Daniel Rosenfeld, Executive Director of BGH: “In the last five years we multiplied the turnover of BGH Consumer almost by four”
We spoke with Daniel Rosenfeld, Executive Director of BGH, about the company's positioning, the market, the transformations it is going through and the business profile of the different products.
Por Rodolfo Pollini
How can we define what Grupo BGH is today and how it is positioned in the Argentine market?
The BGH Group has three business verticals: BGH Consumer, which brings together all household appliances, including mobile, BGH Eco Smart provides energy solutions and air conditioning for large stores, and BGH Tech Partner is more focused on B2B businesses, with innovative technological solutions, such as cloud services, cybersecurity, datacenter, connectivity and services. professionals for organizations and governments. It is a company that has been in the country for many years and a group that provides products and services that have technology as a common denominator. In recent years it has advanced a lot, and in different facets. We did a very important job investing in the enhancement of the brand, communication and in bets such as being a sponsor of the National Soccer Team. We also invested more than 5 million dollars in the Tierra del Fuego plant, to modernize the plate insertion sector and the cell phone manufacturing sector, among others.
How did that work and those investments impact in market terms?
There are two things that happened in recent years that are important to BGH. In the last five years we have gained between 10 and 11 market points in the domestic air conditioning category, mainly by promoting Inverter technology in the country, because we are a technology company that sets trends and the main promoters of the use of this technology in air conditioning. In fact, the best-selling Inverter conditioner in Argentina is the BGH brand. We incorporated the Samsung brand of air conditioning, within television we incorporated Sharp, in kitchen products we made an association with Tramontina, to develop with them products such as small appliances and in the last five years we multiplied the turnover of the Consumer business unit almost by four.
From what you mentioned, the focus is growth and expanding the range of categories and products.
The company had significant growth in the three typical categories of the brand: air conditioning, microwave cookers and television, but we also incorporated new brands and products, making the offer of the Consumer business unit much broader and leading us to be one of the most important distributors in Argentina. In addition to gaining participation in all the categories in which we compete, we launched others that we did not have. Today, for example, we have a complete line of Inverter washing machines, and one of Inverter refrigerators, from top mount to side by side. We are also incorporating dishwashers and a complete line of small appliances within 2025.
Air conditioning is quite high in the aspirational and, on the other hand, it is one of the high ticket products. How do you see it at this moment?
It's true, it is a semi-aspirational category with a fairly offered market. Although the season hasn't started yet, we hope it will be good, although very hard fought. Some competitors took the initiative to bring more quantity than they usually brought, which means that since there is more supply, the largest portion of the demand ends up being taken by whoever is most competitive. Obviously, the brand plays a relevant role and the final consumer is willing to pay more for our brand because they know that the product they is carried is efficient, with a robust warranty from a company like BGH. The combination of this with good local manufacturing efficiency, and a good commercial strategy together with the channel, allows us to compete aggressively from a commercial perspective.
What vision do you have of the impact of market opening on supply and also in relation to potential demand?
The market is oversupplied with everything, cell phones, televisions and washing machines, where players have entered and in many cases with brands that are not very well known or do not fit with the product. This creates a very competitive environment, but it remains to be seen what will happen. I think that in the end it will end up sifting and the most resilient brands and companies are the ones that will remain leading the market,
It will be essential that financing be streamlined and interest rates continue to decline.
I agree, but going back to air conditioning, I think the strongest will survive, because, although the market has an oversupply that it should not have, but it is, there is a very complex competitive situation and with a drop in rates there will be another, more dynamic market. We need it. Not just BGH, but the industry. This is an industry where, with the current economic reality of households, financing is one of the main axes of consumption.
You mentioned the enhancement of the South plant, which was partly for the incorporation of the Tecno cell phone brand. What target are you targeting with this brand and these products?
To position ourselves in a market like this, with very aggressive commercial dynamics, we had to put the factory at a very high level of technology and efficiency, which is the only way to compete in a sector that is monopolized by two large players, such as Motorola and Samsung.
Tecno belongs to the Chinese holding company Transsion, the fourth largest telephone producer in the world. It operates in nearly 90 countries and has a similar strategy in all markets. They target young audiences, do a lot of communication through influencers and have four product families. Spark is the entry level, with a lot of emphasis on having a very durable battery; Pova, due to its memory capacity, is very oriented towards gamers; Camon seeks to compete with mid-high-end cell phones, with a very good camera that reaches up to 100 megapixels and Phantom, already in the high range, has all the characteristics of the other three.
Are all the models already on the market?
Yes, we started with the four of us at the same time trying to carry out a strategy similar to what the brand has in other countries: young consumers and reaching them with influencers and through social networks. We have a very good performance, we are reaching 200,000 units sold in a short time and we have a fairly aggressive plan for the next three years to establish Tecno, with a lot of work and a lot of investment, as the third player in the cell phone market.
How do you see the white line in general?
