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Cleaning Up The Pool Business

That pumping sound in the pool is from a machine which has sucked a fair amount of foreign exchange into the country. Reg Rumney reports

THE swimming-pool cleaner is one uniquely South African product that has made its mark internationally. Small wonder the two main brands, Kreepy Krauly and Baracuda — as South African as boerewors, braaivleis and sunny skies – – were both developed here.

Kreepy Krauly MD Sholto Manthe estimates the number of pools in South Africa at 450 000. This gives what is among the highest ratio in the world to the affluent white population — about 11 to one — a not suprising figure to anyone who has flown over the northern suburbs of Johannesburg and seen the myriad blue spots regularly dotting the landscape.

And, says Baracuda MD Kate Thielscher, the South African market for pool cleaners is 90 percent saturated. The small percentage of pool owners who don’t have automated pool cleaners either can’t afford them or don’t want them. The price of a pool cleaner is between R400 and R500.

To put it another way, Thielscher says 80 percent of the pool cleaners that will be sold this season will replace broken or worn-out ones, and this replacement market has stayed fairly static over the past few years.

Manthe is looking for some growth from a new wave of South African consumers earning between R5 000 and R7 000 a month, and who will want pools.

Thielscher reckons that during the boom years in the mid- 1980s 18 000 to 20 000 new pools were being built a year, but since then the numbers have dropped slightly and only a small number of new pools are forecast to be built this year.

For now, then, the expected growth is in the opening up of new markets after the elections.

As a manufactured product Kreepy Krauly did not really face too much sanctions pressure, but the stamp of legitimacy does provide new opportunities. Manthe sees new markets opening up, with inquiries coming from unexpected places like Tunisia, Cyprus and Eastern bloc countries.

Already 70 percent of the products from Kreepy Krauly’s Springs factory end up overseas, not necessarily as fully assembled products. Manthe explains that the Springs plant and its sister plant in Australia between them make all the components of the Kreepy Krauly. Certain components made here for Kreepy Krauly at a manufacturing plant are sent to Australia and vice versa.

The Springs Kreepy Krauly factory assembles the units for the South African market and for export, and so does the Australian plant. Both outfits sell Kreepy Krauleys to the biggest market, the United States, as well as Canada and Europe.

Baracuda similarly sells components to sister plants overseas, and claims to have achieved dominance in most of the 30 countries where it sells its machines.

As with Kreepy Krauly, Bara-cuda’s factory is an assembly operation. Most of the plastic components are made from dies owned by Baracuda by an outside factory. “Our objective is to be marketing-driven, not manufacturing- driven,” remarks Thielscher.

The Kreepy Krauly tends to be used generically for any vacuum-driven pool cleaner but Baracuda, Kreepy Krauly’s main competitor, says it has 55 percent of the R60-million- a-year turnover of the total South African pool-cleaner market, itself part of a R600-million pool industry.

So competitive is the pool-cleaner business that Manthe is reluctant to reveal any figures of his company’s production or market share.

It doesn’t stop at straight competition. Indeed, Manthe says that almost throughout the company’s 19-year history it has been involved in litigation to stop its product being copied.

A drawn-out and costly legal battle by Kreepy Krauly against Baracuda over patent was resolved in the early 1980s.

Though the antagonism may have vanished, the competitiveness has not. Kreepy Krauly recently announced it was to give a prize to the buyer of its millionth unit sold. Baracuda quickly announced it had already sold more than one million pool cleaners worldwide.

The original South African patent of Kreepy Krauly has in fact expired, though international patents and trade marks are still in force and the present model’s patent still applies. Manthe believes the trade mark remains one of the companies most potent marketing tools, and the law prevents any company copying the Kreepy Krauly too closely for fear of “passing off”.

Using the trade mark, the company has diversified into producing an automatic pool chlorinator called the Kreepy Klear. Baracuda has just launched a new cleaner for fibreglass pools.

As an export success, it shows that niches can be found and developed. Manthe says Kreepy Krauly has been a net importer of currency since inception.

The potential out there may be big, but it is not necessarily an easy sell. Manthe notes that the US market is even more competitive than the South African market: he saw 23 cleaners made by 19 companies on a recent visit to the US.

Since the government has been and is encouraging exports, why are export permits needed to sell pool cleaners abroad?

According to Baracuda, this is to protect local manufacturers from unscrupulous exporters who have exported pirated products as well as products not designed for the overseas market, leading to the closure of at least one reputable operator.

# WHERE IT BEGAN

THE whole pool-cleaner business started with the invention of the Pool Bug by South African inventor John Raubenheimer in 1971.

Kreepy Krauly was started in 1975 by Ferdi Chauvier, to be followed in 1976 by Baracuda.

Kreepy Krauly is now owned by a family trust.

Four years ago United States venture capital fund EGL Holdings bought control of the Baracuda Group from the founding family. EGL is associated with giant fund Mercury Asset Management.

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