Entering the European market for candle holders

The European market for candle holders offers opportunities, but competition is fierce. As mass-producing countries dominate the lower ends of the market, it is best to focus on the mid- and higher-end segments. In order to compete, products need to have added value. Entering the European market means you need to comply with the European Union’s (legal) requirements, as well as any additional or niche requirements buyers may have.

1. What requirements must candle holders comply with to be allowed on the European market?

The following requirements apply to candle holders on the European market. For a more detailed overview, see our report on buyer requirements for Home Decorations and Home Textiles (HDHT).

What are the requirements?

General Product Safety Directive

Europe’s General Product Safety Directive (2001/95/EC) is a legislative framework, stating that all products marketed in the European Union (EU) must be safe to use. Unsafe products are rejected at the European border or withdrawn from the market. The EU uses the Safety Gate system to list and share information about such products.

In 2021 the European Commission adopted a proposal for a General Product Safety Regulation, to replace the current directive. This new legislation would be applied in its entirety across the EU.

Restricted chemicals: REACH

The REACH regulation (EC 1907/2006) lists restricted chemicals in products that are marketed in Europe.

Restricted chemicals in the production of candle holders include:

• lead in the paints used on and in the glazing of ceramics
• arsenic and creosotes as wood preservatives

Timber Regulation

The European Union’s Timber Regulation (EUTR) is aimed at combatting the trade of illegally harvested timber and products. It covers a wide range of timber (wood) products, which are listed in its Annex. Products with a FLEGT or CITES licence are in compliance with the EUTR.

Packaging legislation

The Packaging Directive (94/62/EC) is aimed at preventing or reducing the impact of packaging and packaging waste on the environment. Buyers may therefore ask exporters to minimise the use of packaging and/or to use sustainable (recycled) materials. The EU’s new Circular Economy Action Plan identifies packaging as one of the sectors that uses the most resources, with a high potential for circularity. All packaging on the European market should be reusable or recyclable in an economically viable way by 2030. To help achieve this, the Packaging Directive is under review.

Europe also has requirements for wood packaging materials (WPM) used for transport, such as packing cases and pallets. The goal is to prevent organisms that are harmful to plants or plant products from entering and spreading within the EU.

What additional requirements do buyers often have?

Sustainability

Requirements in relation to social and environmental sustainability are becoming more and more common on the European market. These include requirements with regard to sustainable raw materials and production processes, as well as the impact a company has on the environment and the well-being of its workers and the community. These topics can be included in the “story” behind a product and company. Buyers appreciate good storytelling as it helps create an emotional connection with their customers.

Sustainable wood

FSC (Forest Stewardship Council) certification is the most common label for sustainable wooden products. The FSC chain of custody certification guarantees that a product’s materials are sourced from responsibly managed forests. These products are especially popular in Western European markets.

PEFC (Programme for the Endorsement of Forest Certification) is another option. As with FSC, the PEFC chain of custody certification verifies that the certified forest-based material contained in a product comes from sustainably managed forests.

Because these certification programmes are aligned with the Timber Regulation, they are also a way to show legal compliance.

2. Through what channels can you get candle holders on the European market?

The candle holder market is segmented into low-, mid- and high-end (premium) market segments. The candle holders are bought and sold through the traditional channels: importers/wholesalers that supply to retailers, as well as retailers that buy directly from suppliers.

How is the end-market segmented?

Figure 1: Candle holder market segmentation in Europe

Source: Globally Cool, GO! Good Opportunity & Remco Kemper

Low-end market

In the low-end segment, the focus is on functionality and basic design. These candle holders are usually (industrially) mass-produced and inexpensive and are made to hold tea lights or basic cylindrical candles. To keep prices down, the materials used are generally cheap. Typical retailers include hypermarkets such as Carrefour and general department stores like HEMA, as well as garden centres and online convenience stores such as Amazon.

The items in this segment are hard to compete with. Instead, the mid- and higher-end markets  small or medium-sized enterprises (SME) from a developing country the most opportunities.

Mid-end market

The mid-end segment follows the trends, particularly in terms of decoration and colour. These candle holders need to be affordable and their design needs to be mainstream enough to attract the average consumer. Zara Home and Habitat are examples of key mid-end players. Consumers in this segment create a specific atmosphere in their homes, such as a nostalgic 'cottage' style or a natural style. The candle holders they buy need to fit in with this style.

Figure 2: Kähler – Scandinavian-style ceramic candle holders
 

Source: Kähler @ YouTube

In the mid- to high-end segment, craftsmanship, natural or sustainable values and branding play more of a role. Consumers in this mid-high end of the market are somewhat less focused on price and more on expressing their identity.

