INNOVATION SPARKS THE HOME FRAGRANCE MARKET

Size: px

Start display at page:

Download "INNOVATION SPARKS THE HOME FRAGRANCE MARKET"

Alban Brown
6 years ago
Views:

1 INNOVATION SPARKS THE HOME FRAGRANCE MARKET A presentation to the Spring Meeting & Trade Show April 6, 2006

2 AGENDA Market Overview Sales and growth Categories Trends Innovations Competitive landscape Outlook Q&A 1

3 MARKET OVERVIEW 2

4 MARKET OVERVIEW Candles account for half of industry sales... Candles, 50% Diffusers, 28% All other, 11% Room sprays, 11% Total: $2.9 billion manufacturers 3

5 MARKET OVERVIEW Market growth has been sporadic... Change, %

6 MARKET OVERVIEW The top 5 players control 58% of the market... All other 5

7 MARKET OVERVIEW Diffusers and room sprays lead growth... 1,600 CAGR, 1% 1,400 Manufacturers, $ million 1,200 1, CAGR, 9% CAGR, 11% CAGR, 5% CAGR, 3% CAGR, 3% 0 Candles Diffusers Room sprays Specialty room products Potpourri Specialty wardrobe products 6

8 MARKET OVERVIEW Innovation has helped drive sales in all categories... Candles Diffusers Room sprays New shapes New forms Blendables Fragrance innovation Battery operated Blendables New forms Multifuntional products New dispersal systems 7

9 MARKET OVERVIEW Innovation has propelled price points upwards... Now Candles: $2.99-$35.00 Diffusers: $2.99-$35.00 Room sprays: $2.99-$95.00 Then Candles: $2.99-$12.50 Diffusers: $0.99-$5.99 Room sprays: $0.99-$2.99 8

10 MARKET OVERVIEW Scents are proliferating from candles to other categories... Candles Candles Diffusers Diffusers Room Room Sprays Sprays 9

MARKET OVERVIEW New fragrances are sales drivers across all product

.. Relaxing Harbor Mist Perfect Harmony Relax & Refresh Home Comfort

Spice Spiced Pumpkin Pie Edible Strawberries and Cream Warm Caramel

11 MARKET OVERVIEW New fragrances are sales drivers across all product categories... Relaxing Harbor Mist Perfect Harmony Relax & Refresh Home Comfort Clean Cotton Home Sweet Home Clean Linen Sunwashed Linen Spice Inviting Spice Spiced Pumpkin Pie Edible Strawberries and Cream Warm Caramel Vanilla Macintosh Chocolate cappuccino Floral First Bloom Lily of the Valley Lilac Blossoms Herbal Sage and Citrus Basil Citrus and Sweet Chamomile 10

12 Candles 11

13 CANDLES The category is mature... $ Million 1,600 Dynamic growth Competitive turbulence Saturation 1,400 1,200 1,

14 CANDLES Scented category sales are up about 2%... Manufacturers, $ million 1,600 1,400 1,200 1,

15 CANDLES Category flatness is due to... Competition from diffusers Lower levels of innovation Lack of advertising support Lack of interest in major retailers such as Target Poor performance of key specialty store retailers such as Pier 1 Imports 14

16 CANDLES Yankee Candle is the distant leader... All other 15

market Botanicals Gel/preserve candles Layered Multiples

17 CANDLES Innovation and newness have helped spark sales... Yankee Candle caters to gift channel Mass brands enter market Botanicals Gel/preserve candles Layered Multiples Bendables Soy New shapes Oil candles 1980s 1990s 2000s Today 16

18 CANDLES S.C. Johnson delivers new technology to the category in

19 CANDLES Blending scents and colors continues to be popular... 18

20 CANDLES New shapes add variety to shelves. Rounds, ovals and urn shapes are popular 19

21 CANDLES Wax supply and price is an issue... Wax shortage Wax prices up +30% Manufacturers reformulating with soy & vegetable wax Marketers raising price on most filled candle products to cover material increases 20

22 Diffusers 21

23 DIFFUSERS Growth is more moderate in 2005 compared to a record breaking year in Manufacturers, $ million Change: 7%

24 DIFFUSERS Mass marketers SCJ and Reckitt Benckiser dominate the category... All other 23

25 DIFFUSERS New innovations have driven the category... Jelly jar Scented oil plug-ins Battery operated Appliances Blendables New shapes 1990s 2000s Today 24

