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Lessons from Tupperware

Lessons from Tupperware

Australian companies are competing with multinationals from around the globe and domestic players for a share of the significant growth in Asia's emerging markets. There's a lot they could learn from Tupperware Brands.

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Lessons from Tupperware

Australian companies are competing with multinationals from around the globe and domestic players for a share of the significant growth in Asia's emerging markets. As they plot their moves, there's a lot they could learn from US-based Tupperware Brands, whose plastic kitchen storage containers have filled Australia's shelves and refrigerators since 1963. The company was founded in 1946 by American Earl Silas Tupper but it didn't really take off until a few years later, when single mother Brownie Wise helped introduce a novel sales model: the Tupperware Party. Soon, hundreds of thousands of post-War homemakers were hosting gatherings in their homes to earn income by selling the, vacuum-sealed kitchenware to friends and family.

Five decades later Tupperware is quickly gaining ground in emerging markets like India, where the company is nearing its goal of 100,000 women selling everything from the "roti keeper" (for Indian bread) to the "masala box" (for spices) in major cities and villages alike. The company entered India in 1996 and has grown there at a compounded annual rate of 30 percent. From a base of zero, Tupperware has swiftly become a leading seller of kitchenware in India, a category that has grown 12 percent annually from 2003 to 2008, thanks largely to the rise of the country's middle class.

Until Tupperware entered the country, Indian women almost uniformly preferred to store leftovers in metal containers. Tupperware had to convince millions of homemakers in the subcontinent to turn their backs on long-held kitchen tradition, creating the market for nonmetal kitchenware.  

The company's success serves as an example of how to translate an existing business model to win in an emerging market. The food-storage container maker followed a strategic road map that kept it close to its main business and maintained brand integrity in a new market, while managing costs to compete with lower local prices. From the start, Tupperware understood that to succeed in the world's second-most-populous nation, it had to focus on the power of its core brand—kitchenware—instead of on other product lines. By entering a large new market in its core sector, Tupperware could give its India plan the necessary attention, expertise, and support.  

Adapting products to local markets

Tupperware's intense focus allowed the company to successfully alter consumer behavior. Instead of asking consumers to buy the products as designated for use in other markets, the company converted many Indian consumers into Tupperware diehards by adapting its products to cater to local food habits. For example, Tupperware sells rectangular containers for bread elsewhere; in India it offers round containers to accommodate the shape of roti, traditional Indian bread. It's the same approach the company took in Australia recently, when it redeveloped an American-designed, bento-style lunch box with Nutrition Australia to meet Australia and New Zealand's more stringent nutritional guidelines, introducing the new product in February.

For multinationals, gaining a foothold in large emerging markets such as India and China is a balancing act. Customers aspire to a certain brand status so long as quality is "good enough" and prices are affordable. The challenge: adapting products to local needs without losing the brand's cachet. Tupperware has achieved this by preserving its "premium mass" image. 

Among the biggest hurdles foreign brands face is to understand local costs. They need to figure out how to compete with local players that make money at extremely low prices. One way that Tupperware maintains lower costs is to produce locally; a state-of-the-art plant in the northern city of Dehradun caters exclusively to the Indian market. 

Often, companies competing against local players need to reconsider their business model and manage costs by adapting their product mix, raw materials, and packaging. Like other brand winners, however, Tupperware India resisted the temptation to compete simply on pricing. The company used a locally developed mold for its Eco Bottle to take on lower-cost water-storage rivals while preserving the product's premium image.  

Market leaders also gain an edge by recognizing the power of local talent and by grooming rising stars for global leadership positions. This strategy empowers local management and uses their insights to tailor market offerings. The current managing director of Tupperware India, Asha Gupta, is an Indian who headed up marketing in Scandinavia and the Baltic before taking over the top job in India in 2005.   

Committing for the long haul

It takes time to build a solid foundation in a challenging new market like India. Market leaders commit for the long haul and resist the temptation to pull back in tough times. Tupperware has stayed the course since 1996, confident that India would become one of its fastest-growing emerging markets. In fact, Tupperware India's revenues surged in 2009 to contribute 29 percent of the company's overall local-currency growth among Asia-Pacific emerging markets, which include China, Indonesia, and Malaysia. Emerging markets now account for 56 percent of Tupperware's global sales and helped it post robust revenues of $565 million in the second quarter of 2010, an 8 percent gain vs. the same quarter in 2009.

Multinationals that win in emerging markets look ahead to unleash untapped demand and push growth in targeted segments. They achieve this by basing their investment on market potential, not historical market size or past performance. Tupperware India has grown fast and steadily because it met the market's huge potential with the resources needed to unlock it.  

As countries like India experience boom times, Tupperware has figured out how to share in the boom. The lessons from its success—focusing on a core business, adapting to local costs, capitalizing on domestic talent, staying committed, and matching resources with the market's potential—could help Australian companies in any industry win in Asia's emerging markets. 

David Zehner is a partner with Bain & Company, based in Sydney. Satish Shankar is the Singapore-based leader of Bain's consumer-Products practice for Southeast Asia.


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