Siemens AG (USOTC:SIEGY)
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The incandescent light bulb, a fixture in the Mexican household, is being phased out by government regulations but market leader Osram said it is ready to win over consumers to newer technology.
The substitution of visually similar light bulbs at the consumer level "at times is difficult," said Jorge Cabrera, the Mexico marketing director for the unit of Siemens AG (SI).
"When you physically see one that costs five pesos (40 cents) and another one that costs 15 pesos ($1.21) , you ask yourself why," Cabrera said, referring to the higher price of the newer, longer-lasting bulbs. He spoke following a presentation of Osram's substitution bulbs, including one using LED technology that will burns for 25 years.
Osram said the Parathom light bulb uses 80% less energy than a comparable incandescent bulb. It also costs nearly 10 times as much.
In the short term, Cabrera said, consumers are more likely to opt for relatively inexpensive halogen light bulbs that are physically similar to incandescents, or the power-saving "compact fluorescent" ones, both already on store shelves. Osram is the top seller of incandescent light bulbs in a market of about 260 million units a year.
Mexican regulations for lighting mandate energy efficiency standards that will make incandescent bulbs obsolete, with 100-watt bulbs to be phased out at the end of 2011, followed by 75-watt bulbs in 2012. By the end of 2013, 60-watt and 40-watt light bulbs will be gone.
The regulations have exceptions for bulbs under 40 watts, for decorative lighting, and for industries like transportation, mining and health care. Osram, GE Commercial Materials and Philips Mexicana helped develop the new standards, according to the regulatory document.
Cabrera said the switch to more modern technologies will bring new players into the market. "This is going to be a revolution," he said during a press conference. "Before there were three players, now there are electronics companies like Toshiba and Samsung moving into lighting," he said.
GE and Philips are currently the other two big lighting players in Mexico.
Osram is one of many companies expected to bid on a government tender for about 45 million energy-saving light bulbs that will be used to jump-start the substitution program.
Energy Minister Georgina Kessel, a big promoter of energy efficiency and renewable sources like wind power, said at the U.N. climate change conference in Cancun, Mexico, earlier this month that government and industry were working hand-in-hand for more sustainable development.
She mentioned such programs as the move from incandescent lighting to low-power bulbs, a government-sponsored program to exchange old appliances for newer and more efficient ones, and wind farms built by companies like retailer Wal-Mart de Mexico, cement giant Cemex and bread maker Bimbo to power their own operations.
-By Laurence Iliff, Dow Jones Newswires; (52-55) 5980-5184, firstname.lastname@example.org