© CSIL Centre for Industrial Studies
CSIL
WORLD FURNITURE OUTLOOKFUTURE PERSPECTIVES & OPPORTUNITIES
CSIL Centre for Indust r ia l StudiesCorso Monforte 15, 20122 Milano, Italy
tel.+39 02 796630 fax +39 02 780703
[email protected] www.csilmilano.com
Sylvia Weichenberger
Senior Partner CSIL
TOWARDS A BETTER TOMORROW
Le Meridien Hotel, Kuala Lumpur
October, 18th 2018
© CSIL Centre for Industrial Studies
Contents
GLOBAL FURNITURE
CONSUMPTION
MARKET
TRENDS
AND
OUTLOOK
GLOBAL FURNITURE
PRODUCTIONFORECAST
CSIL, CENTRE FOR
INDUSTRIAL STUDIES
Kuala Lumpur, October, 18th 2018
WOOD FURNITURE
© CSIL Centre for Industrial Studies
Milan, Italy
100 CountriesMONITORED
MARKET RESEARCH
Off the shelf
Custom made
FURNITURE AND FURNISHINGS
STUDIES
1980
Home Upholstery
MattressesOffice
Kitchen
Bathroom
Lighting
Fixtures and
Appliances
“Our Global Perspective”OVER 38
YEARS
CSIL, Centre for Industrial Studies
STUDIES
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
Contents
GLOBAL FURNITURE
PRODUCTION
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
0
50
100
150
200
250
300
350
400
450
500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Global furniture production
World furniture production, 2008-2017
Source: CSIL
Current US$ billion
World furniture production has beengrowing at a global level. Almost +20%(current USD) cumulative growth between2008 and 2017.
Recent growth was sustained by severalfactors:
• Improving macro-economic context -growth and real estate activity after thecrisis in 2009 and 2010.
• Constant and fast growth of furniture consumption in emerging markets and progressive sector industrialization.
• Restart of growth in some largetraditional industries.
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
Europe
26%North
America
15%
Asia and
Pacific
54%South
America
2%
Middle East
and Africa
3%
Global furniture production
Ten years ago…
…today
The geography of furniture production has changed considerably over the last decade.
Main factors affecting the global context:
✓ The pressure of globalization.
✓ The rapid industry development in some emerging, fast growing countries.
✓ Issues relating to competitiveness.
World furniture production. Breakdown by areas, 2008 and 2017
Kuala Lumpur, October, 18th 2018
Source: CSIL
Europe
42%
North
America
19%
Asia and
Pacific
33%South
America
3%
Middle
East and
Africa
3%
% shares on PRODUCTION VALUES
© CSIL Centre for Industrial Studies
0
50000
100000
150000
200000
250000
300000
Europe North America Asia and Pacific South America Middle East and Africa
2012 2017
0
50000
100000
150000
200000
250000
300000
Europe North America Asia and Pacific South America Middle East and Africa
2012 2017
0
50000
100000
150000
200000
250000
300000
Europe North America Asia and Pacific South America Middle East and Africa
2012 2017
0
50000
100000
150000
200000
250000
300000
Europe North America Asia and Pacific South America Middle East and Africa
2012 2017
0
50000
100000
150000
200000
250000
300000
Europe North America Asia and Pacific South America Middle East and Africa
2012 2017
-34%
+15%
+5%
Global furniture production
World furniture production. Growth rates by areaPercentage growth over the last five years (2012-2017) in current US$
Furniture production has been:
✓ Sustained in Asia-Pacific.
✓ Steady growing in North America stimulated by the US market.
✓ Mixed performance across countries in Europe.
✓ Under performing in South America but recently recovering.
✓ Still marginal role of the Middle East and Africa.
-4%
North America Europe
Asia and Pacific
+20%
South America
Kuala Lumpur, October, 18th 2018
Source: CSIL
Middle East and Africa
© CSIL Centre for Industrial Studies
Furniture production in Asia Pacific
Kuala Lumpur, October, 18th 2018
Furniture production, 2015-2017Percentage YoY growth in current US$
Source: CSIL
0
50
100
150
200
China Asia and Pacific
(excl. China)
0
50
100
150
200
China Asia and Pacific
(excl. China)
China
0%+3%
Asia and Pacific (excl. China)
6% 7%
Prospects for Asian furniture production (and markets) arebetter than anywhere else in the world.China is the largest manufacturer, but others are growing faster.India and Vietnam fastest growing producers.
Some issues are affecting the present and the future outlook:
✓ Competition and pressure on prices both within the regionalmarket and for export is increasing.
