Tupperware: Why the successful food container company is on the verge of collapse

Tupperware, the US maker of food storage containers, has warned it could fail unless it urgently raises new sources of funding.

The 77-year-old company said in a statement that there are “substantial doubts” about the company’s survival.

Tupperware has tried to reposition itself to appeal to a younger audience, but has been unsuccessful in countering declining sales.

On Monday, the company’s share price fell nearly 50% before recovering slightly on Tuesday.

The “Tupperware Parties”

The company became known in the 1950s and 1960s for so-called “Tupperware parties” held at private homes to sell its famous plastic food storage boxes.

In addition to selling products on the website, Tupperware still uses a direct trade workforce – where people earn a percentage of all the containers they sell.

It also recently started selling its products at US retail chain Target, to attract younger customers and other similar retailers around the world.

In addition, it has expanded its product range with kitchen utensils and has designed, among other things, a microwave grill.

Miguel Fernández, Tupperware’s third CEO in five years, said he envisioned the grill as a product “for someone who lives in a New York apartment and can’t go outside and cook on the grill.”

“Products and distribution” problems

Neil Saunders, general manager of retail at consulting firm GlobalData, said Tupperware “failed to evolve with the times in terms of its products and distribution.”

Saunders noted that the method of direct selling through Tupperware lots “doesn’t mesh” with younger customers and that even older customers who “remember Tupperware in its heyday” have evolved.

Thus, customers choose to buy cheaper or fashionable containers both in stores and online.

Younger shoppers are also drawn to more eco-friendly, reusable products such as beeswax paper for their food-keeping needs.

And while Tupperware reported a slight increase in sales during the pandemic, it was a short-lived increase when people were cooking at home.

The fall of a great one

Tupperware said in a statement in March that its direct sales force workforce is down 18% by 2022 from a year earlier.

The company was also hit by the lockdowns in China due to the Covid-19 pandemic, which severely disrupted access to a variety of products.

The company added that its shares were in danger of delisting from the New York Stock Exchange because it had not yet filed its annual report.

And he warned that he will have to restructure his debt for a third time, having done so twice since August 2022.

For Tupperware, the challenge is to fight rising interest costs on its loans while trying to improve things.

Given this scenario, the company admitted that “it currently foresees the possibility of not having sufficient liquidity in the short term” and added that continuity is at risk.

An uncertain future

Just a month ago, Tupperware Chief Financial Officer Mariela Matute, who joined the company in May last year, said she was calm about the company’s near-term future: 2023″.

But in its statement, Tupperware said the financial results for 2021 and 2022 — as well as the interim figures for 2021 and those for the first three months of 2022 — were misrepresented due to the method used to account for business taxes and leases.

As a result, Tupperware’s share value rose 5.6% on Tuesday, after falling 50% on Monday.

The company said it is working with financial advisors to secure more funds and investments. He also said he is looking at selling properties and cutting jobs.

But Saunders doubted Tupperware will be able to do enough to turn the tide at this point.

He said if the company had made changes 10 years ago – such as introducing retail or wholesale – it wouldn’t be where it is today.

However, he also stressed that the brand is still widely recognized and could catch the attention of a retail giant like Walmart, or even someone like Amazon.

the beginning

Tupperware was founded in 1946 by Earl Tupper, an American chemist.

The hermetic polyethylene products – airtight and watertight thanks to their double-sealed lid – began to be sold in department stores, but they did not have the expected success because customers had problems with them.

People were used to glass and ceramic products, and this new Tupperware container had to be vented to seal it.

A woman named Brownie Wise, who was already selling cleaning products at house parties, also started selling Tupperware products.

She used demos to attract customers and recruited other salespeople to help her.

Tupper eventually hired Wise, which helped fuel the company’s growth through house parties, helping many women generate an income.

But the founder and his vice president allegedly disagreed on business strategy, and in 1958, Tupper fired Wise. She sued the company and received an annual wage in compensation.

Tupper would then sell the company.