A plastic container for storing and preserving food made Tupperware one of the most important mass consumer companies in the United States after World War II. Seven decades later, the company is experiencing years of problems, suffocating debt and a relationship with plastic that does not fit a new reality where the environmental impact can be a burden. This week, Tupperware Brands filed for bankruptcy in the United States, following in the footsteps of other corporate giants that have gone from the honeys of capitalism to closing their businesses with more or less noise.
“In recent years, the company’s financial position has been seriously affected by a complicated macroeconomic environment. As a result, we have explored numerous strategic options and determined that this is the best path forward,” said Laurie Ann Goldman, the company’s president and CEO, in the statement the multinational sent to the US stock market supervisor to justify its bankruptcy.
This does not mean that the company will disappear immediately, but rather that it will request the application of Chapter 11 of the American bankruptcy law, which consists of putting the company under the control of a court, which must see if the activity is viable and approve the decisions necessary to save the company. In this case, an attempt will be made to find new investors to inject funds and, at least, save the brand.
An economic model from the past
Tupperware made its name in the market—and named its airtight containers—in the 1950s and 1960s, partly through a word-of-mouth business model in which its customers, especially women, simultaneously acted as salespeople and convinced their acquaintances to buy the products, in what became known as “Tupperware parties.” That business model expired, and the company failed to adapt.
Tupperware no longer sells just containers, but all kinds of kitchen items, from ladles to bottles. A company that suffers above all from a debt of more than 800 million dollars (nearly 720 million euros) that it is not able to face with its activity and that has passed into the hands of opportunistic funds.
In 2022 — the last year for which it has presented complete data — it earned more than $1.305 billion, nearly 20% less than the previous year, and lost nearly $30 million. It continues to rely on direct sales, as that year there were nearly 300,000 independent sellers, according to data published by Bloomberg. The group also closed its only factory in the United States, where it employed nearly 150 people. And its shares have for some time been in the orbit of “meme stocks,” in which investors coordinate on social networks to bet on falling prices, which usually ends up causing more problems for companies.
Failure to adapt to changes
Tupperware has not been able to adapt to changes, both in product preferences and in the sales model, where consumers buy online and not by catalog. A lack of adaptation that has taken many companies by storm. One of them, Blockbuster, the video store chain that had 9,000 stores and 60,000 employees worldwide, until its bankruptcy a little over ten years ago. It was said that this brand opened a store every 17 minutes.
Blockbuster didn’t know how to see streaming coming. In fact, Netflix’s founders tried to buy the network for about $50 million, but Blockbuster shareholders rejected the offer and the company eventually lost its meaning.
Something similar is happening in retail, where large companies related to commerce, not only of textiles but also of all types of items such as toys, have ended up closing their doors because they did not know how to face the competition from physical stores, such as Walmart; and online, especially on Amazon.
This is what happened with companies like Sears or American Apparel. The former was the department store chain par excellence. Founded in the late 19th century, it filed for Chapter 11 bankruptcy six years ago because it could not meet its debt of more than $5 billion. In 2021, it is lowering the blinds of its last store.
What happened with Sears was very similar to what happened with Neiman Marcus or Barneys, department store brands that served as an example to other companies around the world, such as El Corte Inglés in Spain. Neiman Marcus and Barneys, which had stores on New York’s main streets, managed to survive the 2008 financial crisis, but were unable to overcome the pandemic and, above all, online competition.
Precisely, surviving only as a digital store is what American Apparel did, declaring bankruptcy in 2015 after more than questionable management that led to the dismissal of its founder, Dov Cherney, accused of harassment. The same manager had to seek protection from the bankruptcy law in 2022. American Apparel claimed $30 million from him.
Other companies, icons of American mass consumption, such as Macy’s, are trying to survive by being smaller. The company, which also owns the Bloomingdale’s department store, announced this year that it was closing 150 stores to focus on the stores it considers most profitable, about 350. These are the ones where it sells more expensive brands and where it gets a bigger margin on sales.
