Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Tupperware Brands Corporation (NYSE:TUP)

DbAccess Consumer, Retail, Gaming & Lodging Conference

March 05, 2013 9:20 am ET

Executives

Michael S. Poteshman - Chief Financial Officer and Executive Vice President

Analysts

William Schmitz - Deutsche Bank AG, Research Division

William Schmitz - Deutsche Bank AG, Research Division

All right. I think we're going to start it here with Tupperware. I just wanted to point you to the forward-looking statement language in the company's disclosures. I'm Bill Schmitz from Deutsche Bank.

Michael S. Poteshman

And I'm Mike Poteshman, CFO of Tupperware Brands.

William Schmitz - Deutsche Bank AG, Research Division

So you know, this is going to be a fireside format. I have a bunch of questions written out, but then we're going to leave plenty of time for Q&A, so feel free to chime in at the end when we open it. Just talking about Europe. I know your business has been very resilient relative to everybody else, but to some of Western European business, are you seeing any signs of macro recovery broadly in the continent yet?

Michael S. Poteshman

Well, when we look at our businesses, we have been pleased that we've been able to get ourselves in front of consumers through our sales force and have had some pretty good success. Our biggest business in Europe is in Germany and France is also very large. And we've been successful there in getting more stellars, which thus mean that the consumers are receptive and the sales force is able to get out there in front of people through hosted business things. [ph] So it's gone pretty well. We were up in Germany in our fourth quarter by 4%. And again, these people are getting in front of others and being able to demonstrate the products and move things along.

William Schmitz - Deutsche Bank AG, Research Division

Okay. And do you think your business is countercyclical in terms of recruitment and sales?

Michael S. Poteshman

Yes, we've taken a lot of a close look at that over time because it is a very important question, and we do feel that we operate within the consumer spending environment, of course. And we do feel that while we have a countercyclical element and clearly, we provide an opportunity, an earning opportunity, for people. And when other way that you might have employment or earnings are softer, we do get a benefit on the recruiting side. So when we net it all together, we find that we do perform better in a good consumer spending environment because while we have 2.8 million sellers and those are our customers really at the end, almost all of our products goes outside of our sales force to the end consumers. And they need to be willing to spend.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And then just sticking with Germany, I know you have a 74% household penetration rate, which is pretty unbelievable. Is there anything to learn from that market as you kind of build the business? Like what happened in Germany to drive that penetration so high and is it transferable to any other market?

Michael S. Poteshman

Yes, I think that there are elements that are definitely transferable. And when we look at how our business has evolved over time, we've been in Germany 50 years or something like that. And really we've run that business very well. We've got a terrific management team there that surround our business in a very classical way, while still evolving in the various elements that we drive to be able to continue to build the business. And what I mean by that is we're very much dependent and are looking for a large sales force. And so we've been able to present an earning opportunity with a good hourly rate for people and for people that want to have a more of a career kind of earnings, we built things there as well. What I mean by that is we put in a group in our sales force system the last several years that we call team leader. And team leaders are in between our distributors, who in Germany are mostly stocking distributors, and our managers. Managers are people who recruited others into the business and are really our first level of leadership in the business. They do hands-on training. They do motivation of the sales force and continue to really help develop the business. And we find that distributors have a natural limit of maybe 30 or 40 managers and so it becomes a span of control issues. It's not that we say you can't have more, but they tend to develop one more and they lose one over here. Team leaders work underneath distributors and they don't have a warehouse and a place of business like that. But they help and they develop other sales force managers and get a compensation for that. So through that, we're able to develop more managers in the business, get more opportunities for the sales force and for the leadership. And those team leaders can really earn a very attractive earnings, a career kind of an earnings. Well, target and talk about lawyers' salaries and things like that. So that's really been a newer innovation the last several years that's helped, and we do run that kind of system around the world in many, many of our markets, including in emerging markets and so we think that that's something that spans transportable.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And then obviously the direct [indiscernible], I know people have different business models, is getting that pretty enhanced scrutiny right now more in Wall Street than anywhere else. But what do you think about what's going on? And then is there any impact on the field operations for you and your competitors, so is it an opportunity? Or you're really not seeing any impact from...

