Indonesia is the world’s biggest market for one American icon: Tupperware.

April 24, 2013, 1:54 p.m. ET

Indonesia Provides a Tasty Dish for Tupperware

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‘Open your hearts,’ CEO Rick Goings told salespeople in Jakarta this month. ‘Indonesia is the No. 1 market in the world.’

By ERIC BELLMAN

JAKARTA, Indonesia—Companies from across the globe are just starting to tap Indonesia’s booming consumer sector. But the Southeast Asian archipelago already is the world’s biggest market for one American icon: Tupperware. Indonesia last year replaced Germany as the biggest market for Tupperware Brands Corp., TUP -4.14% which sells plastic containers for leftover beef stew and baba ganoush at house parties world-wide. Indonesia is likely to lead the company’s growth in Asia this year. That will help make the Asian-Pacific region the company’s biggest this year, topping Europe, South America and North America, said Chief Executive Rick Goings. Tupperware’s sales force has exploded to an army of more than 170,000 people here from only 2,000 a decade ago, riding a consumer boom in Southeast Asia’s largest economy and selling record numbers of water bottles, plastic lunchboxes and neon-green plastic dining sets.

The company’s business model—using a sales force mostly of homemakers to store and deliver products—means Tupperware hasn’t been frustrated by the poor roads and scarce shelf space that plagues many retailers here.

“This is an incredible sweet spot for us,” Mr. Goings said in an interview while attending a pep rally here for the company’s top sales people. “It’s where the population of the world is. You cannot fight that.”

Indonesia has close to 250 million people, making it the world’s fourth biggest country, after China, India and the U.S. The archipelago’s gross domestic product has expanded more than 6% in seven out of the last eight years, lifting ever more of the country’s citizens into the middle class. And while China and India have larger populations, analysts said Indonesia is a bigger market for Tupperware in part because the country’s consumers are more brand-conscious.

 

Tupperware needs Indonesia and other emerging markets as growth slows in mature markets such as the U.S., Germany and Japan. The Orlando, Fla., company is one of the few from the U.S. generating most of its sales from developing markets, analysts said.

“Emerging markets are critical to the growth story,” and make up around 66% of Tupperware’s sales, said Jason Gere, a household-products analyst at RBC Capital Markets. “I would suspect that emerging markets will eventually become 80% of total sales. Asia will be a big part of this.”

The company on Wednesday reported that first-quarter earnings fell 0.2% to $58.2 million, or $1.06 a share, compared with $58.3 million, or $1.02 a share, a year earlier, largely because of the effects of foreign-exchange translations. Revenue rose 3.7% to $662.9 million, with sales in the Asian-Pacific region the strongest.

Close to one-third of Tupperware’s $2.58 billion in revenue last year was from the Asian-Pacific region.

On his recent visit to inspire 2,000 of his top salespeople, Mr. Goings demonstrated how to make salad dressing using the company’s products, explained the importance of Tupperware parties and suggested listening to music as a way to lift flagging spirits.

“Open your hearts,” he told the cheering crowd of women wearing colorful head scarves. “Indonesia is the No. 1 market in the world.”

Tupperware has been able to get a jump on other global companies in Indonesia because its direct-sales network doesn’t require a complicated supply chain and store infrastructure.

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Associated Press

Tupperware’s Chic Dining Collection

Many foreign retailers blame overburdened roads and a lack of retail space on the country’s 17,000 islands for slowing expansion here. But Tupperware’s representatives sell to friends and family in their homes and pick up Cake Takers and ravioli makers themselves at the company’s warehouses.

“There is a limited retail infrastructure once you get away from major metropolitan areas,” Mr. Goings said. “But [our salespeople] take our products to the villages in scooters and on buses.”

Tupperware may also be particularly successful in Indonesia because Indonesians are so social, said Nining Pernama, managing director of PT Tupperware Indonesia . Indonesians are among the world’s most active users of Facebook FB +0.50% and Twitter. Tupperware Indonesia’s page on Facebook is the company’s most popular national page, with more than 300,000 fans.

And, like many direct-sales companies, Tupperware has been able to spur growth by giving financial incentives to the reps who build the largest sales networks. Hundreds of the company’s salespeople make more than the country’s average annual income of $3,500 a year, just by selling Tupperware from their homes, Ms. Pernama said, and a handful make hundreds of thousands of dollars.

Sofia Agnani, a leading salesperson, was called up on stage to meet Mr. Goings. The mother from Bandung in West Java later said her Tupperware earnings put her children through school and allowed her and her husband to visit Mecca.

“I bought these diamonds with my own money,” she said, displaying a set of rings. “When women are given an opportunity, they can also be powerful.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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