Groupe SEB

Groupe SEB

Chemin du Petit Bois
Les 4 M - BP 172
69132 Ecully Cedex
France
Telephone: (33) (0) 4 72 18 18 18
Fax: (33) (0) 4 72 18 16 55
Web site: http://www.seb.com

Public Company
Incorporated: 1926 as Société d’Emboutissage de Bourgogne
Employees: 14,214
Sales: FFr 11.11 billion (EUR 1.69 billion) ($1.7 billion) (1999)
Stock Exchanges: Paris
Ticker Symbol: SEB
NAIC: 335211 Cooking Appliances (Except Convection, Microwave Ovens); 33521 Small Electrical Appliance Manufacturing

France’s Groupe SEB is one of the world’s leading manufacturers of small appliances and other products for the home. Under its international brands Tefal (also known as T-Fal) and Rowenta, as well as local brands including SEB, Calor (Belgium and France), and Arno (Brazil), SEB markets products in over 120 countries, manufactured from 16 production sites worldwide. More than 75 percent of SEB’s sales of FFr 11.11 billion (EUR 1.69 billion) in 1999 came from outside of France. Europe continues to represent the largest portion of SEB’s sales, at more than 60 percent, while the North American and Asian markets each contribute around 15 percent of sales. Since the late 1990s, SEB has also begun expanding its South American presence, particularly with the acquisition of Arno in 1997, and that market now contributes ten percent of annual sales. These sales come from a focused product range targeting four specific families in which SEB has gained worldwide leadership positions: electrical cooking appliances, including electric fryers, steam cookers, food processors, toasters, etc.; small domestic equipment, including irons and vacuum cleaners; household goods, especially non-stick cookware under the Tefal/T-Fal brand, and pressure cookers; and personal care equipment, such as electric toothbrushes, scales, depilatories, and massage devices. SEB is led by Thierry de La Tour d’Artaise, who succeeds Jacques Gairard, architect of SEB’s international expansion through the 1990s. The founding family, the Lescures, still holds more than 60 percent of SEB’s voting rights.

Birth of an Appliance Giant in the 19th Century

If SEB became one of the world’s leading manufacturers of small appliances by the end of the 20th century, its origins were on a much humbler scale. In 1857, Antoine Lescure opened a small tinplating workshop in Selongey, in the Burgundy region of France. The company initially specialized in producing tin buckets and watercans, then began to expand its handmade products to include kitchen utensils and zinc washbowls and tubs. Towards the close of the century, Lescure’s company began to add mechanical production techniques, a process accelerated at the start of the 20th century, when Lescure acquired one of the first bottle-capping machines.

Three of Lescure’s descendants, brothers Jean, Frédéric, and Henri Lescure, took over the family business in 1925, renaming it a year later as the Société d’Emboutissage de Bourgogne. The Lescure family company remained nonetheless a purely regional concern until the mid-1950s. At that time, the Lescure brothers determined to set the company on a new course.

After examining some 40 different cooking products available on the market, the Lescure brothers began to develop their own invention—one that was to prove something of a revolution to the French cook. In 1953, Société d’Emboutissage de Bourgogne introduced the world to the pressure cooker. Known as the “cocotte minute” (minute cooker) in France, the pressure cooker quickly proved popular, transforming the company from a regional concern to a truly national company.

Société d’Emboutissage de Bourgogne’s products remained mechanical devices, and continued to target the home utensils market. In 1967, however, the company made its first move into the booming array of electric household products, when it introduced its own electric deep-fryer. The following year, flush with its success, Société d’Emboutissage de Bourgogne made its first acquisition, that of fellow French company Tefal. By then, Tefal had secured for itself the position as the world’s leading manufacturer of non-stick cookware—a category the company had invented.

Tefal had been founded in 1956 by scientist Marc Grégoire. At his wife’s suggestion, Grégoire developed a patented process for applying the recently discovered PTFE non-stick coating to aluminum frying pans. Gregoire at first sought to interest established manufacturers in his process, but found no takers. Instead, he formed his own company, Société Tefal, and took his product on the road, making demonstrations at stores and trade shows. Tefal quickly found success among French consumers and, by the end of the decade, Gregoire sought to take his invention overseas. The U.S. debut of the company’s products—renamed T-Fal for the U.S. market—came during the holiday season of 1960, at New York City’s Macy’s department store. Success was immediate and the company sold out of its imported stock within weeks. By the end of January 1961, the company was booking orders of nearly 5,000 per week; by the summer of 1961, the company was shipping more than a million pans each month.