Michael S. Poteshman

Right. Yes, there has been a lot of noise, I think, on Wall Street and the investment community and that's understandable given what's been said. When we look at our business, I haven't heard any of our managing directors or other leaders talk about any impact on our ability to recruit or activate the sales force. So I don't really think that there is anything there. When we look at our channel as it's broadly defined or understood, we do see a difference in how companies are really going to market or what they're trying to do. We're a classical seller of products. I talked about this 2.8 million sales force that we have and a very high percentage of what we sell to them is really being sold through them or by them. So they're having parties and they're selling on to end consumers, which our assessment in talking with our large market is something and like 90% of what we're selling is going beyond our 2.8 million sales force to our end consumers. We've even talked about for over 10 years in our -- at the beginning of our MD&A that yes, we're very dependent on our sales force and that's good. We're direct-to-consumer company. But we go on to make the next statement is that the majority of the products are in turn sold to end consumers and that's really what we're trying to do. The contrast with some others that are broadly defined in our channel is they're taking a network marketing approach, which is to recruit people to come in and buy their products and use their products. So it's really a save to get that nominal discount that a sales force [indiscernible] or direct selling company get and then to consume the products. As opposed to what we're really looking to do is to recruit people to earn money and sell the product on to end consumers. And that's what we see as the fundamental difference between some of the others that are considered to be our competitors.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And do have you [indiscernible] had any inquiries from the FTC recently or even in the past about the business model or the way that you guys go to market?

Michael S. Poteshman

No. We've had no specific inquiries. We -- the FTC, you may or may not know, a few years ago went through a process of putting in what they call a business opportunity rule, and we did participate in that process in terms of giving comments and insights into how our model works and what we do. And they know that we've not had complaints. And so that we had some interaction there but nothing from an investigation point of view.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And then if you can just sort of globetrot a little bit here. The turnaround of Fuller, I know it's still early days. Can you talk of -- Fuller's a Mexican beauty business -- can you talk about the turnaround and what you guys have put in place? And what you think sort of the time frame is for full recovery there?

Michael S. Poteshman

Yes, absolutely. We've seen some progress for sure from where we stood in 2011 and the beginning of 2012. We were still down in the sales force size, which is our key nonfinancial metric, at the end of 2012 but in the mid-single-digit in terms of a year-over-year comparison, as well as the fourth quarter local currency sales comparison. So clearly not where we want to be, but much better than where we had been earlier in the year. Some of the steps we've taken is we have a new MD in place as of the middle of last year who had previously run our Tupperware Mexico business for a few years very successfully. And he had previously been active as CFO of the business at Fuller Mexico so we're confident in his ability. We've got a great team that works with him both on the marketing side, and we've seen improvements in the order sizes in that business and that's also a precursor to how things are going. And then on the recruiting side, we're really working to really recruit under normal kinds of promotional programs, meaning nothing too aggressive as we were a bit aggressive in 2011. And what we're seeing out of that, along with the marketing plan is better productivity among the reps and we would expect to see as we continue to work on the business to see sales force size comparison advantages as we move forward and that's clearly what we expect all of our businesses to be able to accomplish.

William Schmitz - Deutsche Bank AG, Research Division

Got it. Is there a discrete path to get to that 20% operating margin target in Mexico?

Michael S. Poteshman

That's where we've been historically, and I wouldn't say that we've laid out it's going to be x point more in 2013 and that kind of a thing. But there is a lot of, fortunately, a lot of leverage in our model. Really, across our businesses, we look at a very healthy contribution margin and then we make decisions about how should or shouldn't we invest that contribution margin. And when we look across all of our businesses, we invest a healthy amount and then we talk about retaining 50 basis points a year of pretax earnings improvement. And that's really after investment, so it's a wonderful model because it is so accretive as you get volume growth.

William Schmitz - Deutsche Bank AG, Research Division

Got you. Is Mexico still a growth store market in your mind -- not just for you, but broadly speaking for direct sellers?