✓ Labour cost and labour availability are impacting oncompetitiveness with wages sensibly lower in several countries ofthe area.
✓ Raw material supply becomes increasingly crucial. Access to andavailability of natural forests diminishing.
✓ New legislation (compliance to regulation and sustainability),new technical standards (toxin and VOC emissions), safetycertification (flammability) and environmental concerns areaffecting sales, both at regional level and on export markets.
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Furniture production in America and Europe
Kuala Lumpur, October, 18th 2018
Europe. Furniture production by area, 2015-2017.
Source: CSIL
✓ Eastern EU countries increasingly competitive in terms of supplies.
0102030405060
Usa Canada Mexico Brazil South
America
(excl.Brazil)
0102030405060
Usa Canada Mexico Brazil South
America
(excl.Brazil)
0102030405060
Usa Canada Mexico Brazil South
America
(excl.Brazil)
0102030405060
Usa Canada Mexico Brazil South
America
(excl.Brazil)
0102030405060
Usa Canada Mexico Brazil South
America
(excl.Brazil)
United States
+2%+2%
Canada
+5%+8%
Mexico
-5%+3%
South America (excl. Brazil)
+4%-7%
Brazil
+16%-6%0
20
40
60
80
100
Western EU Eastern EU Central-East
Europe outside the
EU and Russia
+1%
+5%-5%+5%
+7%+10%
Western EU0
20
40
60
80
100
Western EU Eastern EU Central-East
Europe outside the
EU and Russia
0
20
40
60
80
100
Western EU Eastern EU Central-East
Europe outside the
EU and Russia
Eastern EU Central-East EU outside the EU and Russia
Percentage YoY growth in current US$
America. Furniture production by countries, 2015-2017.
✓ US driving North America.✓ Brazil recovering.
Percentage YoY growth in current US$
© CSIL Centre for Industrial Studies
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Ger
man
y
Ital
y
Po
lan
d
UK
Fra
nce
Tu
rkey
Spai
n
Net
her
lan
ds
Ru
ssia
Swed
en
Den
mar
k
Ro
man
ia
Au
stri
a
Cze
ch R
ep
Bel
giu
m
Po
rtu
gal
Lit
hu
ania
Slov
akia
Hu
ng
ary
Swit
zerl
and
Fin
lan
d
No
rway
Uk
rain
e
Slov
enia
Bo
snia
Her
z
Furniture production in Europe by country
Kuala Lumpur, October, 18th 2018
Europe. Furniture production by main countries, 2017Current EUR million. Growth trend 2017/2015 in current EUR
Source: CSIL
Differences in production performances between EU countries.
Traditional manufacturing countries except UK performed well in 2017.
Eastern EU manufacturers performed comparatively better than western EU manufacturing countries:• Lower labor costs.• Easy access to raw
materials.
© CSIL Centre for Industrial Studies
Contents
GLOBAL FURNITURE
CONSUMPTION
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
0
2000
4000
6000
8000
10000
12000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
0.0
1.0
2.0
3.0
4.0
5.0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
0
1
2
3
4
5
6
7
8
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
The Global furniture consumption
World furniture consumption, 2008-2017Current US$ billion
WORLD - Total population. Billion
WORLD - Urban population. Billion
WORLD - GNI pc. US$
From a global perspective all the drivers of furniture consumption performed positively:
✓ population✓ urbanization✓ income availability
Relevant differences in market performances exist across and within the geographical areas.
Kuala Lumpur, October, 18th 2018
Source: CSIL
0
50
100
150
200
250
300
350
400
450
500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
© CSIL Centre for Industrial Studies
Global furniture consumption
Ten years ago……today
World furniture consumption by geographical regionFurniture consumption value, 2008 and 2017. Percentages
Kuala Lumpur, October, 18th 2018
Source: CSIL
Europe
42%
North
America
25%
Asia and
Pacific
26%South
America
3%
Middle
East and
Africa
4%
Europe
26%North
America
23%
Asia and
Pacific
44%
South
America
3%
Middle East
and Africa
4%
When looking at the global market, consumption by geographical region (in value terms) has evolved and it is different from a decade ago.
✓ Consumption share in Asia Pacific region almost doubled.
✓ European share in global consumption decreased was almost cut in half.
✓ North America almost maintained the same share.
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Top 10 markets account for 80% of world furniture consumption.
China being the largest market accounting for 30%.
Significant growth in furniture consumption registered in India.
