Air Fryer In, Instant Pot Out: The Bankruptcy Case

by Natalia Rudakova
10 minutes read
The Weekly Snack_Instant Pot Bankruptcy
Credit: Unsplash.com

The once-thriving company behind the revolutionary kitchen appliance, Instant Pot, is now facing a challenging period as it files for Chapter 11 bankruptcy.

Instant Brands, the Ottawa-founded company that gained worldwide recognition for its flagship product, announced the filing in the U.S. Bankruptcy Court for the Southern District of Texas. This move comes as the popularity of the Instant Pot seems to have waned, with consumers increasingly gravitating towards alternative kitchen gadgets, such as the air fryer.

In this article, we will explore the factors leading to Instant Pot’s bankruptcy and the challenges the company faces.

The Rise and Fall of Instant Pot

Founded in 2009, Instant Brands experienced tremendous success with the Instant Pot, a versatile kitchen appliance that combined the functionalities of a slow cooker and a pressure cooker. It quickly gained popularity among home cooks around the globe.

However, as the culinary landscape evolved, so did consumer preferences. The emergence of the air fryer, with its promise of healthier cooking and crispy results, posed a direct challenge to the reign of the Instant Pot.

Changing Consumer Trends

The decline in Instant Pot’s sales can be attributed to shifting consumer preferences and the surge in demand for air fryers. Market research firm NPD Group revealed a substantial decline in sales of electronic multicooker devices, primarily Instant Pots.

In 2020, at the onset of the COVID-19 pandemic, sales reached an impressive US$758 million. However, by the following year, they plummeted by 50%, amounting to only US$344 million. Moreover, unit sales saw a significant decline of 20% during the period ending in April.

Instant Brands CEO, Ben Gadbois, acknowledged the challenges faced by the company, citing “global macroeconomic and geopolitical challenges.” He specifically pointed to higher interest rates and tightened credit terms that rendered the company’s capital structure unsustainable and depleted its cash reserves.

Despite the bankruptcy filing, Gadbois remains optimistic about the future, emphasizing the company’s commitment to its consumers worldwide.

To navigate through the bankruptcy process, Instant Brands has secured a new debtor-in-possession financing commitment of $132.5 million from its existing lenders. This injection of funds will support the company during this challenging period, enabling it to maintain operations and fulfill its obligations.

Analyst Downgrade and Industry Challenges

Instant Brand’s financial struggles were further underscored by a recent downgrade in its rating by S&P Global. The rating agency expressed concern that the company’s rating may deteriorate further if it seeks bankruptcy protection. S&P’s analysts highlighted seven consecutive quarters of year-over-year sales contraction as a significant contributing factor to Instant Brands’ decline. Consumer demand for home products, including Instant Pots, has been subdued due to reduced discretionary spending.

Diverse Brand Portfolio and Merger

Instant Brands boasts a diverse brand portfolio, which includes renowned names like Corelle, Snapware, CorningWare, Visions, and Chicago Cutlery. In 2019, the company merged with kitchenware giant Corelle, adding the iconic Pyrex brand to its repertoire. However, even this strategic move failed to shield Instant Brands from the challenges that now culminate in bankruptcy.

The filing for Chapter 11 bankruptcy by the company behind Instant Pot marks a significant turning point for this once-thriving kitchen appliance manufacturer. As consumer preferences shifted towards alternatives like air fryers, Instant Pot faced declining sales and financial challenges. With debtor-in-possession financing in place, the company aims to navigate through this tumultuous period. The fate of Instant Brands hangs in the balance, as it strives to regain its footing and adapt to the evolving culinary landscape.

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