Daily Bulletin

Business Mentor

.

  • Written by The Conversation
imageQuintessentially British?Phil Chambers, CC BY-NC-ND

In its home territory of the UK, a mention of the word “Aga” immediately conjures up an image of middle-class, middle England, where the Aga cooking stove is the aspirational kitchen feature. No country house is complete without one. They have even featured in a series of stories – the Aga Sagas by Joanna Trollope. Now, in a plot that could almost have surfaced from one of the tales, the Aga Rangemaster company is being fought over by two American suitors. They are hoping to save the brand whose fortunes have been weighed down by the recession and a big pension deficit, even though the cookers cost between £5,000 and £16,000 (US$8,000 and US$25,000).

Despite its oh-so-English image, the Aga was actually invented in Sweden, by Nobel Prize winning physicist Gustaf Dalén in 1922. Made of cast iron, the cooker stays on, heating the kitchen and two large hot plates and two ovens continuously. A few years after its invention the licence was sold and since then Agas have been made exclusively in Britain, becoming a quintessentially British brand.

But Agas have faced a saturated market – not surprisingly, as Agas are limited to the affluent and they also last for decades.

Quirky sales blips can occur thanks to sudden housing booms, or new products like a cheaper mini-Aga on wheels designed for city dwellers, and the electric Aga that can be switched on and off. But generally a kind of steady state of decline eventually prevails. In 2013 only 10,300 Agas were sold, a major fall from a pre-recession peak in 2007 of 20,000. Revenues fell by 2.5% to £244.6m in the same year. This resulted in a cut of 750 jobs, although things picked up slightly in 2014.

Marketing headache

This presents a classic marketing headache: how to increase profits from a premium priced product, popular and well-known, but with declining sales. The marketing planners at the Warwickshire-based company must have been saying it was high time to take Aga to new markets such as China or the US. But the money to make it happen seemed destined for addressing the underfunding of their employees’ pension scheme.

So two US corporations with the ability to open up new markets have come along just at the right time. Middleby Corporation, a US food services business were first in with an offer of £129m, accepted by Aga in July. But now US homewares giant, Whirlpool, has also made an approach with a possible cash offer. If Whirlpool makes a firm bid for the company before Aga and Middleby enter a binding “sanction” agreement on September 16, they may yet win the Aga brand.

So why have these takeover bids arrived and what does it mean for the Aga brand? It is after all an iconic British brand, that has positioned itself at the centre of traditional English country life. Fans – both British and foreign – swear by its method of slow cooking.

While Middleby Corporation may be an unfamiliar name to most British consumers, Whirlpool are makers of the Artisan Kitchen Aid, which is used extensively by Nigella Lawson in her TV cookery programmes. Already the world’s largest home appliance company, Whirlpool has announced plans for global expansion. Taking over Aga would fit squarely with that.

Going global

Daniel Wong, Aga’s director of business development in China, sees the changes in Chinese society as an important incentive for Aga: “Five years ago in China, when people got money they just dined out in expensive restaurants … but affluent people have started cooking at home more, showing off to friends, saying, ‘I can cook’. We’ve seen a rise in cooking schools and sales of cooking magazines.”

So Aga has developed an upmarket oven with wok burner for the Chinese market. They will be hoping to capitalise on the same heritage value that has seen fashion brands like Burberry prove so popular with Chinese consumers.

There was a time when the notion of British companies being bought up by foreigners could cause nationalistic outrage and consternation. But now it seems normal that another British company gets added to the list of names like Jaguar, Cadbury, Weetabix and Rolls Royce. Will this dent the image of the brand?

Some commentators are concerned about quality compromises, comparing Aga’s future to that of the Cadbury Creme Egg following its takeover by Kraft (who quickly reduced cocoa content). There have been suggestions that American innovations might include integrated coffee machines operated from your Apple Watch or even a built-in doughnut maker.

But their fears are probably unfounded. A big part of Aga’s selling point is its unique technology and place in British heritage. Even Martha Stewart, queen of the American kitchen, called it the Rolls Royce of cooking stoves. If Aga continues with its quintessentially up-market British image, using models such as Daisy Lowe as its brand ambassador and with product placements in global films such as the James Bond hit Skyfall, it probably has little to worry about and will continue to have owners not only from Chiswick and Chipping Norton but also from Boston and Beijing.

Authors: The Conversation

Read more http://theconversation.com/aga-saga-reaches-boiling-point-with-us-suitors-in-pursuit-47178

Business News

Choosing the Right Mini Digger: Factors to Consider

In the vast landscape of construction and landscaping projects across Australia, mini diggers have become indispensable tools. These compact machines pack a powerful punch, offering versatility and ...

Daily Bulletin - avatar Daily Bulletin

Effective Strategies to Generate and Nurture Sales Leads for Business Growth

Boost your business's growth. Discover effective strategies to generate and nurture sales leads! A sales lead refers to an individual or business entity that is potentially interested in purchasing...

Daily Bulletin - avatar Daily Bulletin

Products Made from Petroleum

From transportation to healthcare, petroleum has become an integral part of our everyday lives. This fossil fuel serves as the foundation for a wide range of products that surround us, offering conv...

Daily Bulletin - avatar Daily Bulletin

Tomorrow Business Growth