<strong>WHITEWARES MARKET OVERVIEW</strong>: Tile, Sanitaryware Markets Benefit from Bathroom Trends; Dinnerware Industry Faces Significant Challenges
December 1, 2006
Despite the housing slowdown in the U.S., the trend to make bathrooms
larger and more luxurious is benefiting the ceramic tile and sanitaryware
markets. However, dinnerware and pottery manufacturers continue to face pricing
pressures and steep competition from low-cost producers.
Mention the term "whitewares" and many individuals automatically think of a shrinking U.S. market. Over the past decade, numerous whitewares plants in the U.S. have closed as much of the production has been shifted to low-cost manufacturing regions such as China and Mexico. But there are some bright spots, particularly in ceramic tile, where several new U.S. plants have come on-line in the last few years. High-end sanitaryware is also providing some new opportunities. And while dinnerware manufacturers continue to struggle, they have not given up just yet. Following is an overview of each of these key whitewares markets.
These trends are having a mixed impact on U.S. ceramic tile manufacturers. While several companies have expanded their production facilities or broken ground on new plants, industry consolidation has also continued.
Mohawk Industries reported that its Dal-Tile segment's second quarter sales were strong as revenues grew 15% over the same period in 2005 from both volume and price increases. Dal-Tile's Oklahoma capacity expansion started production at the end of the second quarter; the company said that this expansion, along with another facility expansion in Mexico, would support its expected future growth and allow it to produce a greater portion of its sales requirements.
After being acquired by the Italian company Panariagroup Industrie Ceramica S.P.A. in February 2006, Florida Tile broke ground in July on a new $20 million porcelain tile factory in Lawrenceburg, Ky. The first phase of the expansion is expected to be completed in May 2007. The new factory will produce 40 million square feet of porcelain tile annually and will reportedly add an additional 67 new jobs to the company's Lawrenceburg site. However, production at the company's clay tile plant in Shannon, Ga., will gradually be phased down as the porcelain production in Kentucky becomes available.
Panariagroup Chief Executive Officer Giuliano Pini said, "Since the Florida Tile acquisition, the U.S. has become an even more important market for our group and is the market with the most interesting expected growth rate in the mid-term. For this reason, it is strategically important to have an efficient production plant in the U.S. in order to improve the service to our customers and to reduce transportation costs and duties." The company said that its best-selling clay products will be either outsourced or converted to porcelain.
Italian tile manufacturer GranitiFiandre reported that its U.S. subsidiary, StonePeak Ceramics, experienced solid sales growth in the first half of 2006, boosted by its acquisition of Trans Ceramica Ltd. in January 2006. StonePeak Ceramics celebrated its first anniversary in April. GranitiFiandre is counting on StonePeak Ceramics to provide "logistical advantages derived from the local production presence" in the North American market, with savings on charter, transportation and customs costs.
In June 2006, the Italy-based Marazzi Group announced plans to invest $50 million in an expansion that will double the capacity of its plant in Dallas, Texas, and will include what the company described as "highly efficient technological solutions." The investment will reportedly allow the plant to become the second largest tile production facility in the U.S. "According to the most recent sector forecasts, the U.S. tile market will still show a strong growth in the next years, driven mainly by the substitution effect that is favoring ceramic products over more traditional flooring products like carpets and vinyl," the company said in a statement.
One trend that is continuing to drive demand for ceramic tile in the U.S. is its high-end, high-value appeal. While the soft U.S. housing market has affected sales of other building products, ceramic tile is increasingly being used by both builders and consumers alike to differentiate a home being placed on the market, particularly in today's "luxury" bathrooms. Donato Grosser, a longtime consultant to the ceramic tile industry, believes that the future of the ceramic tile market in the U.S. is increasingly at the high end and strongly becoming a fashion business. "Customization, and the luxury looks that end users demand, is becoming a greater reality thanks to technological innovations," he said. Many of these innovations were highlighted at Coverings 2006 earlier this year, including tiles that imitate precious metals and rare stones, wood, wallpaper and textiles.
According to the Tile Council of North America, the average square footage in homes rose 3.6% from 2004 to 2005. The two rooms that are most often remodeled are bathrooms and kitchens, which also happen to be the two rooms in which tile is most frequently used.1 This trend is expected to continue despite the soft housing market.
