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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Source: CBI Market Information Database URL: www.cbi.eu Contact: [email protected] www.cbi.eu/disclaimer Page 1 of 51 CBI MARKET SURVEY THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES MARKET IN THE EU Publication date: October, 2007 CONTENTS REPORT SUMMARY .................................................................................................. 2 INTRODUCTION....................................................................................................... 4 1 CONSUMPTION ................................................................................................. 5 2 PRODUCTION ................................................................................................. 16 3 TRADE CHANNELS FOR MARKET ENTRY .......................................................... 20 4 TRADE: IMPORTS AND EXPORTS..................................................................... 29 5 PRICE DEVELOPMENTS ................................................................................... 38 6 MARKET ACCESS REQUIREMENTS ................................................................... 40 7 OPPORTUNITY OR THREAT? ........................................................................... 42 APPENDICES APPENDIX A PRODUCT CHARACTERISTICS ............................................................ 43 APPENDIX B INTRODUCTION TO THE EU MARKET ................................................. 49 APPENDIX C LIST OF DEVELOPING COUNTRIES .................................................... 50 This survey was compiled for CBI by ProFound – Advisers in Development Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

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Page 1: CBI MARKET SURVEY THE TABLEWARE, KITCHENWARE AND …crafthelpline.com/images/File/Home Utensils/Sector Survey/2007... · tableware, kitchenware and other household articles. The UK

CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

MARKET IN THE EU

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

Page 1 of 51

CBI MARKET SURVEY

THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD

ARTICLES MARKET IN THE EU

Publication date: October, 2007 CONTENTS

REPORT SUMMARY .................................................................................................. 2 INTRODUCTION....................................................................................................... 4 1 CONSUMPTION ................................................................................................. 5 2 PRODUCTION ................................................................................................. 16 3 TRADE CHANNELS FOR MARKET ENTRY .......................................................... 20 4 TRADE: IMPORTS AND EXPORTS..................................................................... 29 5 PRICE DEVELOPMENTS ................................................................................... 38 6 MARKET ACCESS REQUIREMENTS................................................................... 40 7 OPPORTUNITY OR THREAT? ........................................................................... 42 APPENDICES

APPENDIX A PRODUCT CHARACTERISTICS............................................................ 43 APPENDIX B INTRODUCTION TO THE EU MARKET ................................................. 49 APPENDIX C LIST OF DEVELOPING COUNTRIES .................................................... 50

This survey was compiled for CBI by ProFound – Advisers in Development

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

MARKET IN THE EU

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

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Report summary This market survey provides developing-country exporters of tableware, kitchenware and other household articles with figures and information related to the European Union (EU) market. The emphasis of this survey lies on those products which are of importance to developing country suppliers. The tableware, kitchenware and other household articles market in individual EU countries is discussed further in separate CBI market surveys. These market surveys can be downloaded through http://www.cbi.eu/marketinfo. Consumption The market for glassware, tableware and household utensils decreased between 2001 and 2004, due to the economic crisis which hit the EU in the beginning of the 21st century. As from 2005, the market recovered to a value of almost € 36 billion in 2006. Forecasts are that this market will continue to grow. The tableware, kitchenware and other household articles market covered by this survey, is part of the market for glassware, tableware and household utensils. The EU tableware, kitchenware and other household articles market is characterized by a shift in consumer preferences towards more informal tableware, kitchenware and other household articles. This is one of the reasons why the plasticware market is the largest tableware, kitchenware and other household articles market in the EU. Production EU manufacturers of tableware, kitchenware and other household articles have faced and still face heavy competition. Therefore, many EU manufacturers have outsourced their production to low-cost countries, like China, in order to keep production costs low. Other EU manufacturers have focused on improving quality and design, to be able to compete in the high-end of the market. Many East European tableware, kitchenware and other household articles manufacturers have profited from becoming EU members. They have gained access to the large EU market and have a competitive advantage in low labour costs. However, this competitive advantage will disappear in the future, as the EU plans a gradual harmonisation of wages. Trade channels Tableware, kitchenware and other household articles are distributed through many different channels. The different actors in the channels are manufacturers, importers, agents, wholesalers, retailers and consumers. The route a product travels to the consumer can vary in length. The route can range from the simplest form, to more complex structures. An example of a more complex route could be from the manufacturer through an agent to a wholesaler and from there to the retailer and finally to the end-user. The length and the route selected generally depend on five factors: organisation, customer characteristics, the environment, the product and the market characteristics. The main distribution intermediaries for exporters in developing countries are agents / sales offices, importers/wholesalers and retailers

Trade: import and exports Between 2002 and 2006, total EU imports increased by 4%, amounting to € 10.2 billion. Germany, the UK and France were leading importing countries, together accounting for 44% of total EU imports. EU imports of tableware, kitchenware and other household articles were mainly supplied by EU countries (57%). In 2006, developing countries accounted for 36% of total imports, indicating an increase of 12% between 2002 and 2006. China is by far the leading supplying country, followed by Turkey, Thailand and India. Of the countries mentioned, only Thailand showed a decrease of 6% in the review period.

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

MARKET IN THE EU

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Opportunities and threats Economic growth has slowed down across much of Western Europe since the turn of the millennium. Reduced consumer confidence and an increase in unemployment were, among others, the main factors leading to lower growth in total consumer spending. Market demand has slowed down significantly in many segments, leading to overcapacity and lower prices relative to the overall price level. Due to the strong competition, many European producers have outsourced their production to developing countries, such as China. However, the EU market has recovered and remained large. The outlook for the EU tableware, kitchenware and other household articles market is positive. Therefore, exporting to this market could be a very interesting opportunity for exporters in developing countries, if they are able to meet the requirements of the market.

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

MARKET IN THE EU

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Introduction This CBI market survey profiles the tableware, kitchenware and other household articles market in the EU. The emphasis of this survey lies on those products, which are of importance to developing country suppliers. The role of, and opportunities for, developing countries are highlighted. This market survey discusses the following product groups:

• Ceramicware • China & porcelain • Cutlery • Glassware • Metalware • Plasticware • Woodware

For detailed information on the selected product groups, please consult appendix A. More information about the EU can be found in appendix B. CBI market surveys covering the market in specific EU member states, specific product(group)s or documents on market access requirements, can be downloaded from the CBI website. For information on how to make optimal use of the CBI market surveys and other CBI market information, please consult ‘From survey to success - export guidelines’. All information can be downloaded from http://www.cbi.eu/marketinfo Go to ‘Search CBI database’ and select your market sector and the EU.

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

MARKET IN THE EU

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1 Consumption In this chapter, data from the Prodcom database as supplied by Eurostat are used to indicate apparent consumption. Apparent consumption is the sum of production and imports minus exports. Variations in inventory are not taken into account. However, two problems occur: sometimes negative consumption is calculated, this being the case when exports are higher than production and imports combined; in that case figures are treated as not available. Furthermore, the figures sometimes show a discrepancy between years, e.g., a large fall or extraordinary growth. These figures are therefore not accurate enough for decision-making and they should be used in conjunction with further market research. Another problem is that the Prodcom production data, which refer to sold production, are not complete. This is even more true for 2005 data and, therefore, 2005 data are not taken into account. Because consumption is directly derived from production, consumption data is not complete either. Especially regarding the smaller EU countries, information is incomplete. This makes it difficult to present data on total EU consumption. The consumption data should only be used as an indication of which EU tableware, kitchenware and other household articles markets can be considered large, middle-sized and small. Regarding the different country surveys, it is made clear what data are available and what data are not and the data is used to reflect on the developments of the different product groups. Moreover, volume production, and therefore consumption data, are even less available and, therefore, not taken into account in this chapter. To give a better idea on how the market is developing, Euromonitor data on consumer expenditure on glassware, tableware and household utensils1 is used. This group of products includes many more products than the tableware, kitchenware and other household articles products studied in this survey. Besides tableware, kitchenware and other household articles, it also includes products used for the bathroom, toilet, office, indoor decoration and different sorts of mechanical devices. The products studied here are only part of the ‘glassware, tableware and household utensils’ group and therefore, in some cases, large differences occur between the consumption data of the two groups. The unavailability of many Prodcom data contributes to the large differences. However, the data on consumer expenditure on ‘glassware, tableware and household utensils’ is more complete than the consumption data of ‘tableware, kitchenware and other household articles’ and therefore does give a good indication on how the sector has developed in recent years. 1.1 Market size Table 1.1 gives an overview of data used in the country surveys. According to Eurostat data, EU consumption of tableware, kitchenware and other household articles amounted to € 8,529 million in 2006. Italy, Germany, France and Spain are considered to be the large EU markets for tableware, kitchenware and other household articles. The UK also belongs to this group, as becomes clear from the 2001-2004 data. The countries from Greece to Romania are the middle-sized markets. Based on older data, Sweden and Ireland are also considered middle-sized. Countries from Lithuania to Estonia are the smallest markets for tableware, kitchenware and

1 Glassware, crystal ware, ceramic ware and china ware of the kind used for table, kitchen, bathroom, toilet, office and indoor decoration, cutlery, flatware and silverware, non-electric kitchen utensils of all materials such as saucepans, stewpots, pressure cookers, frying pans, coffee mills, purée makers, mincers, hotplates, household scales and other such mechanical devices, non-electric household articles of all materials such as containers for bread, coffee, spices, waste bins, waste-paper baskets, laundry baskets, portable money boxes and strongboxes, towel rails, bottle racks, irons and ironing boards, letter boxes, feeding bottles, thermos flasks and iceboxes, repair of such articles. Excludes: lighting equipment (consumer expenditure on furniture and furnishings, carpets and other floor coverings), electric household appliances (consumer expenditure on household appliances), cardboard tableware (consumer expenditure on household goods and domestic services), personal weighing machines and baby scales (consumer expenditure on personal care), ashtrays (consumer expenditure on jewellery, silverware, watches and clocks, travel goods and personal effects).

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

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other household articles, as are the Czech Republic and Latvia. Although no Prodcom data are available on Cyprus, Luxemburg and Malta, it is fair to say that they also belong to the group of the smallest EU tableware, kitchenware and other household articles markets. This classification could change somewhat, if data were more complete and less inconsistent. Table 1.1 EU consumption of tableware, kitchenware and other household articles

2001-2006, in € thousands 2001

2003 2005

2002

2004

2006

Totals 11,578,581 8,161,790 7,874,739 8,435,491 n.a. 8,529,298 Italy 2,847,595 2,791,663 2,267,529 2,349,745 n.a. 2,469,928 Germany 2,842,746 2,383,301 2,413,760 2,396,824 n.a. 1,942,612 Spain 959,709 974,395 1,045,191 1,082,342 n.a. 1,317,475 France 886,725 648,254 731,254 811,450 n.a. 949,871 Greece 204,723 106,133 226,856 269,340 n.a. 278,139 Poland n.a. n.a. n.a. 222,668 n.a. 261,715 Portugal 312,231 217,387 260,839 265,808 n.a. 246,333 Denmark 215,763 204,513 209,734 189,670 n.a. 229,258 Finland 167,276 177,073 137,255 139,111 n.a. 176,820 Austria 53,381 139,598 191,489 243,973 n.a. 176,432 Hungary 104,171 134,005 174,120 128,582 n.a. 121,692 Netherlands 207,710 223,556 181,608 212,126 n.a. 121,095 Romania 211,711 121,481 n.a. 66,961 n.a. 102,035 Lithuania n.a. n.a. n.a. n.a. n.a. 32,603 Bulgaria n.a. n.a. n.a. 19,128 n.a. 29,897 Belgium n.a. 11,835 15,687 20,276 n.a. 21,146 Slovakia 5,590 22,582 13,952 12,258 n.a. 18,471 Slovenia n.a. n.a. n.a. n.a. n.a. 16,986 Estonia 5,990 6,014 5,463 5,230 n.a. 16,791 UK 2,237,093 2,269,017 1,982,894 1,244,814 n.a. n.a. Ireland 40,243 69,877 105,940 105,126 n.a. n.a. Sweden 264,992 272,772 65,836 51,654 n.a. n.a. Czech Rep. n.a. 6,926 n.a. 41,576 n.a. n.a. Latvia 10,929 n.a. 12,500 8,183 n.a. n.a. Cyprus n.a. n.a. n.a. n.a. n.a. n.a. Luxemburg n.a. n.a. n.a. n.a. n.a. n.a. Malta n.a. n.a. n.a. n.a. n.a. n.a.

Source: Eurostat (2007) More consistent data are presented in table 1.2, which shows trends in consumer expenditure on glassware, tableware and household utensils and can be used as an indication for trends in the tableware, kitchenware and other household articles studied in this survey. The classification of countries based on table 1.2 is somewhat different from the one based on table 1.1. EU consumer expenditure on glassware, tableware and household utensils amounted to almost € 35,870 million in 2006. Between 2001 and 2006, it grew steadily by an average annual rate of 1%. Consumption in most countries increased. Consumption is growing fast especially in the East European countries, many of them showing double digit average annual growth rates. At an average annual growth rate of 22%, Lithuania’s consumption of glassware, tableware and household utensils grew the fastest. Denmark’s consumer expenditure grew the fastest of the EU-15 countries. Despite the importance of tradition and lengthy social meals in some countries, the EU market has steadily shifted from formal tableware, kitchenware and other household articles to a more informal and casual style. This trend is reflected in the popularity of plasticware, which is by far the largest market within the EU. This success is due to the advantages of plasticwares, which are cheap, lightweight, practical and fashionable. The adaptability, modern design and colours of plasticwares also attract consumers.

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Table 1.2 EU consumer expenditure on glassware, tableware and household utensils

2001-2006, in € thousands 2001

2003 2005

2002

2004

2006

Average annual %

change Total 33,944,941 33,798,648 33,575,311 34,331,814 34,975,607 35,870,071 1% Germany 7,750,000 7,130,000 7,050,000 7,150,000 7,260,000 7,405,760 -1% UK 7,416,111 7,496,672 6,798,351 6,835,559 6,726,535 6,667,404 -3% France 5,507,580 5,635,120 5,905,680 6,061,780 6,101,160 6,342,480 4% Italy 4,589,300 4,651,700 4,656,200 4,752,760 4,953,920 5,095,680 3% Greece 1,081,620 1,148,130 1,242,920 1,357,780 1,443,140 1,548,370 9% Netherlands 1,594,960 1,615,600 1,578,690 1,542,910 1,479,940 1,416,240 -3%

Spain 1,102,970 1,076,390 1,103,860 1,129,660 1,152,360 1,179,250 2% Portugal 762,010 794,000 819,710 855,640 891,960 926,970 5% Austria 785,390 770,470 821,830 852,180 876,950 914,820 4% Denmark 544,079 562,620 595,036 660,370 728,745 793,291 10% Sweden 526,768 581,313 594,201 608,206 638,679 668,043 6% Ireland 482,380 487,540 518,740 517,120 548,140 580,560 5% Belgium 434,560 444,820 460,570 481,000 486,800 504,310 4% Hungary 258,950 301,824 328,169 371,079 411,925 407,423 12% Czech Rep 288,461 257,427 258,929 288,228 318,185 359,150 6% Poland 302,264 311,332 269,196 275,283 315,444 352,027 4% Finland 255,040 263,740 282,090 296,060 309,990 327,950 6% Slovakia 67,637 68,575 72,741 82,035 98,540 114,127 14% Slovenia 93,000 91,190 92,490 81,650 84,560 89,540 -1% Lithuania 36,290 40,147 50,640 57,188 67,273 80,845 22% Bulgaria 32,200 32,723 32,742 33,493 35,124 39,147 5% Estonia 19,140 21,482 24,474 25,585 25,695 30,063 12% Latvia 14,222 15,826 18,042 16,236 20,528 26,606 17% Romania 8 7 10 12 14 16 18% Cyprus n.a. n.a. n.a. n.a. n.a. n.a. n.a. Luxemburg n.a. n.a. n.a. n.a. n.a. n.a. n.a. Malta n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Source: Euromonitor International (2007) The distribution structure also affects the size of the tableware, kitchenware and other household articles market. In countries where the distribution of tableware, kitchenware and other household articles is dominated by independent specialists, prices are generally higher than in countries where grocery multiples dominate the retail landscape. Euromonitor forecasts that consumer expenditure on glassware, tableware and household utensils will grow between 2007 and 2020 in almost all EU countries. Most EU-15 countries are expected to grow by an annual average of 3% and 9%. The North European countries, Denmark, Finland and Sweden, and Ireland and Greece are expected to grow faster by average annual growth rates between 18% and 25%. Also most East European countries show high growth rates. At an estimated average annual growth of 48% Latvia, is expected to be the most dynamic. German, Czech and Slovak consumer expenditures on glassware, tableware and household utensils are not expected to change very much. Slovenia is the only country that is expected to show some decrease in consumer expenditure on glassware, tableware and household utensils. 1.2 Market segmentation In general, we can make a distinction between the professional (business) users and the private (consumer) users. Tableware, kitchenware and other household articles sold to professional (business) users is often referred to as restaurant or hotelware. According the Committee of the European Glass Industry, 28% of all glassware is sold to the catering industry, indicating the importance of this segment. This market segment is rather stable and generally not heavily influenced by business cycles. Because the tableware, kitchenware and other household articles is used intensively, the catering industry sets high demands on the quality of the products. Products need to be durable, heat-resistant, chip-resistant, microwave and dishwasher proof and

