Dusseldorf While Tupperware, the pioneer of direct party sales, is in financial distress, Vorwerk sold 1.5 million Thermomix units in 2022, as in the previous year. The people of Wuppertal earned 1.72 billion euros with their multifunction cooker – more than ever before. The Thermomix is sold at cooking parties in private households by self-employed consultants
The business is “inflation-resistant due to the close customer loyalty,” says Thomas Stoffmehl, spokesman for the Vorwerk Group, in an interview with the Handelsblatt. And this despite the fact that the TM6 food processor has become more expensive in the middle of the year – by 50 euros to 1399 euros. According to Stoffmehl, direct sales are less dependent on the economy and purchasing power.
Martin Fassnacht, Professor of Strategy and Marketing at WHU, also assesses the stable sales figures for the Thermomix as positive: “This is a positive development for Vorwerk direct sales. Retail, on the other hand, struggles in times of inflation.”
Overall, however, Vorwerk’s figures fell well short of expectations. The total turnover of the Vorwerk Group fell only slightly from 3.38 to 3.17 billion euros in the previous year, mainly due to the sale of the cosmetics direct sales company Jafra, which recently made annual sales of around 313 million euros.
However, after-tax profit collapsed by more than two-thirds. After a surplus of almost 150 million euros in the previous year, it was only 45 million in 2022. Return on sales fell by three percentage points. Stoffmehl attributes this to special effects: “We had higher material costs of around 70 million euros.”
Vorwerk: Suction robot subsidiary Neato is discontinued
The material was not only more expensive, but often in short supply. The Wuppertal family company struggled with delivery problems because important electronic components from Asia were missing. In the meantime, the Thermomix had delivery times of up to twelve weeks. Sales of the Thermomix nevertheless remained stable. In the case of the Kobold vacuum cleaner division, however, the second most important pillar, supply bottlenecks had a massive impact on business.
“We were unable to deliver vacuum cleaners and accessories that we had ordered for around 30 million euros in December,” says Stoffmehl about the vacuum cleaner brand Kobold, the company’s second major revenue generator. Batteries and chips from Asia were missing, as were vacuum cleaner bags from a Belgian supplier. Kobold’s turnover fell by 1.9 percent to 803 million euros.
Because electronic components from Asia were missing, there were delivery times for the Thermomix in 2022 of up to twelve weeks.
(Photo: Vorwerk)
Vorwerk is also concerned about the robot vacuum business. The start-up Neato from Silicon Valley, which Vorwerk took over completely in 2017 after holding a stake since 2010, was never able to assert itself against the competition in retail. The competition from strong rivals such as iRobot, Dyson or Roborock and Ecovacs from China is too great.
Sales collapsed from 62 million euros in 2018 to 8.5 million euros most recently. All attempts at restructuring, in which almost 100 jobs were lost recently, failed.
Vorwerk boss Stoffmehl closes another division
Vorwerk boss Stoffmehl will therefore discontinue the Neato business in June 2023. “Retail is not our core competence and is highly competitive,” the 52-year-old explains the closure. The robotics know-how is now bundled in the electrical works in Laaken. Stoffmehl, who worked at Bofrost and LR Health & Beauty before taking up his post in 2021, is closing the second unprofitable business area after the unsuccessful Temial tea machine.
The Temial, like the Twercs cordless tool case, was introduced as a new beacon of hope. Twercs had already been rehired by Stoffmehl’s predecessor Reiner Strecker after a few years.
Vorwerk will not introduce a new model of the Thermomix this year, contradicts Stoffmehl speculation. Nevertheless, there will be innovations. Florian Kraus, marketing professor at the University of Mannheim, believes that Vorwerk is a very sustainable company. Vorwerk relies heavily on innovation, such as in the digitization of its products.
Away from the retail trade, Vorwerk is hoping for more positive impulses for vacuum robots in 2023. The VR7 from the Vorwerk brand Kobold has been available since May, and Vorwerk sells it primarily through direct sales.
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In addition, the start-up Nexaro, founded by Vorwerk, is launching a vacuum robot for professional building cleaning in June. The device should independently clean office areas using AI mapping. “Building cleaners are finding it increasingly difficult to find staff. Our cobot does not make cleaning workers superfluous, but supports them,” says Stoffmehl. In this way, up to 35 percent of personnel costs can be saved in building cleaning. Vorwerk is breaking new ground with Nexaro, because the vacuum robots are to be sold to business customers – via wholesalers and also online.
The Vorwerk boss separates from another unprofitable business area.
(Photo: Vorwerk)
Vorwerk boss Stoffmehl wants to buy direct sales
Thomas Stoffmehl sees the future of the company in direct sales. “No growth in sales without growth in consultants” is the strategy he launched at the end of 2019. Since then, Vorwerk has almost doubled the number of Thermomix consultants to 83,000.
Unlike Tupperware, an “icon of direct sales”, as Stoffmehl calls the US company. He sees this as the company’s problem: Instead of selling people to people, Tupperware also sells its products in shops and online. The managers would have led Tupperware away from direct sales and thus lost the important customer loyalty.
The device should vacuum surfaces in offices and hotels independently and thus relieve cleaning staff. The industry is suffering from staff shortages.
(Photo: Getty Images)
The numbers show that direct sales grew in 2022 despite the crises and war. “In 2022, the sales of our member companies increased by 1.5 percent,” says Jochen Clausnitzer, Managing Director of the Federal Association of Direct Sales Germany. In the last ten years, industry sales have increased by 50 percent to over 19 billion euros (2021).
Vorwerk boss Stoffmehl says: “In direct sales you are always in a niche, but in a profitable one.” Vorwerk wants to expand this core business accordingly – also through acquisitions. “That could happen as early as this year,” reveals Stoffmehl. He is “in good talks with exciting direct sales companies in Germany and abroad”. However, he makes it clear with a wink: “We definitely don’t want to buy Tupperware.”
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