Household Appliances (Brown Goods) Market Report 1999
Key Note Publications Ltd, January 1999
The focus of this report is the brown goods division of the UK household appliances market. The term `brown goods' is used to describe products that include televisions (TVs), video cassette recorders (VCRs), camcorders, all audio products and compact disc (CD) players. `Brown goods' is a reference to early TVs, radios and radiograms that came packaged in wooden,
wood-coloured plastic or Bakelite cases. Brown goods are all essentially entertainment products.
Between 1995 and 1999, the market experienced a period of strong growth in value. By 1999, the value of the total UK brown goods market at manufacturers' sale prices (msp) was £3.27bn, a rise of 2.9% on 1998, and an increase of 14.8% over the period 1995 to 1999. This growth was driven by a number of factors including the increasing strength of the world economy generally over this period, and the development and increasing market penetration of these products. The latter part of 1998 and the early part of 1999 has witnessed a general slowdown in the growth of the value of the UK brown goods market, largely due to oversupply, a tightening economic climate and the effect of the continuing strength of sterling. Asian and US multinationals have begun to reduce manufacturing capacity in the UK in response to these forces.
Although the UK market is mature, the UK Government's commitment to digital broadcasting technology and the liberalised nature of the UK telecommunications industry offer good opportunities for investment in consumer electronics. Nevertheless, the wide fluctuations of the pound and indecision over European monetary union (EMU) does seem to be causing some companies a measure of concern.
The strength of sterling since 1996 has been a serious cause for concern for both manufacturers and distributors of electronic consumer goods. Export markets are more difficult to penetrate with sterling at such high levels, and competition in domestic markets is intensified by foreign competitors taking advantage of the relative weakness of their own currencies. The collapse of some currencies, above all in South East Asia, has exacerbated the problems for UK-based manufacturers.
During 1999, the brown goods market in Europe is being affected both by the worldwide imbalance between supply and demand and general economic uncertainty in the region. Since 1997, demand for digital goods such as digital video cameras and MiniDisc players has been strong. Production of major products such as TVs and VCRs, however, remains sluggish.
Key Note expects the value of the brown goods manufacturing industry in the UK to grow by 19% in real terms to reach £3.9bn at constant 1999 prices by the end of 2003. Key Note expects limited market growth in 1999 and 2000, as the current over-supply situation in some market segments corrects itself. However, from 2001 there will be steady growth in the overall market up to the year 2003.
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