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For most people, the Samsonite brand is synonymous with travel. But the world's largest luggage maker is setting its sights even higher: it aims to double its size in five years and step up its acquisitions to become a diversified bags company.
With US$1 billion set aside for acquisitions, Samsonite International has been riding the wave of global tourism.
The key mainland China market made up 10 per cent of its US$2 billion turnover last year.
More than 100 million Chinese tourists took outbound trips last year and the figure is expected to double by 2020.
Samsonite delivered a solid set of interim results in the first half of the year, with net profit rising 13.9 per cent to US$105.7 million on sales 12.4 per cent higher at US$1.1 billion.
This year, it bought French handbag brand Lipault for €20 million (HK$193 million) and mobile and tablet cover brand Speck and outdoor backpack maker Gregory for US$85 million each.
Ramesh Tainwala, who replaced Tim Parker as chief executive on October 1, said acquisitions were key to the diversification strategy of the Luxembourg-based company that listed on the Hong Kong stock exchange three years ago and now has a market capitalisation of HK$34 billion.
"Right now, non-luggage business makes up only about 20 per cent of our business and we have a vision to grow that part to 50 per cent," Tainwala said.
He admitted that past efforts to expand Samsonite into outdoor bags, mobiles and tablet covers were poorly received.
"It did not work well because Samsonite is such a strong and reputable brand in luggage," Tainwala said of the brand that was founded in Denver, Colorado. "When you are very strong in one particular category, by definition your ability to stretch the brand into new spaces becomes that much limited. People don't take you seriously.
"For example, we did try to launch Outlab as part of the Samsonite franchise into an outdoor category, a sub-brand. It failed, because people don't think Samsonite is cool enough to be an outdoor backpack brand. As a result, we ended up acquiring a brand like High Sierra."
It was a similar case with Speck, an acquisition made in May to enter the estimated US$6 billion a year mobile and electronic accessories market.
The failure of brand extension was not for lack of resources, Tainwala said.
"You come to know in six months [whether it's working or not]," he said. "We have enough and more capability to design the product. We can hire the best designers. We have enough partnerships and relationships with channel partners to get the distribution but the consumer is not buying you; that starts to tell you.
"It's not even marketing, it's just the brand. Let's say, we try to make handbags - everyday use handbags, office bags for women. Samsonite does not really get so well connected there because it has masculine characteristics. Maybe one day if we want to get into that segment, we should look into acquiring a brand."
Tainwala said acquisitions could also spare headaches over company name registrations.
"The most we're looking for in an acquisition is a five-year story," he said. "It's a medium-term play. It's a small seed but it's globally registered.
"Nowadays, one of the biggest difficulties in launching a brand is to get a clean brand because people, especially in China, pick up an English dictionary and register every noun and verb, adjective, so what is left now?
"The seed you acquired, it comes with some unique characteristics. Maybe it's already a strong brand in its home country. It has a design DNA on which we can build on.
"Secondly, it has a global registration. It does facilitate your start-up to be smoother than launching your brand.
"It can be made profitable within a year, sometimes they are already profitable while developing your own brand requires investment."
Tainwala said he would like to acquire a brand in an emerging economy like South Korea, China and India.
"There are some very interesting handbag brands in Korea. Maybe the Korean brands cannot stretch all the way to North America but it can definitely stretch to all of Asia, which itself is a big opportunity," he said.
Samsonite has seen the power of Korean cool with an advertising campaign featuring actor Kim Soo-hyun that has been a hit across mainland China, Taiwan, the Philippines and Japan.
"Likewise, we have been looking at some backpack brands in China," Tainwala said. "It's not that we are limiting ourselves to developed countries in terms of acquisition choices but sometimes acquiring a business in Western economies could be somewhat easier because their buying and selling of businesses is a very established thing. In Asia, Asians tend to get very [attached] to the business. For them, selling a business is like selling a baby."
Ultimately, "you can't time an acquisition. If it happens, it just happens".


Riding on tourism wave, Samsonite is packed for expansion

Ramesh Tainwala says acquisitions are key to the company's diversification strategy.Photo: Bruce Yan

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Samsonite, the world's largest luggage maker, is riding a global tourism surge to double its size as a diversified bags supplier through acquisitions


Riding on tourism wave, Samsonite is packed for expansion

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Samsonite, the world's largest luggage maker, is riding a global tourism surge to double its size as a diversified bags supplier through acquisitions

Samsonite, the world's largest luggage maker, is riding a global tourism surge to double its size as a diversified bags supplier through acquisitions