The Gifts & Home Furnishings business area includes several strong brands like Orrefors, Kosta Boda and Sagaform. In total, the business area’s seven brands are established in 17 countries. Sweden is the domestic market and accounts for the highest sales. Gifts & Home Furnishings answered for 16% of the Group’s sales figures in 2009 and a loss of SEK 47.6 million (EBITDA). The business area has been weighed down by restructuring costs of SEK 70.1 million. While the brands are mainly sold in the retail market some sales also occur in the corporate promo market.

The market
The global recession that started in 2008 was hard on the gifts and home furnishings industry and 2009 was also a tough year for the market. However, by the end of the year there were signs of stabilisation, albeit at low levels. Competition between handmade and machine-made glass for instance is even tougher.

The USA is the largest export market for Orrefors and Kosta Boda. The brands suffered from the collapse of the North American market in 2008, though not as severely as many of their competitors and in 2009 there were signs that the market is stabilising. Orrefors and Kosta Boda have an interesting market in anniversary products, special production and decorations due to their flexible craftsmanship and design.

The Sagaform brand has, despite the global recession, done very well. In the specialised retail trade the brand gained market shares due to competitive pricing, excellent news value in the collection which sparked dealers and consumers’ purchasing interest, as well as a broad distribution. Awareness of the brand also increased substantially. However, sales in the corporate promo market were lower than previous years. To compensate for the decline, Sagaform has during the year launched a concept where corporate customers can design their own promotional products based on the Sagaform idiom. A possibility to become even more personal, unique and distinctive in the promo business.

TV’s focus on do-it-yourself and home decorating programmes provided a boost to gifts and home furnishings the past years, which is positive for New Wave Group’s gifts and home furnishings brands. The Christmas season remains the most important period for the gifts segment, but as we to a greater extent adopt new holidays and traditions such as Valentine’s Day and Halloween, gift sales also increase.

The future
The Group has taken steps to put Orrefors Kosta Boda back on its feet and predicts strong growth potential especially in the Chinese market where we today have 19 Orrefors Kosta Boda shops. The newly opened Kosta Boda Art Hotel has also created possibilities for the Kingdom of Crystal tourism area and the Kosta Boda brand.

Favourably priced, innovative gifts for the kitchen and tabletop do not seem to be affected by the lacklustre market but instead appear to be strengthening its position. This speaks well for Sagaform. A strengthening of brand awareness, increased market shares and improved recognisability shows good prospects for the coming year. In times of economic crises, the value of strong brands is particularly evident and we see in this enormous potential for the future.

Orrefors
The Orrefors brand is distinguished by a classic design elegantly depicted in clear crystal. A timeless design, with an equally contemporary signature runs like a red thread through Orrefors’ more than 100-year history and market position. Orrefors is the reliable, lasting gift for friends, weddings and homes. The brand’s foremost competitors in Sweden include Iittala, Riedel, Spiegelau, Skruf, and Målerås while Waterford, Baccarat, Lalique, Swarovski and Riedel are its primary competitors in export markets. Orrefors’ natural domestic markets are Sweden and the Nordic countries. The company will intensify its activities in Europe and Asia and has particularly high expectations in Japan and China where the brand is positioned and sold in the company’s 19 shops. The challenge in the important North American market is to defend the market shares acquired over an extended period and persevere throughout the present weakened economic climate in the USA.

Kosta Boda
The Kosta Boda brand is distinguished by a distinct design language and commanding self-esteem. Free, bold shapes and striking colours reflect artistry and artistic expression that exudes self-confidence and dares to be different. Kosta Boda is the ideal gift for self-confident customers audacious enough to stand out and who have a fondness for artistic expression. The brand’s foremost competitors in Sweden include Målerås, Iittala and retailer brands. In export markets, Kosta Boda mainly competes with Hadeland, Magnor, Holmegard, Villeroy & Bosch and Rosendahl. As with Orrefors, Sweden and the Nordic countries constitute the natural domestic market. Also Kosta Boda will intensify its activities in Europe and Asia. Expectations are particularly high in Japan and China where Kosta Boda’s glass art has attracted substantial interest and thereby generated a lot of attention for the standard collection. In the USA, Kosta Boda must like Orrefors persevere until the weakened economic situation is resolved.

Kosta Boda Art Hotel gave Kosta Boda the opportunity to develop a new product category, bathroom. The first collection will be presented during spring 2010. Interest has been great and there is an exciting development potential in the field of interior design when it comes to the handmade glass.