Global furniture consumption
Furniture consumption. Top ten markets, 2015-2017Current US$ billion and cumulative growth over the last three years (2015-2017) in current US$
Kuala Lumpur, October, 18th 2018
Source: CSIL
0
20
40
60
80
100
120
140
China USA Germany India Japan UK France Canada South
Korea
Italy
+7%
+8%
+4% +20% +7% -4% +8% +11% +13% +7%
© CSIL Centre for Industrial Studies
Contents
FORECASTS
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies Kuala Lumpur, October, 18th 2018
Global furniture production% change in real terms2010-2017; 2018; forecast 2019-2022
2.7%
3.5% 3.3%
CAGR 2010-
2017
2018 CAGR 2019-
2022
The forecasts
Source: CSIL
Main factors for the positive scenario for furniture production forecasted by CSIL: • Positive trend in furniture demand. • Increasing international trade.
Other key indicators: • Woodworking machinery sales for Germany and Italy (the two
leading technology suppliers in the world) were up around 10% last year.
• The WBP industry which recovered in 2016, had a strong 2017 and is facing brisk demand in 2018.
• Several wood based panel investments were reported, particularly in China and Eastern Europe but they spread also globally.
However, this scenario is subject to downside risks because of possible major disruptions of international trade which are not taken into account because unforeseeable at the moment. These factors could negatively affect both international trade and the situation in specific countries.
CARG: Compound annual growth rate
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Furniture consumption forecasts, 2019Forecasts of yearly changes in real terms
The market situation remains positive globally.
Asia is leading growth, but some contribution also from mature markets.
Kuala Lumpur, October, 18th 2018
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
World
Asia and Pacific
North America
Middle East and Africa
South America
Europe
The forecasts
Source: CSIL
© CSIL Centre for Industrial Studies
World trade of furniture
US$ bi l l ion
Current US$ billion
Around 30% of global furniture output is traded internationally.
Furniture as well as components are increasingly traded internationally. The drivers:• International value chains.• Global sourcing. • Opening of markets.
The future scenario:According to CSIL forecastsinternational furniture trade is set togrow up to 2020.
Uncertainty of trade policies is a key issue.
Kuala Lumpur, October, 18th 2018
Forecasts: international furniture trade
Source: CSIL
0
20
40
60
80
100
120
140
160
180
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
© CSIL Centre for Industrial Studies
Contents
WOOD FURNTIURE
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
Global furniture production
World furniture production. Breakdown by segment, 2008 and 2017 % shares calculated on production value
Kuala Lumpur, October, 18th 2018
Source: CSIL
Upholstered
furniture
17%
Office
furniture
12%
Kitchen
furniture
12%
Other
household
furniture
59%
Ten years ago… …today
Upholstered
furniture
15%
Office
furniture
14%
Kitchen
furniture
14%
Other
household
furniture
56%
© CSIL Centre for Industrial Studies
Global furniture production
World furniture production (excl. upholstery)
Wooden furniture, including solid wood furniture and wood based panel furniture, accounts for a substantial share on sector production.
Breakdown by material, 2008 - 2017
Kuala Lumpur, October, 18th 2018
Source: CSIL
Office
furniture
Kitchen
furniture
Other
household
furniture
% shares calculated on production value
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Other materials (metal, plastic, bamboo,
rattan, wicker and other materials for
furniture)
Wooden furniture (solid, WBP)
Other materials (metal, plastic, bamboo, rattan, wicker and other materials for furniture)
Wooden furniture (solid, WBP)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Other materials (metal, plastic, bamboo,
rattan, wicker and other materials for
furniture)
Wooden furniture (solid, WBP)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Other materials (metal, plastic, bamboo,
rattan, wicker and other materials for
furniture)
Wooden furniture (solid, WBP)
© CSIL Centre for Industrial Studies
Global furniture trade
World furniture trade. Breakdown by material, 2008 and 2017Percentage shares calculated on exports value (excl. upholstery)
Wooden furniture, including solid wood furniture and wood based panel furniture, accounts for a substantial share on sector international trade.
