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Arçelik announces intentions to bring Beko to US market

Arçelik announces intentions to bring Beko to US market

ANKARA: In early 2015, Arçelik AS, the Turkish home appliances company, announced that it would commence production of major appliances in Thailand for the domestic market as well as to cater to neighbouring markets such as Vietnam, Indonesia, Myanmar and the Philippines. Thailand will be the sixth plant for Arçelik, after Turkey, Romania, Russia, China and South Africa. More recently, Arçelik also announced intentions to bring Beko to the US market.

It is clear that Arçelik is seeking to expand to markets outside its strong foothold in Western Europe, due to market saturation and to reduce reliance on just one core region. With these plans, Arçelik will not only gain cost-effectiveness through its Thai production, but also reap advantages from the ASEAN Economic Community (AEC), a cooperation among 10 nations in Southeast Asia looking to transform ASEAN into a region that promotes the free movement of goods and services, skilled labour, and capital.

Arçelik is the leading manufacturer in consumer appliances in Turkey, where it is based, with 23% of volume sales. The company has traditionally focused on the European market, with its Beko brand ranked third in Western Europe in major appliances in 2014.  Notably, Beko has a strong presence in Turkey and the UK, where it is ranked second in major appliances in 2014 in both countries. Beko competes primarily in the lower-end to mid-priced segments and focuses heavily on energy-efficient appliances.

Apart from the market saturation mentioned above, Arçelik faces increased competition in Western Europe due to the increasing strength of Asian manufacturers such as Samsung, LG, Panasonic and Haier.

Euromonitor International’s consumer appliances data show Indonesia as being ranked third highest globally in terms of absolute volume growth of major appliances over 2014-2019, with Vietnam and Thailand at 11th and 12th, respectively. The growth of major appliances in the region is being driven by both rural and urban sales. For example, in Vietnam, Thailand and Indonesia, volume sales growth is fuelled by new purchases, notably in rural areas, where households are buying fridge-freezers and washing machines for the first time. Concurrently, growth is also being driven by product replacement by higher-income households that are willing to pay higher prices for premium models that offer improved efficacy, electricity costs and time savings. This product trading up also generates higher value growth, with CAGRs of 8%, 5% and 4% forecast for Indonesia, Vietnam and Thailand, respectively. Therefore, it is a timely opportunity for Arçelik to leverage on the advantages that the AEC offers, along with the surge in demand for consumer appliances in Southeast Asian markets due to increased disposable incomes and improved economic conditions.