The Lescure family company quickly followed the Tefal acquisition with that of Calor, another French company, based in Lyon, specializing in irons, portable heaters, and hair dryers. The Calor acquisition gave the company not only the leadership of France’s nonstick cookware and pressure cookers markets, but also of the market for irons. Following the Calor acquisition, the company changed its name to the more modern SEB S.A., which became the holding company for its Tefal and Calor subsidiaries.

International Expansion in the 1990s

By the mid-1970s, SEB had firmly established itself as a leader in the French small appliances market. The company had also begun to turn its attention to the international marketplace, notably through the Tefal/T-Fal brand. Fueling the company’s expansion was a listing on the Paris stock exchange, in 1975. The Lescure family remained, however, majority shareholders with control of the company’s voting rights. A year after the public offering, Emmanuel Lescure, who had begun his career with the family-run company, took over as the company’s president.

The company created a new subsidiary, T-Fal Corp., for its international expansion efforts, which targeted particularly the U.S. and Japanese markets. Through T-Fal, SEB began its policy of internationalization, establishing local bases in order best to respond to the particular needs of various markets. In this way, the company introduced unique, target-specific products, including square-shaped frying pans in Japan; flat pans in India; and rice cookers designed for the Asian market.

The company remained, however, largely a French company, with the majority of sales coming from its domestic marketplace. The 1980s did little to change this situation; indeed, SEB found itself struggling through much of the early part of the decade. SEB also made a strategic decision to avoid the new and promising market for microwave ovens—unlike its chief French rival Moulinex, which later found strong success in this market. By the end of the 1980s, with its absence from the microwave market, SEB’s reliance on “traditional” houseware products seemed to place it in a difficult position.

Nevertheless, the company remained firm in its decision to avoid the microwave market. As CEO Jacques Gairard told L’Expansion, investing in microwaves offered “the assurance of seeing one’s short-term margins massacred, and, in the longterm, seeing one’s position flattened by the countries of South-east Asia.”

If SEB remained uninterested in microwaves, it nevertheless sought to increase its international presence. The company took a big step in accomplishing this objective when it acquired Germany’s Rowenta, in 1988. Founded in 1884, Rowenta had long been at the forefront of ironing technology, introducing the world’s first lightweight, thermostat-controlled electric irons in the first half of the 20th century. Rowenta also developed the first steam irons, revolutionizing ironing boards worldwide in 1957. By the late 1980s, Rowenta had captured the worldwide lead in a number of its product groups, which by then included toasters, electric coffee makers, and vacuum cleaners. With factories in both Germany and France, the Rowenta purchase, which cost SEB some US$170 million, significantly enhanced both its production capacity and its worldwide reach. Rowenta’s market position in particular placed SEB in a strong position for entry into the rapidly opening Eastern European markets.

SEB’s expansion had been guided by Emmanuel Lescure. In 1990, however, at the age of 61, the descendant of founder Antoine Lescure handed over the direction of the company to Jacques Gairard, the first outsider to lead the company. Gairard took the company on a renewed drive to build its international position.

Company Perspectives:

To achieve its strategic ambitions for international growth, the Group has set itself a number of clearly defined objectives: to satisfy the basic needs of consumers; to develop innovative products that make day-to-day life easier and more agreeable; to establish itself locally on every continent, so as to be close to markets and better able to respond to the specific demands of consumers.

One of SEB’s first international moves was the opening of a factory for the assembly of electric fryers in Toluca, Mexico. The implantation of production facilities in Mexico gave the company a stronger position in the North American market and the benefit of lower Mexican wage rates. At the same time, the company made investments in a production site in soon-to-be renamed Saint Petersburg (known as Leningrad under Soviet rule). The Saint Petersburg plant was soon joined by commercial subsidiaries targeting the newly redefined Russian consumer market. As the other countries in the former Eastern bloc began to adopt free market policies, SEB began to establish marketing subsidiaries and local partnerships in these countries as well, including Hungary, Poland, Slovakia, the Czech Republic, and Ukraine, a process largely completed by 1993. In that year, the company also opened a commercial subsidiary in Turkey.

By then, SEB had clearly defined its plans to become a leading force in its international small appliance markets, launching its Ambition 2000 program outlining the company’s strategy for international development. Into the late 1990s, the company opened a series of subsidiaries and branch offices in its targeted international markets, including Ireland, India, and China in 1995; Dubai, Kiev, Bucharest, and Miami in 1996; and Cairo, Oslo, Greece, and South Korea in 1997. The company also formed a joint venture in China in 1996, and acquired a leading Chinese iron manufacturer, Red Heart. At the same time, SEB doubled production at its Mexican plant, as it made steady increases in the North American markets. Nonetheless, Europe—by then still only slowly recovering from an extended economic downturn—continued to produce the majority of SEB’s sales.