Kosta Boda Art Hotel
In the summer of 2009 Kosta Boda Art Hotel opened in Kosta. The world's first art glass hotel where Kosta Boda's seven designers had a hand in all the art glass décor. With its 102 rooms, several conference rooms, indoor and outdoor pools and large spa area, the hotel has generated a real upswing for Kosta's tourism and boosted the number of visitors throughout the entire region.

Kosta Linnewäfveri/Orrefors Jernverk
Clearly associated with the quality and design traditions of Orrefors Kosta Boda, these brands offer an exciting collection of home furnishing products for design-conscious customers who appreciate Swedish design. The collection has both classic and revolutionary, provocative products. Design, quality and form are prestige words but focus must be on function. Principal competitors include Lexington, Gant, Georg Jensen, Alessi, Stelton, Design House Stockholm, Himla and Klippan. At present, products are sold mainly in the Nordic market, although our long-term objective is to capitalise on markets where Orrefors Kosta Boda is established.

Sagaform
Sagaform sells welcoming, innovative gifts for the kitchen and table settings. The products are favourably priced for consumers looking for an everyday luxury gift for someone else as well as for themselves. The Sagaform brand is distributed in both the retail and corporate promo segment. Principal competitors include Iittala, Menu, Eva Solo, and others but also the chain store’s own brands. Sagaform concentrates on its domestic market in Sweden where it aims to become the leader in the innovative gifts product segment. In the export area, the other Nordic countries as well as Great Britain, Germany, France and Benelux are the main priority. In the USA, the company aims for growth with the support of the strong presence of Orrefors, Kosta Boda and Cutter & Buck.

Sales channels
The Swedish retail sector is undergoing a major restructuring where we see consumer interest in traditional glass and ceramics falling in favour of design and home decorating shops. The expansion of on-line shopping is another strategically important aspect where the shift in customers’ buying patterns demands completely different availability than previously.  During the fall of 2009, Orrefors Kosta Boda launched its first webshop in the Swedish market and developing potential for this type of business is great.

Some of the Orrefors, Kosta Boda and Sagaform brands’ sales activities target the corporate promo markets where the products are used as everything from simple gifts to exclusive anniversary gifts and mementos. Orrefors and Kosta Boda uphold their position as an interesting alternative for occasions warranting high-class objects. Sagaform's products are popular as Christmas and summer gifts to employees and customers.

In 2009, the Sagaform brand has invested a lot of effort in deepening and intensifying its collaboration with existing customers. An effort to reach new customers and new distribution has begun, and has already had some effect over the past year. A project to market Sagaform on the web has also been initiated.

Some of the largest gifts and home furnishings chains are Bruka, Cervera, DesignTorget, Inspiration, Lagerhaus, NK, Stockmann, Tilbords, Åhléns, and more. The market also accommodates several independent specialised retail businesses. Sweden, Denmark and Norway have a well developed speciality trade, while Finland has historically had a strong department store culture.

Capital tied up
Production in Orrefors Kosta Boda is conducted throughout the entire year, while sales occur primarily during the second half of the year. Consequently, tied up capital is most considerable the first part of the year. Most of the production involves classic and popular products like Mine, Château, Line, Intermezzo and others with a product cycle in excess of 20 years, which reduces the risk of obsolescence. For the part not in-house manufactured, most purchases are made against stock for later sale to customers. New Wave Group limits its foreign exchange risk by hedging between 50 and 80% of the purchasing costs. Sales are made to selected retailers and credit losses are low. However, there is a higher concentration to fewer customers in the retail segment compared with the corporate promo market. In 2009, confirmed bad debt losses in the business area made up 0.35% of the sales. Most of the products are the same for corporate promo and retail, which provides a significant risk diversification.

Sponsorship and partnerships
Orrefors Kosta Boda has a number of prestigious trophies and awards contracts. Each year, Orrefors designer Efva Attling designs the Grammis Award in partnership with artist Kjell Engman, and Kosta Boda designs the international award for the Eurovision Song Contest. In addition to these contracts, the Jerring Award and People´s Choice Award is created by Orrefors Kosta Boda every year. Orrefors Kosta Boda also makes the prize for the TV production Let’s Dance in partnership with TV4.

Sagaform has throughout 2008 focused on loyalty campaigns based on the gift-with-purchase concept which, together with retailers and their customers, has generated major business. Also in the years to come, Sagaform will strongly support their resellers in this form of campaign approaches. One is the collaboration with Santa Maria where Sagaform together with the reseller has managed to sell in large volumes of the Tex Mex series.