Can Instant Pot Survive Post-Bankruptcy?

The New York Times reported earlier this year that "Instant Brands has struggled to find new fans for its beloved Instant Pot and other products." Now the company has filed for bankruptcy.

Introduced in 2010, the Instant Pot emerged as an electronic marvel for both pressure and slow cooking. Its swift ascent in popularity gave birth to an enthusiastic community known as “Potheads,” who passionately experimented with a variety of recipes, from soups to puddings.

Vanity Fair put it bluntly by stating that "the Instant Pot failed because it was a good product," and "maybe even a great one." It saves time and labor, "promising to turn ingredients into family meals while you clean up, tend to your kids, and do all of the other things you could be doing instead of keeping an eye on the stove."

However, the allure of the Instant Pot seems to have waned among newer audiences, placing its parent company in a precarious position. Instant Brands, the conglomerate behind the Instant Pot and other renowned household names like Pyrex, Snapware, and CorningWare, recently disclosed its decision to file for Chapter 11 bankruptcy. This strategic move aims to secure $132.5 million in financial support, allowing the company to reorganize and remain operational rather than dissolve its assets.

In a recent statement, Instant Brands emphasized that the fresh capital would ensure uninterrupted payments to employees, suppliers, and vendors. Additionally, the bankruptcy proceedings won't encompass the retailer's operations beyond the U.S. and Canada. While the company remained tight-lipped about the performance of specific products, data from the market research firm Circana indicated a 20% slump in multicooker sales between April 2022 and April 2023.

Smrity P. Randhawa, a clinical accounting professor from the University of Southern California Marshall School of Business, highlighted a challenge for companies like Instant Brands and Peloton: They manufacture long-lasting products that don't require frequent replacement. Barbara E. Kahn, a marketing professor from the Wharton School of the University of Pennsylvania, stressed that makers of such durable goods must incentivize consumers to upgrade or replace their items.

Merely achieving viral popularity doesn't guarantee a company's lasting success, particularly for brands offering products intended for single-time purchases. While a product might enjoy a sweeping demand surge, this momentum often dwindles, potentially depriving the company of its primary income stream. Moreover, maintaining a sustainable business is challenging when relying solely on products without a continuous revenue model.

In contrast to the Keurig coffee maker, which can be upgraded with advanced features, Instant Pots maintain an inherent simplicity.

This month, TheStreet stated that the Instant Pot company should survive its Chapter 11 filing, "which will be a relief for millions of people who own its products." Before the bankruptcy, the company had been majority-owned by Cornell Capital, but now it's been sold.

Instant Brands' proposal has been approved for "the sale of its housewares and appliance businesses to affiliates of Centre Lane Partners," according to PR Newswire.

Instant Brands anticipates that the sale will ensure its continued operations and the backing of its entire brand portfolio. Before the companies finalize these deals, they will undergo scrutiny by regulatory authorities in both the U.S. and Canada. The aim is to complete both transactions by the end of Q4 2023.

The company estimates that nearly 90% of American homes (and more around the world) own a product from Instant Brands.