Tupperware Parties Help Reshape India's Kitchens

As consumer-products companies compete to profit from booming growth in Asia's emerging markets, they could learn from an unlikely teacher, Tupperware Brands (TUP). The company came to life in the U.S. in the 1940s selling plastic food storage containers and gained fame for its unusual distribution strategy: Hundreds of thousands of homemakers held so-called Tupperware Parties to introduce neighbors to the new products and earn income by selling the colorful, vacuum-sealed kitchenware.

Five decades later, such scenes are taking place all over India. In an expansion move that founder Earl Silas Tupper could scarcely have envisioned, Tupperware has taken India by storm and is nearing its goal of 100,000 women selling everything from the "roti keeper" (for Indian bread) to the "masala box" (for spices) in major cities and villages alike. The company entered India in 1996 and has achieved remarkable success, growing at a compounded annual rate of 30 percent. From a base of zero, Tupperware has quickly become the leading seller of kitchenware in India, a category that has grown 12 percent annually from 2003 to 2008, thanks largely to the rise of the country's middle class.

To underscore the significance of the company's success, consider that until Tupperware entered the subcontinent, Indian women almost uniformly preferred to store leftovers in metal containers. Tupperware had to convince millions of homemakers to turn their backs on long-held kitchen tradition, creating the market for nonmetal kitchenware.

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

preserving its "premium mass" image

This intense focus allowed the company to successfully alter consumer behavior. Instead of asking consumers to buy the products as designated for use in other markets, the company converted many Indian consumers into Tupperware diehards by adapting its products to cater to local food habits. For example, Tupperware sells rectangular containers for bread elsewhere; in India it offers round containers to accommodate the shape of roti, traditional Indian bread.

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

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

Often, companies competing against local players need to reconsider their business model and manage costs by adapting their product mix, raw materials, and packaging. Like other brand winners, however, Tupperware India resisted the temptation to compete simply on pricing. The company used a locally developed mold for its Eco Bottle to take on lower-cost water-storage rivals while preserving the product's premium image. This is a path pioneered by such companies as McDonald's (MCD), which Indianized 75 percent of its menu with products that include the reasonably priced vegetarian McAloo Tikki Burger.

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

targeting untapped demand

Building a solid foundation in a challenging new market like India cannot happen overnight. Market leaders commit for the long haul and resist the temptation to pull back in tough times. Tupperware has stayed the course since 1996, confident that India would become one of its fastest-growing emerging markets. In fact, Tupperware India's revenues surged in 2009 to contribute 29 percent of the company's overall local-currency growth among Asia-Pacific emerging markets, which include China, Indonesia, and Malaysia. Emerging markets now account for 54 percent of Tupperware's global sales and helped it post robust revenues of $557 million in the first quarter of 2010, a 20 percent gain vs. the same quarter in 2009.

Multinationals that win in emerging markets look ahead to unleash untapped demand and push growth in targeted segments. They achieve this by basing their investment on market potential, not historical market size or past performance. This approach enabled both PepsiCo (PEP) and Coca-Cola (KO) to help increase the Indian soft-drink market by 261 percent from 1999 to 2009. Both beverage companies ramped up marketing, production, and distribution efforts. Tupperware India, too, has grown fast and steadily because it met the market's huge potential with the resources needed to unlock it.

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

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