Tariffs are top of mind for retailers globally but one Australian kitchen appliance maker, Breville, is simultaneously planning its expansion into China while preparing for looming US tariffs under a new administration. During the fiscal first half, before Trump’s inauguration, Breville Group reported that its net profit soared to 16.1 per cent year over year to AU$97.5 million as revenue grew 10.1 per cent to AU$997.5 million. While it doesn’t yet know the full impact of a Trump preside
residency on the company’s trade, Breville CEO Jim Clayton told investors on Tuesday, “If Kamala Harris had won (the election) we would be doing exactly the same thing right now”.
According to Clayton, 40 per cent of Breville’s sales were exposed to a potential US-China trade war last year; he has plans to reduce this to 10 per cent by next year.
“Tactically, we landed some inventory in the US early as a hedge against potential tariffs,” shared Clayton.
Based in Sydney, Breville is known for its blenders, coffee machines, toasters, kettles, microwaves and toaster ovens, which are sold online and through kitchen and home retailers globally.
Preparing for the unexpected
Breville’s strategy is to account for macroeconomic uncertainty while moving full steam ahead in ramping up its sales in Asia and the Middle East, despite moving some of its production out of China.
“The unknown that we are working through is how, and when, US trade policy might further evolve with various trading partners, particularly China,” said Clayton.
“Our project to move 120v production out of China is in full swing, and we will continue to adapt and adjust as the rules on the field change,” he added, referring to the products the brand makes for the North American market.
Starting in January this year Breville began selling directly into the Middle East through an office it opened in Dubai.
Meanwhile, it will move its operations in China to a Shanghai office from the second-half of the fiscal year to sell its Sage coffee machine range directly to the market – with plans to open additional offices in Shenzhen and Hong Kong.
“The group will have new product launches, fast-growing new territories, including our direct entry into the Middle East and China, and our ongoing solutions roll out to support growth,” Clayton elaborated.
“Coffee continues to lead our growth, cooking is performing well, and food preparation is still finding its footing,” he continued.
Bracing for ongoing impact
Breville appears to have adopted an ‘if you fail to plan, you plan to fail’ approach to impending tariffs, but for Jamie Cairns, chief strategy officer at Fluent Commerce, the trade market remains unpredictable.
“Since the announcement from President Trump threatening tariffs on global imports, the trade market can only be described as an unstable, ever-changing state,” Cairns stated.
“If the US does proceed with imposing tariffs, other countries will retaliate, as we’ve already seen with China. In this scenario, tariffs may be imposed in the opposite direction, raising costs within the supply chain,” he added.
Cairns predicts that if Trump’s tariff threats do materialise, and the Australian government can’t broker an exemption, consumers will ultimately bear the brunt of these changes as businesses will be forced to protect their profit margins.
“If the US enforces these tariffs, it will create mid-term challenges that demand real-time visibility across inventory and supply chains,” forecasted Cairns.
“Even if Australia is exempt, ripple effects from other impacted world markets and trade partners will be felt throughout the global supply chain,” he added.
Real-time inventory visibility will be crucial for retailers looking to navigate the uncertain global supply and trade landscapes.
“In the short term, businesses may face delays from production to end consumers, tightening cash flow,” concluded Cairns.
“Some may resort to stockpiling goods to mitigate supply disruptions, but this strategy comes with its own logistical and financial risks.”