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

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have high hygiene standards. The more traditional tableware, kitchenware and other household articles is generally plain, durable and reasonably priced. Important tableware, kitchenware and other household articles manufacturers in this particular segment include Steelite, Churchill, Royal Doulton, Wedgwood, Rosenthal and ARC International. The private users segment is far more liable to change than the relatively stable professional segment. Changes in lifestyle and trends have been occurring faster, making consumer behaviour more unpredictable, especially in north-western EU countries. Segmentation of consumers is therefore becoming increasingly important, as tableware, kitchenware and other household articles manufacturers nowadays offer a wide range of different styles, targeted at different market segments. Generally, a market segment can be defined as a group of customers which has shared characteristics and responds to marketing activities in a similar way. Segmentation is generally based on one or more criteria, which differentiate one segment from another. Traditionally, manufacturers and retailers operating in the tableware, kitchenware and other household articles segment their market by using the traditional criteria, such as demographics, disposable income, etc. However, as customers are becoming more whimsical and diverse, segmentations based on these (old) criteria are becoming less conclusive. As a result, other segmentation criteria are needed/used. An example of such an alternative segmentation is proposed by the German GPK Federal Association of Cutlery, Decoration and Houseware Retailers, (which will be discussed in paragraph 3.2.2.) which bases its segmentation on social status and orientation. First, however, the segmentation based on demographics will be discussed. 1.2.1 Segmentation on the demographic criteria The size and age structure of the population and, more significantly, the number and age profiles of households are basic determinants of the levels of expenditure on tableware, kitchenware and other household articles. The following consumer age groups, with their own specific tastes and requirements, can be distinguished: Singles (young) This segment consists of students and single-person households. The people in this group usually live alone; they spend more time outside their homes. They mostly perceive cooking as a chore. They mainly purchase low-priced tableware, kitchenware and other household articles which is functional and easy to use. This segment spends relatively little on tableware, kitchenware and other household articles. Couples (childless) This segment consist of couples, where both partners are employed, resulting in higher spending power. They are increasingly sensitive to fashion and are more responsive to new and modern design trends. People in this segment are important customers for premium designer tableware, kitchenware and other household articles. Couples (parents) This segment consists of people with young children. They are sensitive to fashion, but not as much as childless couples. The parents prefer convenience and dishwasher-safe, durable products to high-priced elegant items, which may easily get broken. Older couples (middle-aged) This group consists of somewhat older people (baby boomers). In most cases, the children have left the house. These middle-aged people spend most of their leisure time at home, socialising with friends and family. They are gradually replacing and upgrading their current tableware, kitchenware and other household articles. The people in this group have high disposable incomes. Value-for-money and functionality are important purchase criteria in this group. They are less sensitive to fashion and mainly purchase the more traditional tableware, kitchenware and other household articles products.

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Seniors (65+) This is the fastest growing market segment in the EU countries. It consists of retired people. In most cases, these seniors move to smaller houses. Value-for-money and functionality are important purchase criteria. These people mostly fancy traditional tableware, kitchenware and other household articles, which they have collected throughout their lives. Consumer expenditure on glassware, tableware and household utensils peaks in the age group of between 30 and 50 years old and drops as people get older. 1.2.2 Segmentation on customer preferences The segmentation proposed by the German GPK (Federal Association of Cutlery, Decoration and Houseware Retailers), is called “Tischwelten 2”. This segmentation is based on a qualitative study of the German market and makes a distinction between seven different segments with regard to lifestyle and characteristic preferences regarding eating and table settings. Because of its qualitative nature, no indication of the sizes of the different segments can be given. The segmentation proposed by the German GPK consists of the following segments: The traditionalist The traditionalists include proportionally more women than men, with a centre point of people in their sixties with a low(er) education level and a low-to-average disposable income. This group generally also holds on to the traditional eating habits, i.e. three proper meals a day on fixed time schedules and there is little or no experimentation with regard to cooking. Tableware, kitchenware and other household articles purchased is generally bought to last a number of years or even decades, in some cases even a lifetime, and is not replaced as long as the products serve their purpose. This segment was traditionally one of the backbones of the tableware, kitchenware and other household articles industry. They are considered to be loyal and satisfied customers. The main problem, however, is that this segment generally consists of older people, with the lion’s share over sixty years old, and therefore they generally do not make large tableware, kitchenware and other household articles purchases anymore. The conservative well-educated The conservative well-educated segment mainly consists of women of an age of sixty and over, who generally enjoyed higher levels of education and whose husband generally had a professional career and are now enjoying their retirements (also often reflected as golden greys). The conservative, well-educated generally live in two-person households (empty nesters) and tend to have an average-to-very-high disposable income. The households of conservative well-educated are generally well equipped with tableware, kitchenware and other household articles. The conservative well-educated considers tradition to be of importance and has a liking for unity in design and high-quality materials and workmanship. This segment can be regarded as an important market segment due to their high(er) disposable incomes. The modern ambitious The modern ambitious are more likely to be women than men, although the share of the latter is increasing. The average age of this segment is between thirty and sixty years old. This segment is generally engaged in middle and higher occupations, with a high(er) disposable income. The segment includes both families with children and Dinks (double income no kids). The kitchen and dinner table in the day-to-day situation is convenience-oriented. On special occasions, however, the modern ambitious shows great ambition, with refined cooking and a creative and exclusive table culture. The modern ambitious generally wants to be up-to date and strives for luxurious tableware, kitchenware and other household articles, emphasizing special utensils, tablecloth, cotton napkins, etc. The modern ambitious are generally well equipped with tableware, kitchenware and other household articles. They are also important consumers of tableware, kitchenware and other household articles, due to their need to be up-to-date. They generally make a lot of impulse purchases and have a thorough knowledge of the different brands. They generally orientate themselves on prestigious brands.

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CBI MARKET SURVEY: THE TABLEWARE, KITCHENWARE AND OTHER HOUSEHOLD ARTICLES

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The conventional modernist Looking at the social demographic characteristics, the conventional modernist includes women as well as men, the majority aged between thirty and fifty years old. The conventional modernist generally occupies a middle position in business life and has an average disposable income. The conventional modernist generally has a family with children, living in newly constructed parts of the city (often suburbs). In short, the conventional modernist can be regarded as a “mainstream” consumer group. The conventional modernist enjoys cooking and experimenting with new recipes. Besides that, they have the pretension to cook frequently and healthily, in order to give their children good nutrition. On the other hand, they feel the need to simplify and shorten the cooking process in order to create spare time for themselves. The conventional modernist has many wishes when it comes to domestic ambience. These wishes are limited by their spending power. Regarding tableware, kitchenware and other household articles, the conventional modernist is sensitive to quality, attractive designs and adequate pricing. They are therefore often considered as “smart shoppers”. The authentical This segment includes young and average aged men and women; they have generally attended a higher form of education. The segment includes singles, dinks as well as families with children. They are engaged in middle to higher occupations (self-employed, freelancer, etc.) and tend to have an average to high disposable income. Authenticals can be regarded as critical consumers, who enjoy the fine things in life. The kitchen and cooking in general are regarded as the communicative centre point for family and friends. Their cooking style can be described as carefree and informal, with a broad spectrum of international and exotic dishes. Healthy and diversified nutrition is also important to them. When it comes to purchasing tableware, kitchenware and other household articles, the authentical is selective and thoughtful, buying only useable, functional products. The authentical has a necessity for high-quality products. They reject trend products with low lifespans, extravagant prestigious brands and superficial luxurious products. However, the authentical however, has a preference for individual and authentic brands. The experimentalist Experimentalists include both men and women aged between twenty and thirty-five. The segment includes singles, dinks as well as young families. The experimentalists are just starting their professional career and, therefore, generally occupy starting functions. Their disposable income is low to average. The importance of dining and cooking varies. Their eating and cooking pattern is irregular and fast. They have a preference for fast-food, ready-made meals and home service. The experimentalist has a lot of wishes when it comes to table- & kitchenware. These wishes are, however, often deferred in favour of other purchases, like vacations, car and furniture. They have a preference for trendy brands; however they are sensitive to vantage plagiarism. The consumer style is impulsive and price-conscious. The hyper This segment includes more men than women. The age centre point lies between twenty and forty years old. The hyper generally lives in a single or two-person household and tends to have an average to higher disposable income. Hypers are generally engaged in the following occupations: self-employed, employee in the fashion and gastronomy industry, trade and other creative occupations. In day-to-day life, hypers can be regarded as trendsetters, since they generally have an extrovert lifestyle and tend to be very outdoor-oriented. The table-setting is seen as an extension of their lifestyle. The consumer preferences of the hyper are subject to rapid changes. They have a preference for individual products with classical designs. Their style can be described as retro and eclectic. Hypers generally have a low interest in prestige brands. The style, material and design are of far greater importance. When it comes to purchasing table- & kitchenware, the hyper is rather impulsive and spontaneous. The hyper is important to keep an eye on, since they often set the trends of tomorrow. More information about the “Tischwelten 2”, including examples can be found on the site of the German GPK: http://www.gpk-online.de/.

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1.3 Trends The demand for tableware, kitchenware and other household articles in the EU-27 is influenced by a number of trends. We will discuss these trends in the macro-environmental analyses presented in this paragraph. One should, however, take into account that different developments discussed can relate to each other. For example, the social trend, “individualization” is closely related to the demographic trend towards smaller households. We review the following trends:

• Demographic trends • Social & cultural trends • Technical trends • Economic trends

1.3.1 Demographic trends The age structure of the population and, more significantly, the number of households, the life stage of these households and marriage rates are basic demographic determinants of the levels of expenditure on tableware, kitchenware and other household articles. The main demographic trends which influence the consumption of tableware, kitchenware and other household articles will be discussed. Ageing population The population of Europe is ageing quickly. This phenomenon extends to the majority of the EU countries. In 2006, around 15.9% of the EU27 population was younger than 15 years old. Persons of working age (15-64) accounted for 67.3% of the EU-27 population. The remaining 16.8% was aged 65 and over, according to Eurostat. The retired generation (65+) will increase significantly in the near future, as the post-war baby-boom generation ages. By 2030 nearly 25% of the people within the European Union will be above the age of 65.2 These developments have both a negative and a positive effect on the sales of tableware, kitchenware and other household articles. On the one hand, it will have a positive effect on sales of some products, like those with ergonomic designs, as for example easy grip handles. Ekco, for example, specially emphasizes the good grips of their kitchen items. On the downside, the generally thrifty elderly will have a preference for timeless, classical designs over fashionable, replaceable products. They generally spend less on tableware, kitchenware and other household articles, as can be seen in paragraph 1.2.1. Household size and formation New household formation, which is an important engine for growth in the tableware, kitchenware and other household articles market, is not expected to rise substantially in the near future. While the absolute number of households has increased, the average household size is decreasing. This is caused by developments like “dilution”, family households are becoming smaller because of the simple fact of people are having fewer children. Also, the growing divorce rates and the dropping marriage rates have an expanding effect on the number on households in the EU. The trends towards a growing number of smaller households will impact the sales of tableware, kitchenware and other household articles, with both a negative and a positive effect of the tableware, kitchenware and other household articles market. On the negative side, the smaller households generally do not have the need for large tableware, kitchenware and other household

2 Wolfgang Lutz, European Demographic Data Sheet 2006 (Vienna and Washington, DC: Vienna Institute of Demography, International Institute for Applied Systems Analysis, and Population Reference Bureau, 2006).

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articles sets. The demand for formal tableware, kitchenware and other household articles is also forecast to decline, as small households generally rely on quick, convenient, ready-made meals, often consumed in front of the television. This development will also affect the sales of cookware and other products used while preparing dinner. On the other hand, the sales of products which are not influenced by the number of members within the household will increase, as the total number of household will increase. Examples of such products are kitchen knife sets, bins, buckets, and kitchen utensils, carving knives, salt and pepper shakers, etc. According to Keynote, the demand for products which are microwave- and dishwasher-safe is also likely to grow. Labour-saving products will also benefit from this development. The trend towards smaller households will also encourage the sales of small(er) pack sizes of tableware, kitchenware and other household articles and individual items. According to Euromonitor, this will offer manufacturers the opportunity to increase the unit prices. Marriage rates & timing According to Euromonitor, the number of marriages is an important sales driver in the tableware, kitchenware and other household articles market, especially in the premium-end of the market, due to the importance of these products as wedding gifts. Wedding gift sales traditionally make up a substantial share of the formal tableware, kitchenware and other household articles sales. However, as marriage rates are declining, the traditional backbone of the industry is disappearing. The marriage rate in the EU-27 is steadily dropping, from 5.3 marriages per 1,000 inhabitants in 1995 to 5.2 marriages in 2000 and 4.9 marriages in 2005. Pre-marriage households are very common. According to Euromonitor, many marriages today take place between couples who tend to have well-equipped homes, making the traditional wedding gifts of tableware, kitchenware and other household articles, such as crockery sets and crystalware, redundant. On the other hand, there are, however, opportunities for more unusual tableware, kitchenware and other household articles items, like for example chrome orange squeezers. 1.3.2 Social & cultural trends There are significant changes in consumption habits in the varying EU countries, due to the improvement of living standards, and differences in culture, traditions and tastes. This section discusses the main social trends which influence the consumption of tableware, kitchenware and other household articles. Social diversity The modern consumer can no longer be clearly defined. Consumers are becoming more diverse, both in social and in cultural terms. This is due to a number of developments. First, ageing and increasing life spans lead to a greater diversity of ages. Secondly, growing immigration, combined with growing tourism and the better availability of foreign spices and herbs, generate a greater variety in cooking and eating habits. According to Eurostat, migration made up 85.6% of the total EU population increase in 2005. These developments are, for example, reflected in the popularity of the oriental cuisine. According to Key Note, the popularity of ethnic dishes has led to increased demand for cooking and eating utensils, such as woks. Women’s increased participation in the labour market has greatly influenced their financial independence and their disposable income. According to Eurostat, women accounted for 44% of the total European workforce in 2006. Female participation in the labour market is more common in Northern Europe. The proportion of females in the workforce ranged from about 39% in Greece, Italy, and 41% in Spain to about 47% in Denmark and Sweden, 48% in Sweden and even 49% in Latvia and 50% in Lithuania and Estonia. The female workforce is, however, increasing. This development is due to a number a factors, such as the increased educational level of women, the gradual improvement of child care facilities and, primarily, the swiftly changing attitudes regarding women's roles, according to the Dutch Social Cultural Planning Department (SCP). This development has led to the growing importance of women as consumers. The increase, however, also meant that the time left over for cooking is often short. Leisure time is too highly valued to spend on cooking, especially when the additional income can be spent on ready-made meals or on eating out. This development has also had some

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implications for tableware, kitchenware and other household articles sales, particularly on the increased demand for easy-to-handle utility products, which are microwave- and dishwasher-proof. The growing social diversity is also triggered by the increasing individualization, which is one of the most important social trends within Europe. More and more opportunities arise for individual persons to organize their lives as they see fit. The European consumer of today wants to distinguish him- or herself from the mass, consumption is a means of doing so, making it increasingly hard for manufacturers to distinguish different market segments. Changing eating and cooking habits As mentioned earlier, the EU consumption of tableware, kitchenware and other household articles is steadily shifting away from formal products towards more practical and informal products. According to Euromonitor, the busier lifestyles, the increasing number of single-person households and a growing number of working women, lead to changing lifestyles. Family meals are being replaced by “grazing”, as consumers eat more easy-to-prepare snacks during the day rather than a formal meal. This trend is more pronounced in the North-Western countries of Europe. However, even in countries with a significant, traditional dining culture, like Italy and France, this trend is also evident. The tradition of long, extensive meals is being replaced by convenient, ready-made meals, which take less time to prepare. Health awareness There is also a growing trend towards health and wellbeing. Today’s stressful society has had a positive effect on the sales of health-related products. Fat-free or low-fat products are very popular throughout many food product ranges. In the tableware, kitchenware and other household articles market, this trend has a significant impact on food preparation methods. Low fat or even fat-free cooking methods, like for example steaming, increasingly substitute less healthy cooking methods like frying and roasting. Low-fat cookware like grills, steamers and woks, has become more popular in the review period. Hygiene is also considered to be very important, leading to increased demand for antibacterial plastics used in tableware, kitchenware and other household articles, like storage boxes and chopping boards, etc. Fashion One of the most noticeable trends in the tableware, kitchenware and other household articles market is the move away from formal to casual dining. Consumers are increasingly abandoning the traditional matching sets in favour of fashion-led pieces. Because of the shift towards more casual products, table- & kitchenware are increasingly influenced by fashion developments. Manufacturers follow this trend by encouraging consumers to make frequent replacement purchases. According to sources at the Birmingham Autumn Fair, trends in the tableware, kitchenware and other household articles market are likely to change significantly every twelve to eighteen months.