Kuala Lumpur, October, 18th 2018
Source: CSIL
Metal
28%
Plastic
3%Bamboo,
rattan, wicker
and other
materials for
furniture
4%
Wooden
furniture
(solid, WBP)
65%
Ten years ago… …today
Metal
26%
Plastic
2%
Bamboo,
rattan, wicker
and other
materials for
furniture
4%
Wooden
furniture
(solid, WBP)
67%
© CSIL Centre for Industrial Studies
Trends affecting furniture consumption
Europe. Some examples
Height adjustable
bed systemSolid wood in
perfect shape
Solid wood in the
bathroom
Material mix in the
dining
Kuala Lumpur, October, 18th 2018
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Contents
MARKET
TRENDS
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
Mega trends affecting the way people live and impacting on furniture purchases, particularly in
large traditional markets
Trends affecting furniture consumption
Increasing connectivity Changing society, ageing of population
Increasing mobility
Urbanization, smaller houses
Environmental consciousness Shrinking budget available/devoted
to furniture purchases
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
China. Trends in solid wood furniture consumption
✓ Increasing share of wood in the preference of Chinese consumers. Main driver: living standards are growing and families are asking for solid wood instead of wood based panel furniture which is perceived of lower quality.
✓ High-value decorative solid hardwoods such as walnut is often used in combination with low-cost plantation wood (inside).
✓ Oak dominates the contemporary furniture market. Walnut continues to be highly popular in higher end markets. Tulipwood is also a trend.
✓ Smooth finishing are preferred.
Kuala Lumpur, October, 18th 2018
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Europe. Trends in solid wood furniture consumption
✓ Wood is appealing. Solid wood remains favourite material, especially in the middle and upper range. Trend toward natural wood with finishing almost invisible. Natural oil usage is increasing among leading companies. Oak, beech, ash and light-coloured wood are increasingly used.
✓ Material mix combination is modern. Natural wood is often combined with glass, metal or stone, to give a modern aspect to furniture. Wood is combined with leather, for example in the bedroom or in the top of cabinets.
✓ Matt and super matt (opposed to glossy) is a preferred finishing option in Europe. The trend is versus matt finishing, whereas glossy and brilliant finishing are losing importance in the European market. The super-matt trend goes along with the anti-finger print finishing and high resistance of furniture surfaces.
✓ Smoother wood finishing with the natural touch effect, as if there is no treatment on the surface are increasing in Europe.
Kuala Lumpur, October, 18th 2018
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USA. Trends in solid wood furniture consumption
✓ Increase in solid wood furniture in high-end, mid- and even lower-priced furniture pieces, “by manufacturers who have learned that consumers understand the benefits and value.”
✓ Preferred woods in furniture are ash, pine, gum, and poplar; pine, fir, and other inexpensive woods are used for hidden parts.
✓ Furniture trends in 2018 also involve the use of wood with dark finishes to add depth, and sophistication, and elegance.
✓ Colors: deep wood finishes, rich shades of brown, cherry, espresso, merlot and black.
✓ Glossy finishes, black and white palette, gray.
✓ Materials: wood mixed with plastic, metal, steel and glass. Natural wood with wood grain pattern. Colors: natural wood finish, oak, pine, brown, walnut, maple.
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
The Outlook
The future?
✓ World GDP is expected to grow over 3% in 2018 and 2019 (World Bank in June 2018).
✓ CSIL forecast: increase of furniture production 2018 of over 3% , which should be confirmed in the coming years (even if slightly decreasing in the medium term).
✓ Sector growth is expected to be driven by a positive trend in furniture demand as well as in international furniture trade (over 30% of world output and it is forecasted to grow by 7% and 5% respectively in 2018 and 2019 by CSIL).
✓ Expectations of the CSIL surveyed sector companies are optimistic with three quarters of interviewed expressing a positive forecasts for 2018-2022 (survey of June 2018).
However, this scenario is subject to downside risks because of possible major disruptions of international trade which are not taken into account because unforeseeable at the moment.
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
The OutlookFrom a geographical perspective:
✓ APAC will continue outperforming the world average in terms of growth rates even if decelerating in the medium term, mainly as a consequence of the Chinese reduced speed in furniture production.
✓ EMEA region is set to grow at over 2% per year, (a rate double than the one registered since the beginning of the decade). This is due to a more positive scenario on the regional market and lively export activity, particularly for traditional producers.
✓ NAFTA growth, led by the US, should also be in the range of 2% in the medium term, with consumption drivers acting actively and stimulating furniture production.
✓ LATAM is on a recovery process, led by Brazil.
This perspectives for positive growth generates an increasing demand for wood resources. With the impact of regulations on wood product trade and trade policies on globalization, alternatives to wood (due to costs, logistic, sustainability…) will be increasing, along with changing preferences and trends in each region.
Kuala Lumpur, October, 18th 2018
© CSIL Centre for Industrial Studies
Thank you!
For any questions:
Senior Partner CSILSylvia Weichenberger
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