Outside the U.S., the demand for tile also remains strong, particularly in Russia and Eastern Europe, which have seen a significant construction boom over the past year. Construction forecasts indicate that these regions are likely to see continued growth in demand for ceramic tile and other building materials over the next several years.
However, the residential construction slowdown in the U.S., combined with high energy and material costs, is pressuring sales and earnings. American Standard reported that sales in its Bath and Kitchen segment in the first half of 2006 were down 4.3% from the prior year because of sales declines in the Americas. Earnings were also down substantially, due to lower sales and production volumes, as well as higher commodity costs. While the segment's third quarter sales were up slightly compared to the same period in 2005, the company said that it continued to face higher costs and decreased unit volumes.
One exception can be found with American Standard's new Cadet® 3 toilet, which has seen good demand since it was introduced earlier this year. The toilet features EverCleanTM-a permanent, antimicrobial glaze that inhibits the growth of stain- and odor-causing bacteria, mold, and mildew on exposed surfaces-along with an advanced flushing system and easy installation. The solid demand for this product indicates that innovation can provide a key advantage in a challenging market.
Other regions are faring better. The booming construction market in Asia is boosting demand for all building products, including sanitaryware. American Standard reported that it won contracts for a variety of new construction projects associated with the 2008 Olympics in Beijing, including several sports stadiums, the Qingdao yacht center, the Qinhuangdao football training center and Marco Polo Hotel. Its Bath and Kitchen segment also opened a new Bathaus in Guangzhou, China, its fifth flagship showroom in Asia.
Villeroy & Boch noted that its Ceramic Sanitary Ware & Furniture Business Segment saw a 7.8% increase in sales in the first six months of 2006. The higher sales were driven by Eastern European countries (+23.5%), Italy (+27.4%) and the Netherlands (+13%). The company also saw sales in Germany rise slightly (0.8%). Villeroy & Boch noted that the overall German economy continues to enjoy a strong upward trend.
Despite the current housing slowdown in the U.S., companies continue to believe that the U.S. market has strong future growth prospects. In January 2006, Villeroy & Boch took over the entire ceramic sanitaryware business of Grupo Industrial Saltillo (GIS) in Mexico, which involved three sanitaryware factories with a capacity of 2.1 million units. Under the brand names Vitromex and St. Thomas Creation, the group achieves annual sales of around US$60 million, roughly 45% of which is in the U.S. market. Villeroy & Boch said that the acquisition will enable the company to better serve the U.S. market, which it views as its second most important export market after France. The acquisition is also expected to help the company address the growing markets in Central and South America.
According to a report from The Freedonia Group, demand for plumbing fixtures and fittings in the U.S. is expected to rise 2.4% per year through 2010 to $10.9 billion, supported by increasing applications in repair and improvement markets in both residential and nonresidential construction, and by an acceleration in new nonresidential construction expenditures.3 While residential markets for plumbing fixtures and fittings accounted for nearly 70% of total demand in 2005, the nonresidential and nonbuilding markets (such as recreational vehicles and boats) will provide better growth prospects through 2010.
The South and West regions are expected to lead gains, as higher income in these regions will support spending on plumbing products in residential markets. Increasing nonresidential construction expenditures in the South and West will also boost demand. Gains in the Northeast and Midwest will remain below those of the South and West through 2010, due to a less favorable outlook for personal income and construction spending.
The Freedonia Group also projects that demand for plumbing products in China will increase 2.8% per year through 2009 to almost 85 billion yen (~US$726.8 million), outpacing growth in most other parts of the world.4 Market advances will be driven primarily by healthy gains in building construction activity as industrialization efforts continue and income levels rise. Also aiding demand growth will be continuing trends toward larger bathrooms and kitchens in residential markets. In addition, increasing demand for greater living space, further privatization of home ownership, and a rapidly expanding domestic consumer market will all contribute to market gains. Residential markets for plumbing products will see the fastest advances, with demand rising 13.88% annually to 47 billion yen (~US$401.9 million) in 2009. Demand for plumbing fixtures and fittings in nonresidential applications will rise 1.8% per year in the same period, benefiting from a healthy outlook in the office and commercial and institutional building segments.
