This Q&A first appeared in DNA Money edition on Wednesday, March 28, 2012.
What has been your recent experience in India?
Our share price which used to be Rs17 in 2005 went up to Rs60 in 2008 and went on to touch a record high of Rs338 in November 2010, making us one of the highest profitable mid-cap stocks on the National Stock Exchange. Over the last 12-15 months, we anticipated the slowdown, and have intensified our focus on controlling costs and accelerating innovation. The launch of 160 models across six categories this season shows that we are far better prepared than anyone else in this industry. We are going for leadership even as the industry goes through a difficult period.
How has your Indian business grown? Which categories are piloting growth?
All our categories grew in topline and percentage margin during the period 2008-2011. We grew in our areas of strength — refrigerators and washers — led by some innovations like Protton (3-door refrigerator) and Ace Washstation (top-load washing machine), to name just two. However, we made exceptional progress in categories that Whirlpool has not generally been associated with - air-conditioners and microwaves.
Looking ahead, we see huge opportunity in growing our refrigerator business in 2012 on the back of some great innovation. We wish to become leaders in refrigerators in the next 18 months.
What have been your product failures? Explain the reasons.
Fortunately, we have not had any failures in the last 6-7 years. This is largely because all the products and innovations we bring to market are based on well-researched insights and consumer studies. Perhaps, the only failure we have had was the launch of oil heaters in 2008-09 when we had an unexpectedly short winter.
How do you plan to differentiate in the Indian clutter?
Innovation, design, performance and quality will drive our brand. Our summer 2012 launches establish new benchmarks for performance — fastest ice-making and fastest bottle-cooling (in refrigerators) and removal of 15 different types of stains (in washing machines).
Why is Whirlpool tapping all price points?
To be No.1 in a country as diverse as India, it is important to understand the dynamics of our demography. For a country with over 200 million households, the size of the home appliance market is 15 million. There are many Indias within these 200 million households. There is the large ‘mass India’, a ‘middle India’ with approximately 65 million households and a ‘premium India’. Therefore, if we want to be No.1 in India, we will have to address each of these consumer segments. Whirlpool has been very strong in ‘mass’ and ‘middle India’, and while we strengthen our position there, we are widening our horizon to launch products that will address the needs of ‘premium India’. In the next 12-18 months, we expect to be leaders in refrigerators and washing machines and the No.1 home appliance company in three years.
We have the lowest penetration levels among emerging markets such as Brazil, China and countries in Southeast Asia. This is a huge opportunity for growth. India is a very large and heterogeneous market, both in terms of economic as well as social profiling. Hence, consumer insights in India need to be very local to the geographies and cannot be just country- specific.
In recent times, you have also launched invertors and water purifiers. What gives?
Water is a strategically important category in India and we want to be leaders there. We see great value creation opportunities here. As regards inverters, these are important but tactical opportunities and we will leverage our brand wherever there are such opportunities. We have tasted more than moderate success in our power accessory business.
Why has Whirlpool earmarked Rs100 crore for product innovation?
Whirlpool India has been a source of inspiration for low-cost innovation. It has won many awards for producing value-creating products with very low use of capital. With India’s increasing relevance to Whirlpool Corporation, we will be expected to innovate continuously for the benefit of our Indian arm and Whirlpool at large.
What’s your plan to develop and enlarge distribution?
We are targeting to be a company with more than 15,000 dealers across India. We are going outside the appliance trade to the specialist kitchen manufacturer channel. Air-conditioners are sold from appliance outlets as well as specialised AC trade called SSDs (sales and service dealers). Water has found its way into electric and small appliance stores. We intend to grow our store presence by 10% every year. We also have about 100 brand stores and these will also get attention and money in our channel strategy.