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Figure 1.1 Influencing factors in design trends Fashion Home Textiles/ DIY Architecture Lifestyle Tableware, kitchenware

and other household articles

Source: Euromonitor from NHMA

According to Euromonitor, fashion has a major influence on table- & kitchenware. The increasing importance of design has been stimulated by the growing popularity of DIY (Do It Yourself) and home makeover programmes, which have increased the popularity of interior design. In general, fashion in the tableware, kitchenware and other household articles market is influenced by several trends. In terms of colour, trends generally begin in women’s fashion and extend themselves via men’s fashion into home textiles, and into DIY products. From here, the influence impacts tableware, kitchenware and other household articles. Shape is influenced by architecture, especially at the premium-end

of the market. On the practical and functional side of the market, shape is influenced by lifestyle trends. The ageing society has also triggered the demand for light-weight, ergonomically designed utensils, gadgets and pan handles. Hobby Cooking The growing trend towards more practical and more functional tableware, kitchenware and other household articles does not mean that the consumer is not interested in food and food preparation. On the contrary, the popularity of TV cooking shows and interest in cooking magazines has increased, exposing consumers to a wide variety of cuisines, table- & kitchenware and cooking techniques, and prodding them to purchase and try these new techniques and products. Manufacturers have latched on to this development and introduced new product lines in collaboration with these TV chefs. In the United Kingdom, for example, Jamie Oliver has designed china ovenware for Royal Worcester and a series of cookware for Tefal. Designers such as Calvin Klein and Vera Wang have lent their names to tableware, kitchenware and other household articles. Also the use of children’s licensed characters like Mickey Mouse has always helped to boost sales, particularly of tabletop items. Also, the retail business has joined this development and more and more specialised cook stores have emerged, like for example Oil & Vinegar, which offers an extensive range of culinary products, like oils, herbs and vinegar. Next to these products, the shops sell a range of related products, including a limited range of tableware, kitchenware and other household articles. 1.3.3 Technical trends The busy lifestyles and the trend away from family meals, together with the increasing popularity of microwaves and dishwashers, have triggered demand for easy-to-use products adapted for use in these appliances. Products which can be heated up at different times for individual family members are characteristic of the new eating habits. Convenience and functionality are becoming increasingly important throughout Europe. According to Key Note, the popularity of microwaves has led to the introduction of plasticwares specifically designed for microwave cooking. New products & innovation Because the tableware, kitchenware and other household articles market is very mature and stable, replacement spending is one of the key triggers in the market. This spending is, however, not extensive in times of depressed business cycles. Manufacturers therefore try to innovate their products with new features and designs, in order to motivate consumers to buy their products. 1.3.4 Economic trends

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Economic growth has slowed across much of Western Europe since the turn of the millennium. Reduced consumer confidence and growth in unemployment were, among others, the main factors leading to lower growth in total consumer spending. However, it looks as if tableware, kitchenware and other household articles consumption has not been greatly affected by this development, as can be seen in table 1.2. According to the trade fair Ambiente, this can partly be explained by fact that, due to the slow economy, consumers have turned more inwards to their homes and kitchens. Economic development has improved since 2005. 1.3.5 Other branch-related trends & developments EU consumers are generally not very familiar with the different brands of tableware, kitchenware and other household articles. Most consumers do not believe that famous brands automatically mean better quality and the average consumer is not well-informed about the different brands of tableware, kitchenware and other household articles manufacturers. Brand awareness, however, differs per product group. In the ceramicware, china & porcelain and metalware sectors, brand awareness is generally higher than in the other segments, mainly due to the marketing efforts of the manufacturers in these sectors. 1.4 Opportunities and threats + Despite the negative growth rates in the two leading markets for glassware, tableware and

household utensils, Germany and the UK, the total EU market increased, and is expected to increase further, as most EU markets for glassware, tableware and household utensils are expected to grow. Greece, Ireland and the North and East European countries are especially interesting, because of their relatively high expected growth rates.

+ The UK, France, Italy, The Netherlands and Spain have more modest expected growth rates and Germany is expected to decrease a little, although these countries are interesting because of their market size.

+ Consumer preferences are changing towards more informal tableware, kitchenware and other household articles. This trend is most noticeable in countries which still have more formal eating and cooking traditions, like France, Italy and Spain. This offers mainly opportunities for exporters who want to enter the middle and lower-end of the market and offer new products which tap into the trends presented.

- Manufacturers who want enter the high-end of the market face serious competition from already established European manufacturers, which are constantly improving their quality and designs.

1.5 Useful sources • Eurostat http://epp.eurostat.ec.europa.eu production data per country and product code: Click: industry, trade and services on the left side; browse database on the left side; industry, trade and services; see Excel tables under Statistics on the production of manufactured goods. • Euromonitor http://www.euromonitor.com/ market information on many EU countries. Click on Industries and then on Housewares to get a country list. Complete reports can be bought, summaries are available on the website.

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2 Production This chapter presents a general overview of the production of tableware, kitchenware and other household articles in the EU-27 (both EU-15 and the new EU countries), highlighting the countries specified in Chapters 1. The production statistics used refer to sold production and are derived from the Eurostat PRODCOM database. The production statistics used concern the years 2001 to 2006. However, the Prodcom production data are not complete. This is even more true for 2005 data and, therefore, 2005 data are not taken into account. Information is incomplete especially regarding the smaller EU countries. Because large inconsistencies occur, one should be very careful in comparing the different countries. For example, because production data for the UK in 2006 is not available, while when looking at earlier years it becomes clear that the UK is one of the bigger producing countries within the EU. Data of glassware production are not available for France, although it is a very important product group in France. Production data for The Netherlands are only comprised of data from the plasticware industry, because other data is not available. Therefore, the production data should only be used as an indication of how EU production has developed and which EU tableware, kitchenware and other household articles producing countries can be considered large, middle-sized and small. In the different country surveys, it will become clear what data is available and what data is not. Moreover, volume production data are even less available and, therefore, not taken into account in this chapter. 2.1 Size of production According to the available data, presented in table 2.1, total EU production of tableware, kitchenware and other household articles amounted to € 7,882 million in 2006. The lion’s share of total EU production is manufactured in the EU-15. The largest producers, Italy and Germany, have been responsible for more than 50% of EU tableware, kitchenware and other household articles manufacturing. Italy is Europe’s leading producer in this industry. However, the production of tableware, kitchenware and other household articles is decreasing steadily in most EU-15 countries, except for Spain. Total EU manufacturing of tableware, kitchenware and other household articles experienced an average annual decrease of 10%, according to the available data. Over the last decades, the tableware, kitchenware and other household articles industry has become increasingly competitive, mainly due to the pressure of low-priced imports coming from Asia and Eastern Europe. Also, the perception of tableware, kitchenware and other household articles changed because of retailers, like Ikea and other retailers, positioning tableware, kitchenware and other household articles as fashionable accessories sold at competitive prices. Grocery multiples are also continuing to tap into the tableware, kitchenware and other household articles market, because of the relatively high margins and the need to create more “traffic”. They generally also sell low-priced tableware, kitchenware and other household articles, often “private-label”. Many manufacturers have been slow to pick up on the shifts in consumer preferences.3 The newer EU countries face different challenges. Becoming an EU member means access to a large, well developed market, without any Customs burden, in which they have a competitive advantage in labour costs. At the same time, EU membership should bring economic growth and a higher standard of living. This means that the internal markets for tableware, kitchenware and other household articles will grow as well. In the long run, however, the

3 Unity Marketing (2006). Tabletop Market Report 2006 – A Consumer Insights Study of the Dinnerware, Glassware, Flatware and Tabletop Decorative Accessories Markets. http://www.researchandmarkets.com

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competitive advantage in labour costs will be lost gradually due to progressive wage harmonisation within the EU. For reasons described above, it is difficult to provide reliable data on EU totals for the different product groups. In general, the plasticware industry is the largest tableware, kitchenware and other household articles industry in the EU. Its production decreased in most EU-15 countries, except for Italy, Spain and Greece. However, in most East European countries plasticware production increased. Important plasticware producers are Italy, Germany and Sweden. Furthermore, Poland has become one of the important EU plasticware manufacturers. Table 2.1 EU production of tableware, kitchenware and other household articles

2001-2006, € thousand 2001 2003 2005

2002

2004

2006

EU totals 12,082,156 11,893,666 9,221,678 9,821,674 n.a. 7,919,655 Italy 3,923,838 3,797,887 2,471,598 2,642,720 n.a. 2,682,951 Germany 2,491,570 2,237,341 2,133,337 2,150,125 n.a. 1,832,578 Spain 758,459 803,199 811,952 792,474 n.a. 800,247 France 1,530,064 1,289,353 674,954 1,221,158 n.a. 766,876 Poland n.a. 477,484 482,541 510,653 n.a. 540,160 Portugal 470,248 369,538 432,053 436,963 n.a. 382,860 Belgium 170,898 168,877 161,265 152,840 n.a. 151,621 Greece 94,663 8,471 104,724 130,434 n.a. 134,854 Denmark 139,886 149,968 148,826 118,555 n.a. 124,475 The Netherlands 180,391 198,932 160,994 195,885 n.a. 108,900 Finland 110,974 123,096 81,268 79,887 n.a. 104,811 Hungary 132,510 141,054 163,892 113,132 n.a. 104,798 Romania 211,711 184,959 n.a. 98,267 n.a. 88,363 Austria 26,289 37,679 33,436 36,614 n.a. 48,206 Bulgaria n.a. n.a. n.a. 11,547 n.a. 19,802 Slovenia 14,361 n.a. 15,161 12,911 n.a. 11,530 Slovakia 23 27,871 8,028 1,175 n.a. 10,779 Lithuania n.a. n.a. n.a. n.a. n.a. 3,525 Estonia 303 1,116 775 959 n.a. 2,319 United Kingdom 1,535,332 1,475,324 1,205,297 950,585 n.a. n.a. Czech Republic 62,730 171,175 55,077 90,864 n.a. n.a. Sweden 217,582 220,262 52,147 46,869 n.a. n.a. Ireland 9,181 10,079 22,522 20,074 n.a. n.a. Latvia 1,141 n.a. 1,832 662 n.a. n.a. Cyprus n.a. n.a. n.a. n.a. n.a. n.a. Luxemburg n.a. n.a. n.a. n.a. n.a. n.a. Malta n.a. n.a. n.a. n.a. n.a. n.a.

Source: Eurostat, 2007 (adapted by own calculations) The metalware industry is another large industry in the EU. Metalware manufacturing showed very different developments across different EU countries. Important metalware producing countries are Italy, Germany and France. Here again, Poland is the most important metalware producer of the East European countries. Glassware production is also big in the EU. France, Italy, Germany and Poland are responsible for the lion’s share of EU glassware manufacturing. The china & porcelain industry is dominated by Germany, while Italy and Portugal are important in ceramicware production. The cutlery and woodware industries are the smallest in tableware, kitchenware and other household articles production. France, Italy and Spain are the most important cutlery manufacturers. The cutlery industry in the EU is declining steadily as many producers move their production to low-cost countries, mainly China. Woodware production is mainly concentrated in Italy and Spain, and to a lesser extent in Poland, Finland and France. The woodware industry is close to only 1% the total EU tableware, kitchenware and other household articles industry.

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It is expected that total EU production of tableware, kitchenware and other household articles will continue to decrease, because many manufacturers will be forced out of the market, due to increasing imports from low-cost countries. This is especially true for manufacturers operating in the medium and low-end market. The EU also has many manufacturers producing for the high-end market, which are world famous for quality and designs and will not easily be competed out of the market. However, to reduce costs they move production to low-cost countries. The expected increase in production in East European countries will not be large enough to offset the transferring of production to low-cost countries. 2.2 Trends The developments described above have led to a pressure on prices, making it increasingly difficult for EU manufacturers to compete and has triggered them to take action. Manufacturers were pressed into competing on prices at the middle and lower end of the market, or on quality and design at the high-end of the market. To cope with increasing competition, several EU tableware, kitchenware and other household articles manufacturers established manufacturing bases in Asia, especially in China, Taiwan and Thailand. Here they could combine their state-of-the-art technology with a low cost-base. In this way, they could maintain an efficient, high-quality production system but at low cost. Outsourcing a part of their production to cheap(er) contract manufacturers, offers the EU manufacturers the chance to focus their attention on marketing their products. An example is Waterford Wedgwood, which closed two of its factories in United Kingdom, with the loss of over 1,000 jobs, as the manufacturer shifted production of its mid-price tableware, kitchenware and other household articles range to China. This relocating of production resulted in considerable declines in total UK tableware, kitchenware and other household articles production. However, some EU companies have started to withdraw production from these low-cost countries, as they cannot deliver the high quality needed to compete at the premium-end of the market. According to Euromonitor, many EU manufacturers tried to position themselves at the premium-end of the market, where the margins are better, due to increased competition in the economic-end of the market. However, because of this development, the segment became crowded, again leading to more competition. Achieving “economies of scale” was another answer to the increasing competitiveness. Mergers and acquisitions were a popular means to acquire the scale necessary to survive in the globalizing world. Small companies with insufficient production were taken over. This provided an ideal way for the bigger companies to increase their market share in the mature EU tableware, kitchenware and other household articles market. SEB SA and Newell Rubbermaid are both examples of manufacturers which have pursued a “growth by acquisition” strategy for years. However, the latter has recently changed its strategic focus to organic growth, fuelled by innovation behind a stable of strong brands. Another notable development is brand extension; Waterford Wedgwood, for example, extended their product line into linens, jewellery, writing instruments and other giftware. Because of the increasing competition, manufacturers are searching for ways to differentiate their products from their competitors’. Branding, together with advertisements, is an important way of achieving this. 2.3 Opportunities and threats + Many developing country manufacturers are able to produce tableware, kitchenware and

other household articles at much lower costs than the EU-15 countries. As long as they can maintain the quality of their output, this represents an opportunity for DC exporters.

