Demand for Private Brands Growing, Deldo Reports

Belgian wholesaler Deldo Autobanden is one of the largest operators in Europe, and amongst the more than 25 brands stocked at the company’s 60,000 square metre warehouse in Antwerp are four exclusive and two private brands – Fortuna and Minerva. The labels are aimed at the budget segment, an area where Deldo reports seeing significant growth during the last 12 months. In an interview with Tyres & Accessories, Deldo marketing manager Rutger Veerman stated the company has “noticed a growing demand in the European replacement market. Acceptance of Chinese products is growing, and we are benefitting from this.”

Indeed, to see how far Chinese made tyres have progressed in terms of consumer perception, it is only necessary to cast your mind back a few years and consider people’s attitudes when the first imports from China arrived. Times have certainly changed, as Veerman reflects: “Many dealers who never sold a Chinese tyre in 10 or 15 years are now asking us if we have any solution to offer them. This is because the reasons they had from eight or ten years ago, why they didn’t want to sell Chinese tyres, are no longer valid.

 “We are working with decent manufacturers and coaching them in terms of tread patterns and sizes,” Rutger Veerman continues, elaborating on Deldo’s relationship with its private brand manufacturers. “All the tyres we now import possess the required DOT, E-marking and S-Marking and are produced with environmentally friendly oils. We are also following new regulations in terms of quality.” Furthermore, to ensure product quality, Deldo representatives travel to China four times a year to visit the factories’ R&D teams and at the end of 2009 the company established a sales office in China. “This office supports our communication and partnerships there, and we consider this a next step for Deldo as the budget segment is so important for us.”

Veerman estimates that, within the more than thirty countries it sells to, budget brands typically occupy between 10 and 20 per cent of its customers’ market. The exception to this is the UK, where the share taken by budget brands is estimated to be at least 50 per cent. “It is, at any rate, by far the highest proportion in Europe,” the marketing manager notes. “The UK is the most important market for our Wanli (exclusive) brand. Price is the most important factor for UK customers.”

During the previous twelve months numerous sizes were added to the company’s two private labels. Deldo reports the Minerva range as having 120 sizes in the 13 to 20-inch rim diameter range and Fortuna has having more than 100 sizes for 13 to 19-inch rims. And the pride the Belgian wholesaler has in its own brands is evident: “We have an interesting budget mix with Wanli, Fortuna, Sailun, Rockstone, Minerva and Roadstone; we expect a lot from these brands,” states Veerman. “The plants where they are made are state of the art. We are working with factories in China fitted with VMI equipment and that use Bekaert steel cord. It is important for us that factories producing our tyres follow directions such as these. The factories are also cooperating with TÜV Germany – Its branches in China consult with the factories’ R&D departments.”

Summing up the company’s private and exclusive brand portfolio, Veerman comments “we are fairly confident in the budget sector.” And he adds it is no surprise that interest in these products is so strong: “For the dealer, budget is still a profitable – and for some new – business. The 17-inch sizes and up can make nice money.”

Indeed, the budget sector appears to be a recession beater. “Demand from end consumers grew in 2009 and will keep on growing,” Veerman confirms. “We sold almost seven million tyres in 2009. We have never sold so many. It was the best year ever in our 37 year history.” This high level of sales was of course helped by the particularly harsh winter experienced in Western and Central Europe. Rutger Veerman estimates that Deldo sold some 15 to 20 per cent more winter tyres than usual during the season.

“We have been selling a lot of winter tyres, we are very happy with the season. It started in October and has continued up till now (late February),” Veerman confirms. “We have also been selling winter tyres in markets where sales weren’t previously that strong, such as the Benelux. We’ve never sold so many winter tyres before. It has been a great success, also in terms of profitability. In fact, winter tyre sales are so good that at the moment the question from our customers is not ‘do you have this particular brand?’ – it is ‘do you have anything for me in this size?’”

At the time of talking with Rutger Veerman in late February, Deldo was processing many pre-orders for summer tyres. These orders are handled by Deldo’s sales team which, Veerman reports, has now grown to 35 members. Sales staff deal with customer orders and requests in 12 European languages, and the team now includes a newly-added e-commerce team responsible for online orders. “When we sell to dealers, we are not just selling a tyre,” notes Veerman. “This sales support is part of an overall package that includes our Just in Time logistics service, 24/7 availability through our webshop, continuity of stock all under one roof, product support and a constant contact person at Deldo. It is the combination of all these factors that make the difference for our customers.”