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Strategy

Tupperware: a party somewhere every two seconds

Shellie Karabell |

Say “Tupperware” to anyone over 40 and you conjure up visions of 1950s American housewives gathered together at someone’s home for a chance to test and buy airtight, plastic food containers. Passe, right? Wrong.

Today, 60 years after the company was founded by inventor Earl Silas Tupper of New Hampshire, Tupperware’s revenues grew to $2.2 billion in 2008 and the sales force (of more than 2.4 million) has gone global, holding Tupperware parties in more than 100 countries, some of them as far from the US as India, France, China and Brazil.

“What we really are is a global portfolio of direct-selling companies,” says chairman and CEO Rick Goings, who spoke at INSEAD’s Europe campus in Fontainebleau as part of the school’s Global leader Series. Goings joined Tupperware in 2005, after several years with Avon - another direct-selling (albeit cosmetics and fragrance) company. One of his first moves was to add eight lines of home-sell beauty products to the company. “I understood the beauty business,” he says. “Today, Tupperware is 65 per cent of the company; the other third (comprises of) eight beauty companies, all separate direct-selling companies.” There are also children’s educational toys, nutritional products, and apparel.

Tupperware Brands, as it has been known since December 2005, is a far cry from the company founded by Earl Silas Tupper in 1947, in Leominster, Massachusetts, when he patented the “Tupperware” name for the airtight food storage containers he created from left-over plastic substances bought from Dow Chemical, where he worked at the time, in-between a series of failed inventions. The product did not sell well in department stores but it did do well at the in-home selling parties being pioneered after the war (catering to suburban housewives) by Stanley Home Products and a selling champion named Brownie Wise.

Tupper heard of, then hired, Wise; Tupperware sales skyrocketed with the Tupperware party sales model, and Wise became the first woman to grace the cover of Business Week. Tupper’s jealous streak emerged as her fame eclipsed his: he fired Wise in 1958 with one year’s severance pay (about $30,000), then sold the company months later for $16 million (about $120 million in today’s currency). He also divorced his wife and moved to Costa Rica where he attempted other significantly less successful inventions, and died in 1983.

Today, the company’s fastest-growing markets are the former Soviet Bloc; sub-Saharan Africa, and Latin America. “We’re 85 per cent outside the US,” says Goings. “An important area, too, is China, India, Indonesia. Those countries are 47 per cent of the world’s population, so we’re growing fast there, too. But we’ve been 47 years in France and we were up 11 per cent in France last year. We’re up again in the double-digits this year, and we are the largest direct-selling company here.”

Tupperware has proven somewhat counter-cyclical to the economy. Goings cites cosmetics legend Estee Lauder’s so-called ‘lipstick effect.’ “Women may not be able to get durable goods (cars, appliances) in tough economic times,” he says, “but at least she’s going to be able to put on a new lipstick; she’ll get herself some ‘soft goods.’”

Tupperware’s recruitment pool is growing as the number of jobs shrinks. That means a bigger sales force (four per cent between July 2008 and this July) but “the argument is a bit overblown,” cautions Goings. “Yes, we’ll get more (sales) people but still it’s difficult in this environment to get consumers to buy. So, all things being equal, we would rather have a good economic environment. But we can still, as you see in our trends right now, navigate through this (crisis) as well as anybody.”

The numbers are the proof of the pudding. As of mid-October, the company’s share price had increased fourfold and hit new two-year highs. Second-quarter results topped analysts’ expectations, and Goings is confident about the rest of the year. “We said this summer we’d be up three to five per cent in sales this year, and I’m still very confident with that number.”

With today’s emphasis on viral and social marketing, you could consider Tupperware as the Grandmother of it all. “We spend nothing on advertising. We clearly will do it on Public Relations,” says Goings. There’s a party somewhere starting in one of our businesses every two seconds, “and nobody’s a stranger at these. People like to get together with their friends and find a way to leverage that.”

Goings has himself leveraged the Tupperware corporate culture. “We call it ‘E3’ : enlighten, educate and empower women.” It was part of his message to INSEAD MBAs.

“Companies are loose collections of people, and not enough business schools are spending enough time on the dynamics of showing individuals how to grow, how to be motivated, how to get up every day and want to give everything they have. If you can create an environment where you can attract the best people, develop them, reward them and therefore retain them, that’s who wins. It’s worked for Tupperware.”

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