KITCHEN APPLIANCE REPORT UK 2003

SUMMARY

SUMMARY OF REPORT CONTENTS

Since the mid-1990's, the overall market showed consistent levels of growth. This was particularly boosted by the building society windfalls in 1997. There is still signs of growth in the market, however, due to slower economic growth and lower consumer confidence, the growth level is at a much lower rate than in the mid-late 1990's.

The overall UK Kitchen Appliance Market By Value is ?2.3bn at msp.

The trend towards build-in appliances is growing. The increase in this sector is particularly due to improved new build sector throughout the 1990's, improvements in consumer confidence and to some degree the lower level of household penetration.

In terms of volume, the free-standing sector improved throughout the 1990's, although, in terms of value, the market has shown lower levels of growth, reflecting the increasing level of imports and the high level of price competition. However, there has been growth at the upper-end of the market, as an increasing proportion of consumers are trading up to higher specification appliances. This is particularly the case within the cooking and laundry sector.

The major sector within build-in appliances is cooking (including microwaves) with 79% by volume and 63% by value. Within the free-standing market, cooking takes 28% by volume, 24% by value, compared to refrigeration (31% and 30%), laundry (33% and 38%) and dishwashers (8% and 8%).

Build-In Appliances

The build-in cooking market is comprised of ovens, which account for ?164m at MSP and 1million units, hobs (?68m and 697,000 units) and hoods (?31m and 1.1 million units). Definition of build-in microwaves is difficult, as a proportion of microwaves are included with a build-in kit, although in the majority of cases this is optional therefore the microwave can either be built-in or free-standing.

 The build-in oven sector is the largest by value being primarily electric, estimated at 65%, though gas has made some gains in share in recent years. Unlike ovens, the hob sector is primarily gas, which accounts for around 59%, with electric accounting for the balance. Dual-fuel appliances, with gas hob and electric oven, are becoming increasingly popular. The build-in cooking market has experienced considerable growth in terms of volume, and this has spread to increase demand for extractor hoods.

 Build-in refrigeration products are led by refrigerators with 243,000 units and ?40m at MSP, freezers (?17m) and fridge/freezers.

 The build-in dishwasher market was worth ?52m at MSP in 2002. The product is still low in terms of penetration and growth potential still exists. Build-in dishwashers represent around 20% of the total dishwasher appliance market, a higher level than either refrigeration or laundry appliances.

 Build-in laundry appliances are led by washing machines with ?22m at MSP, followed by washer-dryers at ?9m and tumble dryers with ?1.2m. The build-in laundry sector holds a very low share of total laundry appliance sales at around 3%, reflecting their use in utility rooms and generally out of the kitchen.

 Key suppliers include Whirlpool (UK), Bosch, Siemens, Electrolux (Zanussi, Tricity Bendix, Parkinson Cowan, AEG), Merloni (Indesit, Ariston, Scholtes),General Domestic Appliances, recently acquired by Merloni, (Creda, Hotpoint, Cannon), and Bernstein/Homark. In addition there are a large number of other suppliers.

The distribution profile is widespread with kitchen distributors significant while retail multiples (e.g. Magnet, MFI), kitchen specialists, DIY multiples and builders merchants are also important. However the REC's have lost share in recent years as a result of consolidation within the sector and in addition there has been the closure of the British Gas Energy Centres.

 Free-Standing Appliances

 The free-standing cooking appliance market is comprised of cookers with ?325m at MSP and microwaves (2.0m units and ?106m). Free-standing cookers are comprised of gas with 55%, dual fuel, and electric. The increasing trend towards larger cooking appliances has resulted in the growth of range cookers.

General Domestic Appliances, now owned by Merloni Elettrodomestici, are the overall market leaders in cookers including the Creda, Hotpoint and Cannon brands. The Electrolux organisation incorporating Tricity Bendix, Zanussi, Parkinson Cowan, AEG are also significant in this sector. In addition The Glen Dimplex Group which incorporates Burco Dean Appliances, Belling Appliances and more recently, Stoves and New World Appliances has also emerged as a major company.

The supplier profile of the microwaves is very different to that of the other kitchen appliances, with the leaders being Sharp and Sanyo. Other major brands are Hinari, Panasonic and Samsung. In addition there is a wide range of other brands, though the products are often manufactured by Far Eastern companies on an own brand basis.

 The free-standing refrigeration sector is comprised of refrigerators with ?132m, freezers (?110m) and fridge/freezers (?288m). The refrigeration market is saturated, with overall penetration at 99%. The trend towards larger appliances has resulted in significant growth within the fridge/freezer sector. Within fridge/freezers, the 'larger fridge smaller freezer' products are gaining market share.

 Key suppliers in this sector are General Domestic Appliances with the Hotpoint brand. Followed by Electrolux, Lec Refrigeration and Merloni in addition to a range of companies, a number which specialise in refrigeration eg. Norfrost, Gram Refrigeration etc.