In mid-2005, Department 56 bought Lenox for $190 million, then changed its name to Lenox Group. Last year, Lenox said it would stop making fine china at its Pomona, N.J., factory and close 31 of its 61 Lenox stores after falling demand for fine ivory china dinnerware. The company is still struggling to find its niche. While sales in the first half of 2006 were up as a result of the acquisition, losses were substantial. "We purchased the Lenox business to diversify our product offerings and channels of distribution, which provides our company with more opportunities beyond Department 56's core business," said Susan Engel, chairwoman and chief executive officer. "Today we are even more committed to growing the business and leveraging the opportunities made available through the Lenox acquisition. At the same time, we continue to work at reducing costs to maintain the leanness historically displayed by Department 56."
Lenox is also focusing on innovative marketing initiatives to increase sales. In a new strategy, the company has signed four leases at mall locations in connection with its launch of four new concept stores called All The Hoopla, which will compete with stores such as Crate and Barrel and Pottery Barn. These stores will market and sell all of the Lenox Group brands (Department 56, Lenox, Gorham and Dansk) in a single-store format. The first All the Hoopla store in the nation opened in Twelve Oaks Mall in Novi, Mich., in September and features a range of products, including dishes, silverware, stationery, gourmet food, drink mixers and tabletop villages. Two more Hoopla stores were expected to open in Florida around November 1, and the fourth store is slated to open in 2007.
Lifetime Brands Inc., which purchased Pfaltzgraff in 2005, has also found dinnerware to be a challenging market. The company reported that its York-based direct-to-consumer division is struggling and is projected to post an operating loss this year. Division sales were below expectations for the quarter ending September 30, and business reportedly suffered from misaligned retail inventories and unsuccessful merchandising initiatives in the company's Pfaltzgraff Factory Stores, as well as its Faberware Outlet Stores.
According to Unity Marketing, the entire tabletop market rose 3.1% to $9 billion in 2005 compared to 2004 levels. However, this growth lagged behind the overall housewares market, which grew 4.5% to $36.9 billion in the same period.5 Pam Danziger, president of Unity Marketing, said that a change in consumer taste is largely to blame for the tabletop industry's struggles. "Too many tabletop companies have been slow to pick up on the shifts in consumer preferences," she said. "Tabletop marketers have been notoriously product driven. But they must listen to the consumer and adopt a consumer-centric business model."
According to Danziger, consumers' tastes have shifted toward a more casual, but luxurious, way of setting the table. "People want tableware they can dress up and dress down depending on the occasion. This affects marketers at both ends of the pricing spectrum, as people want tabletop that is better than everyday, but more casual than formal dinnerware."
Tony DeMasi, an internationally known tableware and giftware expert and founder of the Worldwide Tabletop and Giftware Association, agrees. "Formal dinnerware is quickly losing its share of the market, while casual is expanding to include 'semi-formal,' 'everyday dinnerware' and 'good dinnerware/bridge dinnerware.' Good/bridge dinnerware is capturing the market because it consists of product that has the properties of 'casual'-i.e., durable, easy to care for and popularly priced-while having a 'sort of formal look' in design. As a result, we're seeing many of the established formalware companies, such as Wedgwood, Lenox and Noritake, move their design and marketing emphasis to 'bridge dinnerware,'" he said.
DeMasi said that pricing pressures will continue to be a part of the future landscape, with stores such as Target and Wal-Mart driving price trends. "Celebrated clothing and home furnishings designers have given cachet and respectability to products from price-conscious mass merchants," he said. He also noted that private-label branded merchandise has largely lost its appeal among consumers because it is typically made in the same offshore factories as all other products and therefore has the same quality.
However, focusing on design can continue to give companies a competitive edge, regardless of where the product is manufactured. "Manufacturers that can't compete on price when it comes to production are upping the importance of design," said DeMasi. "An innovative design can provide a marketing edge for about six months before lower-priced knockoffs begin flooding the market."
Editor's note: The foregoing information (except where noted) was compiled from personal interviews and publicly available information in annual reports and news releases.