26 DIFFUSERS Battery-operated diffusers spiked sales in SCJ s Glade Wisp SCJ s Oust Fan Reckitt Benckiser s s Air Wick Mobil Air 25

27 DIFFUSERS Blendable fragrances transfer to the category... SCJ s Create-a-Scent launched in 2005 Yankee and Febreze follow with dual chamber oil electric diffusers in

28 DIFFUSERS Febreze Scentstories adds a new dimension... $35.00 price tag Sales tripled in first full year on market Modeled after CD player Heavily supported by P&G 27

29 DIFFUSERS Other new diffusers also add interest... Glade Glass Scents (2005) Method Aroma Capsule (2006) 28

30 DIFFUSERS Bath & Body Works adds its own spin... Perfect Christmas Program Wallflowers Night Light 29

31 DIFFUSERS Reed diffusers continue to grow and add texture... First introduced by The Thymes Ltd. in 2002 Uses reeds to diffuse scented oil Price points to $

32 Room Sprays 31

33 ROOM SPRAYS The category enjoys double-digit growth of 10.4%... Manufacturers, $ million Change: 10.4%

34 ROOM SPRAYS Mass marketers dominate the category accounting for 77% of sales

35 ROOM SPRAYS Many factors bolster category sales New dispersal systems Multifunctional products Scent proliferation Heavy ad spending Dominated by mass High end/specialty joins game 34

36 ROOM SPRAYS Products now do more than ever... Then Mask odors Leave scent behind Now Eliminate odors Neutralize odors Leave scent behind for up to one hour Sanitize air Kill airborne bacteria 35

37 ROOM SPRAYS P&G s Febreze extended to category and leads growth... Launched in 2004 Grew by 250% in 2005 Now third leading brand after Oust (#1) and Glade (#2) 36

38 ROOM SPRAYS Specialty and prestige players show interest... Yankee repackages aerosols in decorative boxes Henri Bendel launches room sprays Bath & Body Works introduces mood-balancing sprays Jo Malone introduces Living Cologne at $

39 Potpourri 38

40 POTPOURRI The category inches along... Leading players Blyth Aromatique Esscentual Brands Yankee Candle Limited Brands Market trends Modest sales gains New companies continue to emerge Marketers place stickers on potpourri bags calling out enhanced fragrance levels Existing marketers continue to freshen their on-shelf look through new packaging Craft stores show strong potential Object potpourri displacing traditional botanical sales 39

41 Specialty Products 40

42 SPECIALTY PRODUCTS The category remains quiet... Includes Simmering oils Incense Fragrance oil burning lamps Lamp rings Sachets Market trends Fragmented market Fragrance oils biggest contributor and growth driver Small/older consumer base Sachets important segment Important add-on category for marketers 41

43 SPECIALTY PRODUCTS La-Tee-Da adds excitement to gift store channel... Oil burning lamp Collectable New affordable price point of around $35.00 (previously in $75.00 range) Attractive idea for mass marketers 42

44 Outlook 43

45 Industry sales are projected to grow at a moderate pace... 4,000 CAGR, 5.2% $3.7 billion 3,500 $2.9 billion 3,000 2,500 2,000 1,500 1,

Many factors will affect the industry... Positive factors Strong growth projected via innovation Multi-functional products Opportunity for value-added products 5.

46 Many factors will affect the industry... Positive factors Strong growth projected via innovation Multi-functional products Opportunity for value-added products 5.2% CAGR THROUGH 2010 Negative factors Strong spending in diffusers and room sprays make it difficult to grow mass-market candles Need to evaluate how to grow candle business: buying habits, new consumers New channels can provide opportunity 45

crackle finish Products to emphasize flame glow New diffuser

47 Innovation will continue to play a key role... Fragrance innovation New finishes - Yankee iceberg w/ crackle finish Products to emphasize flame glow New diffuser forms P&G will be a force to be reckoned with Limited/Bath & Body Works to stir things up 46

48 For more information... If you require additional information about the content of this analysis or the services that Kline provides, please contact: Carrie Mellage Industry Manager, Consumer Products Phone: % discount for conference attendees through April 15,

49 Questions &Answers 48

candles and beyond 2010 Home Fragrance Overview

candles and beyond 2010 Home Fragrance Overview air care industry review Air fresheners* sales increased 15% from 2004-2007 but declined -8% from 2007-09 as consumers cut spending Candles sales decreased