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+ In the long run, the competitive advantage of a cheap labour force in Eastern Europe will disappear, due to wage harmonisation within the EU, thereby leading to more opportunities for exporters in developing countries.

- In the short and medium run, East European countries have a competitive advantage in labour costs with respect to other EU countries; they have easy access to the large EU market compared to non-EU countries and are obviously much closer to the EU market.

2.4 Useful sources • Eurostat http://epp.eurostat.ec.europa.eu production data per country and product code: Click: industry, trade and services on the left side; browse database on the left side; industry, trade and services; see Excel tables under Statistics on the production of manufactured goods. • Euromonitor http://www.euromonitor.com/ market information on many EU countries. Click on Industries and then on Housewares to get a country list. Complete reports can be bought, summaries are available on the website.

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3 Trade channels for market entry Trade or distribution channels may be described as the “path of goods followed from manufacturer to consumer”. As goods move from manufacturer to consumer they may have to pass through various intermediaries. This chapter discusses the characteristics of the European tableware, kitchenware and other household articles trade channels. Sub-section 3.1 will discuss the major trade and distribution channels, will emphasize the most suitable channels for exporters in developing countries and will discuss the general trends and developments in EU distribution. Paragraph 3.2 will discuss the price structure and sub-section 3.3 will provide useful sources of information about interesting players in this sector. Note that trade structures can vary widely among different sectors. The trade channels described below do not necessarily apply to every product group. Refer to the individual country surveys covering the market to find the most appropriate channels. 3.1 Trade channels Tableware, kitchenware and other household articles are distributed through many different channels, partly because they come in many different price ranges and functional varieties. Figure 3.1 shows the basic links between the various kinds of sales intermediaries, agents, importers, wholesalers and retailers. The thick lines indicate the most important trade flows. Figure 3.1 Trade and distribution channels for tableware, kitchenware and other household articles

The route a product travels to the consumer can vary in length. The route can range from the simplest (two layers) form, to more complex structures (five or more layers). An example of a

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more complex route could be from the manufacturer through an agent to a wholesaler and from there to the retailer and finally to the end-consumer. The length and the route selected, generally depend on five factors: organisation, customer characteristics, the environment, the product and the market characteristics. 3.1.1 Intermediaries in tableware, kitchenware and other household articles trade Tableware, kitchenware and other household articles in the EU are distributed through a variety of different channels, as can be seen in Figure 3.1. As the tableware, kitchenware and other household articles market is becoming increasingly competitive, many retailers try to lower their costs and business risks by minimising inventory and shortening order lead-time, leading to direct sourcing from the manufacturer. This process is called the shortening of the distribution chain. Combined with the increasing popularity of the more organised retailers, like variety stores and discounters, an increasing share of the tableware, kitchenware and other household articles products tends to go directly from the manufacturer to the retailer and then to consumers. In the business-to-business markets, the route is somewhat different. The catering industry (i.e. restaurants and hotels) generally purchases its tableware, kitchenware and other household articles at specialist wholesalers, which give a high level of service and low prices, in return for a large volume of business. An example of such a company is Lorey in Germany. Many large-scale tableware, kitchenware and other household articles manufacturers have their own sales offices in their main sales markets. Arc International has, for example, 30 sales offices around the world. Smaller manufacturers, which do not have the financial means to maintain sales offices in many different countries, often have agents, who have the legal authority to act on behalf of the manufacturer. The agent receives a commission from the manufacturer. The level of commission depends on a number of factors, including the turnover rate of the product concerned and commitments undertaken (e.g. participation in local trade shows, advertising and promotional activities). Roughly speaking, an agent’s commission generally ranges between 3% and 15% of turnover. Most agents represent more than one manufacturer, although competition is normally avoided. Agents usually have a good knowledge of distribution structures and consumer behaviour. An example is the Belgian wholesaler, Billiet Trading Company, which is the agent in the Benelux for different manufacturers like Aeternum and Arcos. Wholesalers are also important when it comes to distribution, especially for the (smaller) independent retailers. Their importance, however, varies per country. Most importers / wholesalers offer extensive product ranges of different brands, which can range from 15 thousand up to 20 thousand articles. The wholesaler purchases from the manufacturers. The wholesaler takes legal title to the products, as well as physical possession of them and stocks at his own risk. The mark-up of the wholesaler is approximately 20%. The main benefit of a wholesaler is that the retailer can buy different products of different brands in much lower quantities. The wholesaler therefore serves as a focal point for manufacturers as well as retailers, by buying the production in bulk then splitting it into manageable proportions. Many tableware, kitchenware and other household articles manufacturers also import and sell tableware, kitchenware and other household articles to complement their product range. Because of their function of buying and selling tableware, kitchenware and other household articles and handling the administration of import and export procedures, wholesalers can supply considerable information and guidance to a manufacturer. So, developing a successful working relationship with your wholesaler can lead to a high level of teamwork, providing you with appropriate designs and information on the latest market trends, use of materials and quality requirements. The independent retailers are sometimes organised in buying groups. Buying groups are individual dealers/wholesalers/retailers which unite and cooperate as a single buying and

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marketing force. Membership of such a group by an individual company offers the opportunity to source around 50% to 90% of his requirements at a considerable discount. By becoming a member of such an organisation, the individual retailer aims to reduce his costs. The original function of the buying groups is therefore to reduce costs by centralising buying and logistics. Participating in a buying group can, however, involve a restriction of choice if the group aims at maximising the volume of the order which is placed with the manufacturers. In addition, the role of buying groups in the form of independent retailers is under pressure. For more information, visit the website or contact one of these buying groups in Europe. An important buying group in The Netherlands is Gepea. The EK Großeinkauf eG, which has 2,500 members, is an important buying organisation in Germany. Companies can also sell directly to end-consumers. There are many variations on this theme, such as through manufacturer-owned brand stores, like the Wedgwood stores and Zwilling J.A. Henkels A.G stores. The latter has 25 company-owned retail stores, 13 of which are in Germany, 6 in European countries outside Germany (Denmark, Netherlands, Switzerland) and 6 in China. Also, e-commerce offers a direct link between a manufacturer and the consumer. Other variants are door-to-door selling and party-plan selling (organising a party with the aim of selling products). A manufacturer famous for its party-plan selling is Tupperware. Still, this route is rather underdeveloped in the distribution of tableware, kitchenware and other household articles. 3.1.2 Retailers of tableware, kitchenware and other household articles In the last few decades, the European tableware, kitchenware and other household articles retail market has undergone a lot of changes, as an increasing share of products is sold through branch-foreigners (foreign shops with a number of branches located in the countries). In addition, the traditional retail formats are under pressure from new formats. Grocery multiples, like super- and hypermarkets and new retail formats, like IKEA, are making their way into the tableware, kitchenware and other household articles market. As a consequence, there is increasing competition amongst the tableware, kitchenware and other household articles retailers. Nowadays table- & kitchenware is sold through a wide range of different retailers, ranging from variety stores and department stores to home interior specialists and even garden centres. These formats differ in the extent to which they sell tableware, kitchenware and other household articles. While there is a number of stores which concentrates mainly on selling tableware, kitchenware and other household articles, the vast majority of businesses is fairly general in nature, selling table- & kitchenware to complement their product range. Table 3.1 Retail channels of table-& kitchenware in the EU by retail formats, 2000

Countries Mixed &

Independent Retailer

Department Stores

Grocery Multiples

Others Mail-order

Germany 47% 38% 10% 2% 3% France 44% 14% 30% 3% 9% United Kingdom

37% 10% 15% 28% 10%

Italy 38% 20% 25% 15% 2% Spain 17% 30% 40% 9% 4% Netherlands 28% 9% 21% 38% 4% Belgium 27% 7% 23% 39% 4% Poland 64% 6% 10% 20% 0% Czech Republic

40% 25% 25% 0% 10%

Hungary 23% 24% 48% 0% 5% EU 39% 22% 21% 14% 4%

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Source: Euromonitor, 2000 Quantitative information concerning the distribution of tableware, kitchenware and other household articles is not readily available and therefore rarely reported on an annual basis. We are therefore limited to using older distribution statistics. The statistics used in this section come from a forecast made in 1997 for the year 2000. In these statistics, Euromonitor distinguishes five channels, namely mixed and independent stores, department stores, grocery multiples, mail-order and other (incl. catalogue showrooms). The most import retailers will now be discussed. Please, use the table simply as a reference for analysing the market. Houseware specialists This category contains a great variety of retail formats, including independent specialists, interior design specialists, DIY (Do-It-Yourself) specialists and furniture specialists. With the exception of the independent specialists, houseware specialists are becoming increasingly important for the dynamics of the market. This is largely due to the trend towards lifestyle solutions, where consumers are presented with a package of “lifestyle solutions” rather than isolated product categories (Euromonitor, 2006). This trend is normally conducted and stimulated by interior design specialists and its development has led to the creation of different market niches, each aiming at a specific consumer group. Interior design specialists have become all-round retailers, not only selling furniture, but also the matching accessories including tableware, kitchenware and other household articles, especially ceramicware, china & porcelain and glassware. According to Euromonitor, these products help to enhance the main product portfolio. Furthermore, these products increase in-store traffic, encourage consumers to linger longer in the outlets and boost sales. Due to their low-unit costs, these products are cheaper to stock and easy to dispose of through special offers. Formats such as Ikea, Habitat and Interio, show that market success is increasingly dependent on manufacturing a particular lifestyle image. It will be increasingly difficult for the independent specialists to survive in this increasingly competitive environment. They are, however, still of significant importance, especially in countries with a less developed retail structure, like, for example, East European countries. Department stores & variety stores Traditionally, department stores were one of the few retailers located in city centres which would offer a wide range of tableware, kitchenware and other household articles. The growth of new formats, like the category killer IKEA, has put increased pressure on their market position. As a result, the department stores tried to reinvent themselves and came up with new concepts like the store-in-store concept, whereby the shops offer space to various designers. Despite the struggle to create a new identity, department stores still account for a substantial share of tableware, kitchenware and other household articles sales. Most department stores offer a wide range of both major brands and private label. They are generally situated in the mid- and high-priced segment of the table- and kitchenware market. Important department stores in Europe are: Karstadt/Quelle and Galeria Kaufhof in Germany, John Lewis and Allders in the UK, El Corte Inglés in Spain, Le Printemps in France and Bijenkorf and Vroom & Dreesman in The Netherlands. Most of these stores are restricted mainly to their country of origin, although El Corte Inglés is also present in Portugal. Variety stores are one of the most important formats for the sales of tableware, kitchenware and other household articles but, like the department stores, the variety stores suffer from their old-fashioned image (Euromonitor, 2005). Traditionally, the variety stores offer a wide range of cheap products at inner-city locations. However, due to fierce competition from supermarkets/hypermarkets and discount stores, it is no longer viable to concentrate solely on cheap products. Consequently, variety stores need also to redefine themselves. Important

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variety stores in Europe include: Woolworth GmbH & Co and Strauss Innovation in Germany, Marks & Spencer in the United Kingdom, Monoprix/Prisunic and Tati in France, Upim and La Standa in Italy and Blokker, Marskramer, Novy, Xenos and Hoyng in The Netherlands. Figure 3.2 Distribution of tableware, kitchenware and other household articles by format

Source: Based on information derived from different sources, including KeyNote, Euromonitor and company sites Grocery multiples Hyper- and supermarkets are increasingly tapping into the tableware, kitchenware and other household articles market. They generally tend to stock low-priced basic products. There is, however, a difference between hyper- and supermarkets. Hypermarkets sell a more comprehensive range of tableware, kitchenware and other household articles, whereas supermarkets mostly offer a limited range, such as mugs and other small household products, which are mostly private labelled. Both formats cater to an increasing share of shelf space for non-food articles like compact discs, table linen, napkins, candles, pots and pans, tableware, cutlery and other kitchen utensils. According to an article in TDC Trade, this is mainly because non-food products offer better margins than the standard grocery lines. Furthermore,

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supermarkets and hypermarkets mostly position tableware, kitchenware and other household articles as impulse purchases through cross merchandising with core grocery items. For example, woks are displayed next to prepared stir-fry vegetables, sauces and noodles. The lion’s share of these products is private label. It is expected that the importance of the grocery multiples will increase as consumer lifestyles become busier and demand for convenience rises. Discounters Discounters are another important format for retailing tableware, kitchenware and other household articles. These retailers often operate from low-rent locations. Low-price with no-frills is the most important driver in this concept. Discounters are becoming increasingly important. The economic downturn in the first halve of this decennium has been significant trigger for the success of this type of format. Discounters are very popular in Germany, where Aldi and Lidl take a significant share of the retail market. According to Euromonitor, these discounters carry a limited total of 600 to 1,200 products, whereas in a hypermarket the product range can reach 30,000 products. The discounters generally have special weekly offers regarding non-food items like tableware, kitchenware and other household articles, sold at extremely competitive prices. Other Next to the above-mentioned formats, there is a variety of other formats selling tableware, kitchenware and other household articles, such as mail order, Internet sales, door-to-door selling, party plans and company-owned outlets. The market share of these formats however, tends to be limited. Several manufacturers like Richard Ginori and Waterford-Wedgwood are selling their products directly through the Internet. Also, licensed third-parties selling through the Internet is becoming common practice in the tableware, kitchenware and other household articles market. However, companies like Tupperware still sell mainly through door-to-door selling and party plans. The company became known world-wide through which the so-called Tupperware parties through which the products were sold extensively. 3.1.3 Distribution channels for exporters from developing countries Traditionally, exports deriving from developing countries transit through a set of intermediaries like agents and importers and, in some cases, stock-keeping wholesalers, discussed in paragraph 3.1.2, who in turn market the exported products to wholesalers or retailers. These long distribution lines are mostly caused by the distance between the exporter and his export market and, in most cases, the relatively small size of the production in developing countries. Furthermore, a lack of information concerning the export market makes exporting a hazardous venture. The disadvantages of working through a large number of intermediaries include poor knowledge of market trends, inability to gain competitive advantage by adapting the product to specific customer needs and, of course, the margin lost at each stage of the distribution chain. The most important intermediaries, like agents/ sales offices, importers and retailers will be discussed briefly in the next paragraph of this section. See also Figure 3.1, for the different trade flows. Agents / sales offices Agents are intermediaries who do not keep stocks. The agent may serve as an intermediary between the manufacturer and the wholesaler or retailer, receiving a commission from the former. The level of commission depends on a number of factors, including the turnover rate of the product concerned; it averages an estimated 3 to 15% of turnover. Most agents represent more than one manufacturer. Agents usually have a good knowledge of distribution structures and consumer behaviour. Some foreign manufacturers have their own sales office in Europe or elsewhere. This is advisable if a manufacturer wants to make sure that his products are

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properly advertised and distributed. In fact, only the larger companies, which cover a substantial part of the market, maintain their own offices. The problem of working through an agent is, however, that the manufacturer is totally dependent on the agent and has to trust the quality of the agent's knowledge, commitment and selling ability. Importers/wholesalers Importers/wholesalers are familiar with local markets and can supply considerable information, assistance and guidance to the overseas manufacturer, such as the administration of import and export procedures and holding of stock, in addition to the primary business of buying and selling. Furthermore, they have strong relationships with suppliers and buyers all over the world. These intermediaries have long-established links with their customers and are in a better position (than foreign processors) to know the requirements of the local market and of individual end-users. Retailers Most large retailers, like for example IKEA, buy tableware, kitchenware and other household articles directly from foreign suppliers. This may involve intermediary activity by a selling agent on behalf of the manufacturer or a buying agent on behalf of the (multiple) retailer. This method of doing business has become popular, since it cuts out several intermediaries, thus reducing costs and enabling the retailer to offer the product at a lower end-price. It is particularly significant when a fashion trend takes hold, involving fierce competition between retailers offering lower prices. Unfortunately, this method often results in the supply of huge volumes of poorer quality, cheaper merchandise, after which the demand peaks and then falls off. Large chains have their own purchasing staff, buying from all over the world. In the country of origin, most buyers prefer the lines between manufacturer and themselves to be as short as possible. Short communication lines create better control over production and deliveries. This reduces the risk of discrepancies between buyers’ requirements and the final product. 3.2 Price structure The prices of tableware, kitchenware and other household articles fluctuate widely depending on a variety of factors. Price levels are influenced by: • Product type: woodware products differ a lot from glassware products and ceramicware,

for example. Plasticware has also very different prices from metalware and so on. • Brands: world-known brands are normally more expensive than simple, cheap tableware,

kitchenware and other household articles. Products sold by Wedgwood are backed by a tradition which IKEA products do not have.

