Rattibha

Multipie

11 Tweets 40 reads Dec 27, 2021

Indian mattress exports are gaining prominence in US and European markets.
But first - here is a map of the $19 BN export-import of mattresses globally (2019). China exports ~half of all. US+Europe import 60%.
That's changing since the last year. 🧵
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Part 1: Domestic (moderate)
~70% of Indian mattress market is unorganized. Not surprising as mattress brand is not a priority for many and there aren't any capex barriers for manufacturing.
Plus, GST hasn't really caused a rapid shift towards the formal/ organized industry.
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Domestic demand is seeing a steady 8-10% growth.
Outlook is better at 10-12%. Key drivers: focus on affordable housing, increased focus on health and hygiene, faster replacement cycles and decline in used mattresses post-Covid.
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Part II: Export market: improved growth outlook for India
Why?
Hefty anti-dumping duty levied by US dept of Commerce on 7 countries and 98% CVD for China in Mar-2021. See details in image.
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This places India in a sweet spot with export economics now more attractive than tariff notified regions.
China’s exports are on decline since 2018. This was largely taken over by Vietnam/Indonesia during FY18-20..that is now shifting to India as we can see in charts below.
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One key beneficiary is Sheela Foams - India’s largest branded mattress company and exporter.
Europe is the largest importer at ~40% ($7.3b), followed by North America ($5.6b). SFL recently acquired a unit in Spain, which provides a good opportunity to address EU markets.
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Strategic changes at Sheela Foam
1. Location advantage: Transportation & warehousing cost are 6-10% of sales. SFL has 11 manufacturing facilities pan India (4N, 3W, 2S, 2E). Entering Central India via a large factory in Jabalpur.
Distributed mfg leads to better EBITDA margins:

2. More focus towards Exclusive brand outlets (EBO): Consumers now seek to experience the product physically, ascertain comfort factor before buying mattresses.
Working on a strategy to convert MBOs into EBOs. a Total EBO outlet at 5,000+ now vs 3,667 at Dec-19.
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3. Increasing focus on e-commerce sales: Price-sensitive and highly competitive online space.
SFL entered e-com space in Feb 2019 and set up its own e-commerce portal sleepx.com
As per mgmt, SleepX is now the #2 mattress brand online (revenue contribution of ~4-5%)