Michael S. Poteshman

I think that it is. Certainly, when you look at our business in Mexico, it's our largest market in the world when you put together -- well, it's our largest business, is Fuller Mexico, the beauty business, and then we have a very successful Tupperware business as well. So it's our largest geography in the world. But that said, it continues to grow from a GDP point of view and so we do see the opportunities there. It's a very attractive -- it's an emerging market, a very attractive place to be from an earnings opportunity for our sales force. So we continue to work on those models to make sure that they're tweaked in the right way. But we certainly expect to see growth in Mexico going forward.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And then how about the 2 great growth markets of [indiscernible] a little bit recently South Africa and China. Are there any signs of a turnaround in those 2 markets? I know they're relatively small but obviously they have great growth potential.

Michael S. Poteshman

Yes, there are. In South Africa, we closed the year with an 11% sales force size advantage. We've been down fairly significantly early in the year so we had some good recruiting. We were able to keep enough people to get to that kind of an advantage. What we did see was less activity among the sales force and that was as we continued to roll out of the aftereffect of some counterfeited knocked-off product that we saw really in the back half of 2011, beginning of 2012, and that hurt some of the confidence of the sales force. But having that raw material of a double-digit sales force size advantage was favorable. We were down quite a bit in sales in the fourth quarter. But we did say that we expected to see better comparisons going forward and I do expect that to be the case. In the case of China, we were -- we closed the year there. We run an outlet model, through our independent sales force and has been -- and that's the legacy of when direct selling was not allowed in China. You can get licenses now, but we haven't moved in that direction because we've got a good model that we've able to grow and quite profitable as well. So we have 3,700 outlets through our independent sellers at the end of 2012. And that was up 10% or so from the year before. And we'll -- and we've, over time, been able to grow the productivity of those outlets and we'll look to continue to do that. So we see a lot of opportunity there. And while we did have quite a pause in the company sales comparison in the fourth quarter when we were flattish, the sales again to end consumers was up in the double digits nicely. So we, on our earnings call, even talked about the fact that we felt we were going to have another good year in China and really didn't even see that as a break.

William Schmitz - Deutsche Bank AG, Research Division

Got you. I mean, sort of broadly speaking, how do you manage sort of the growth needs of the business and then the credit risk with the distributor?

Michael S. Poteshman

Yes, it's interesting. In many of our businesses, we don't even give credit. Others, we do. We've been successful when we're giving credit at the individual sales person level and managing that reasonably well. Of course, there's going to be some cases where we don't collect. But if you go to our cash flow statement, you see that our bad debts are in the low double-digits, $13 million or something like that. So it's really come through quite well. In other cases when we're selling to our distributors, which is the top of our sales force, we had 1,800 distributors at the end of 2012 and we don't have distributors in every market. There, we can have larger credit situations, and there we look to manage things and really, the way that we win there and have credit risk is to make sure that we've got the models and that we're driving the business to the distributors such as they're increasing sales and then they're easily able to pay us, so that's what we hope to do. But again, when you put the whole picture together, last year, around $2.6 billion of sales, again not having the exact number, but it was somewhere in the low double-digits [indiscernible] bad debt.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And then how about M&A going forward. Is there a magic to that sort of 1.75x leverage ratio that you kind of put out there? I know it is your comfort zone and it seems like there's a lot of properties for sale right now. I mean I don't want to put on the spot but Avon said that they're looking at some digital alternatives for this [indiscernible] business they bought for instance?