• Quality factors: determined by the country of origin, by the quality of the raw material, by the art applied to the products, by tradition and by the method of manufacture. Swedish glassware as well as ceramics from Slovakia, for example, are more expensive than glassware and ceramics from other neighbouring countries, because of the tradition and quality of production.

• Economic factors: based on supply and demand. The trade depends on the size of the current market situation, the development and trends from previous years, stocks held by traders, processors, final users and the existence of cheaper substitutes.

Furthermore, the trade channel, the distances between the manufacturer and the end-consumer, and taxes, have great influence on price developments. In addition, the discussion on the entrance of East European countries to the European Union has also brought up the question of labour cost and general price calculations. In the tableware, kitchenware and other household articles sector, there is a direct relationship between the price of production and the price asked for the end-product. In general, every finished product has its target price which manufacturers must reach in order for the company to achieve its profit margin. The type of product also affects the amount of labour and other

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production costs. A high-quality product requires the use of a more knowledgeable workforce. At the same time, production styles can vary along with the amount of personnel employed to create high-quality products meeting price targets. When negotiating prices with a buyer, it is critical to know the bottom line – a point below which you will not go. That calls for an in-depth understanding of the costs of the product and the overheads and, crucially, how the cost of overhead is shared across the range of products. A single product has to absorb the entire overhead. At the same time, costs are also affected by factors such as quality, reliability, uniqueness of the supply and the attitude of the buyer. It is important from the outset to emphasise that it is difficult to obtain information on the prices which are paid for goods in the country of origin, or even for prices in general. As for most products, no world-market price exists. Brokers and traders form the main source of price information. Moreover, price developments call for market research and market intelligence. It can be easier if similar items are already exported from the same country, because it may be possible to obtain basic price data from local companies. No price information is available for specific tableware, kitchenware and other household articles products. However, it can be said that, due to the pressure of low cost imports from Asia and Eastern Europe, the tableware, kitchenware and other household articles market is becoming increasingly competitive. At the same time, the market is shifting away from traditional, formal and mostly high-priced products, towards more casual tableware, kitchenware and other household articles. Manufacturers increasingly introduce new ranges of fashionable products every year. In addition, existing market prices have come under pressure, due to the increasing importance of mass-market outlets like grocery multiples and discounters selling low-priced popular tableware, kitchenware and other household articles, in order to create more “traffic”. The developments mentioned have contributed to an intensified competitive environment. Different prices and margins apply throughout the various trade channels. Prices increase significantly along the value chain. In addition, the tableware, kitchenware and other household articles market consists of a very wide variety of products. It includes cutleries, metalware, plasticware, woodware, glassware, ceramicware and china & porcelain. Therefore, it is not feasible to define or give advice on prices for individual products in this survey. Therefore, the manufacturers will have to research the different market segments, distribution channels and criteria (i.e. brand) before attempting to access the EU market. Please refer to Chapter 5 for a calculation schedule on prices and margins of the different trade channels. In addition, it is important to note that the costs of transportation vary, depending on the origin, the volume of the shipment and so on. In general, prices at the final consumer destination (i.e. wholesalers and department stores) do not vary much across Europe. European Union countries collect taxes straight from consumers. These Value Added Taxes (VAT) rates differ in each country. However, rates within the EU are expected to gradually be harmonized. Interesting information can be found at the CBI website in the publication “Tariffs and quota for Tableware, kitchenware & other household articles in the EU”. Furthermore, EU countries use common Customs tariffs when importing from countries outside the Union, when no specific trade agreements apply. Most developing countries are granted special trade preferences through international agreements (i.e. ACP agreement). 3.3 Useful sources An interesting source of information for price developments is the European Central Bank (http://www.ecb.int). Even though the website does not give the price developments for tableware, kitchenware and other household articles, it gives price developments for goods and industrial goods as well as information on consumer and industrial prices. An interesting

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publication is the “Understanding price developments and consumer price indices in South-Eastern Europe”, which can be found at: http://www.ecb.int/pub/pdf/scpops/ecbocp57.pdf A list of European importers of houseware, kitchenware and tableware can be purchased from Exim Info (http://www.eximinfo.com). Select ‘Houseware & Kitchenware’ on the left side of the screen and then choose ‘Directory of 550 European Importers of Houseware, Kitchenware & Tableware’. In the website of FEC – Federation of the European Cutlery, Flatware, Holloware and Cookware Industries (http://www.fecinfo.org) you will find information on key manufacturers in the EU. An interesting website which shows some developments in the EU glassware market is the website of CPIV - Standing Committee of the European Glass Industries (http://www.cpivglass.be). In this website you will come across information about the EU glassware production, consumption and some news on price developments, as well. The IHA - International Houseware Association (http://www.housewares.org) gives some interesting information on houseware developments in Europe. However, there is no specific information on tableware, kitchenware and other household articles; the information is broader. In order to obtain more information on the EU market, it is worth to contacting importer/wholesalers or visit their websites. In table 3.2, some websites are presented. In addition, a list of trade channels is also available in the market survey of each one of the countries. Table 3.2 Important tableware, kitchenware and other household articles

importers/wholesalers in Europe Importer/Wholesaler Website Country ARC Distribution France http://www.arc-intl.com France

Sandra Rich Gmbh http://www.sandrarich.de Germany Kela http://www.kela.de Germany Decco http://www.decco.co.uk United Kingdom Pengo Spa http://www.pengospa.it Italy Koopman International BV http://www.koopmanint.com The Netherlands

Edelman BV http://www.edelman.nl The Netherlands Billiet Trading Company http://www.billiet.be Belgium

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4 Trade: imports and exports Trade statistics given in this chapter are derived from Eurostat, which bases its statistics on information from the Customs and from EU companies. It is worth noting that, in the case of intra-EU trade, not all transactions are registered, such as those made by smaller companies and transactions from non-EU sources (see remarks on trade statistics in Appendix A). On the other hand, figures for trade between the EU and the rest of the world (Extra-EU) are accurately registered and are, therefore, more precisely represented in these statistics. Nevertheless, these statistics must be treated with extreme caution and are only intended to give an indication of trade flows in the international tableware, kitchenware and other household articles market. The statistics specify total imports, divided into volumes/values, sourced from other EU countries (Intra-EU), non-EU-countries (extra-EU) with the values/ volumes coming from developing countries. 4.1 Total EU imports Between 2002 and 2006, the total EU imports increased by 4% amounting to € 10.2 billion. Germany, the UK and France were leading importing countries, together accounting for 44% of total EU imports. Imports of tableware, kitchenware and other household articles by many East European countries showed considerable increases. In the review period, imports from Romania increased by 27%, while Bulgaria and Latvia expanded their imports by 17% and 18% respectively. EU imports of tableware, kitchenware and other household articles were mainly supplied by EU countries (57%). Of the 43% from extra-EU countries, developing countries accounted for 36% of total imports in 2006, indicating an increase of 12% between 2002 and 2006. China is by far the leading supplying country, followed by Turkey, Thailand and India. Of the countries mentioned, only Thailand showed a decrease of 6% in the review period. Table 4.1 EU Imports of tableware, kitchenware and other household articles

2002-2006, € million / 1,000 tonnes 2002 2004 2006 value volume value volume value volume

Average annual % change in value

Total EU, of which from 9,098 2,780 9,922 3,662 10,757 3,483 4%

Intra-EU 5,776 1,681 6,017 1,997 6,123 1,496 1% Extra-EU 3,322 1,098 3,905 1,665 4,634 1,988 9% Developing countries 2,513 952 3,145 1,502 3,925 1,839 12% Source: Eurostat (2007) 4.2 EU imports per product group This section discusses the total EU imports per product group falling under the tableware, kitchenware and other household articles covered in this survey and developments therein. For information on imports by the individual EU member states, please refer to the CBI surveys covering the tableware, kitchenware and other household articles market in the individual EU member countries. Plasticware Between 2002 and 2006, the EU-27 imports of plasticware increased by an average annual rate of 6% amounting to € 2.8 billion. Germany, France, UK and Spain are the leading

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importers accounting for 55% of total EU imports. In terms of value, imports by Spain increased considerably (31%), while in terms of volume the opposite trend was noticed. Of the new EU-countries especially Romania, Lithuania, Bulgaria and Latvia showed considerable growth. Their imports grew by 29%, 16%, 14% and 13% respectively between 2002 and 2006. The EU countries are the dominant suppliers of the EU-27 plasticware imports. This is largely due the “economies of scale”, which enable the manufacturers to produce at low cost. In 2006, the EU countries supplied 70% of the plasticware requirements. Supplies from the Czech Republic, Hungary and Germany showed increases of more than 10% between 2002 and 2006. Accounting for 17% of total EU imports in 2006, China was the leading supplying country to the EU. The share of developing countries in total EU imports increased from 18% in 2002 to 21% in 2006, mainly represented by increases in the supply from China. Table 4.2 EU imports and leading suppliers of plasticware

2002 - 2006, share in % of value 2002 2004 2006 Leading suppliers to EU in 2006 Share € mln € mln € mln Share in % (%) Total EU, of which from

2,206 2,354 2,787

Intra-EU 1,599 1,655 1,953 Germany (11%), Belgium (11%), Italy (11%), France (6%), Netherlands (6%)

70%

Extra-EU ex. DC* 218 235 250 Switzerland (2%), USA (2%), Taiwan (2%)

9%

DC* 390 465 584 China (17%), Turkey (1%), Thailand (1%) 21% Source: Eurostat (2007) *Developing countries Woodware The woodware import market is by far the smallest of all the tableware, kitchenware and other household articles segments in this survey, representing 3% by value of total EU-27 table- and kitchenware imports. In 2006, the EU import of woodware grew by an average annual rate of 3%, reaching a value of € 222 million. Table 4.3 EU imports and leading suppliers for woodware

2002 - 2006, share in % of value 2002 2004 2006 Leading suppliers to EU in 2006 Share € mln € mln € mln Share in % (%) Total EU, of which from

200 207 222

Intra-EU 83 85 92 Germany (5%), Italy (5%), Poland (5%), Netherlands (3%), Romania (3%)

41%

Extra-EU ex. DC* 10 6 7 Taiwan (1%), Hong Kong (1%), USA (0.5%)

3%

DC* 107 115 123 China (36%), Thailand (10%), Vietnam (5%), India (1%), Indonesia (1%)

56%

Source: Eurostat (2007) Although the United Kingdom experienced an average decrease of 4% per year between 2002 and 2006, it remained the largest importer of woodware in the EU-27. It is closely followed by Germany. The UK and Germany accounted for 22% and 18% of the total EU-27 woodware imports respectively. The share of the new EU countries is only marginal, although their growth rate is far more dynamic. In the review period, imports from Romania, Latvia, Lithuania and Bulgaria increased by an annual average rate of more than 30%.

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Almost 60% of EU imports is supplied by countries outside the EU, of which 56% is accounted for by developing countries. China was by far the leading supplier of woodware to the EU countries. Other major leading suppliers were Thailand, Germany, Vietnam and Italy. Thailand, however, is experiencing tough competition from the other countries mentioned; especially Vietnam with an average annual growth of 13% in the review period is of increasing importance. China & porcelain As from 2002, imports of china & porcelain by EU member countries increased by an average annual growth rate of 6% and 16% in terms of value and volume respectively, amounting to € 1.1 billion / 526 million tonnes in 2006. Table 4.4 shows the most important suppliers to the EU of china & porcelain. Table 4.4 EU imports and leading suppliers of china & porcelain

2002 - 2006, share in % of value 2002 2004 2006 Leading suppliers to EU in 2006 Share € mln € mln € mln Share in % (%) Total EU, of which from

870 977 1,098

Intra-EU 615 600 558 Germany (15%), France (4%), Poland (4%), Belgium (4%), UK (3%)

51%

Extra-EU ex. DC* 43 47 42 Switzerland (1%), Japan (1%), Norway (1%), South Korea (1%)

4%

DC* 212 331 498 China (35%), Turkey (2%), Thailand (2%), Indonesia (2%), Bangladesh (1%)

45%

Source: Eurostat (2007) A relatively large part of the imports is handled by Germany, Italy, France and the UK, which together accounted for 54% of total EU imports. The share of developing counties increased from 24% in 2002 to 45% in 2006, mainly due to increases in the supply by China. Between 2002 and 2006, China experienced an average annual growth of 45%. The supply from extra-EU countries other than developing countries decreased significantly, with average annual growth rates of more than 10%. Hong Kong is an upcoming supplier to the EU with its average annual growth rate of 27% in the review period. Ceramicware Between 2002 and 2006, EU imports of ceramicware increased slightly, showing an average annual growth rate of 4%, amounting to € 684 million in 2006. In that same year, the leading importer was the UK, closely followed by France and Germany. The UK accounted for 20% of the total imports, France 16% and Germany 11%. In this same period, the Eastern EU countries increased their imports significantly; Romania, Hungary and Latvia showed average annual growth rates of more than 20% in the years 2002 and 2006. Table 4.5 EU imports and leading suppliers for ceramicware

2002 - 2006, share in % of value 2002 2004 2006 Leading suppliers to EU in 2006 Share € mln € mln € mln Share in % (%) Total EU, of which from

584 635 684

Intra-EU 358 374 289 Portugal (9%), Germany (5%), UK (5%), Italy (4%), Romania (4%)

42%

Extra-EU ex. DC* 35 30 21 Taiwan (1%), Hong Kong (1%), Japan (0.4%)

3%

DC* 190 231 374 China (40%), Thailand (7%), Turkey (2%), Indonesia (1%), Vietnam (1%)

55%

Source: Eurostat (2007

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The shares of supplies from developing countries increased during the survey period from a share of 33% in 2002 to a share of 55% in 2006. China is the leading supplier to the EU member states, at the same time also the biggest supplier from developing countries. Between 2002 and 2006, the supply of ceramicware to the EU by China grew on average by 48% per year. Glassware The imports of glassware by the EU-27 are fairly stable and only increased marginally, amounting to € 2 billion in 2006. Between 2002 and 2006, Germany, the UK, France and Italy were the leading importing countries in the EU. Imports of glassware by France slightly increased (average annual rate of 2%), while the other leading importing countries mentioned lshowed small decreases. Table 4.6 EU imports and leading suppliers of glassware

2002 - 2006, share in % of value 2002 2004 2006 Leading suppliers to EU in 2006 Share € mln € mln € mln Share in % (%) Total EU, of which from

2,064 2,201 2,143

Intra-EU 1,539 1,551 1,455 France (14%), Germany (11%), Italy (7%), Netherlands (5%), Poland (5%)

68%

Extra-EU ex. DC* 139 130 124 Taiwan (1%), Hong Kong (1%), USA (0.5%)

6%

DC* 385 520 564 China (17%), Turkey (6%), India (1%), Brazil (1%), Thailand (0.4%)

