22 May 2010

Where there’s green or greed there’s gold

You have to hand it to the BSH Group. At a time when market conditions are driving more and more companies to pull back on R&D, reduce staff levels, and cut prices it is investing new energy efficient technologies, maintaining manufacturing staff levels and holding its price points.

But has such a strategy paid off? If its results for 2009 are anything to go by, they certainly have as the Group has outperformed the market in many regions. And while it may have taken a hit in 2009 on its built-in business in Britain, it is still the market leader in built-in with in excess of 25 percent of the market.

The BSH Group it seems is banking on making its future greenbacks with greener appliances. Energy efficient and low water consumption have been the main focus of their product development for a number of years, and it looks like the results are starting to deliver results. ‘Super efficient’ appliances now account for 15 percent of its sales.

It has to be said that the lion’s share of these 'super efficient appliance sales is in Germany, possibly because of a more discerning consumer, but probably because of expensive energy costs. Unlike its UK equivalent consumer (according to BSH’s own 2008 research), the German punter is more inclined to take a longer view, calculating that the money saved in energy costs will cover the purchase price of the new appliance well within its working life.

It’s the same rationale that says when all the depreciation and running costs are taken into account; a Mercedes is a more economical car than a Ford over the lifetime of the vehicle. It may be true, but there are still an awful lot of Fords on Britain’s roads.

The UK consumer stands out like a sore thumb from most of the rest of Europe with its myopic fixation on purchase price and apparent disregard for energy or water conservation, but there are changes afoot. The confusing energy labelling scheme is being replaced with a much easier to understand system that is simple to explain to consumers. And soon it is going to be virtually impossible to buy appliances without a minimum A-rated for energy status.

A++ products will continue to be premium products but as an A++ refrigerator uses 45 percent less energy than an A-rated version, making this an easier-to-understand argument can only help sales – especially as energy prices look likely to join the heat they produce and go through the roof.

It is calculated that if every refrigerator in Germany that is over ten years old was replaced with an A++ refrigerator, it would save the equivalent of two power stations’ energy output.

But if green appliances are really going to be the croc of gold at the end of the environmental rainbow, one of two things is needed. Either the manufacturer is going to have to subsidise A++ appliances, or our spanking new Government is going to have to pull back from encouraging us to generate more ‘green’ energy and help us to help the planet by reducing VAT on A++ appliances, thus instantly cutting down on energy consumption.

Personally I think manufacturers have done their bit and now it’s the Government’s turn to chip in. VAT reduction saw the sales of A++ appliances in Italy rocket (if you will pardon the expression), and there is no reason why it would not work in the UK.

Let’s face it, drowning polar bears have not melted the consumer’s heart, any more than emotional blackmail regarding the future of ‘Mother Earth’ for the grandchildren. So why not try a bit of good old fashioned greed?

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