Pottery that is designed with emotional appeal and caters more to consumers' personal tastes tends to be insulated from broad economic trends and pricing pressures. According to Anne M. Bracker, vice president of Bracker's Good Earth Clays, Inc., Lawrence, Kan., certain galleries in certain regions will always do well, regardless of what's happening with the overall economy. Additionally, "many potters have the flexibility to change directions midstream. If their products aren't selling well at one gallery or show, they typically can shift to another venue or change their products to better suit the market," Bracker says.
One trend Bracker has been seeing across the pottery market is a desire for more texture in finished products. "Pottery producers are actively seeking new tools that will allow them to easily modify the texture of the clay. We've seen strong demand for products such as our new Slap Stix, which are hard, textured plastic paddles that can be used to accent thrown and handbuilt pieces," she says.
Florida Tile's Cotto porcelain floor tile is designed to
emulate the ambience and charm of handmade Mexican terra-cotta tile with
porcelain's durability and ease of maintenance. Photo courtesy of Florida Tile,
Inc.
Mention the term "whitewares" and many individuals automatically think of a shrinking U.S. market. Over the past decade, numerous whitewares plants in the U.S. have closed as much of the production has been shifted to low-cost manufacturing regions such as China and Mexico. But there are some bright spots, particularly in ceramic tile, where several new U.S. plants have come on-line in the last few years. High-end sanitaryware is also providing some new opportunities. And while dinnerware manufacturers continue to struggle, they have not given up just yet. Following is an overview of each of these key whitewares markets.
Tile Benefits from High-Value Status
According to U.S. Department of Commerce figures obtained from the Tile Council of North America, U.S. consumption of ceramic tile increased 2.4% in 2005 to 3.27 billion square feet. However, imports also rose 5.7% to 2.6 billion square feet, capturing 80.8% of the market-up from 79.2% in 2004. Imports from Italy and Spain fell by 6.5% and 0.3% to 688,909 square feet and 364,535 square feet, respectively, while imports from Brazil, Mexico, and China rose by 14.3% (451,906 square feet), 23.8% (408,772 square feet), and 104.9% (225,157 square feet), respectively. In general, European manufacturers lost market share to South American and Far Eastern countries, which have lower labor costs.1 Domestic shipments dropped 4.3% to 665.6 million square feet, while exports rose 6.2% to 37 million square feet.These trends are having a mixed impact on U.S. ceramic tile manufacturers. While several companies have expanded their production facilities or broken ground on new plants, industry consolidation has also continued.
Mohawk Industries reported that its Dal-Tile segment's second quarter sales were strong as revenues grew 15% over the same period in 2005 from both volume and price increases. Dal-Tile's Oklahoma capacity expansion started production at the end of the second quarter; the company said that this expansion, along with another facility expansion in Mexico, would support its expected future growth and allow it to produce a greater portion of its sales requirements.
After being acquired by the Italian company Panariagroup Industrie Ceramica S.P.A. in February 2006, Florida Tile broke ground in July on a new $20 million porcelain tile factory in Lawrenceburg, Ky. The first phase of the expansion is expected to be completed in May 2007. The new factory will produce 40 million square feet of porcelain tile annually and will reportedly add an additional 67 new jobs to the company's Lawrenceburg site. However, production at the company's clay tile plant in Shannon, Ga., will gradually be phased down as the porcelain production in Kentucky becomes available.
Panariagroup Chief Executive Officer Giuliano Pini said, "Since the Florida Tile acquisition, the U.S. has become an even more important market for our group and is the market with the most interesting expected growth rate in the mid-term. For this reason, it is strategically important to have an efficient production plant in the U.S. in order to improve the service to our customers and to reduce transportation costs and duties." The company said that its best-selling clay products will be either outsourced or converted to porcelain.
Italian tile manufacturer GranitiFiandre reported that its U.S. subsidiary, StonePeak Ceramics, experienced solid sales growth in the first half of 2006, boosted by its acquisition of Trans Ceramica Ltd. in January 2006. StonePeak Ceramics celebrated its first anniversary in April. GranitiFiandre is counting on StonePeak Ceramics to provide "logistical advantages derived from the local production presence" in the North American market, with savings on charter, transportation and customs costs.