 Distribution is led by the Electrical Multiples. Electrical Wholesalers and kitchen and bathroom distributors are also important, as are freezer centres, particularly in the chest freezer market.

There were some 934,000 free-standing dishwashers sold in 2002, worth ?155m. Compared to other household appliances, the dishwasher market remains at a relatively low level of household penetration. The wider available product range, including slim-line and compact dishwashers, and increased consumer awareness of the benefits the dishwasher can offer, have contributed to growth in this sector.

 Key suppliers of dishwashers are General Domestic Appliances with the Hotpoint brand followed by Electrolux with Zanussi and AEG, Merloni, Bosch/Siemens and Whirlpool. Distribution is dominated by the electrical multiples, with the general multiples and electrical wholesalers also significant.

The free-standing laundry products are comprised of washing machines worth ?453m at MSP in 2002, dryers (?114m) and washer dryers (?107m). Automatic washing machines dominate this sector, and high spin-speed models are accounting for an increasing share of the market. Tumble dryers take over 90% share of the dryer market with condenser dryers growing in popularity.

 Leading suppliers within the laundry market are General Domestic Appliances with the Hotpoint and Creda brands, Candy and Hoover, Electrolux, Merloni and Whirlpool. Crooslee are particularly strong in the drying market.The major channels of distribution for laundry appliances include electrical multiples, followed by the general multiples and electrical wholesalers. The REC's, DIY multiples and discount warehouses are also important within this sector.

TABLE OF CONTENTS

CONTENTS and LIST OF TABLES & CHARTS

1. INTRODUCTION 9

2 SUMMARY 10

• 2.1 The Overall Kitchen Appliance Market 10
• 2.2 Product Mix 11
• 2.3 Build-In Appliances 12
• 2.4 Free-Standing Appliances 13

3. ECONOMIC ENVIRONMENT 16

• 3.1 GDP 16
• 3.2 Inflation & Interest Rates 17
• 3.3 Unemployment 18
• 3.4 Household Consumption 19
• 3.5 Housing & Construction 20
• 3.6 Sterling 21
• 3.7 Conclusions 22

4 BUILD-IN KITCHEN APPLIANCES 23

• 4.1 Overall Market 23
  • 4.1.1 Definition 23
  • 4.1.2 Market Size and Background 24
  • 4.1.3 Current Trends 25
  • 4.1.4 Future Trends 26
  • 4.1.6 Mix of End Uses 29
  • 4.1.7 Product Mix 30
• 4.2 Cooking Appliances 33
  • 4.2.1 Market Size 33
  • 4.2.2 Ovens 36
  • 4.2.3 Hobs 37
  • 4.2.4 Extractor Hoods 38
  • 4.2.5 Microwave Ovens 39
  • 4.2.6 Imports & Exports 39
• 4.3 Refrigeration Appliances 41
  • 4.3.1 Market Size 41
  • 4.3.2 Refrigerators 43
  • 4.3.3 Freezers 44
  • 4.3.4 Fridge-Freezers 45
  • 4.3.5 Imports and Exports 45
• 4.4 Dishwashers 46
  • 4.4.1 Market Size 46
  • 4.4.2 Product 47
• 4.5 Laundry Appliances 47
  • 4.5.1 Market Size 47
  • 4.5.2 Washing Machines/Washer-Dryers 49
  • 4.5.3 Tumble Dryers 49
• 4.6 Pricing 50
• 4.7. Suppliers 51
• 4.8 Distribution 56
  • 4.8.1 Channel Shares 56
  • 4.8.2 Kitchen & Bathroom Distributors 57
  • 4.8.3 Kitchen Specialists 58
  • 4.8.4 Discount Warehouses/Retail Multiples 59
  • 4.8.5 Builders & Plumber Merchants/Contract 61
  • 4.8.6 DIY Multiples 62
  • 4.8.7 Others 62
• 4.9 Future Prospects 64

5. FREE-STANDING KITCHEN APPLIANCES 66

• 5.1 Overall Market 66
  • 5.1.1 Definition 66
  • 5.1.2 Market Size 66
• 5.2 Free-Standing Cooking Appliances 69
  • 5.2.1 Market Size 69
  • 5.2.2 Free-Standing Cookers 71
  • 5.2.3 Microwaves 74
  • 5.2.4 Distribution Of Free-Standing Cooking Appliances 76
  • 5.2.5 Imports & Exports 78
• 5.3 Free-Standing Refrigeration Appliances 79
  • 5.3.1 Market Size 79
  • 5.3.2 Refrigerators 83
  • 5.3.4 Fridge/Freezers 86
  • 5.3.5 Suppliers 86
  • 5.3.6 Distribution 87
  • 5.3.7 Imports & Exports 88
• 5.4 Dishwashers 89
  • 5.4.1 Market Size 89
  • 5.4.2 Product 92
  • 5.4.3 Suppliers 93
  • 5.4.4 Distribution 94
  • 5.4.5 Imports & Exports 94
• 5.5 Free-Standing Laundry Appliances 95
  • 5.5.1 Market Size 95
  • 5.5.2 Washing Machines 99
  • 5.5.3 Dryers 100
  • 5.5.4 Washer dryers 101
  • 5.5.5 Suppliers 102
  • 5.5.6 Distribution 102
  • 5.5.7 Import & Export 103
• 5.6 Market Shares 104
• 5.7 Distribution Shares 108
• 5.8 Future Prospects 109

