“We doubled business in India in 2021 over 2020, and year-to-date, we have doubled business again,” said Kalmbach. “During the pandemic, people spent more time at home and invested in decorating their homes and upgrading bathrooms and kitchens, driving up demand for our products.”
The company, which operates two brands, Hansgrohe and Axor, is currently present in 142 stores in 58 cities through a franchise model and generates about 88% of business from trade.
Kalmbach said Hansgrohe Group plans to invest further in India as it feels that the next 5-10 years could be a great opportunity for growth.
“Currently, India is a top 10 market for us, but strategically, it is one of the top five markets for our company,” he said.
In 2021, the company achieved its best-ever results in its 127-year history, with sales reaching €1.36 billion, a 27% increase over 2020.
Asia contributed about 50% of the sales growth in the company, and India’s share of the overall Asia business stood at around 20-30%, with China making up the bulk of the business.
Kalmbach said the company had been operating in India for the last 10 years, but was able to achieve a breakthrough in the last 2-3 years.
“We learned our lessons in the first couple of years but patiently built up distribution and our brand. Now consumers, architects and interior designers are much more aware of our brands—Hansgrohe and Axor,” he said.
Given that a large part of manufacturing for Hansgrohe is situated in Germany, which is reeling under high inflation due to record energy prices courtesy the Ukraine-Russia conflict, the company had to raise product prices globally and in India, too.
“We have seen high inflation in the market over the last few years and there’s more to come. The company has increased prices in the last 18 months and plans another moderate one next year. Yet price hikes do not cover the cost of inflation,” said Kalmbach.
Hansgrohe, like most global companies, faced supply chain issues due to the pandemic but has fared much better than the competition.
“We, like any other global business, had supply chain challenges in getting components or raw materials from Asia to Europe, but we were better prepared as we produce a lot of components internally. So a better inventory position allowed us to serve the market better , said Kalmbach.
The company faces strong competition in the Indian market from global brands like Grohe and Kohler and Indian brands like Jaguar, which are transitioning into premium and luxury categories.
“We are really strong in the luxury segment with our Axor brand and in the premium segment with Hansgrohe products, especially premium showers and faucets. We win market share due to our overall positioning, innovation, cutting-edge design combined with strong German build quality , said Kalmbach.
Hansgrohe is recording strong growth even in tier 2 and 3 cities, as rich people spend more on their homes. “We are growing faster outside the top eight cities. Customers in smaller cities now want a differentiated product, something that can stand out, and they are willing to spend more on premium products,” said Gaurav Malhotra, MD, Hansgrohe India.
Given that bathrooms and kitchens use a large amount of water in every household, the company is putting more effort into bringing efficient products into the market quickly.
“Klaus Grohe, the son of our founder Hans Grohe, started sustainability activities in the 80s; he was a pioneer. We were the first company that had products that were both energy and water efficient. We have intensified these activities now. All 50 business units in the world will be climate neutral in 2022. By 2030, all of our products will be water or energy-saving products,” said Kalmbach.
According to him, running a global business was challenging due to multiple crises hitting companies at the same time.
“I really now understand what the term VUCA (volatility, uncertainty, complexity, and ambiguity) means. Inflation, the energy crisis, the Ukraine-Russia war; it is a challenging time. But as a global business, there will always be spots in the world that offers more opportunities, so we are rather optimistic about the future,” he said.