Why the owner of the Instant Pot, Pyrex filed for bankruptcy

When Carmel Pratt’s slow cooker broke in late 2019, she decided an Instant Pot would be the best value for her time and money. “I replaced like three appliances with this thing,” the 30-year-old said of the multicooker.

Years later, Pratt, a construction consultant in Congers, NY, uses the same Instant Pot once or twice a week. And she has no plans to upgrade to a newer version.

“I don’t feel the need to spend more money,” she said. “The type I already have works great and I don’t know where it would end up if I got rid of it and bought a new one.”

It’s a scenario like this that helps explain why Instant Brands, the parent company of Instant Pot, Pyrex, CorningWare and other popular brands, went from selling the hottest countertop appliance on the market just a few years ago to filing for Chapter 11 bankruptcy this week . . Industry experts have seen this before, and it’s the enduring conundrum for brands like these – durability can ultimately be their worst enemy.

“Customers don’t buy multiples,” said Mark Cohen, director of retail at Columbia Business School. “Having a consumer business that basically deals with a limited range that is not updated, is outdated and does not expand is a death trap.”

Instant Pot’s maker declares bankruptcy amid falling sales

After years of hot sales in the 2010s and a surge of demand early in the pandemic, the multicooker market is saturated, said Michael Wolf, the founder of the food technology conference Smart Kitchen Summit and editor of the industry publication the Spoon. According to the market research company Circana, sales of multicookers fell by 50 percent last year from 2021. For the 12 months ending April 2023, multicooker sales fell 20 percent compared to the previous 12-month period, Circana data shows.

“I think consumer cookware, especially countertops, is often a challenging business because the margins are pretty low,” Wolf said. “And at least in the U.S., Americans are pretty cheap when it comes to buying new countertops.”

In a statement, Instant Brands CEO Ben Gadbois said the company continues “to face several global macroeconomic and geopolitical challenges that have impacted our business,” and that it secured $132.5 million in financing to continue operations.

The company said in the filing Tuesday that Chapter 11 protection would give it “time and flexibility” to craft a plan to shore up Instant Brands’ finances.

Instant Pot, founded in 2009, became increasingly popular in the mid-2010s as Americans’ interest in multicookers increased. It was the top-selling item on Amazon Prime Day in 2016, with 215,000 orders, the online retailer reported, and remained one of the annual event’s hottest gadgets in 2017 and 2018. Private equity firm Cornell Capital bought Instant Pot in 2019 and combined it with kitchen equipment company Corelle Brands, which included well-known older brands Pyrex and CorningWare.

There were Facebook groups, cookbooks, YouTube channels and blogs all dedicated to the multi-functional pressure cooker. The company sent Instant Pots to influencers and bloggers who wrote about how the appliance made cooking easier and more efficient.

“It was just a stroke of marketing genius,” said Lisa McManus, managing editor of America’s Test Kitchen reviews. “They made pressure cooking cool again—or maybe for the first time.”

A product that once intimidated amateur cooks was now available, she added.

The brand’s success only grew during the pandemic, according to Circana. Unable to eat out or hesitant to order in, many Americans were forced to get creative when it came to cooking. The Instant Pot made it easier.

Ellie Leitner, who was gathered at home in Milwaukee in 2020, said her favorite food and mommy bloggers were constantly posting Instant Pot recipes.

“I was like, ‘Oh my God, I can’t make this white bean chili without an Instant Pot!'” said the 30-year-old psychotherapist. “So I had to get it.”

But Leitner, who bought the Instant Pot during a Black Friday sale that year, estimates she used the pot twice. Now it gathers dust under a pile of boxes in her basement. “Yeah, I think I regret buying it,” she said.

Instant Brands, similar to Peloton, fell victim to post-pandemic trends, Cohen said.

After an initial surge in demand, “the bottom fell out,” Cohen said. “And they’re probably suffering from huge inventories that they pushed out into the channels that support their products, which stopped selling.”

Instant Brand’s other lines, such as Pyrex, are difficult to scale, he added. Pyrex products are sturdy and last for decades. Unlike others in the category such as KitchenAid and Le Creuset, Pyrex does not release new product colors and is not seen as a kitchen accessory, Cohen said.

Instant Brands tried to expand its product line. McManus noted that it released an air fryer — the Instant Vortex — that American Test Kitchen named its top pick this year. It also made coffee machines, stand mixers, air purifiers and an indoor grill. But they didn’t have the market reaction that the Instant Pot did.

“It’s hard to invent a new thing that people are going to jump on,” McManus said, and it’s rare to have a “lightning twice” moment.

It is unclear what will happen to Instant Pot, Pyrex and CorningWare. There is a possibility that the company finds its financial footing during the bankruptcy process, successfully reorganizing and shedding most of its liabilities as the creditor becomes the new equity partner, giving the company “a new lease of life,” Cohen said.

But it’s the “Hollywood end,” he added. More often, these companies fail their restructuring plan, acquire more debt and eventually file for Chapter 7 liquidation, Cohen said. But the brands could live on — or a company could buy the intellectual properties of Instant Pot, Pyrex and CorningWare. A company could also buy Instant Brands — Bloomberg reported that the company is entertaining a sale.

Regardless, Pratt of Congers, NY, will still use the Instant Pot.

“I’m lazy,” she said. “Having a pot that requires a thing to clean is really reason enough to use it.”

Source link

Back to top button

mahjong slot