SEB looked for ways to develop its overseas markets as a means to reduce its reliance on the European markets. In 1997, the company took over 44 percent of Arno, Brazil’s leading small appliances producer, with a product range embracing food processors, washing machines, irons, fans, and vacuum cleaners. For a price of more than FFr 1.2 billion, SEB gained not only Arno’s five production facilities, but strong access to the booming Brazilian and South American markets. In keeping with SEB’s long tradition, the company vowed to maintain the Arno brand name and also introduce its international T-fal and Rowenta brand names.

After completing the Arno acquisition in 1998, for a total position of 97.6 percent, Arno boosted its South American position with the acquisition of Volmo, the leader in the Colombian and Venezuelan home appliance markets, adding that company’s product specialties of irons, fans, mixers, and blenders. The company’s gains in the South American region were particularly impressive, jumping from just FFr 100 million in the early part of the decade to top FFr 1.7 billion by 1998. In the United States, the opening of a new US$15 million operations and distribution center in Millville, New Jersey, boosted the company’s T-Fal subsidiary logistics base for North America.

SEB’s South American acquisitions left the company exposed to the economic collapse of most of its South American markets in the late 1990s. The company was similarly exposed to the growing financial chaos in Russia. Adding to the company’s burdens was the devastating earthquake in Turkey, which severely cut down on its otherwise booming sales in that country. By 1999, the company saw its sales slip, from EUR 1.76 billion in 1998 to just EUR 1.69 billion in 1999.

SEB responded by cutting some ten percent of its international workforce, and reducing its advertising budget as well. The company also dropped a number of products in which it had been unable to gain worldwide leadership positions, such as heating and air conditioning appliances. Meanwhile, SEB continued to build its presence elsewhere, taking 100 percent control of its Chinese joint venture. The company’s presence in the Asia-Pacific region was also boosted by the creation of a subsidiary in Australia, and branch offices in New Zealand and Thailand. In Africa, the company opened a subsidiary in Johannesburg. At the same time, SEB celebrated the sale of its 50 millionth pressure cooker.

Jacques Gairard retired in May 2000 and was succeeded by former company Vice-President Thierry de La Tour d’Artaise, who vowed to continue reinforcing SEB’s international standing in the new century. De La Tour d’Artaise also began hinting at the company’s willingness to make new acquisitions in what might become a consolidation of the global small appliances market.

Principal Subsidiaries

Calor S.A.; Rowenta Invest B.V.; SA SEB; SEB Développement S.A.; SEB Internationale S.A.; Tefal S.A.

Principal Competitors

Applica; Newell Rubbermaid Inc.; Conair Corp.; Philips Electronics N.V.; Electrolux AB; Salton, Inc.; The Gillette Company; Sanyo Electric Company, Ltd.; Holmes Group; Sunbeam Corporation; Matsushita Electric Works, Ltd.; Whirlpool Corporation; Moulinex S.A.; WKI Holding; NACCO Industries, Inc.

Key Dates:

1857:

Company is founded by Antoine Lescure.

1926:

Business is reincorporated as Société d’Emboutissage de Bourgogne.

1953:

Company introduces the first pressure cooker.

1956:

Société Tefal is launched.

1967:

Electric fryer is introduced; company enters into electric small appliance market.

1968:

Société Tefal is acquired.

1972:

Calor S.A. is acquired.

1973:

Company reincorporates as SEB S.A.

1975:

SEB attains listing on Paris stock exchange.

1988:

Rowenta is acquired.

1996:

Enters into joint venture to acquire Red Heart brand of irons (China).

1997:

Takeover of Arno (Brazil) is effected.

1998:

Company acquires Volmo (Colombia).

2000:

Thierry de La Tour d’Artaise is named president of company.

Further Reading

Beaufils, Vincent, “Jacques Gairard,” L’Expansion, May 18, 1989, p. 33.

Brothers, Caroline, “France’s SEB Warns of Plunge in 1999 Profits,” Reuters, August 31, 1999.

Leboucq, Valérie, “Le groupe SEB repart de 1’avant,” Les Echos, March 3, 2000.

——, “SEB va acheter le leader brésilien du petit électromenager,” Les Echos, March 24, 1997, p. 11.

—M.L. Cohen