In June 2006, the Italy-based Marazzi Group announced plans to invest $50 million in an expansion that will double the capacity of its plant in Dallas, Texas, and will include what the company described as "highly efficient technological solutions." The investment will reportedly allow the plant to become the second largest tile production facility in the U.S. "According to the most recent sector forecasts, the U.S. tile market will still show a strong growth in the next years, driven mainly by the substitution effect that is favoring ceramic products over more traditional flooring products like carpets and vinyl," the company said in a statement.
One trend that is continuing to drive demand for ceramic tile in the U.S. is its high-end, high-value appeal. While the soft U.S. housing market has affected sales of other building products, ceramic tile is increasingly being used by both builders and consumers alike to differentiate a home being placed on the market, particularly in today's "luxury" bathrooms. Donato Grosser, a longtime consultant to the ceramic tile industry, believes that the future of the ceramic tile market in the U.S. is increasingly at the high end and strongly becoming a fashion business. "Customization, and the luxury looks that end users demand, is becoming a greater reality thanks to technological innovations," he said. Many of these innovations were highlighted at Coverings 2006 earlier this year, including tiles that imitate precious metals and rare stones, wood, wallpaper and textiles.
According to the Tile Council of North America, the average square footage in homes rose 3.6% from 2004 to 2005. The two rooms that are most often remodeled are bathrooms and kitchens, which also happen to be the two rooms in which tile is most frequently used.1 This trend is expected to continue despite the soft housing market.
Outside the U.S., the demand for tile also remains strong, particularly in Russia and Eastern Europe, which have seen a significant construction boom over the past year. Construction forecasts indicate that these regions are likely to see continued growth in demand for ceramic tile and other building materials over the next several years.
American Standard's new Cadet® 3
toilet features a permanent, antimicrobial glaze that inhibits the growth of
stain- and odor-causing bacteria, mold, and mildew on exposed surfaces, along
with an advanced flushing system and easier installation compared to other
toilets. Photo courtesy of American Standard Companies, Inc.
High-End Sanitaryware Sees Growth
Like ceramic tile, the sanitaryware industry is also benefiting from the current trend to make bathrooms larger and more luxurious, stylish and comfortable. High-end, "artistic" fixtures such as vessel sinks are seeing a significant increase in demand. One report noted that the 2006 Kitchen and Bath Industry Show in Chicago featured more vessel sinks than traditional porcelain or cast-iron sinks.2 Demand for other high-end bathroom products is also on the rise as consumers increasingly look to achieve a "spa-like experience" in their bathrooms.However, the residential construction slowdown in the U.S., combined with high energy and material costs, is pressuring sales and earnings. American Standard reported that sales in its Bath and Kitchen segment in the first half of 2006 were down 4.3% from the prior year because of sales declines in the Americas. Earnings were also down substantially, due to lower sales and production volumes, as well as higher commodity costs. While the segment's third quarter sales were up slightly compared to the same period in 2005, the company said that it continued to face higher costs and decreased unit volumes.
One exception can be found with American Standard's new Cadet® 3 toilet, which has seen good demand since it was introduced earlier this year. The toilet features EverCleanTM-a permanent, antimicrobial glaze that inhibits the growth of stain- and odor-causing bacteria, mold, and mildew on exposed surfaces-along with an advanced flushing system and easy installation. The solid demand for this product indicates that innovation can provide a key advantage in a challenging market.
Other regions are faring better. The booming construction market in Asia is boosting demand for all building products, including sanitaryware. American Standard reported that it won contracts for a variety of new construction projects associated with the 2008 Olympics in Beijing, including several sports stadiums, the Qingdao yacht center, the Qinhuangdao football training center and Marco Polo Hotel. Its Bath and Kitchen segment also opened a new Bathaus in Guangzhou, China, its fifth flagship showroom in Asia.
Villeroy & Boch noted that its Ceramic Sanitary Ware & Furniture Business Segment saw a 7.8% increase in sales in the first six months of 2006. The higher sales were driven by Eastern European countries (+23.5%), Italy (+27.4%) and the Netherlands (+13%). The company also saw sales in Germany rise slightly (0.8%). Villeroy & Boch noted that the overall German economy continues to enjoy a strong upward trend.