High-end/premium market

Premium candle holders are eye-catchers that allow consumers to tell a story. Innovation and high design value are more important than price. The candle holders in this segment are often made with premium hand-made techniques and premium materials, but may also have innovative value by virtue of being made with more industrial processes. Premium materials can include crystal, rare metals or special wood types, or innovative combinations of materials. Luxury department stores such as Harrods play an important role in this segment, and designer brands/names are often advertised.

Whether the mid- or high-end segment holds  the most opportunities for an exporter in a developing country depends on its production efficiency, level of craftsmanship and design, and marketing skills.

Through what channels do candle holders end up on the end market?

The channels through which candle holders are bought and sold on the market follow the traditional patterns: import takes place via importers/wholesalers that supply to retailers. Larger retail chains often bypass the importers/wholesalers and import items directly, while more and more smaller retailers have also started buying directly from the supplier. In some cases, buying agents play a role.

Figure 3: Trade channels for candle holders in Europe

Source: Globally Cool, GO! Good Opportunity & Remco Kemper

Importers/wholesalers

Importers/wholesalers sell products to retailers in their own country or region, or re-export them across Europe. Some European markets therefore obtain products through importers/wholesalers from other European countries (intra-European trade). The products supplied to buyers in the business-to-business (B2B) market can be considered a secondary distribution flow for them.

These importers/wholesalers take care of the import procedures. They take ownership of the goods when they buy them from the exporter (as opposed to agents), taking on the risk of the onward sale of the products. Developing a long-term relationship can lead to intensive cooperation on appropriate designs for the market, new trends, the use of materials, the type of finishing and quality requirements.

Importing retailers

Retailers come in many sizes: they can be large and part of a chain, or small and independent. Larger retail chains, in particular, often import directly from exporters in developing countries. Many even have their own buying offices in developing countries. Others, mainly the smaller independent stores, order in Europe from wholesalers.

There is a tendency towards consolidation in European retail. Large retail brands are becoming more widespread and more ‘lifestyle-centred’, offering home decoration items and textiles in addition to fashion accessories and furniture.

Buying agents, buying houses and sales agents

European buyers work through various types of intermediaries In developing countries, there may be buying houses, and in Europe there are both buying agents and sales agents.

• European buying agents represent European buyers in sourcing countries. They act as intermediaries, meaning they do not import products themselves. Sometimes they have a more limited role, such as checking the quality of the products. They can work individually or as part of a purchasing company.
• Buying houses are comparable to buying agents, but they are based in the exporter’s country and usually offer more services. These can range from the sourcing of raw materials to design and sampling services.
• European sales agents can help you find European buyers. However, you should be careful about entering into agreements with commercial agents, because European legislation protects their position.

Agents and buying houses mostly work on commission. They may contact exporters directly you, or a buyer may indicate they prefer using an intermediary. However, it is always best to try to work directly with the buyer. That way, no commission is charged and the buyer can be communicated with directly.

E-commerce

E-commerce is growing, particularly since the start of the COVID-19 pandemic. The best way to benefit from this, is to focus on finding a European importing wholesaler or retailer with a strong online presence to supply products to. For most producers, this is not a separate channel. Catering to buyers that sell online is no different from doing business with offline. Retailers often combine online and offline channels, but the manner of supplying to them is the same. Companies that only sell online also need to take inventory before they can sell their products.

Direct business-to-consumer (B2C) sales

Selling directly to European consumers via an exporter’s website can be complicated and costly. The exporter bears responsibility for aftersales obligations and payment systems, among other things. For most exporters from developing countries this is not manageable. In addition, according to the Consumers’ Association Dutch consumers have been buying less from non-EU web shops since new EU VAT rules were rolled out in July 2021. This makes direct online sales even less appealing.

What is the most interesting channel for you?

Importers/wholesalers are the main channel between exporters in developing countries and European retailers. Working with them can be a good option if the goal is to develop a long-term relationship. These importers usually know the European market well, so they can provide valuable information and guidance on market preferences.

However, as the market becomes more and more competitive, large retailers are increasingly importing goods directly instead of through wholesale importers. Cut out the margins of the wholesaler and reduce delivery time to market are obvious advantages of this. In the lower-end market segments, self-importing retailers might drive a much harder bargain. However, price is less of an issue in the mid- to high-end segment, which offers the most opportunities.

Smaller, independent European retailers continue to buy mainly from domestic wholesalers/importers. As in other sectors, independent HDHT retailers struggle to compete with retail chains. They need to differentiate themselves based on value-added service, specialised offers and authenticity. These buyers typically prefer to order small quantities of each item and small total volumes and to have the items delivery to their doorstep. Repeat orders are also less likely with these buyers. This may not be cost effective for all exporters.