6. KEY MARKET INFLUENCES 112

• 6.1 The Housing Market 112
  • 6.1.1 New Housebuild 112
  • 6.1.2 House-Moving Levels 114
  • 6.1.3 Value Of Output - New Work And RMI 115
• 6.2 Population Profile 116
• 6.3 Employment/Unemployment 118
• 6.4 Interest Rates 119
• 6.5 Disposable Income Levels And Savings 120
• 6.6 Households 121

TABLE & CHARTS

• Table 1 The UK Kitchen Appliance Market By Volume ('000) 1996-2007 10
• Table 2 The UK Kitchen Appliance Market By Value (?m MSP) 1996-2003 11
• Table 3 The UK Kitchen Appliance Market Mix By Product Group 2002 12
• Chart 4 Interest Rates and Inflation (RPI) from 1990-2005 18
• Chart 5 PDI & Savings Ratio 1980-2005 20
• Table 6 Exchange Rate Fluctuations 1997-2003 - Dollars, And The ECU To The Pound Sterling, Spot Rates 22
• Table 7 The UK Build-In Kitchen Appliance Market By Value (?m MSP) 24
• Table 8 UK Household Penetration Of Build-In Kitchen Appliances 2002 27
• Chart 9 Mix Of Applications Of Build-in Appliances 2002 29
• Table 10 UK Build-In Kitchen Appliances Market - By Volume 2002 31
• Chart 11 Product Mix by Build-In Appliance Market - Percentage By Value 2002 32
• Table 12 UK Build-In Cooking Appliance Market By Volume ('000) 34
• Table 14 UK Build-In Cooking Appliance Market Import & Exports 39
• Table 15 The UK Build-In Refrigeration Appliance Market By Volume ('000) 1996-2007 41
• Table 16 The UK Build-In Refrigeration Appliance Market By Product 2002 43
• Table 17 Import & Exports of Build-In Refrigeration Appliances 2001 45
• Table 18 The UK Build-In Dishwasher Market 2002 46
• Table 19 The UK Build-In Laundry Appliance Market By Volume & Value 2002 48
• Chart 20 Market Shares Of The UK Build-In Appliance Market 2002 51
• Chart 21 Channel Shares Of The UK Build-In Appliance Market 2002 56
• Table 22 Distributors Share By Product Group 2002 57
• Table 23 UK Free-Standing Kitchen Appliance Market By Volume (000's) 67
• Table 24 The UK Free-Standing Kitchen Appliance Market By Value 2002 ?m MSP 68
• Table 25 UK Free-Standing Domestic Cooking Market By Volume (000's) 1996-2007 69
• Table 26 The UK Free-Standing Domestic Cooking Market By Value 1996 & 2002 (?m MSP) 71
• Table 27 Import & Exports of Free-Standing Cooking Appliances 2001 78
• Table 28 The UK Free-Standing Domestic Refrigeration Appliance Market By Volume (000's) 79
• Table 30 Import & Exports of Free-Standing Refrigeration Appliances 2001 88
• Table 31 UK Free-Standing Dishwasher Market By Volume (000's) 89
• Table 32 UK Free-Standing Domestic Dishwasher Market By Value 1996 & 2002 (?m MSP) 91
• Table 33 Import & Exports of Domestic Dishwashers 2001 94
• Table 34 The UK Domestic Free-Standing Laundry Market By Volume (000's) 95
• Chart 35 The UK Free-Standing Domestic Laundry Market By Value 1996 & 2002 (?m MSP) 97
• Table 36 Import & Exports of Laundry Appliances 2001 103
• Chart 37 Supplier Shares Within The UK Free-Standing Appliance Market 2002 105
• Chart 38 Channel Shares of the UK Free-Standing Appliance Market 2002 108
• Table 39 House Building Completions (000's Dwellings) 1995-2005 In Great Britain 112
• Table 40 Housing Starts 1992-2005 In Great Britain By Sector ('000) 114
• Table 41 Number Of Property Transactions In England And Wales 1994-2002 115
• Table 42 Value Of New UK Housing Output And RMI Output (?M) 1994-2002 116
• Chart 43 Age Distribution Of The Resident UK Population 2001 ('000) 117
• Chart 44 Number Of Employees In Employment GB - June 1981-2002 (Millions) 118
• Chart 45 Interest Rates And Inflation (RPI) From 1990-2005 119
• Chart 46 PDI & Savings Ratio 120
• Table 47 Stock Of Dwellings Great Britain - 1983-2002 121
• Table 48 Average Household Size For Great Britain 1991-2000 122