26%

Source: Eurostat (2007) The supply from a number of East European countries decreased, especially Hungary (down on average by 8% per year), Czech Republic (7%) and Romania (7%). The decline of the EU countries has two main explanations, firstly, the low-priced products made by manufacturers in non EU-countries and, secondly, EU manufacturers, like their American counterparts, have shifted production to low-cost regions in Eastern Europe and Asia. The share of developing countries in the supply of glassware to the EU increased from 19% in 2002 to 26% in 2006, indicating an average annual growth of 10% in the survey period. China is the leading supplying country of glassware to the EU, but at the same time also the main leading supplier among the developing countries. Between 2002 and 2006, it witnessed an average annual growth rate of 18%. Metalware Total EU imports of metalware amounted to € 2.8 billion in 2006, indicating an average annual growth of 5% between 2002 and 2006. Germany, the UK and France are the leading importing countries, accounting for 46% of total EU imports of metalware. Imports by Eastern EU countries showed substantial increases. Imports by Bulgaria, Latvia and Romania grew on average more than 20% per year in the review period. The role of EU member states in total EU imports of metalware as suppliers to the EU was equal to the role of extra-EU countries, including developing countries. It should be mentioned that the share of EU countries grew at a slower rate between 2002 and 2006. The share of EU countries showed an average annual growth rate of 3%, while the share of extra-EU countries, including developing countries, amounted to an average annual growth rate of 8%. In 2006, China was the leading supplying country to the EU member states, showing an average annual growth rate of 13% in the survey period. In this same period, supply by Ukraine to the EU increased considerably from € 1 million in 2002 to almost € 9 million in

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2006. Other supplying countries which showed average annual growth of more than 10% were Vietnam (up 16%), Czech Republic (13%), Sweden (12%) and Austria (12%). Table 4.7 EU imports and leading suppliers of metalware

2002 - 2006, share in % of value 2002 2004 2006 Leading suppliers to EU in 2006 Share € mln € mln € mln Share in % (%) Total EU, of which from

2,246 2,588 2,755

Intra-EU 1,236 1,389 1,384 Italy (13%), Germany (10%), France (7%), Netherlands (5%), Belgium (4%)

50%

Extra-EU ex. DC* 205 185 146 Taiwan (2%), Zwitserland (1%), Hong Kong (1%), USA (1%)

6%

DC* 805 1,014 1,225 China (36%), India (3%), Turkey (2%), Thailand (1%), Vietnam (1%)

44%

Source: Eurostat (2007) Developing countries are represented by China. Between 2002 and 2006, the role of developing countries in total EU imports of metalware increased by an average of 11% per year. This is mainly due to the increases in supply from China. Cutlery The total EU imports of cutlery amounted to € 1 billion, indicating an average annual growth of 4% between 2002 and 2006. Germany, the UK and France were the leading importing countries, accounting for 20%, 13% and 11% of the total EU imports respectively. Imports from the following EU countries which showed average annual growth rates above 15% were Slovenia (38%), Latvia (30%), Romania (25%), Lithuania (16%), Bulgaria (16%) and Estonia (15%). Table 4.8 EU imports and leading suppliers of cutlery

2002 - 2006, share in % of value 2002 2004 2006 Leading suppliers to EU in 2006 Share € mln € mln € mln Share in % (%) Total EU, of which from

928 960 1,069

Intra-EU 345 363 392 Germany (12%), Netherlands (4%), France (4%), Italy (4%), Belgium (3%)

37%

Extra-EU ex. DC* 159 126 118 Zwitserland (4%), Japan (2%), Taiwan (1%), USA (1%), Hong Kong (1%)

11%

DC* 424 471 559 China (41%), Vietnam (3%), India (1%), Thailand (1%), Indonesia (1%)

52%

Source: Eurostat (2007) Developing countries as suppliers of cutlery to the EU played a more important role in total EU imports than the EU member states. In 2006, developing countries accounted for 52% of total EU imports, whereas the 27 EU countries were responsible for 37% of total imports. Between 2002 and 2006, the share of developing countries in total EU imports increased on average by 7% per year. China is by far the leading supplying country to the EU, showing an average annual growth rate of 7% during the review period. Other supplying countries with remarkable average annual growth rates were Czech Republic (35%), Denmark (32%), Austria (30%), Vietnam (18%), Belgium (14%), India (12%) and Poland (12%). 4.3 The role of developing countries This section discusses the role of developing countries in the tableware, kitchenware and other household articles market in the EU. By developing countries, we mean the countries on the OECD DAC list, which can be found in Appendix 5. The role of developing countries in EU-27

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imports of tableware, kitchenware and other household articles has increased considerably. In 2006, the imports deriving from developing countries accounted for 36% of the total EU-27 tableware, kitchenware and other household articles imports. Between 2002 and 2006, imports deriving from developing countries grew on average by 12% per year against a total import growth of on average 4% per year. It should, however, be noted that China accounts for the lion’s share of the EU-27 tableware, kitchenware and other household articles imports. Of the imports deriving from developing countries, 78% originated in China. In 2006, the Chinese supply accounted for 28% of the total EU-27 imports. Many emerging countries in Asia have set up their own tableware, kitchenware and other household articles industry, strongly dedicated to low-priced exports. At the same time, many EU manufacturers have shifted their production to these countries to benefit from low production costs. They combine their efficient and high-quality production systems with the low labour costs in these countries. This development has offered the local manufacturers in developing countries a chance to copy the new technologies and production systems. Therefore, the quality of their products has improved considerably. Especially China and, to a lesser extent, Thailand have taken advantage of these developments and therefore pose an increasing threat to EU manufacturers. The other developing countries (excluding China and Thailand) are currently also expanding their exports, although it will take a long time for them to obtain a significant position in the international tableware, kitchenware and other household articles trade, because:

• Most developing countries do not have a well-established tableware, kitchenware and other household articles industry. Production capacity, the level of technology, product innovations and variety in design are limited.

• EU manufacturers continue to sub-contract to foreign manufacturers in Eastern European countries and China, which are more flexible in terms of meeting their specific requirements and, in the case of the East European countries, are closer to the sales market.

Table 4.9 Main developing country suppliers, share of total EU-27 imports, 2006

Total import (€ thousand) Import from DC (€ thousand) Leading developing country suppliers

Total imports Imports DC Leading DC suppliers Plasticware 2,786,794 583,532 China (17%), Thailand (1%) Wood

221,988 123,405 China (36%), Thailand (10%), Vietnam (5%), India (1%), Indonesia (1%)

China and porcelain 1,098,465 497,902

China (35%), Turkey (2%), Thailand (2%), Indonesia (2%), Bangladesh (1%)

Ceramicware 683,779 373,791

China (40%), Thailand (7%), Turkey (2%), Indonesia (1%), Vietnam (1%)

Glassware 2,142,966 563,656

China (17%), Turkey (6%), India (1%), Brazil (1%), Thailand (0.4%)

Metalware 2,754,535 1,224,548

China (36%), India (3%), Turkey (2%), Thailand (1%), Vietnam (1%)

Cutlery 1,068,658 558,568

China (41%), Vietnam (3%), India (1%), Thailand (1%), Indonesia (1%)

Source: Eurostat, 2004 Metalware and plasticware are the main product groups imported from developing countries. Of these products, the bulk is imported from China, India and Thailand. It should be noted that woodware is a known product deriving from developing countries, mainly because wooden products do not require difficult and expensive production processes. Of all EU countries, the UK and Germany import the most from developing countries. In 2006, the imports deriving from developing countries amounted to € 766 million and € 780 million respectively. This indicates that, of the total imports by Germany and the UK, 20% of total EU

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imports was sourced in developing countries. As in many EU countries, China accounted for the major part of imports from developing countries. Figure 4.1 Share of developing countries in the total import of table- and

kitchenware in the EU, by product, 2002-2006, % of imported value

36%

21%

56%

45%

55%

26%

44%

52%

0% 10% 20% 30% 40% 50% 60%

Total

Plasticware

Woodware

China & porcelain

Ceramicware

Glassware

Metalware

Cutlery

200620042002

Source: Eurostat, 2004 The share of developing countries in total imports by Romania increased considerably between 2002 and 2006. In this same period, the growth of the share of developing countries showed the highest in Latvia, Denmark and France. Table 4.10 Imports of table-kitchenware from developing countries

2002-2006, € thousand / tonnes 2002 2004 2006 value volume value volume value volume

Average annual % change in value

EU27 2,513,077 951,614 3,145,102 1,501,600 3,925,403 1,839,108 12% UK 655,794 219,840 680,384 311,229 780,209 338,843 4% Germany 510,784 162,087 631,082 254,250 765,959 296,758 11% Italy 200,197 82,919 286,458 144,553 399,287 219,725 19% France 254,397 95,340 298,818 125,275 390,855 173,576 11% Spain 157,161 68,600 239,773 129,060 321,684 174,082 20% Netherlands 224,926 92,404 285,581 134,217 316,033 145,907 9% Belgium 124,760 45,009 162,876 76,383 236,690 105,513 17% Sweden 74,943 25,896 95,510 37,048 112,664 43,899 11% Poland n.a. n.a. 75,107 59,215 102,899 69,501 - Denmark 47,875 15,616 63,629 24,263 99,804 33,862 20% Greece 55,544 27,630 74,356 41,332 84,067 47,513 11% Austria 29,470 15,661 37,295 19,287 53,999 27,321 16% Czech Rep 38,987 19,880 45,183 25,446 46,962 23,976 5% Romania 10,519 17,861 24,708 33,652 45,484 43,152 44% Ireland 20,827 7,617 19,958 8,085 27,578 12,077 7% Hungary 18,154 10,022 30,407 21,028 25,443 16,425 9% Finland 14,626 5,313 16,266 5,976 25,387 8,341 15% Portugal 17,883 10,285 21,632 12,757 23,204 15,132 7% Bulgaria 9,061 10,727 13,219 14,606 17,390 14,799 18% Lithuania 8,324 3,811 9,427 6,573 12,074 8,165 10% Slovenia 9,415 3,102 7,640 3,583 11,047 4,956 4%

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2002 2004 2006 value volume value volume value volume

Average annual % change in value

Slovakia 11,365 5,470 8,263 4,759 5,754 4,309 -16% Latvia 2,415 1,259 3,014 1,939 5,642 3,330 24% Estonia 5,348 2,009 4,246 2,078 3,181 1,407 -12% Malta 2,729 0 2,019 704 1,931 968 -8% Luxembourg 392 175 491 308 711 307 16% Source: Eurostat (2007) 4.4 Exports Between 2002 and 2006, the value of EU tableware, kitchenware and other household articles exports increased slightly by an average annual rate of 1%, amounting to more than € 10 billion in the latter year. The EU-27 is the leading exporter of tableware, kitchenware and other household articles in the world, with Germany, France and Italy being among the world’s top ten exporting countries. Table 4.11 Total exports of tableware, kitchenware and other household articles by EU-27, 2002-2006, in € thousand, tonnes 2002 2004 2006 value volume value volume value volume Total EU 9,645,795 2,368,844 9,782,612 2,571,422 10,077,457 2,212,236 Germany 1,645,902 260,911 1,586,048 274,477 1,737,095 299,377 France 1,831,507 505,999 1,678,995 480,419 1,646,073 263,958 Italy 1,697,157 492,046 1,540,984 447,374 1,506,467 340,720 Belgium 709,053 160,861 767,475 180,897 844,332 168,782 United Kingdom 659,633 118,323 579,878 96,403 558,503 118,271 Poland n.a. n.a. 490,832 200,734 529,234 199,819 The Netherlands 442,624 113,703 486,883 152,535 515,086 109,703 Czech Rep. 423,538 118,418 451,565 128,295 477,111 91,965 Spain 445,308 165,580 419,674 169,272 405,061 103,350 Austria 320,020 38,797 333,852 38,631 342,854 48,131 Portugal 318,069 111,935 323,820 114,574 287,501 107,642 Sweden 204,589 35,764 262,232 45,056 251,510 52,065 Denmark 218,708 20,857 211,555 26,629 232,514 26,807 Romania 130,687 75,476 124,064 79,052 114,084 65,793 Slovakia 81,470 25,224 98,223 26,937 110,423 28,082 Slovenia 79,469 27,308 79,386 25,487 91,586 32,368 Ireland 135,870 6,981 106,871 9,668 90,845 7,554 Hungary 106,784 29,184 91,764 27,577 89,537 27,259 Greece 47,475 14,371 48,568 18,722 56,747 16,477 Luxembourg 68,581 18,828 16,466 3,140 55,037 22,172 Finland 48,062 6,898 43,500 6,465 51,165 6,727 Bulgaria 11,942 9,181 11,152 7,505 50,006 60,507 Lithuania 9,219 5,328 12,960 5,903 18,612 6,713 Estonia 4,204 1,097 8,216 2,543 8,297 5,723 Latvia 4,492 1,739 6,017 2,795 6,878 2,126 Cyprus 990 4,037 1,235 311 733 118 Malta 441 0 398 23 167 29 Source: Eurostat (2007) Exports by Bulgaria (up 43%), Lithuania (19%), Estonia (19%) and Latvia (11%) increased remarkably, whereas the exports by Malta (down 22%), Ireland (-10%) and Cyprus (-7%) showed the opposite trend.

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Looking at the destinations of the EU-27 export, we can see that in the review period intra-EU trade increased, and accounted for 63% of the total EU exports in 2006. Within the EU-27, Germany (11%), France (9%), United Kingdom (5%), Italy (5%), Spain (5%), and The Netherlands (4%) were the major destinations. It should be noted that the USA is the second most important destination for the EU-27 exports. Other important non-EU destinations were Russia (3%), Switzerland (3%), Japan (2%) and Norway (2%). 4.5 Opportunities and threats + Imports have increased and this can offer interesting opportunities for exporters in

developing countries. + The share of developing countries also increased on average by 12% per year between

2002 and 2006. + The share of developing countries in all tableware, kitchenware and other household

articles dealt with in this survey has shown increases between 2002 and 2006. China & porcelain, ceramicware and glassware showed average annual growth rates of more than 40% in that same period.

+ Although it is of least value compared to other products, woodware represents the most interesting product group, as about 55% of total woodware imports is supplied by developing countries.

+ Germany, the UK, France and Spain are the EU’s leading import markets for table-& kitchenware.

+ The outsourcing development offers local producers in developing countries a chance to copy the new technologies and production systems, which in turn can bring about an improvement in the quality of the products.

- Developing countries play a relatively minor role within the plasticware. - It should be noted that although the share of developing countries in total imports of table-

and kitchenware into the EU is significant, the major part is accounted for by China. This means that other exporting developing countries have to compete with China, if they wish to penetrate EU countries.

- All tableware, kitchenware and other household articles exported to the EU must comply with the EU legislation concerning food-contact materials.

- Delivery time and consistency in product quality are usually mentioned as bottlenecks, when trading with exporters from developing countries.

Please refer to Chapter 7 of the survey covering the EU market for general opportunities and threats in the EU. 4.6 Useful sources • EU Expanding Exports Helpdesk

http://export-help.cec.eu.int/ go to: trade statistics

• Eurostat – official statistical office of the EU http://epp.eurostat.cec.eu.int go to ‘themes’ on the left side of the home page go to ‘external trade’ go to ‘data – full view’ go to ‘external trade - detailed data’

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5 Price developments Price is an important aspect of the tableware, kitchenware and other household articles sector, but there is such a broad range of items, qualities, materials, and styles, that it is almost impossible, and certainly not meaningful, to give typical prices. Therefore, this chapter will discuss developments which influence the price level in the tableware, kitchenware and other household articles market. Furthermore, differences in price levels between EU countries are examined. 5.1 Price developments As can be seen in Chapters 1 and 2, the tableware, kitchenware and other household articles market is becoming increasingly competitive, due to the pressure of low cost imports from Asia and Eastern Europe. At the same time, the market is shifting away from traditional, formal and mostly high-priced products, towards more casual tableware, kitchenware and other household articles. Manufacturers nowadays introduce new ranges of fashionable products every year. In addition, existing market prices have come under pressure, due to the increasing importance of mass-market outlets like grocery multiples and discounters selling low-priced popular tableware, kitchenware and other household articles, in order to create more “traffic”. The above developments have contributed to an intensified competitive environment. Traditionally, the tableware, kitchenware and other household articles market can be divided into three main price segments:

• Premium-priced tableware, kitchenware and other household articles: consisting of high-quality, formal product brands like, for example, Alessi and Villeroy & Boch. These products are mostly sold through specialty retailers and department stores.

