux products for professional food service are sold mainly
under the Electrolux brand. Molteni is a niche brand for exclusive
Opportunities within professional products
annual report 2008 | part 1 | business areas | professional products
North America, Europe and Japan
account for approximately 80% of
the market for professional prod-
ucts. Historically, global growth has
been approximately 2–3% annually,
and mainly concentrated to growth
regions. Total market value is
approximately SEK 145 billion.
North
America
Rest of
world
JapanEurope
75
60
45
30
15
0
SEK billion
North
America
JapanEurope
10
8
6
4
2
0
Rest of
world
SEK billion
Market value, food service Market value, laundry
20