Michael S. Poteshman

Yes. We, as you know, we have done a couple of acquisitions since we've been public. We did, in 2000, we bought BeautiControl and in 2005, we bought the direct selling business, Sara Lee. But we have said more recently that we don't expect to be acquisitive. What we found is on the one hand, the white space that we see for the Tupperware Brands and the aspiration for that brand is huge. So we're able to grow very nicely in the places where we have this housewares brand. There's less channel competition. There's less competition at retail. And when you look at our most fundamental opportunity and where we've grown, most significantly, recently, it's been in the housewares emerging market, particularly in Asia and in South America and so in Brazil, in Indonesia, in Malaysia, China, India. And when you look at the penetration that we have and the opportunity, how much we have to go in those markets, depending on how we look at it on a market-by-market basis and as our leaders in each market, "Well, how penetrated do you think we are?" It's not a hard measurement but the feedback we get back ranges anywhere from 15% to maybe 25%. So there's just a huge way to go in these markets where we've already reached sales. We're growing nicely on the kind of top line and we already have a very good ROS. So what's not to like about that? And then at the same time, we are an end story because we can do much better in the established market economy businesses than we have. We do have more penetration in many of those markets than in those emerging markets I talked about. But nowhere we hit the wall and there's nowhere to go. We're going to continue to work that. We would expect ourselves to be able to get more consistent execution. We haven't really built that into the 68% sales guidance because that's for 2014 forward that's really built on a 10% increase in the emerging market as that becomes a bigger and bigger base. It was -- 61% of our sales last year were in emerging markets. And really just the low single-digit increase in the established markets, and it's not that we expect any particular market to do that slow of a growth, we don't. But it's recognizing some of the historical reality. So we would expect ourselves as we continue to focus on execution to be better in those businesses overall. And then in some of the beauty businesses we haven't hit on all cylinders as consistently as we would have expected or as we would like, and so we continue to work that as well. If we're able to get more of those levers to work at the same time, then we've been too conservative on our guidance and that's what we're trying to do. But that's not where we think we should be calling it at the moment.

William Schmitz - Deutsche Bank AG, Research Division

Got you. A couple of great segues there. So if you get to sort of like the midpoint of the sales guidance, does that give you the 50 basis points of margin expansion just from the fixed cost leverage in the business?

Michael S. Poteshman

It does. And really the way we look at it going to going back to this great leverage that we get on incremental sales and then we get to decide what's the right amount to invest to really handle things from an offensive point of view where we've got these huge growth opportunities and we need perhaps still to do some more brand building even though we tend to have good brand recognition and aspiration even in these emerging markets where we've only been 10 or 15 years. So we can make those offensive kind of investment and then we look to make more defensive kind of investments if we're changing our compensation plan and we want to walk people through from where we are and to where we're going and everybody's mind in the right place. And sometimes things don't work on a promotional program quite how we thought. We take all that into account in setting that 50 basis points. But if you do the math, it means we can invest north of $20 million out of that incremental profit we get from the sales and still get the 50 basis points. And we think that's a healthy place to be in terms of leveraging that investment. So we could invest more, but we think there we might be being a little bit wasteful with the capital.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And then as I talk to investors there's sort of a core group out there that says, "I don't like direct selling as a business model. I won't buy those stocks. I think that as modern trade develops, direct selling becomes obviated, middle-class creation also makes the business more difficult." What do you tell those people?

Michael S. Poteshman

So the biggest direct selling marketer in the world is the U.S. and it's also the most developed retail infrastructure. So in a more slowly growing economy, less consumer spending, we saw in the consumer spending environment, if there's alternatives, yes. Of course, it doesn't make it easier direct [indiscernible]. When we look though, what we have to do in terms of getting Tupperware in front of people and the beauty products that we have in these emerging markets, it's just a huge [indiscernible]. And the great thing about us on the housewares side is the brand that we have is very differentiated, very aspirational and it's based on the facts. I mean it's based on the kinds of products we've been able to develop, the quality of our product and you can't those at retail. So, of course, you have to make it harder if there's what some might consider to be an alternative at retail, but we're a push business. When we offer good earning opportunity, and we do, the team leaders in aspect are being able to make it even better in the developed markets, in particular by having a career earning opportunity for primarily women who are in a sales force. We're able to use that push business to get our products in front of people in an environment they like. We work on the selling situation to make sure it's enjoyable for the people who are there. That it's easy for the sales force numbers and the people who attend. They see that and they make some more -- willing to listen to the opportunity to join us our sales force. And that's how our system works. So we're going to grow more quickly in economies that are growing more quickly, where the middle classes