• Mid-priced tableware, kitchenware and other household articles: most of the industry’s volume is realised in this segment. These products are mainly sold through department stores and retailers.

• Low-priced tableware, kitchenware and other household articles: mostly deriving from Asia or Eastern Europe. These products are mainly sold through discounters and grocery multiples.

According to branch experts of NPD Industry, an American research agency, the price levels in the tableware, kitchenware and other household articles market are polarizing. Consumers who traditionally shop in the mid-price segment shift towards the higher priced products, called “shopping up”, as quality and specialty are very important in this segment. The opposite development is also evident, “shopping down”, meaning consumers are shopping for lower prices. The latter is triggered by the increasing demand for low-priced fashionable tableware, kitchenware and other household articles which can be found, for example, in discounters and grocery multiples. The increasing amount of cheap products deriving from Asia and Eastern Europe drove many EU manufacturers out of the low-priced and mid-priced segment. In turn, many European manufacturers repositioned themselves at the premium end of the market, making this high-priced segment more crowded. Margins Table 5.1 describes three different mark ups, low, medium and high. It is impossible to draw up a schedule of actual margins for each product/market combination. Even within the same type of combination, different importers use different margins. The effect of low, medium and high margins on the retail price, based on the same CFR for three different products, is shown in Table 5.1. A multiplier of between 2.12 and 3.14 on the manufacturer’s or importer’s price should be used to calculate an appropriate final consumer price. The height of this multiplier is influenced by several factors, among them:

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• Degree of risk (highly innovative, new brand, etc.) • Volume of business (turnover) • Functions or marketing services rendered (advertising, etc.) • General economic conditions (booming or depressed business) • Competition • Exclusiveness • Velocity of stock turnover

Table 5.1 Calculation schedule: prices and margins Low Medium High FOB Manila 90.00 90.00 90.00 C&F Rotterdam/Amsterdam 100.00 100.00 100.00

• Import duties charges on C&F basis* pm* pm* pm* • Handling charges, transport, insurance and bank

service 6.00 6.00 6.00 Subtotal: 106.00 106.00 106.00

• Importer/wholesaler's margin (20/30/40%) 21.20 31.80 42.40 Subtotal: 127.20 137.80 148.40

• Retailer's margin (40/50/60%) 50.90 68.90 89.00 Net selling price 178.10 206.70 237.40

• Value added tax (VAT) 19% of net selling** 33.80 39.30 45.10 Gross selling price (consumer price) 211.90 246.00 282.50 ratio consumer price/FOB 2.35 2.73 3.14 ratio consumer price/C&F 2.12 2.46 2.83 * Between 0 and 11% of C&F value ** In practice, retailers calculate a 90 – 125 percent mark-up, including VAT. The VAT rates

vary per country in the EU. The multiplier has decreased in the last decade, caused by factors like increasing competition at all levels in the distribution chain, further retail concentration and sales chain integration. Elimination of the wholesaler, for instance, can lead to a lower multiplier used by multiples, department stores, variety stores and mail-order companies. 5.2 Useful sources The best way to obtain information about prices and price levels in the EU is by visiting one of the major trade fairs. Alternatively, comparisons can be found in the prices given in catalogues from mail-order houses, large department stores and from internet sites. Window-shopping in the prospective market place, at several retail shops, is another good way of gaining information about prices. Apart from prices, window-shopping gives you a good impression of the wide variety of products, qualities, fashions, colours and promotions. The internet is also a good source of price information:

• Ikea: http://Ikea.com/ • Tupperware: http://order.tupperware.com/coe/app/home# • Karstadt: http://www.karstadt.de/ • Galeria Kaufhof: http://www.kaufhof.de/ • Neckermann: http://www.neckermann.de/ • Otto: http://www.otto.de/ • Quelle: http://www.quelle.de/ • Argos: http://www.argos.co.uk/

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6 Market access requirements As a manufacturer in a developing country preparing to access EU markets, you should be aware of the market access requirements of your trading partners and the EU governments. Requirements are demanded through legislation and through labels, codes and management systems. These requirements are based on environmental, consumer health and safety and social concerns. You need to comply with EU legislation and have to be aware of the additional non-legislative requirements that your trading partners in the EU might request. For information on legislative and non-legislative requirements, go to ‘Search CBI database’ at http://www.cbi.eu/marketinfo, select Household utensils and the EU in the category search, click on the search button and click on market access requirements. Manufacturers and exporters planning to export their products to the EU should be compliant with the legislation. Tableware, kitchenware and other household articles are subjected to certain legislation relating to food sanitation, especially for products which have direct contact with food, and which generally applies to all products covered in this survey. Products which come in contact with food (so-called Food-contact materials) are regulated by three types of directives:

• The Framework Regulation (EC) No 1935/2004 sets up general requirements for all food contact materials (repealed the Directives 80/590/EEC and 89/109/EEC).

• Specific Directives cover single groups of materials and articles listed in the Framework Directive. Currently, specific directives exist for three groups of materials and articles: ceramics, regenerated cellulose film and plastics.

• Directives on Individual Substances or groups of substances used in the manufacture of materials and articles intended for food contact.

In addition to the legislative requirements related to packaging of products, there are well-known established business practices for packaging, labelling and marking of kitchenware products in the EU market.

Packaging, marking and labelling

Packaging has the overall purpose to protect products during transportation. Products imported from developing countries have a long distance to travel to reach European markets. Therefore it is of foremost importance to have your products packaged in a reliable way to ensure their protection from extremes temperatures, humidity, vibration, shock and damage. In addition, most European distributors and retailers demand that the products are packaged in an attractive, easy-to-handle and self-promoting way. Packing in corrugated boxes with dimensions enabling easy handling and weight (not exceeding 25kg per carton) is recommended. Wherever possible, the outer cartons should be placed together on pallets to further avoid risks associated with damage during transit. Attractive consumer packing is also very important and it should reflect the design, image, quality and price of the product. Marking and labelling have the main purpose to convey a message to distributors, buyers and consumers.

Labels

The labels should include information concerning the product as well as information on the originating and destination addresses, contact names and telephone numbers. Appropriate labelling and marking can protect products from being damaged by indicating, for instance, that the item is fragile or it needs to be kept upright. It is important to label individual parcels and packages as well. A label on the article has to provide the necessary data in a language comprehensible for the target market. In general, the label should state material(s) used, qualities, country of origin and, if applicable, size in centimetres or volume in litres, as well as instructions for use.

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Barcodes

Barcodes are largely used within Europe and it is advisable to label your products stating both the contents and the article code of the buyer/distributor. Using barcodes is an automatic way of entering product’s data in the computers. The barcode consists of a number of thick and thin lines and four groups of digits. The digits groups represent the country of the manufacturer, manufacturer, a special product number and extra digits for control. It is not compulsory to use barcodes, nevertheless an increasing share of producers make use of these codes, making it easier to keep information concerning the product stock. Check with your importer!

Symbols

Sometimes symbols are used to indicate the qualities of the product, such as food-safe, recyclable, dishwasher-safe, microwave-safe; for example, porcelain or ceramic ware should be marked whether or not it is safe to put in the dishwasher and /or microwave. The pictures below presents some labels used for kitchenware products.

Keep dry This side up Fragile Additional information on packaging can be found at the website of ITC on export packaging: http://www.intracen.org/ep/packaging/packit.htm Information on tariffs and quota can be found at http://export-help.cec.eu.int/

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7 Opportunity or threat? Economic growth has slowed across much of Western Europe since the turn of the millennium. Reduced consumer confidence and growth in unemployment were, among others, the main factors leading to lower growth in total consumer spending. Market demand has slowed down significantly in many segments, leading to overcapacity and lower prices relative to the overall price level. Due to the strong competition, many European producers have outsourced their production to developing countries, such as China. However, the EU market has recovered and remained large. The outlook for the EU tableware, kitchenware and other household articles market is positive. Therefore, exporting to this market could be a very interesting opportunity for exporters in developing countries, if they are able to meet the requirements of the market. Factors influencing or offering opportunities for developing countries’ exporters are: • Favourable business conditions. • Increasing demand for tableware, kitchenware and other household articles. • Increasing incomes, particularly in the new EU member states. • More outsourcing of production to other countries/regions. • Relatively high production costs in the EU. • The share of tableware, kitchenware and other household articles imports from developing

countries is increasing. Particularly china & porcelain and ceramicware are interesting. Factors which could pose threats to developing countries’ exporters of tableware, kitchenware and other household articles are: • Increasing complexity of products and quality requirements. • Closely related to economic development and energy prices. • High level of European research and technical development. • Developing countries play a relatively minor role within the plasticware and glassware trade. • Ageing population is expected to result in less often replacing of tableware, kitchenware and

other household articles as the older generations are more likely to have traditional tastes. Please note that a trend or development could offer opportunities for certain (developing country) exporters, but at the same time pose a threat to other exporters. As an exporter, you will need to analyse if the development provides an opportunity or a threat to your business. This will depend on your specific situation.

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Appendix A Product characteristics Statistical product classification Prodcom and Combined nomenclature (CN) Two different sets of statistical data are used in this survey. Both sets have been provided by Eurostat, the statistical body of the EU. The first set is derived from Prodcom. The term Prodcom is derived from PRODucts of the European COMmunity. This is based on products whose definitions are standardised across the EU to allow comparability between the member countries’ data. Prodcom covers some 4,800 products which are assigned to some 250 industries (subclasses) as defined by the Standard Industrial Classification (SIC). Prodcom data contain production, imports and exports. Based on these data apparent consumption can be calculated as follows: apparent consumption = production + imports -/- exports. The second set is the trade data based on the Combined Nomenclature. The abbreviation CN stands for Combined Nomenclature. This Combined Nomenclature contains the goods classification prescribed by the EU for international trade statistics. The CN is an 8-digit classification consisting of a further specification of the 6-digit Harmonised System (HS). HS was developed by the World Customs Organisation (WCO). The system covers about 5,000 commodity groups, each identified by a six-digit code. More than 179 countries and economies use the system. Statistical data: limitations Trade figures quoted in CBI market surveys must be interpreted and used with extreme caution. The Prodcom data used in Chapter 1 and 2 are less reliable than the import and export statistics used in Chapter 4, as they are not part of official data collection for Customs. Companies only have to send in their data on an annual or quarterly basis. The figures sometimes show a discrepancy between years, e.g. a large fall or extraordinary growth. These problems are caused by inaccurate, inconsistent and untimely reporting by companies. However, Prodcom data are the only official source for production and apparent consumption data, displaying numbers at product group level and describing the different EU markets in detail. Therefore they are useful to get an indication of size and trends within those markets. However, these figures are not accurate enough for decision making and should be used in conjunction with further market research. In the case of intra-EU trade, statistical surveying is only compulsory for exporting and importing firms whose trade exceeds a certain annual value. The threshold varies considerably from country to country, but it is typically about € 100,000. As a consequence, although figures for trade between the EU and the rest of the world are accurately represented, trade within the EU is generally underestimated. Furthermore, the information used in CBI market surveys is obtained from a variety of sources. Therefore, extreme care must be taken in the qualitative use and interpretation of quantitative data, because it puts limitations to in-depth interpretation of relations between consumption, production and trade figures within one country and between different countries. Description product groups This survey analyses the market for tableware, kitchenware and other household articles and other household articles in the European Union. Naturally, the category is broad, and includes a wide range of applications from storage containers to laundry- and waste-baskets. For the purposes of this report, the EU-market for tableware, kitchenware and other household articles

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is segmented into seven categories, depending on the material from which they are made. The following segments are distinguished: glassware, ceramicware, china & porcelain, cutlery, plasticware, metalware and woodware. Because of this division, there is some overlap between ceramicware and china & porcelain and between cutlery and metalware. This survey does not include small domestic electrical household appliances such as, for example, coffee makers. A related CBI survey is the one concerning “Gifts and decorative articles”. This survey covers candles, artificial flowers and fruits, decorative glassware, basketwork and suchlike. We will give a short definition of the seven product groups included in this survey. Most product groups include a number of different products. However, for the ease of use and taking into account the extent of information available, the survey does not specify the different products included in each product group. The following product groups are distinguished in this survey: Plasticware Plasticware consists of storage products like cups, containers, etc. It also includes plastic tableware like plates, mugs, jars etc. Cleaning equipment such as bowls, buckets and drainers are also included in this group. Woodware The smallest segment consists of wooden tableware, kitchenware and other household articles, including products such as chopping boards, bowls, bread bins and spice racks, all made of wood. Because information on this segment is very limited, it is not possible to give accurate figures concerning the consumption of these products. China & porcelain The china & porcelain segment is closely linked with ceramicware. This could mean that there is some overlap between these segments. China and porcelain is defined as fine semi-transparent or white earthenware. It includes dinner services and individual items of china tableware. Ceramicware Ceramicware includes cookware, such as casseroles and oven-to-tableware. It furthermore consists of non-china ceramics, like earthenware and stoneware. Other products, such as mugs, storage jars, jugs and pitchers are also included in this segment. Glassware The glassware segment can be divided in to three types of products, each having it own specific purpose. “Drinking glasses” is the first and one of the largest groups. It includes tumblers, crystalware and stemware. The second group is glass cookware, including glass pots, pans and heat-resistent casseroles. The third group is glass tableware, which includes glass plates, serving dishes etc. Metalware The metalware segment includes all types of metals such as silver, silver-plate, stainless steel, hard-anodised steel, aluminium, etc. Metalware can be divided into four main categories:

• Cookware, including pots, pans and pressure cookers; • Bakeware, including baking trays and sheets; • Tableware, including plates as well as holloware; • Accessories, such as bread bins, cocktail shakers and trivets.

Cutlery Included in the cutlery category are kitchen utensils such as knives, ladles and scissors. It also includes table cutlery like knives, forks and spoons for eating and serving. All types of materials are included, such as metal, silver, silver plate and stainless steel.