The trend of direct sourcing is expected to continue and may create more opportunities for exporters in developing countries. The pool of buyers will grow if more retailers become importers, which could improve exporters’ bargaining position. Importing retailers order for their own shops and can therefore place orders much more quickly than some importers/wholesalers, who may need to show samples to their retailers before ordering.

3. What competition do you face on the European candle holder market?

Most of Europe’s imports of non-electrical lamps and lighting fittings come from China. These manufacturers mainly supply mass-produced, low-cost items. It is best to focus on in the mid- to high-end market in order to avoid competing with them.

(!) Because no specific trade data are available for candle holders, these statistics cover non-electrical lamps and lighting fittings.

China dominates the European market for non-electrical lamps and lighting fittings, accounting for 63% of the imports. India trails behind, accounting for 11% of imports. The remaining countries in the top 6 are Germany (5.2%), the Netherlands (4.5%), Poland (2.6%) and Denmark (1.7%).

Which countries will you compete with?

China dominates the market

With a direct import market share of more than 60%, China is Europe’s main supplier of non-electrical lamps and lighting fittings. However, the country’s dominance seems to be slightly decreasing. After already declining between 2017 and 2019, Chinese exports of candle holders to Europe fell by another 22% in 2020. In 2021 they recovered to €249 million, but this is likely to have included a significant quantity of delayed shipments carried that over from 2021. Even so, they did not reach 2017-levels.

Its low-cost workforce, availability of raw materials and efficient shipping to Europe compared to other Asian countries make China the most competitive supplier. However, the country’s rising labour costs in the last 10 years have affected its price competitiveness. In the coming years, disruptions following China’s trade war with the United States and the COVID-19 pandemic may also negatively impact the country’s trade performance. This could benefit companies from other developing countries.

Chinese producers mainly supply inexpensive products to the lower ends of the market, as product development and creativity are not their key strengths. To avoid having to compete with them in terms of costs, it is important for a company to differentiate itself and avoid selling mass-produced candle holders. It is better to focus more on products with added value, such as sustainability and the story behind the product. This makes it easier to enter the mid- and higher-end markets, which hold the best opportunities for exporters in developing countries.

Flow of goods from India is unstable

The flow of non-electrical lamps and lighting fittings from India to Europe has been fluctuating in recent years. The import value reached €42 million in 2021, which was the same as in 2017.

Offering skilled labour and transport at competitive costs, India could be well-positioned to take up a bigger share of the European import market. Indian producers have easy access to natural materials and specialise in craftmanship. This allows them to target higher market segments than China with its mass-produced products.

Poland strengthens its position as a regional supplier

After a decline in 2018, Polish exports of non-electrical lamps and lighting fittings to Europe have grown significantly. Even during the COVID-19 pandemic. The country’s supplies grew from €7.0 million in 2017 to €10 million in 2021, at an average annual rate of 11%.

As an Eastern-European country, Poland benefits from its proximity to the Western-European market. This allows suppliers to offer short delivery times, while at the same time, labour in Poland is relatively affordable compared to Western Europe. Suppliers have a good understanding of the European consumer and have well-established and efficient production lines. In addition, products that are ‘Made in Europe’ are becoming increasingly popular.

Vietnam is a low-cost producer

Vietnamese exports of non-electrical lamps and lighting fittings to Europe have stabilised at around €2.9 million, after declining considerably in 2018 and 2019. This resulted in an average annual decline of 11%. This amounts to a market share of about 1%.

Like suppliers from China, Vietnamese manufacturers often prefer to produce in large volumes and are capable of doing so inexpensively. These producers generally have a good idea of what is commercial and trendy. They effectively combine handmade and mechanised production and can cater to a wide range of lower- and mid-end markets. As such, they can be an effective (second-sourcing) alternative to China.

Indonesia performs well despite disruptions

After some fluctuations, Indonesian exports of non-electrical lamps and lighting fittings to Europe performed well during the pandemic years of 2020 and 2021. They grew from €1.8 million in 2017 to €2.4 million in 2021, at an average annual rate of 6.5%.

Wages in Indonesia are relatively high for an Asian country. This means Indonesian suppliers have to target the mid- to high-end markets to be able to compete. They need to do so by delivering high quality items that are often handmade. The logistical structure and business climate in Indonesia are good. This makes the country accessible for European importers, many of whom already have a well-established base in the country.

Slovenia increases its supplies eightfold

Like Poland, Slovenia is an Eastern-European country that benefits from its proximity to the Western-European market. This is reflected in the country’s strong performance in recent years. Slovenian exports of non-electrical lamps and lighting to Europe soared between 2017 and 2021, growing from €0.3 million to €2.1 million, at an average rate of 69% per year. Although this rate is somewhat inflated due to the relatively low export values in 2017, Slovenia’s performance is impressive, nonetheless. The country’s European market share grew from 0.06% to 0.5%.