[Audio Gap]

market now. And we were up over 20% in the fourth quarter. It's difficult to project then if that's going to go on for the next 6 or 7 years and it's going to double a couple of times because that would be more Tupperware than we sold anywhere ever. But they've continued to prove that it's something wrong, same thing with Brazil. And then we get that kind of growth rate. We were up in the 20s in India in the fourth quarter. And that's not one of the markets that we even sell more than $100 million, or did in 2012. But it's the scale, it's got a good ROS, and just a phenomenal opportunity going forward. So that's what we're working to capture.

William Schmitz - Deutsche Bank AG, Research Division

And why do you think India has been so slow to develop relative to China, broadly speaking for both direct selling and for consumer goods?

Michael S. Poteshman

Our model is fairly different between the 2 markets. I think that some of the infrastructure in India in terms of how do you transport and what's the statutory environment across states, that's something that we've learned to deal with over time. And I think it works fine now. We've been able to deal with those sort of regulatory issues fairly reasonably. I think that if you look at us and that's really what I can respond to best, we started with in that case, call it, maybe a slash strategy where we developed a group of people who could become our distributors and went to several cities at the same time. And I think that what we found in retrospect is that we didn't get as fast -- we're trying to do that to get things moving more quickly, obviously. And I think that we weren't able to get the right attention or do it in the most optimal way and so we didn't get as fast of growth that we felt we might have. Now when we go into places like Bangladesh where we entered last year through our Indian business, we're being more focused in starting in Dhaka and the capital and focusing our efforts there first and we think that we can grow from there. Another way that we look to enter markets now, instead of going in with distributors as top of our sales force, we can go with more of a team leader approach with a little bit more in the middle where you don't have to have that infrastructure and you can focus more of the front end direct sales -- the consumer sales and we're hopeful that, that can give us more leverage there quickly. And then if the business size, and when the business size will benefit from having that distributor on the ground and being able to move forward in that way, we can add or promote perhaps the team leader to be able to do that. And so that's how we think we'll be able to get it more quickly that way. In the case of China, we entered as a direct seller in 1995, 1996. We became illegal in 1998, well, we that didn't help. We went to this outlet model and I think we found a way like I said to do it very -- we clearly have found a way to do it very well because we've got growth and profit in that market, and many haven't gotten both. So that I don't think helped the industry in that sense as well. But we're happy with how things are going there.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And then what's the plan that gets you to control turnaround, I mean, with both short term and long term?

Michael S. Poteshman

Sure. Well, for us, it's always the sales force size is paramount and we are at a sales force size disadvantage there. So job number one is to grow the sales force. So how do we look about doing that? We've added some more systematic training and better focused training back into our business. We've always had training but we've worked on the method. We think that could help us. We put in a more interesting vehicle program for the sales force last year. We're still working through it, looking to really the leverage the pull on the top of our sales force, to have and it has underneath its building blocks for the sales force structure and recruiting people into the business that we think can pay off in the intermediate term. We're working on that. We're also working on our marketing plans and our product program to have a bit of a tilt in emphasis. What we've seen is we've been able to develop some very interesting products that are conversational and have some great features in them but they aren't necessarily one to fit our more everyday use. So we want to realize that we're a skin care focused business but one that can also have more fragrance, more color and more things that are going to be more interesting to consumers on more of an everyday basis. So work on the balance there a little bit and we think that, that can help us there as well. So we're working on it. The bad news is we are where we are. The good news it's a relatively small part of our business. The U.S. overall with the Tupperware business included is only about 10% of our sales. So today, we're an end story with the developing or with the developed markets, but we're very much of an emerging market story. We are up 11% in currency sales in the fourth quarter and for the full year in emerging markets. Today, they're much more profitable for us in terms of our profitability on sales. And it's actually interesting because it's not by model or design or the facts on the ground, we can be just as profitable in the developed markets, and we are in many of them and others we're not. o if I had to pick one, I'll take the emerging markets because that's the bigger share of our business, and it's growing more quickly. So it's great to be sales in China, in India, in Indonesia, in Brazil to be able to be very profitable in places where you are already large and growing quickly. But on the other hand, we know how to be profitable in established markets. We've got a very good ROS in Germany and France, even Tupperware U.S. and Canada has a pretty good ROS, so other places not as good but certainly, we know how to do it.

