It’s one of the oldest marketing clichés to find a new angle for an item: a different name, redesigned packaging or an added ingredient, and call it the “Product of the Future” in a must-have-it frenzy. And, almost without fail, it’s forgotten next year.
But, can a product – or a line of products – point the way to the future? Is there a bold statement in how manufacturers are doing business that’s beyond the usual promotional ploys?
At least one sector of alternative surfaces – engineered stone – may be offering a practical insight into the general direction of the countertop market. Manufacturers are getting bullish on the future ... and making some multimillion-dollar bets on meeting bigger demand.
Engineered stone (usually quartz-based surfaces) often get the tag as the up-and-coming part of the countertop market, going from near-zero a decade ago to a respectable share of the market. In a study last year of U.S. countertop demand, the Cleveland-based Freedonia Group market-analysis group estimated engineered stone pulling 7.1-percent of the market in 2010, with a 9.6-percent annual growth rate through 2015.
That learned estimate, however, might be a bit off – and far too conservative. Imports currently make up the majority of engineered stone sold in the United States, and the growth rate is impressive.
At the end of the first half of 2011, for example, U.S. International Trade Commission data showed quartz-slab imports for the year at 5.19 million sq. ft., up 21.8 percent from the first six months of 2010. (One slab is approximately 46.5 sq. ft.) That’s certainly beating the projections. But in the first six months of this year, U.S. quartz-slab imports came in at 8.97 million sq. ft., beating last year’s first-half total by 72.8 percent. That growth curve isn’t slacking off through July and August, either.
Someone’s making hay in the post-recession recovery. And engineered-stone manufacturers are anything but shy in trying to meet market growth in the coming years.
• Cosentino Group made a large bet earlier this month, announcing a $215.5 million expansion of its manufacturing base in Cantoria, Spain. While the bulk of the spending is aimed at a brand-new product in alternatives surfaces – the ceramic-glass hybrid Dekton large-format slab – a new logistics center will combine the new output with Cosentino’s three Silestone plants to store more than 115,000 slabs and ship 3,300 slabs per eight-hour shift, with two shifts a day. Cosentino’s largest market: United States.
• Israeli manufacturer CaesarStone Sdot-Yam Ltd., meanwhile, is considering plans to use approximately $30 million of the revenues from its NASDAQ IPO earlier this year to install another production line for its namesake quartz surface. Demand remains strong, with worldwide revenues up 14.2 percent in this year’s second quarter from 2011. CaesarStone’s largest market: the United States, where second-quarter 2012 revenues jumped by 60% from the previous year.
• The major U.S.-based quartz-surface producer – Eden Prairie, Minn.-based Cambria – is anticipating more market growth as it starts a 350,000 sq.-ft. expansion of its manufacturing facilities in Le Sueur, Minn.
The project, scheduled for completion next April, will increase its production-line total from two to four and meet increased product demand; currently, the company’s shipping approximately 20,000 orders every month.
• LG Hausys put its new 95,000 sq.-ft. facility in production this year in Adairsville, Ga., to make its Viatera quartz surface for the U.S. market. Previously, the subsidiary of the South Korean conglomerate LG Group put the product badge on surfaces imported from Italy.
All show major investments in ramping up production to supply the U.S. market. These are plans to expand business and increase revenues by finding more customers and more counter space to cover, instead of buying up competitors or building margin by stepping up the price schedule.
These alternative-surface manufactures aren’t going to get caught empty-handed in the near future; they’re preparing for a positive market with plenty of opportunity, and spending millions to get ready. That’s a welcome message.