Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Large kitchen appliances; Small electrical appliances
Executive summary
EXECUTIVE SUMMARY
Slowing housing market to hurt appliances sales
Towards the latter part of the review period, particularly during 2004 and
2005, demand considerably slowed both in terms of volume and value sales.
Market performance was dynamic over 2002 and 2003, which in large part was
attributable to the strong performance of the property market, which resulted
in many consumers moving home. The great majority of consumers purchased new
appliances for their new homes and therefore the domestic electrical
appliances market was one of the main beneficiaries of the boom in the
property market. The housing market however lost momentum in 2004, in part due
to the considerable increase in consumer debt during the two years prior to
this year, although the reduction in government support provided for mortgages
in January 2004 also proved to be a significant influence on property sales.
Subsequently, appliances sales also slowed.
Additionally, the government announced that early in 2005 the 25% VAT (Value
Added Tax) rate would be reduced in January 2006 to 20%, which made many
consumers postpone their planned purchases to 2006, which further hampered
growth in the domestic electrical appliances market. Overall volume sales
increase in 2005 was almost market negligible and any increase was
attributable to increasing sales of small electrical appliances, while large
kitchen appliances recorded a small decline. Given that price discounting
remains a major characteristic of the market, value sales registered a decline
of 1% in 2005 in terms of overall market value sales.
Mature demand in large kitchen appliances subsectors
Large kitchen appliances are widely perceived as essentials and therefore
household penetration rates of these appliances are very high. This on the one
hand maintains stable demand in the sector at a reasonably high level. On the
other hand, however, it also limits further growth potential. Additionally,
demand for large kitchen appliances is tied to the performance of the property
market, as new purchases tend to occur when consumers move home. The large
kitchen appliances sector is highly concentrated with a handful of
international players commanding the bulk of sales in all large kitchen
appliances subsectors.
while most small electrical appliances subsectors are in their infancy
Household penetration rates of small electrical appliances are considerably
lower when compared with their large counterparts. Growth in sales of small
appliances was more dynamic over the review period, which was largely due to
the growing spending power of the Hungarian population. Most small electrical
appliances are considered as non-essentials given that the functions carried
out by these appliances can easily be replaced by human labour. The combined
effect of the growing spending power of the Hungarian population, increasingly
busy lifestyles and widening product assortment in small appliances subsectors
resulted in growing sales of these products in the second half of the review
period. Consequently, small electrical appliances sectors are more fragmented.
Although many international players are already present and growing market
share, the share of other brands is still very high, which inarguably offers
an opportunity for strong players to grow share.
The domestic electrical appliances market to hope for better days
The performance of the Hungarian domestic electrical appliances market was
poor between 2004 and 2005, due to a number of factors including the VAT
increase, although this is only expected to have a temporary impact.
Therefore, the industry is optimistic and value sales are expected to grow
more dynamically at CAGR 3% over the forecast period. In 2006, this will be
due to those purchases being realised in 2006 that were postponed in 2005 due
to the anticipated VAT reduction. Besides, income levels rose over the review
period, which is expected to continue in the forecast period. This is expected
to further aid growth in sales of appliances over the forecast period.
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