William Schmitz - Deutsche Bank AG, Research Division

Got you. And are you worried about the taxation risk a lot of cash draft governments now are really starting to buckle down on direct sellers and others about an 8% tax increase in Russia. I mean is there a risk for that sort of spread throughout the globe? And what kind of impact do they typically have on [indiscernible] ?

Michael S. Poteshman

Well, we operate like I've said in the consumer spending environment, those things that go against that are not things that help us for sure. We benefit from being a push business and as people are feeling more cash strapped and the earning opportunity either as a supplement or the primary career opportunity, which is usually after somebody's entered the business, it becomes more attractive and that can help us and we're again, a push or a go-to business so we'll be able to bring our different product to consumers and able to explain why they should want it and why it can help save them money. Our sales force is trained to talk about when you’re in Indonesia and it's really humid and it's the rainy season, some of our basic more basic price point products are for storage, and it keeps out the bugs and it keeps out the moisture. And I'll tell you, when you're in front of somebody and you paddled there on a boat, which in some cases you do, 10,000 islands or something, it's a pretty compelling story. So it doesn't help us -- things that hurt consumer spending are not good for us. We do have experience in many markets, if not all of them, where government do things that challenge the status of our sales force, the independent status, or seek to put our sales force somehow into the social spending, the social program, those medical programs and so we need to address the necessary work through that. We have experience doing that and it sometimes can cause a bit of a hiccup but we've been able to work through that over time. And we would expect to find ways to do it in the future.

William Schmitz - Deutsche Bank AG, Research Division

Great. Thanks, Mike. I think we could open up now for Q&A. So any questions out in the audience there?

Question-and-Answer Session

William Schmitz - Deutsche Bank AG, Research Division

Really? Come on.

Unknown Analyst

Can you just talk about how the business [indiscernible] in both on the positive and negative side? And kind of what metrics you're looking at internally to make sure that you don't have a country or a region that [indiscernible] actions you [indiscernible]?

Michael S. Poteshman

Right. Well, as direct sellers, the way I would characterize it is we need to be very upbeat. We need to recruit something like 2.8 million people into our sales force each year just to stay even and we're looking to aspirationally be 10% ahead every year. We had a 5% advantage in our total sales force size at the end of 2012 versus '11. So we need to be very upbeat. And we are dealing with people who are in many cases joining our business in a very volunteer way and hard times, so they need to have success and we need to have motivation and so on in the sales force all the time. So we need to have new things and interesting product program and awards and things like that. So in that, sense we can see momentum in our business because when our sales force is doing well, making money, earning awards, and this goes all the way up to top of our sales force. That drives excitement and motivation into our business. So keeping an eye on that and making sure that we're relevant with the selling situation so people are going to want to come to the party where the sales force is at, the host of the party she's going to have been to one perhaps and say, "Oh yes, my friends are really going to enjoy coming." So it all fits together in that way. So we rely on the party plan in our housewares business, primarily and we get a lot of our new recruits for people into our sales force among hostesses, so as you can imagine if somebody gets invited to a party by a hostess party that's been recruited to have a party by the sales force member, and she talks about the products that probably the person knows about Tupperware. And so she comes to the party and she sees how easy it is, how much fun it is and she hopefully will agree to host a party herself and then the sales force member gets to talk to her over 2 or 3 weeks while their party is being set up about who to invite, who might be interested in hosting a party out of her party [indiscernible] of having the party, and so there's a linkage in our party theme developed for the whole momentum of the business because when we have the parties, we get to schedule more parties, our sales force to build party theme like aspirationally or hopefully there's 2 parties in each of the parties she has and recruiting. So there's momentum in the business [indiscernible] . We look to have things that excite hostesses, feel like they're going to be successful [indiscernible] come to the party [indiscernible] at the party. We look for drivers that people are going to be interested in by the activity drivers that we have at parties.

