Forest Lighting Taps into Europe Supermarket Distribution Channels with Acquisition of Super Trend Lighting
Prospects of a booming LED filament bulb market in 2016 and Super Trend Lighting’s unique market position and distribution channels, were some of the main reasons behind Forest Lighting’s latest acquisition, said Forest Lighting General Manager Lawrence Lin in an exclusive interview with LEDinside recently.
As the top five global LED package manufacturer in the lighting application sector, Forest Lighting has been aggressively expanding its production capacity to reach its goal of becoming the world’s third largest company within a decade. Part of its expansion strategy includes the acquisition of manufacturers in niche lighting markets, such as the merge with Hong Kong-based LED filament bulb manufacturer Super Trend on March 25, 2016.
Previously, Forest Lighting has been manufacturing LED filaments, but not LED filament bulbs, said Lin. “The company has strong LED filament bulb products, but not SMD LED bulbs. Our product lineups are complementary of each other’s, we use their LED filament bulbs and they can use our SMD LEDs.” The acquisition of Super Trend makes is a logical step for the company to further strengthen its luminaire brand strategy, while scaling up needed LED filament production capacity.
|Forest Lighting General Manager Lawrence Lin.|
Forest Lighting adds Super Trend Lighting’s distribution network in Europe super markets
Super Trend’s subsidiary Sunny World (Shaoxing) Green Lighting’s average monthly LED filament bulb actual output per month is about 2 million bulbs (or equivalent to 6.5 million pcs monthly production capacity), said Lin. The Hong Kong LED filament bulb manufacturer has some 200 LED filament bulb models under its Luktek brand. But it is not just LED filament bulb production capacity that Forest Lighting is after, an integral part of merger deal is to expand distribution networks in Europe.
“Basically, we will be able to tap into Super Trend’s wide distribution channels in super market franchises in Europe after the merge”, said Lin. Added value that Super Trend will bring to the Forest Lighting brand is its role as a private label supplier in Europe, which is aligned with Forest Lighting’s general business strategy and market position in the private label sector. The Hong Kong LED filament manufacturer is an OEM for many leading international retailers, and other major European and American supermarket franchises that have launched their own LED bulb brands.
German lighting giant Osram is also one of Super Trend’s big clients. Before restructuring and selling its 100% stake in Shaoxing to Super Trend in 2013, Osram was the main owner of the Shaoxing manufacturing site, said Lin. The Shaoxing manufacturing site was previously one of Osram’s largest CFL and LED manufacturing base. Even though Osram no longer has any investments in Shaoxing, it has continued to forge a strong OEM partnership with Super Trend, and outsources most of its LED filament bulb manufacturing to the Hong Kong company.
After the transaction was completed, Super Trend has kept Osram’s original production lines, technology, and quality control system. These attributes will contribute to MSL’s advantages in its acquisition of Super Trend, emphasized Lin.
Asked if there would be any changes in Super Trend management structure, Lin said there would temporarily be none. “However, I expect Forest Lighting will gradually take over,” he said. The two company’s gradual integration will be supported by rapid developments in the LED filament bulb market.
|Forest Lighting showcased some of its LED filament bulbs such as the one shown here at TILS 2016.|
Forest Lighting’s outlook of LED filament bulb market in 2016
Resembling the century old incandescent bulb invented by Thomas Edison, the retro styled LED filament bulbs gained traction over the last few years in U.S. and Europe, where warm white bulbs are generally preferred over cool white lights. Previously, a niche market in the decorative lighting sector, Lin forecasted LED filament bulbs will become the star luminaire this year. “If you attended the Frankfurt lighting show (Light+Building 2016), it’s quite obvious that LED filaments are an upcoming trend,” he said. “It is a common view shared by the industry that LED filament bulbs will be a big trend this year.”
The outlook for LED filament bulb is bright in 2016. “LED filament bulb production volume for sales in China was 120 million bulbs in 2015, I estimate it will grow exponentially to 500 million bulbs this year,” said Lin. “On average every LED filament bulb uses two to three LED filaments.” Based on these statistics, market demand for LED filaments could reach nearly 360 million this year.
Speaking about the rise of LED filament bulbs, Lin analyzed the emerging bulbs would replace incandescent, halogen, and omnidirectional LED bulbs. “As you already know Europe will be phasing out halogen lights by 2018…which is going to accelerate LED filament bulb developments. Eventually, many large retailers in Europe will no longer sell halogen or incandescent bulbs, due to the phase out policy,” said Lin. The European policies will spur LED filament bulb replacements, mainly since consumers still prefer traditional shaped halogen bulbs. LED filaments resemble the conventional bulb the most out of all LED bulb models, making it the ideal substitute for halogen. Popularity of loft styled bulbs in the Europe market provides further ample opportunity for LED filament bulbs, Lin observed.
Meanwhile, omnidirectional LED filament bulbs have a much lower manufacturing costs than SMD LED bulb counterparts, making it a much more economic option, he added. Even though the general outlook for LED filament bulbs is a good one, steeper price falls are expected. “Since it is an expanding market, there is larger room for LED filament bulb price cuts compared to other LED products,” he explained.
With the LED filament market flourishing, Forest Lighting is positioning itself to acquire larger market shares and revenue from the market, especially in Europe where the bulbs are in high demand. By integrating Super Trend to its company structure, Forest Lighting has further strengthened its market strategy as a private label LED supplier, acquired larger distribution network through Europe supermarkets, and indirectly established a business partnership with Osram. Despite potential setbacks in lowered LED filament bulb prices, the company is ready to grab a large share from the prospering LED filament bulb market in 2016.