Dusseldorf, New York Plastic bowls, lids, direct sales: the Tupperware business model, including the legendary Tupper parties, has survived for decades. But the listed US company is now in the deepest crisis of its history.
Company boss Miguel Fernandez has now had to publicly admit that the continuation of business operations is uncertain given the liquidity bottlenecks. In a report to regulators, Tupperware said the company was working with financial advisors to set up bridge financing.
The cash was no longer sufficient to finance ongoing operations, Tupperware continued. Layoffs would be examined, and there is also a real estate sale in the room. Tupperware initially did not respond to a Handelsblatt request.
The stock market reacted shocked to the admission. The price fell almost 50 percent to $ 1.20 on Monday. By 2022 it had already fallen by 90 percent. A decade ago, the stock was nearly $70. How did it get to the point that a brand icon like Tupperware got into such a deep crisis? And is a turnaround still possible?
Tupperware had already warned in November that the continuation was at risk. In mid-March, the company then indicated that the publication of the balance sheet for 2022 would be delayed. Tupperware had previously announced preliminary figures that boded ill: sales had fallen by 18 percent to $1.3 billion with a loss of $28 million.
Brainstorm direct sales – “Tupperparty” makes Tupperware a success
By not publishing the annual report, Tupperware is in breach of credit agreements with its creditors. Now the Orlando, Florida-based company is working on changing its loan agreements or raising fresh money, it said.
The problem: Since August 2022, Tupperware has already adjusted the agreements three times. Among other things, Tupperware blamed rising interest rates for the latest problems, which made financing the mountain of debt more difficult.
But according to Neil Saunders, retail expert at analysis house Global Data Retail, Tupperware isn’t just struggling with the interest rate environment. The company did not manage sufficiently to renew the direct sales model. Saunders sees a “sharp decline in the number of sellers, consumer reluctance to buy household products, and a brand that has still not fully caught on with younger consumers.”
Because Tupperware is struggling to grow sales and lacks “great fundraising capacity” due to small assets, its financial position is “precarious,” Saunders said. “The company was once a hotbed of innovation in problem-solving kitchenware, but it’s really lost its edge.”
The original innovation: inventor Earl S. Tupper patented an airtight and watertight bowl in 1949. However, it sold poorly. Saleswoman Brownie Wise had the decisive brainwave with her idea of sales parties.
In doing so, she convinced Earl Tupper to go full direct and stop selling through stores. The Tupper Party was born. And so she turned the “miracle bowl”, as it was called at the time, from a slow seller to a bestseller.
But for years the company has been gripped by a gradual decline. Long before the corona crisis, which temporarily made sales parties completely impossible, sales were falling and debts were rising.
The consequences of the pandemic finally revealed that Tupperware’s business model was fundamentally in crisis. On the one hand, the competition from other manufacturers increased, and Tupperware lost its unique selling proposition.
Social commerce and online trade are supplanting the Tupper party
But it was much more serious: When the Tupper parties could no longer take place for fear of infections, it became apparent that the company had major deficits in digitization. Competitors were much further ahead in online trading – and were now taking over the business.
Tupper only launched the “myParty” portal in 2018. It works like an online shop, but with guests. Social commerce, the modern form of direct sales in social networks based on recommendations, was largely new territory for Tupperware.
>> Read also: Direct sales survives the corona crisis without major damage
A slump in sales during the Corona period could have been avoided in direct sales, as other companies have shown. The direct sales industry in Germany was able to increase its sales by around one percent to 18.7 billion euros in 2020, according to a study by the University of Mannheim on behalf of the Federal Association of Direct Sales Germany (BDD).
In 2021, sales increased again. “Many companies have successfully used online parties in sales and exchanges on social media, thus enabling customers to receive personal advice even during the lockdown,” said BDD CEO Jochen Acker when presenting the study.
Tupperware seems to be less successful at this. Last year, sales in Europe, Asia and North America collapsed by 30 percent, only in South America did they remain stable. “2022 was a real test of our determination to turn this company around,” CEO Fernandez said when presenting the preliminary figures. Apparently he didn’t pass it.
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