NEW YORK— Coming off an encouraging holiday season, small appliance suppliers predict a generally bright outlook for 2020, although the continuing uncertainty over tariffs and trade issues is casting a cloud over sales expectations. Manufacturers and retailers continue to negotiate on increasing benchmark prices on many key products, as the already-implemented tariffs coupled with rising raw materials costs put a squeeze on margins.
Most manufacturers reported generally positive results for the holidays, with air fryers, waffle makers, indoor grills, coffeemakers, food processors and styling irons cited as some of the most-sought-after products by consumers. Suppliers said their business was strongest with mass merchants, although online sales showed a definite uptick.
“Holiday was strong in both e-commerce and brick-and-mortar,” said Jonathan Schaefer, divisional vice president, marketing home and personal care, Spectrum Brands. “We have a strong presentation and are ramping up for a good 2020 in both home and personal care.”
Schaefer cited Remington Twist & Curl styling irons, George Foreman indoor grills and Black & Decker combination air fryer/toaster ovens as standout sellers for the holidays. “The Remington Twist & Curl was the number one specialty styling iron at Walmart, and the George Foreman brand did very well at both Walmart and Target,” he said. “Air fryers across the board continue to grow, especially newer units that combine air frying with the features of a toaster oven. The consumer sees real benefits to air frying— number one, they see a health benefit, because they are using less oil; and number two, they see a benefit to the food, because you get a very crispy result.”
Pinny Kahana, vp/sales and marketing for Chefman, said, “Air fryers really killed it last year. We expect at some point that it will hit a saturation level, but right now, the category shows no signs of slowing down. We are continuing to add more features and see the next frontier as air fryer/toaster oven combinations. The consumers are really responding to these products, even at higher pricepoints, because they perform a lot of functions well and save valuable countertop space. We also did extremely well with electric kettles, and our anti-overflow waffle maker performed very well at retail.”
Select Brands had positive sell-through on large-capacity air frying ovens, double-flip waffle makers and griddles, according to Eric Endres, vp/marketing. “We saw some very strong sales on these products in the fourth quarter— and expect those categories to continue to do well going forward.”
Cuisinart focused on air fryers, coffeemakers and food processors as stand-out categories for the fourth quarter, according to Mary Rodgers, director of marketing communications. “Key business developments continued to be focused on the outcomes from decisions related to tariff increases and roll backs,” she said. “Holding price points through the holiday season enabled us to meet corporate sales goals, and the categories we expected to perform well, delivered. Air fryers, coffeemakers and food processors continue to grow and become iconic to our brand. We attribute our success to integrated marketing campaigns and alignment at retail.”
Air fryers continue to be an expanding category for Gourmia, fueling a strong fourth quarter. “When it comes to our brand, we like thinking ‘a mile wide’— as in a full range of products all based on the core product/technology,” said founder Heshy Biegeleisen. “With air fryers, we’re also thinking ‘a mile deep,’ with expansions into multi-functional air fryers/toaster ovens, a single footprint, delivering enhanced functionality across multiple platforms. This wasn’t just combining two distinct technologies into one, it also involves optimizing elements like programmability and the user interface to deliver maximum performance and value— without cannibalizing or diminishing the distinct benefits of each.”
Biegeleisen also cited coffee-related products as strong performers that are expected to continue growing. “The single-serve revolution that began with Keurig created a generation of consumers with more refined tastes when it comes to coffee,” he said. “Groups like these are like oenophiles, they tend to keep ‘evolving’ by looking for the next level of product to take their experience to an even more refined level. The Keurig experience, while better than drip or instant, is only good up to a point, as your tastes are still limited by what’s in the pre-packaged pod. To go beyond that means a line of machines that let them experience small batch roasters, blends, single-sourced beans. In short, the kind of more curated experience our new line of machines are designed and engineered to address.”
The implementation of the first round of tariffs, and the suspension of subsequent tariffs, had a tremendous impact on the housewares business, and the small appliance business specifically. “Uncertainty is the key word, because no one really knows what will happen with China and the trade situation,” said Endres of Select Brands. “The tariff situation has made decision-making much more complicated and uncertain, impacted costing and the ability of manufacturers to commit to inventory positions.”
Endres added, “Some people have searched and scrambled for alternate countries of origin, but supply chain changes just don’t happen that rapidly, and overall, the infrastructure in some of these other countries just isn’t there to support the business. Speed and cost are issues, which means you have to deal with China. The industry is having some challenging conversations with retailers, because vendors aren’t equipped to absorb these increases. Ultimately, the price increases due to tariffs are going to trickle down to the consumer.”
