Tupperwera South Africa (Facebook)
Global food container and plasticware company Tupperware has placed its industrial property and head office in Brakpan, Gauteng, on the market for an undisclosed amount.
This is as the group looks to dispose of its non-core assets amid liquidity concerns.
Tupperware’s 41 585m2 South African base was listed for sale on the Naspers-owned property search engine Property24 in July, months after reports surfaced in April that the American company was facing financial hardship.
In a short response to Moneyweb’s questions on the sale of the property, Tupperware’s senior manager for global communications and public relations, Yeni Gonzalez, said the sale forms part of the group’s global strategy but clarified that it does not mean the end of its activity in the local market.
“The sale-leaseback is a part of our global strategy to sell non-core assets, which has been mentioned in past quarterly earnings calls,” Gonzalez says in an emailed response.
“It does not impact our presence in the South African market. Our direct sellers and consumers can continue to buy Tupperware® products in the market the same way they do today.”
The property, listed by Broll Property Group, is described as a “single facility” comprising “a production unit, bulk unit, finished goods unit and 2 office blocks with varying eaves height”.
Broll declined to comment on the sale but did note that it is engaged in negotiations relating to the property.
Earlier this year, the company – which is listed on the New York Stock Exchange – informed investors of its liquidity challenges, which at the time it said posed a risk to its ability to fund its operations.
As such, the group in April said it was engaging its financial advisors to find solutions that would improve the company’s capital structure and near-term liquidity.
To free up some cash, Tupperware said it would review its estate portfolio to find “property available for potential dispositions or sale-leaseback transactions” and that the group was considering other “right-sizing efforts, monetization of fixed assets, cash management, and marketing and channel optimization, to preserve or deliver additional liquidity”.
President and CEO of Tupperware Brands Miguel Fernandez said in a statement released in April: “Tupperware has embarked on a journey to turn around our operations and today marks a critical step in addressing our capital and liquidity position.
“The company is doing everything in its power to mitigate the impacts of recent events, and we are taking immediate action to seek additional financing and address our financial position.”
According to independent retail analyst Chris Gilmour, the costs associated with owning Tupperware brand products has contributed to it losing its shine as local consumers have to think about what they spend their diminishing disposable income on.
He says the wide availability of cheaper alternatives makes it difficult for the brand to compete.
“To be fair, Tupperware is extremely high quality … and that may be one of the problems it’s got, the quality is too high in an ever-increasing throwaway world … and I think it may well have priced itself out of the market.”
“There are many other competing products out there that, while they are not as good, are much cheaper. That is probably why they are able to steal the margin on Tupperware.”
Gilmour says Tupperware will have to rethink its sales model and overall customer engagement strategy if it is to survive the fast-changing retail environment driven by the consumer’s need for on-demand services offered by e-commerce giants like Amazon.
Although local consumers can buy the brand online today, historically, at its peak, Tupperware sales in the country were largely facilitated via the direct selling model.
This model depends on party plan sales, a strategy that entails the marketing of products at social events. Locally, women were the main foot soldiers participating in this sales model and driving product sales.