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Although the survey does not specify the different products included in each product group, the different products will be described in the next table, including the related CN codes and Prodcom codes. PLASTICWARE CN code Prodcom code Description 3924 1000 25242320 Tableware and kitchenware, of plastics 3924 9090 25242370 Household articles and toilet articles, of plastics other than regenerated

cellulose (excl. tableware, kitchenware, baths, shower-baths, wash- basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware)

3924 9019 25242350 Household articles and toilet articles, of regenerated cellulose (excl. tableware, kitchenware, baths, shower-baths, wash-basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware)

WOODWARE CN code Prodcom code Description 4419 0010 20511200 Tableware and kitchenware, of tropical wood as specified in additional

note 2 to this chapter 4419 0090 20511200 Tableware and kitchenware, of wood (excl. 4419.00-10) CHINA & PORCELAIN Hs code Prodcom code Description 6911 1000 26211130 Tableware and kitchenware, of porcelain or china (excl. ornamental

articles, pots, jars, carboys and similar receptacles for the conveyance or packing of goods, and coffee grinders and spice mills with receptacles made of ceramics and working parts of metal)

6911 9000 26211150 Household and toilet articles, of porcelain or china (excl. tableware and kitchenware, baths, bidets, sinks and similar sanitary fixtures, statuettes and other ornamental articles, pots, jars, carboys and similar receptacles for the conveyance or packing of goods, and coffee grinders and spice mills with receptacles made of ceramics and working parts of metal)

CERAMICWARE CN code Prodcom code Description 6912 0010 26211210

Tableware, kitchenware, other household articles and toilet articles, of common pottery (excl. statuettes and other ornamental articles, pots, jars, carboys and similar receptacles for the conveyance or packing of goods, and coffee grinders and spice mills with receptacles made of ceramics and working parts of metal)

6912 0030 26211230 Tableware, kitchenware, other household articles and toilet articles, of stoneware (excl. baths, bidets, sinks and similar sanitary fixtures, statuettes and other ornamental articles, pots, jars, carboys and similar receptacles for the conveyance or packing of goods, and coffee grinders and spice mills with receptacles made of ceramics and working parts of metal)

6912 0050 26211250 Tableware, kitchenware, other household articles and toilet articles, of earthenware or fine pottery (excl. baths, bidets, sinks and similar sanitary fixtures, statuettes and other ornamental articles, pots, jars, carboys and similar receptacles for the conveyance or packing of goods, and coffee grinders and spice mills with receptacles made of ceramics and working parts of metal)

6912 0090 26211290 Ceramic tableware, kitchenware, other household articles and toilet articles (excl. sinks, baths, bidets and similar sanitary fixtures; statuettes and other ornamental articles; pots, jars, etc. for the conveyance or packing of goods; household mills with containers of ceramics and working parts of metal; articles of porcelain or china, common pottery, stoneware, earthenware or fine pottery)

GLASSWARE

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CN code Prodcom code Description 7013 1000 26131360 Glassware of a kind used for table, kitchen, toilet, office, indoor

decoration or similar purposes (excl. goods of heading 7018, cooking hobs, leaded lights and the like, lighting fittings and parts thereof, atomizers for perfume and the like)

7013 2111 26131215 Drinking glasses of lead crystal, gathered by hand, cut or otherwise decorated

7013 2119 26131219 Drinking glasses of lead crystal, gathered by hand (excl. cut or otherwise decorated)

7013 2191 26131235 Drinking glasses of lead crystal, gathered mechanically, cut or otherwise decorated

7013 2199 26131239 Drinking glasses of lead crystal, gathered mechanically (excl. cut or otherwise decorated)

7013 2910 26131255 Drinking glasses of toughened glass (excl. glasses of glass-ceramics or of lead crystal)

7013 2951 26131253 Drinking glasses, gathered by hand, cut or otherwise decorated (excl. glasses of glass-ceramics, lead crystal or toughened glass)

7013 2959 26131253 Drinking glasses, gathered by hand (excl. glasses cut or otherwise decorated, or of glass-ceramics, lead crystal or toughened glass)

7013 2991 26121355 Drinking glasses, gathered mechanically, cut or otherwise decorated (excl. glasses of glass-ceramics, lead crystal or toughened glass)

7013 2999 26131255 Drinking glasses, gathered mechanically (excl. glasses cut or otherwise decorated, or of glass-ceramics, lead crystal or toughened glass)

7013 3110 26131310 Glassware of lead crystal, of a kind used for table or kitchen purposes, gathered by hand (excl. articles of heading 7018, drinking glasses, glass preserving jars, sterilizing jars , vacuum flasks and other vacuum vessels)

7013 3190 26131330 Glassware of lead crystal, of a kind used for table or kitchen purposes, gathered mechanically (excl. articles of heading 7018, drinking glasses, glass preserving jars sterilizing jars , vacuum flasks and other vacuum vessels)

7013 3200 26131350 Glassware for table or kitchen purposes of glass having a linear coefficient of expansion =< 5 x 10 -6 per kelvin within a temperature range of 0 to 300. C (excl. Glassware of glass-ceramics or lead crystal, articles of heading 7018, drinking glasses)

7013 3910 26131390 Glassware for table or kitchen purposes, of toughened glass (excl. glass having a linear coefficient of expansion =< 5 x 10 -6 per kelvin within a temperature range of 0 to 300. C, glassware of glass-ceramics or lead crystal, articles of heading 7018)

7013 3991 26131390 Glassware of a kind used for table or kitchen purposes, gathered by hand (excl. toughened glass and glass having a linear coefficient of expansion =< 5 x 10 -6 per kelvin within a temperature range of 0 to 300. C, glassware of glass-ceramics or lead)

7013 3999 26131390 Glassware of a kind used for table or kitchen purposes, gathered mechanically (excl. toughened glass and glass having a linear coefficient of expansion =< 5 x 10 -6 per kelvin within a temperature range of 0 to 300. C, glassware of glass-ceramics or lead)

7013 9110 26131310 Glassware, of lead crystal, of a kind used for toilet, office, indoor decoration or similar purposes, gathered by hand (excl. glassware of a kind used for table or kitchen purposes, glassware of glass-ceramics or lead crystal, articles of heading 701)

7013 9190 26131330 Glassware, of lead crystal, of a kind used for toilet, office, indoor decoration or similar purposes, gathered mechanically (excl. glassware of a kind used for table or kitchen purposes, articles of heading 7018, mirrors, leaded lights and the like)

7013 9900 26131390 Glassware of a kind used for toilet, office, indoor decoration or similar purposes (excl. glassware of lead crystal or of a kind used for table or kitchen purposes, articles of heading 7018, mirrors, leaded lights and the like, lighting fittings and the like)

METALWARE CN code Prodcom code Description

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7323 9100 28751217 Table, kitchen or other household articles, and parts thereof, of cast iron, not enamelled (excl. cans, boxes and similar containers of heading 7310; waste baskets; shovels, corkscrews and other articles of the nature of a work implement; articles of cutlery, spoons, ladles, forks etc. of heading 8211 to 8215; ornamental articles; sanitary ware)

7323 9200 28751217 Table, kitchen or other household articles, and parts thereof, of cast iron, enamelled (excl. cans, boxes and similar containers of heading 7310; waste baskets; shovels, corkscrews and other articles of the nature of a work implement; articles of cutlery, spoons, ladles, forks etc. of heading 8211 to 8215; ornamental articles; sanitary ware)

7323 9310 28751223 Articles for table use, of stainless steel (excl. cans, boxes and similar containers of heading 7310; corkscrews, nutcrackers and other articles of the nature of a work implement; articles of cutlery, spoons, ladles, forks etc. of headings 8211 to 8215; ornamental articles; sanitary ware)

7323 9390 28751229 Table, kitchen or other household articles, and parts thereof, of stainless steel (excl. cans, boxes and similar containers of heading 7310; waste baskets; shovels, corkscrews and other articles of the nature of a work implement; articles of cutlery, spoons, ladles, forks etc. of headings 8211 to 8215; ornamental articles; sanitary ware)

7323 9410 28751237 Articles for table use, of iron other than cast iron or steel, enamelled, spoons, ladles, forks etc. Of headings 8211 to 8215; ornamental articles (excl. cans, boxes and similar containers of heading 7310; spoons, ladles etc. of heading 8215; ornamental articles)

7323 9490 28751237 Table, kitchen or other household articles, and parts thereof, of iron other than cast iron or steel, enamelled (excl. cans, boxes and similar containers of heading 7310; waste baskets; shovels and other articles of the nature of a work implement; spoons, ladles etc. of heading 8215; ornamental articles; sanitary ware; articles for table use)

7323 9910 28751243 Articles for table use, of iron other than cast iron or steel (excl. enamelled articles; cans, boxes and similar containers of heading 7310; corkscrews, nutcrackers and other articles of the nature of a work implement; articles of cutlery, spoons, ladles, forks etc. of headings 8211 to 8215; ornamental articles)

7323 9991 28751249 Kitchen or other household articles, and parts thereof, of iron other than cast iron or steel other than stainless, varnished or painted (excl. cans, boxes and similar containers of heading 7310; waste baskets; shovels and other articles of the nature of a work implement; ornamental articles; sanitary ware)

7323 9999 28751249 Table, kitchen or other household articles and parts thereof, of iron, other than cast iron, or steel other than stainless (excl. enamelled, painted or varnished articles; cans, boxes and similar containers in heading 7310; waste baskets; shovels, corkscrews, waffle irons, etc.; articles of cutlery such as spoons, ladles, forks, etc. in heading 8211 to 8215; decorative articles; sanitary ware; articles for table use)

7417 0000 29721170 Cooking or heating apparatus of a kind used for domestic purposes, non- electric, and parts thereof, of copper (excl. hot water heaters and geysers)

7417 1100 28751253 Pot scourers and scouring or polishing pads, gloves and the like, of copper (excl. sanitary ware)

7417 1900 28751253 Table, kitchen or other household articles, parts thereof, of copper (excl. pot scourers and scouring or polishing pads, gloves and the like, cooking and heating appliances of heading no 7417, cans, boxes and similar containers of heading no 7419, articles of the nature of a work implement, articles of cutlery, spoons, ladles, etc., ornamental articles and sanitary ware)

7615 1100 28751257 Pot scourers and scouring or polishing pads, gloves and the like, of aluminium (excl. sanitary ware)

7615 1910 28751255 Table, kitchen or other household articles, parts thereof, of aluminium, cast (excl. cans, boxes and similar containers of heading 7612, articles of the nature of a work implement, spoons, ladles and other articles of headings 8211 to 8215, ornamental articles, fittings and sanitary ware)

7615 1990 28751257 Table, kitchen or other household articles, parts thereof, of aluminium, uncast (excl. pot scourers and scouring or polishing pads, gloves and the

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like, of aluminium, cans, boxes and similar containers of heading 7612, articles of the nature of a work implement, spoons, ladles, forks and other articles of headings 8211 to 8215, ornamental articles, fittings and sanitary ware)

CUTLERY CN code Prodcom code Description 8211 1000 Sets of assorted articles of knives of heading no 8211; sets in which

there is a higher number of knives of heading no 8211 than of any other article

8211 9130 28611113 Table knives with handle and fixed blade, of stainless steel 8211 9180 28611119 Table knives with fixed blade, of base metal (not with handle and blade

of stainless steel and excl. butter knives and fish knives) 8211 9200 28611120 Knives with fixed blades of base metal, incl. handles (excl. Straw knives,

machetes, knives and cutting blades for machines or mechanical appliances, table knives, fish knives, butter knives, razors and razor blades and knives of heading no 8214)

8211 9300 28611130 Knives having other than fixed blades, of base metal, incl. Handles (excl. Razors)

8211 9400 28611150 Blades of base metal for table knives, pocket knives and other knives of heading no 8211

8215 1020 28611470 Sets of spoons, forks or other articles of heading 8215, which may also contain up to an equivalent number of knives, of base metal, containing only articles plated with precious metal

8215 1030 28611470 Sets of spoons, forks or other articles of heading 8215, which may also contain up to an equivalent number of knives, of stainless steel, containing at least one article plated with precious metal

8215 1080 28611470 Sets of spoons, forks or other articles of heading 8215, which may also contain up to an equivalent number of knives, of base metal other than stainless steel, containing at least one article plated with precious metal

8215 2010 28611440 Sets of spoons, forks or other articles of heading no 8215, incl. Those with up to an equal number of knives, of stainless steel, containing no articles plated with precious metal

8215 2090 28611440 Sets of spoons, forks or other articles of heading no 8215, incl. Those with up to an equal number of knives, of base metals other than stainless steel, containing no articles plated with precious metal

8215 9100 28611470 Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, sugar tongs and similar kitchen or tableware of base metal, plated with precious metal (excl. Sets of articles such as lobster cutters and poultry shears)

8215 9910 28611440 Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, sugar tongs and similar kitchen or tableware of stainless steel, not plated with precious metal (excl. sets of articles such as lobster cutters and poultry shears)

8215 9990 28611440 Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, sugar tongs and similar kitchen or tableware of base metals other than stainless steel, not plated with precious metal (excl. Sets of articles such as lobster cutters and poultry shears)

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Appendix B Introduction to the EU market The European Union (EU) is the current name for the former European Community. Since January 1995 the EU has consisted of 15 member states. Ten new countries joined the EU in May 2004. In January 2007 two more countries – Bulgaria and Romania - joined the EU. Negotiations are in progress with a number of other candidate member states. In this survey, the EU is referred to as the EU27, unless otherwise stated. Cultural awareness is a critical skill in securing success as an exporter. The enlargement of the EU has increased the size of the EU, but also significantly increased its complexity. Because there are more people from culturally diverse backgrounds, effective communication is necessary. Be aware of differences in respect of meeting and greeting people (use of names, body language etc.) and of building relationships. There are also differences in dealings with hierarchy, presentations, negotiating, decision making and handling conflicts. More information on cultural differences can be found in chapter 3 of CBI’s export manual ‘Exporting to the EU (2006)’. General information on the EU can also be found at the official EU website http://europa.eu/abc/governments/index_en.htm or the free encyclopaedia Wikipedia http://en.wikipedia.org/wiki/Portal:Europe. Monetary unit: Euro On 1 January 1999, the Euro became the legal currency within eleven EU member states: Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg, The Netherlands, Spain, and Portugal. Greece became the 12th member state to adopt the Euro on January 1, 2001. Slovenia adopted the Euro in 2007. Since 2002 Euro coins and banknotes replaced national currency in these countries. Denmark, United Kingdom and Sweden have decided not to participate in the Euro. In CBI market surveys, the Euro (€) is the basic currency unit used to indicate value. Table 1 Exchange rates of EU currencies in €,

average yearly interbank rate Country Name Code 2006 July

2007 Bulgaria Lev BGN 0.511 0.512 Cyprus Pound CYP 1.737 1.714 Czech Republic Crown CZK 0.035 0.036 Denmark Crown DKK 0.134 0.134 Estonia Crown EEK 0.064 0.064 Hungary Forint HUF 0.004 0.004 Latvia Lats LVL 1.436 1.438 Lithuania Litas LTL 0.288 0.290 Malta Lira MTL 2.322 2.336 Poland Zloty PLN 0.257 0.263 Romania Lei ROL 0.027 0.321 Slovakia Crown SKK 0.004 0.030 Sweden Crown SEK 0.108 0.108 United Kingdom Pound GBP 1.467 1.494 Source: Oanda http://www.oanda.com/ (August 2007)

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Appendix C List of developing countries OECD DAC list - January 2006 When referring to developing countries in the CBI market surveys, reference is made to the group of countries on this OECD DAC list of January 2006. Afghanistan Gabon Nepal Uruguay Albania Gambia Nicargua Uzbekistan Algeria Georgia Niger Vanuatu Angola Ghana Nigeria Venezeula Anguilla Grenada Niue Vietnam Antigua and Barbuda Guatemala Oman Wallis & Futuna Argentina Guinea Pakistan Yemen Armenia Guinea-Bissau Palau Zambia Azerbaijan Guyana Palestinian Admin. Areas Zimbabwe Bangladesh Haiti Panama Barbados Honduras Papua New Guinea Belarus India Paraguay Belize Indonesia Peru Benin Iran Philippines Bhutan Iraq Rwanda Bolivia Jamaica Samoa Bosnia & Herzegovina Jordan Sao Tome & Principe Botswana Kazakhstan Saudi Arabia Brazil Kenya Senegal Burkina Faso Kiribati Serbia Burundi Korea Rep. of Seychelles Cambodia Kyrgyz Rep. Sierra Leone Cameroon Laos Solomon Islands Cape Verde Lebanon Somalia Central African Rep. Liberia South Africa Chad Libya Sri Lanka Chile Macedonia St. Helena China Madagascar St. Kitts Nevis Colombia Malawi St. Lucia Comoros Malaysia St. Vincent & Grenadines Congo Democratic Rep. Maldives Sudan Congo Rep. Mali Suriname Cook Islands Marshall Islands Swaziland Costa Rica Mauritania Syria Cote d’Ivoire Mauritius Tajikistan Croatia Mayotte Tanzania Cuba Mexico Thailand Djibouti Micronesia, Fed. States Timor-Leste Dominica Moldova Togo Dominican Republic Mongolia Trinidad & Tobago Ecuador Montenegro Tunisia Egypt Montserrat Turkey El Salvador Morocco Turkmenistan Equatorial Guinea Mozambique Turks & Caicos Islands Eritrea Myanmar Tuvalu Ethiopia Namibia Uganda Fiji Nauru Ukraine

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CBI countries – January 2007: CBI supports exporters in the following Asian, African, Latin American and European (Balkan) countries: Albania Armenia Bangladesh Benin Bolivia Bosnia-Herzegovina Burkina Faso Colombia Ecuador Egypt El Salvador Ethiopia Georgia Ghana Guatemala Honduras India Indonesia Jordan Kenya Macedonia Madagascar Mali Moldovs Montenegro Morocco Mozambique Nepal Nicaragua Pakistan Peru Philippines Rwanda Senegal Serbia South Africa Sri Lanka Suriname Tanzania Thailand Tunisia Uganda Vietnam Zambia