The white line is very wide. Specifically in washing machines and refrigerators something very particular happened. We had a closed market with consumption very driven by supply, but with the opening of imports came products with better specifications, much better design and at a lower price. Now there is a lot of product and a lot of new players. We managed to build a real value offer, with products at a lower price than those sold, Inverter technology and very good design. We want to reach the very competitive consumer, with a quality product and a powerful brand that allowed us to quickly take 10% of the washing market in the inverter segment and 5% of the refrigerator market in the same segment. This not only happened to us, but other brands also managed to make this change that adds value to the market.
How is the microwave doing, a product with which BGH was always an important player, including with a campaign, some time ago, to promote microwave cooking, although the Argentine consumer is still reluctant to do so?
It is a mature product category, with a bit of cannibalization with electric ovens, although they have different functions. It is a category to which many bidders also arrived, generating oversupply. In the last twelve months, 700,000 units entered, double that of a year ago and there are products of all types and of course, of all qualities. Microwave cooking was not completely implemented, but it evolved a lot, the microwave was given uses that it did not have before and it continues to be a valuable product for the home.
Televisions is another of BGH's “usual” categories, and we are about to start another World Cup campaign, an event that always calls and pushes us to make the leap not only to higher inches, but also to better technology.
Although there is still a predominance of 43" and 50", there is an intention, both in supply and demand, to incorporate larger inches, from 50" upwards, which is very good for the market. But there is also an important technological leap, with applications of all kinds and to watch all types of content on the television, a product that in the pandemic lost a bit of its predominant role to the smaller screen, such as the cell phone or the tablet, but now it is once again the center of the house.
Is the technological leap for the middle segment of demand already QLED?
To make the leap to a better screen and operating system, the average consumer has to go to QLED or MINI LED, which are not as expensive technologies as others and have important quality.
Do you expect a good World Cup campaign?We are optimistic. The market is not linear and after any decline there always comes a moment of improvement. Consumption is affected by the economic reality of the country, but we have important events ahead for the industry such as Cyber Monday, the summer season for air conditioning is coming and if rates go down, and we all capitalize on the opportunities that arise, we will have a good campaign prior to the World Cup.
We Argentines are demanding consumers, but I don't know if this is the case in all countries.
It's like you say. The Argentine is a consumer demanding and intelligent, who within their purchasing power seeks to buy the best. This is good for brands like ours, which are dedicated to adding value, it is not the same for us to offer anything and with that type of consumer we feel very comfortable.
This consumer has at their disposal the physical store, the online channel and sometimes a combination of them. How do you see the market from the channels?
For the final consumer, omnichannel is spectacular, because they have more opportunities to find the best offer. It is true that many products are not bought without seeing them first, so the retail points of sale, of our commercial partners, are the ones that give the consumer the opportunity to see what they are going to buy. 97% of BGH's sales are made through our commercial partners, the retailers, which does not mean that they do not then sell these products to consumers through their marketplaces or on their websites. We have our site too, but we mainly use it as a testing platform for product launches and as a big catalogue, so everyone can see what BGH has available.
The capillarity of retail is important to reach all points in such a vast country.
All channels have the role of bringing our products to the final consumer, but each one has different functions. Purchasing networks, with their presence throughout the country, show and display our products from big cities to the most remote places. Supermarkets do not find our products their main source of sales, but they have a tremendous flow of people and they also give us the possibility of showing our products to many consumers and of course the large chains that are a fundamental part of the industry's sales.
How do you see AI, in the integration in these products and in the immediate future?
Artificial intelligence is producing a break in the history of technology, as the Internet once was. Regarding products, the introduction of artificial intelligence is beginning to be seen in an increasingly sustained manner. Very recently I was at IFA, in Berlin, and I was able to see two examples of this. One is a device the size of a coin that you can put on your desk, have a two-hour meeting with ten people speaking in different languages and, at the end, the device, which you can carry in your pocket, gives you a perfect summary of what the meeting was about. The other thing that seemed very good to me are headphones that two people put on, each speaking in different languages and each one listens, simultaneously and in their own language, to what the other is saying. All of this is going to be significantly enhanced in the coming months.
Are there AI applications at BGH here and now?
Yes. We are incorporating an air conditioner with artificial intelligence that allows us to regulate the temperature by understanding the size of the room, how many people there are in it or how much the sun hits through a window. This will be available for this season.
A final reflection, on BGH and on the market, where we all ultimately work?We are in a challenging environment, but all complex situations bring opportunity. BGH is a company with a long history in technology and innovation and will provide the best value offer on the market. There are times of strong competition, but also of commercial opportunities that will allow us all to offer good products and deplete this oversupplied market a little, which is what we players who have a value offer want. It is very important to be competitive and efficient in the processes as well, because those who do not have this incorporated will have a hard time competing. For BGH, the future is linked to technological development and we have many plans to incorporate products and services that allow us to continue being one of the most important distributors in the country.
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