Samsonite to acquire US luxury baggage maker Tumi

World's popular luggage maker, Samsonite has decided to buy luxury bag rival Tumi Holdings for $1.8 billion to access premium end of the market.
Samsonite all set to buy Tumi

World’s popular luggage maker, Samsonite has decided to buy luxury bag rival Tumi Holdings for $1.8 billion to access premium end of the market.

While the acquisition will assist Samsonite to get a stronghold in the higher-end business primarily for European and Asian markets, as per its global chief executive Ramesh Tainwala, India is still a nascent market for brand such as Tumi.

Tainwala said that the market for luxury bags is still very small in India and Tumi may not be appropriate right now. But, Samsonite will keep evaluating opportunity for Tumi as its own brand Black Label has met with limited success. Samsonite is still considered premium in India despite the brand being a mid-market one globally.

Tumi's luggage are available at a price of $500 and above that is higher than Samsonite, which sells at around $300 and its lower-end brand American Tourister that cost $100 and below.

Samsonite, which was founded in Colorado, US, has shifted its base in Asia in recent years in line with high demand from markets including India and China. In fact, after the 2008-09 global meltdown when it was struggling for growth, its US retail unit had filed for bankruptcy-court protection with the goal of cutting its store count in half in a bid to boost earning. Two years later, Tainwala successfully managed to raise $1.25 billion through Samsonite's Hong Kong initial public offering.

Samsonite has been on an acquisition spree especially in the up-market segment - it has acquired High Sierra and Hartmann brands in 2012 and Lipault and Speck in 2014. However, the company in India had for long been focused on selling sophisticated products at Rs 10,000 and mass-premium brand American Tourister that has price-tags of Rs 5,000 and above. However, they haven't been able to grab market share in a country where more than half the luggage market is at below 5,000 price point which rival VIP Industries dominates.

Talking about a positive change, Tainwala said that Samsonite tried entering the segment with AT which eroded the brand equity of its mother brand American Tourister. The brand has been testing its new brand - Kamiliant - in India and will launch it this month at price point below Rs5000. Samsonite hopes to grow by 12% in the next three years in India.

In India Samsonite equals VIP’s net sales at Rs 1400 crore. However, the company had its share of struggle in India when it entered the country in early 90's. In fact, Tainwala originally an entrepreneur in the plastic processing and consumer goods industry and a vendor to the luggage behemoth signed 40-60 joint ventures with Samsonite nearly two decades ago to form Samsonite South Asia Pvt Ltd, when the American firm was on the verge of exiting India.

Two years later, when the Indian business had a turnaround with high sales traction, Samsonite convinced Tainwala to join as an employee to head its South East Asia and Middle East region based out of Hong Kong.

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