Despite the current housing slowdown in the U.S., companies continue to believe that the U.S. market has strong future growth prospects. In January 2006, Villeroy & Boch took over the entire ceramic sanitaryware business of Grupo Industrial Saltillo (GIS) in Mexico, which involved three sanitaryware factories with a capacity of 2.1 million units. Under the brand names Vitromex and St. Thomas Creation, the group achieves annual sales of around US$60 million, roughly 45% of which is in the U.S. market. Villeroy & Boch said that the acquisition will enable the company to better serve the U.S. market, which it views as its second most important export market after France. The acquisition is also expected to help the company address the growing markets in Central and South America.
According to a report from The Freedonia Group, demand for plumbing fixtures and fittings in the U.S. is expected to rise 2.4% per year through 2010 to $10.9 billion, supported by increasing applications in repair and improvement markets in both residential and nonresidential construction, and by an acceleration in new nonresidential construction expenditures.3 While residential markets for plumbing fixtures and fittings accounted for nearly 70% of total demand in 2005, the nonresidential and nonbuilding markets (such as recreational vehicles and boats) will provide better growth prospects through 2010.
The South and West regions are expected to lead gains, as higher income in these regions will support spending on plumbing products in residential markets. Increasing nonresidential construction expenditures in the South and West will also boost demand. Gains in the Northeast and Midwest will remain below those of the South and West through 2010, due to a less favorable outlook for personal income and construction spending.
The Freedonia Group also projects that demand for plumbing products in China will increase 2.8% per year through 2009 to almost 85 billion yen (~US$726.8 million), outpacing growth in most other parts of the world.4 Market advances will be driven primarily by healthy gains in building construction activity as industrialization efforts continue and income levels rise. Also aiding demand growth will be continuing trends toward larger bathrooms and kitchens in residential markets. In addition, increasing demand for greater living space, further privatization of home ownership, and a rapidly expanding domestic consumer market will all contribute to market gains. Residential markets for plumbing products will see the fastest advances, with demand rising 13.88% annually to 47 billion yen (~US$401.9 million) in 2009. Demand for plumbing fixtures and fittings in nonresidential applications will rise 1.8% per year in the same period, benefiting from a healthy outlook in the office and commercial and institutional building segments.
Dinnerware Markets Continue to Face Challenges
The dinnerware industry continues to face challenges from pricing pressures, fierce global competition and changing consumer tastes.In mid-2005, Department 56 bought Lenox for $190 million, then changed its name to Lenox Group. Last year, Lenox said it would stop making fine china at its Pomona, N.J., factory and close 31 of its 61 Lenox stores after falling demand for fine ivory china dinnerware. The company is still struggling to find its niche. While sales in the first half of 2006 were up as a result of the acquisition, losses were substantial. "We purchased the Lenox business to diversify our product offerings and channels of distribution, which provides our company with more opportunities beyond Department 56's core business," said Susan Engel, chairwoman and chief executive officer. "Today we are even more committed to growing the business and leveraging the opportunities made available through the Lenox acquisition. At the same time, we continue to work at reducing costs to maintain the leanness historically displayed by Department 56."
Lenox is also focusing on innovative marketing initiatives to increase sales. In a new strategy, the company has signed four leases at mall locations in connection with its launch of four new concept stores called All The Hoopla, which will compete with stores such as Crate and Barrel and Pottery Barn. These stores will market and sell all of the Lenox Group brands (Department 56, Lenox, Gorham and Dansk) in a single-store format. The first All the Hoopla store in the nation opened in Twelve Oaks Mall in Novi, Mich., in September and features a range of products, including dishes, silverware, stationery, gourmet food, drink mixers and tabletop villages. Two more Hoopla stores were expected to open in Florida around November 1, and the fourth store is slated to open in 2007.
Lifetime Brands Inc., which purchased Pfaltzgraff in 2005, has also found dinnerware to be a challenging market. The company reported that its York-based direct-to-consumer division is struggling and is projected to post an operating loss this year. Division sales were below expectations for the quarter ending September 30, and business reportedly suffered from misaligned retail inventories and unsuccessful merchandising initiatives in the company's Pfaltzgraff Factory Stores, as well as its Faberware Outlet Stores.