Which companies will you compete with?

Native Crafts and Arts, Philippines                                           

Native Crafts and Arts is a small family-owned company. This manufacturer and exporter of Philippine crafts has a clear focus: rattan and bamboo fibres. They use these materials in pendant lighting and candle holders in the form of lanterns. Inside the bamboo container, a recycled glass holder can contain the candle. The candle holders are ideal for creating ambience both indoors and in the garden.

The company’s aim is to “empower Filipino craftsmen and promote Philippine craftsmanship by creating and re-envisioning traditional handicrafts in new, sustainable and innovative ways”. Native Crafts and Arts is a good example of Philippine craftsmanship, but it would be good to hear more about the environmental side of their raw materials – the sustainability of their rattan and bamboo.

Esma Dereboy, Turkey

Figure 5: Esma Dereboy – The Production Story of Esma Dereboy Handmade Porcelain Products

Source: Esma Dereboy @ Youtube

Turkish artist Esma Dereboy uses an innovative technique to create embossed ceramics. After the products are handcrafted from a special clay mixture, undercoated and baked, the patterns are embossed or inlaid onto the base. With this technique the studio produces a range of ceramic tableware and home accessories, including candle holders. These embossed ceramics come in various colours, from turquoise to bronze. The studio’s craftsmanship is a key selling point, which is highlighted across the website and in social media. Again, it would be good if sustainability were included in the communication.

Aglow Exports, India

Aglow Exports produces metal home decorations – mainly small furniture, candle holders and other lighting. It combines modern technology with traditional creative processes. Aglow has a design studio with designers from India and abroad, who develop a “wide array of designs using different techniques and skills” and “innovative design concepts”. Besides polishing, the company’s finishing techniques include electroplating, powder coating and lacquering. Aglow’s candle holders come in designs ranging from simple tealight containers to tree-shaped taper holders.

Which products will you compete with?

When it comes to creating ambience, candle holders (and candles) compete with ambient lighting concepts. This is a question of traditional versus modern solutions, and it is up to the consumer to decide what style creates the best cocooning experience. In hospitality settings, the industrial option is often preferred. A vast number of competing options in terms of style and price are available in the product group of candle holders.  

4. What are the prices for candle holders on the European market?

Prices for candle holders vary across the different market segments, ranging from low-end to high-end. Including logistics costs, wholesaler and retail margins, and Value Added Tax (VAT), European consumer prices amount to about 4 to 6.5 times your selling price.

Table 1 gives an overview of the prices of candle holders in the low-, mid- and high-end market segments.

Table 1: Indication of consumer prices of candle holders in Europe

Consumer prices will depend on the value perception of the product in a particular segment. This is influenced by the marketing mix.

Figure 6: Marketing mix – the 4 Ps

Source: Globally Cool, GO! Good Opportunity & Remco Kemper

The European consumer price of your candle holders is about 4 to 6.5 times the selling (FOB) price. In addition to energy, labour and transport costs, FOB prices depend greatly on the availability and cost of raw materials. Occasional cost increases are not passed directly on to the consumer, so they squeeze the margins of exporters, importers and retailers. The recent pandemic-related disruptions have resulted in longer-term cost increases. Because of this continuing pressure, some European retailers have now decided to increase their consumer prices.

Consumer prices generally consist of:

• the FOB price
• shipping, import and handling costs
• wholesaler margins
• retail margins
• VAT, which varies per country, but is about 20% on average

Figure 7: Indication of price breakdown for carpets in the supply chain

Source: Globally Cool, GO! Good Opportunity & Remco Kemper

For example, in Table 2 the FOB price is set at €10. Depending on the market segment the product is designed for, the consumer price will range from €41 in the low-end market to €65.50 in the high-end market.

Table 2: Example of the price breakdown by market segment

The FOB price of €10 includes the margins of the producer. These margins will depend on efficiency and the way in which prices are determined. Margins in the lower-end segment, in which large volumes are sold at low prices, are generally smaller than in the middle- and higher-end segments.

The following are a few examples of candle holder prices across Europe:

• recycled glass candlestick, Dille & Kamille  (the Netherlands), €8.95
• ceramic candlestick for 2 candles, H&M (international), €14.99
• WFTO-guaranteed soapstone lantern, Globo Fair Trade Partner (Germany), €25.90
• designer iron and aluminium candle holder, Catellani & Smith (Italy), about €160

This study was carried out on behalf of CBI by Globally Cool B.V. in collaboration with GO! GoodOpportunity.

Please review our market information disclaimer.