Kahana of Chefman asserted, “There is no doubt that tariffs are hurting our business, and everyone is suffering from similar pains. We absorbed as much as we could, but were forced to pass some on to the retailers. We are working with our customers to find creative solutions to manage the impact on the consumer.”
Cuisinart’s Rodgers pointed out, “The tariff situation used up a lot of human capital. Chasing the latest announcements directly impacted our budgeting processes and caused reworking throughout the year of costs, budgets and production. There is some mitigation, but there is still impact on the bottom line. Every vendor situation is different, and decisions must be very localized based on their upper management’s expectations. It is also highly reliant on product mix, categories that you are selling in, and material choices. Another factor that comes into play is whether you are willing to make moves to our production facilities in other countries. Cuisinart management is on top of all the changes and we are making decisions based on impact to our business, profitability, category performance and willingness to move factories.”
Gourmia’s Biegeleisen said the company worked closely with its manufacturing and retail partners to alleviate many of the issues caused by tariffs. “Our relationships with our factory partners and key accounts enabled us to develop solutions that didn’t just enable us to get past the tariff challenges, but to also emerge as a smarter, leaner more agile and responsive company. Our corporate culture makes us nimble.”
The December suspension of some tariffs mitigated some potential consequences. “Tariffs had some impact but not too bad,” said Spectrum’s Schaefer. “Most of the tariffs affecting our categories have been placed on hold. On some products, we have seen price increases, but we have been working closely with our retail partners to drive increased volume to offset the increase, and hopefully maintain the optimal pricepoints. Pricing is always at the discretion of the retailer, but they understand that they need to partner with us. And, we are working with our suppliers to get the best costs and to maintain efficiencies.”
Not surprisingly, many of the products that did well in the waning days of 2019 are expected to continue to sell strongly in 2020, including air fryers, indoor grills, and other food prep tools. Newness, innovation, multi-functional products and enhanced features continue to drive sales, according to suppliers.
“The speed at which the consumer and the retailer are demanding newness has increased dramatically; this in turn changes the way deliveries and inventories are managed, creating a higher level of risk, but also creates opportunity,” said Endres of Select Brands. “We see continued growth in air fryers, especially units with more features, more capacity, as well as units that offer combinations of features. We also expect to see some growth in motor-driven appliances and food prep items, as we are investing in some new applications and technologies to make them more versatile.”
Spectrum’s Schaefer said, “We expect air fryers and air fry toaster ovens to continue to grow, and turn in solid year-to-year performance gains. We are also planning a launch in March for our George Foreman grills, and will be making a sizeable marketing investment. We are continuing to invest in innovation and technology to bring new features to products and generate sales.”
Gourmia expects continued growth in air fryers as well. “We believe air fryers have only begun to scratch the surface, both in terms of single and multi-function platforms,” said Biegeleisen. “Based on what’s in our pipeline for 2020, in terms of market-making pricepoints and engineering/design, we believe we’re uniquely poised to make the most of this opportunity.”
“It’s an election year, so flux on both a national and global level can lead to uncertainty with consumers,” Biegeleisen added. “As this uncertainty tends to impact considered purchases more than ‘rationalizable’ necessities like our categories, we plan on focusing on the elements that help communicate this. Case in point: the versatility and health benefits of our air fryers and the ‘per cup’ savings and convenience of our coffee products. Basically the plan is to position our products as intelligent purchases not ‘indulgences.’”
Rodgers of Cuisinart pointed out, “This year, there will be a greater focus on health and wellness as consumers reflect on making improvements to their nutrition, exercise and overall lifestyle. Air fryers and food processors tie in nicely with these trends and will remain as product highlights in 2020.”
“Everyone wants to be the lowest cost producer at retail, which will continue into 2020,” Rodgers continued. “Additionally, the trend of ongoing movement from in-store to online consumer purchasing will continue to impact all our retail channels. The impending election will also have a huge impact on the economy, tariffs and taxation. Although these effects may not be felt until early 2021, we plan to keep an eye out.”
Smart home applications continue to make inroads in small appliances. “We are developing our own apps to take the guesswork out of smart appliances,” said Chefman’s Kahana. “We’re focusing on how to make the technology work for you, to enable people to hand off the stressful part of meal preparation, but still be in control of the process. The experience we want to design for the consumer is to make cooking more fulfilling, and more fun.”