Unknown Analyst

[indiscernible] why you guys think [indiscernible] you know what the overlap is between sort of the exclusive Tupperware distributors versus somebody who sells multiproduct but direct selling it? And I know varies country by country considerably.

Michael S. Poteshman

It does vary considerably. We think about -- one of the ways we think about our market is split between brand focused market and channel focused market and what we mean by that brand focused markets are places like United States, Western Europe, Australia, where people identify when they hear Tupperware with houseware. And so they get it that we've expanded our categories from initially food storage to serving and tabletop [indiscernible] footwear [ph] and knives, all those things for the home that would be called TupperChef and so on. They get the best thing offered in Tupperware products. If the consultant then at the party said "Yes, and I've also got a catalog here with some fragrances and skin care," they wouldn't really understand what we were getting at. Our sales force in these geographies tends to be committed to one product line, one catalog. And more channel focused market, what we mean by that, is in places like South America, some of the Asian markets, even Mexico, frankly, but we've got 2 separate businesses there. People are used to as direct selling participants, people who are selling, are used to carrying more the one catalog, people are used buying them. Again, there's less retail and a lot higher percentage of consumer goods are sold through direct selling type approaches. So there we see much more of an overlap. We did some work before we [indiscernible] in 2000 with our Tupperware Mexico business and we found that upward to 70% we're carrying with more than one catalog. So it wouldn't be true at the higher levels of our sales force but as a broad group it would be. And we hope that if they're carrying a Tupperware in the beauty catalog that it's Fuller, but sometimes there might be another one. So it is fairly common in a very high overlap of those businesses. Really the way that you win is by having the sales force member, think of herself as your seller that's also carrying somebody else's catalog if that's what's going to happen and you want your program and promotions and so on to be of a nature that she's going to present your catalog first and the other one is the add-on.

William Schmitz - Deutsche Bank AG, Research Division

One more question.

Unknown Analyst

Who's your target end consumer? And also the sales force consumer, how do you think about the macro trends?

Michael S. Poteshman

Yes, on the houseware side with our aspirational brand, we really look to play in the developing markets on the higher end of the consumer spending triangle. So As, Bs, C pluses. Unfortunately, we've seen over time that we can be very successful even in the lowest socio economic even with the price points for a product which is sort of a full value product. But going back to some of the mix we have in our product line, we've got products that are very functional. All our products are functional, but products that can be explained in a way that you're going to save money by spending the money on this product because the food is not going to spoil. The bugs aren't going to get it. Those kinds of messages. We also have a very differentiated product with our steaming product that we sell most significantly in Europe. It's got metal in it that, you need to understand, is shielding the food from getting cooked by the microwave and it's getting steamed by water. So that's at EUR 101, so very high priced point. So there, we can go and end up going into a slightly lower demographic, which also goes along with our sales force earning opportunity. It works well for an A but they just might not to be interested in earnings at all as a second income, and so there, we might see more of Bs, C-, in the sales force and that might bring us a bit down the socio economic. So with the very aspirational product that we have and brand, we play all the way up, everybody wants our product line. But in the more highly developed markets we end up a bit lower because where our sales force is. With some of our beauty brands is a bit more of a mix of being positioned more highly up and a little bit lower. Fuller Mexico is more of a mass brand and we are actually working to get more of a differentiated in our brands to our sub-brand there, our biggest sub-brand there is called Armand Dupree and that's positioned a bit higher and we're looking to focus on that brand and develop the awareness of that.

William Schmitz - Deutsche Bank AG, Research Division

Great. Well, thanks so much, Mike. I appreciate you coming out here.

Michael S. Poteshman

Thank you. We appreciate the opportunity, Bill, and thanks to all of you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Tupperware Brands' Management Presents at DbAccess Consumer, Retail, Gaming & Lodging Conference (Transcript)
This Transcript
All Transcripts