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Continental’s three-brand strategy: a unique feature in the material handling market
2021 was a profound year for Continental's material handling division – and not just because the Covid pandemic brought product and freight transportation to an almost complete standstill worldwide. This “pause” in the market also coincided with the launch of a new three-brand strategy for material handling tires long in the making. Three years later, Klaus Framenau, Head of Business Field Material Handling, and Matthias-Stephan Müller, responsible for the product management of material handling tires, explain in an interview what the intention behind the new strategy is, how it was received by the markets and what is on their minds for the coming years.
Mr Framenau, your competitors rely on a single umbrella brand for their respective tire portfolios. Why did Continental make the conscious decision in 2021 to offer the material handling market tires under three different brands?
Klaus Framenau: Fortunately, we did not have to relaunch any of these brands. Our strong premium brand Continental, our quality brand General Tires and our entry-level brand Barum have all grown historically and have already been successfully positioned as brands in their respective segments by the passenger car and truck sectors, albeit to varying degrees and depending on the region. However, they lacked a strategic foundation in the material handling segment. We laid this three years ago and aligned our tire portfolios with the positioning of the passenger car and truck segments. This was crucial for us, as it allowed us to further sharpen the value proposition of the individual brands and clearly differentiate the respective product portfolios in terms of price. With the three brands, we are unique on the market, which has further strengthened our profile and makes us stand out from the competition.
Matthias-Stephan Müller: This breakdown of our brand portfolio made sense, especially with regards to the customers whose requirements are the main focus of Continental. After all, not every application demands absolute top performance from every tire. If you only move a few pallets a day, you are probably quite price-sensitive and may be happy with a tire from the budget segment. A brewery, where the vehicles are operative 24/7, has completely different requirements and relies on the robustness and durability of our premium tires. With Continental, General Tires and Barum, we have a clear approach and our customers know exactly which brand is designed for which intensity – but all with the Continental quality seal.
Klaus Framenau: The competitive environment has also increasingly changed in our established regions. More and more imported brands and other suppliers are entering the market, further increasing competition. We want to do justice to these market trends and protect our brands at the same time.
How would you assess the results in the interim?
Matthias-Stephan Müller: Our advantage is that we are strongly positioned with Continental, which also helps in the other segments. Interestingly, one of the most difficult things was to convince everyone internally that, for some customers, it can make sense to offer them an alternative for low-intensity applications that does not have to withstand the same thermal loads as the absolute premium product. And even after three years, we are still learning. Because even if customers are definitely open to our other brands, this is not a sure-fire success and the market has not necessarily been waiting for us. We align ourselves even more closely with the competition and make individual adjustments.
Klaus Framenau: Ultimately, the material handling sector is a seller's market and it takes a while for the first successes to materialize. If a brand is hardly known in a region, we have to do a lot of convincing. But after three years, we can see that demand is picking up and that a brand like General Tires, which originated in the USA, is also becoming increasingly accepted by customers in other regions. Here and with the Barum tires, we were able to significantly increase sales last year, and we see this as a success in a tough sales environment because the feedback is consistently positive.
How does the new three-brand strategy affect your position in the market?
Klaus Framenau: With our premium brand Continental, we are definitely one of the market leaders. In terms of performance, however, we are competitive with all our brands and we therefore assume that we will continue to develop our customer base with General Tires and Barum as well – with brand-specific focuses in different regions.
Matthias-Stephan Müller: We definitely want to achieve above-average growth in these two segments, as the market has a lot of potential due to the current megatrend towards more and more e-commerce with the corresponding turnover of goods. And it is precisely this expansion of our market situation, for example with General Tires in Europe, that is an exciting challenge and really fun.
Throughout its entire value chain of a tire, Continental develops sustainable solutions. The tire manufacturer uses recovered carbon black in its Continental solid tires from its tire plant in Korbach, Hessen, Germany.
What topics are you most concerned with in terms of the future?
Klaus Framenau: One of the biggest topics is sustainability. Not only Continental as a group has set itself ambitious goals in terms of CO2 neutrality, but also we in the tire sector. By 2030, 40 percent of the materials used for our tires should be sustainable, and we have already reached that for some time with the material handling tires of the Continental brand. We want to continuously expand this and also make the products in the other two segments completely sustainable by 2050 without any loss of performance.
Matthias-Stephan Müller: This is also important for our customers, who now have to disclose their carbon footprint and are therefore urgently looking for solutions. With our roadmap for the material handling sector, we want to be a pioneer for the industry, from material procurement and energy consumption in production to the entire logistics chain. By 2030, for example, all natural rubbers used in our tires should be 100 percent sustainable. And we are also working on the fillers.
Klaus Framenau: Beyond sustainability, we want to get even closer to our customers. For all three brands, tires alone are no longer enough. We want to offer comprehensive solutions in all markets so that our customers can do their intralogistics job as easily as possible and without downtime. This means that we have now started to make our service networks fit for the future. And when it comes to larger fleets, as is often the case for example in the USA, we also seek direct contact to ensure that they have the right tires in use.
Matthias-Stephan Müller: And we are intensively discussing the refurbishment trend, for example for forklift trucks, meaning used vehicles that are almost as good as new after remanufacturing. A new market segment for second-life vehicles is currently emerging here with potential for our Barum products if dealers want to fit fresh tires before selling them. So, it will remain exciting in the coming years.
Matthias-Stephan Müller - „With Continental, General Tires and Barum, we have a clear approach and our customers know exactly which brand is designed for which intensity – but all with the Continental quality seal.“
Klaus Framenau - „With the three brands, we are unique on the market, which has further strengthened our profile and makes us stand out from the competition.”
- Matthias-Stephan Müller - „With Continental, General Tires and Barum, we have a clear approach and our customers know exactly which brand is designed for which intensity – but all with the Continental quality seal.“
- Klaus Framenau - „With the three brands, we are unique on the market, which has further strengthened our profile and makes us stand out from the competition.”