According to Unity Marketing, the entire tabletop market rose 3.1% to $9 billion in 2005 compared to 2004 levels. However, this growth lagged behind the overall housewares market, which grew 4.5% to $36.9 billion in the same period.5 Pam Danziger, president of Unity Marketing, said that a change in consumer taste is largely to blame for the tabletop industry's struggles. "Too many tabletop companies have been slow to pick up on the shifts in consumer preferences," she said. "Tabletop marketers have been notoriously product driven. But they must listen to the consumer and adopt a consumer-centric business model."
According to Danziger, consumers' tastes have shifted toward a more casual, but luxurious, way of setting the table. "People want tableware they can dress up and dress down depending on the occasion. This affects marketers at both ends of the pricing spectrum, as people want tabletop that is better than everyday, but more casual than formal dinnerware."
Tony DeMasi, an internationally known tableware and giftware expert and founder of the Worldwide Tabletop and Giftware Association, agrees. "Formal dinnerware is quickly losing its share of the market, while casual is expanding to include 'semi-formal,' 'everyday dinnerware' and 'good dinnerware/bridge dinnerware.' Good/bridge dinnerware is capturing the market because it consists of product that has the properties of 'casual'-i.e., durable, easy to care for and popularly priced-while having a 'sort of formal look' in design. As a result, we're seeing many of the established formalware companies, such as Wedgwood, Lenox and Noritake, move their design and marketing emphasis to 'bridge dinnerware,'" he said.
DeMasi said that pricing pressures will continue to be a part of the future landscape, with stores such as Target and Wal-Mart driving price trends. "Celebrated clothing and home furnishings designers have given cachet and respectability to products from price-conscious mass merchants," he said. He also noted that private-label branded merchandise has largely lost its appeal among consumers because it is typically made in the same offshore factories as all other products and therefore has the same quality.
However, focusing on design can continue to give companies a competitive edge, regardless of where the product is manufactured. "Manufacturers that can't compete on price when it comes to production are upping the importance of design," said DeMasi. "An innovative design can provide a marketing edge for about six months before lower-priced knockoffs begin flooding the market."
Editor's note: The foregoing information (except where noted) was compiled from personal interviews and publicly available information in annual reports and news releases.
Design elements such as texture and bright colors are in
high demand in pottery products. Photo courtesy of Danny Meisinger, Spinning
Earth Pottery, Gardner, Kan.
SIDEBAR: Pottery Benefits from Unique Appeal
Large pottery producers that rely on high-volume sales are facing the same challenges as manufacturers in the dinnerware market. Jeremy Willis, managing director of Pottery Supply House Ltd., Oakville, Ontario, Canada, notes that a good portion of slipcast production has moved offshore because companies simply can't compete on price. "In general, pottery producers are moving away from high-volume production to lower-volume, high-value products to try to retain their market share," he says.Pottery that is designed with emotional appeal and caters more to consumers' personal tastes tends to be insulated from broad economic trends and pricing pressures. According to Anne M. Bracker, vice president of Bracker's Good Earth Clays, Inc., Lawrence, Kan., certain galleries in certain regions will always do well, regardless of what's happening with the overall economy. Additionally, "many potters have the flexibility to change directions midstream. If their products aren't selling well at one gallery or show, they typically can shift to another venue or change their products to better suit the market," Bracker says.
One trend Bracker has been seeing across the pottery market is a desire for more texture in finished products. "Pottery producers are actively seeking new tools that will allow them to easily modify the texture of the clay. We've seen strong demand for products such as our new Slap Stix, which are hard, textured plastic paddles that can be used to accent thrown and handbuilt pieces," she says.
Other tools that can be used to create specialized designs
are also in high demand, as potters continue to look for ways to create a unique
niche for their products.
According to George Debikey, vice president and director
of technical services for American Art Clay Co., Inc., Indianapolis, Ind.,
color is also playing an important role in product design. "While earth
tones were popular for quite some time, consumers are now looking for brighter
colors, particularly reds and yellows. As a result, we're seeing an increased
use of underglazes on pottery, as well as on sculpture," he says.