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Markets and Dichotomies

By: Briony Davies
Posted: August 26, 2008, from the September 2007 issue of GCI Magazine.

page 2 of 4

With global sales of $23.6 billion, the bath and shower products category is among the largest in personal care. However, with average annual growth rates of 3.5%, it is the least dynamic sector in cosmetics and toiletries. In Western Europe and North America, manufacturers seem to have reached a dead end, with maturity of bath and shower products in these developed economies leaving little room for volume growth. In addition, increased competition puts pressure on prices, thus limiting opportunities for value gains. North America, in particular, has been struggling with 0% growth each year since 2001.

Segmentation is one of the key trends driving the sector, with more products designed specifically for women, men, children and seniors. New spins on this include targeting athletic and active lifestyle consumers with convenience formats and strong-acting, refreshing formulations. Examples include Liz Sport Shower Gel (Liz Claiborne) for women and Physio Sport Shower Gel, which moisturizes and uses aromatherapy ingredients to soothe sore muscles. Cleansing is still the primary purpose of bath and shower products, but enhancing mood and offering a holistic, pampering experience have also become key. Spa and aromatherapy claims have, therefore, become commonplace, and textures and formulations are more fragrant, thicker and more luxurious. The at-home spa trend also offers opportunities for segmentation, with products distinguished by their influence on mood. Despite this trend, however, consumers still prefer the convenience of showering, and bath additives are on the decline at the global level.

A look at less-developed markets, in contrast, highlights the different strategies that need to be employed. India’s bath and shower penetration is among the lowest in the world, with spend less than $2 per capita in 2006, and value growth there is being driven by bar soap. Manufacturers are dropping pack sizes to reduce unit prices and place products within reach of the country’s less affluent majority. There is also a push to widen penetration to India’s rural poor. Unilever’s Swasthva Chetna (“health-awakening”), launched in partnership with the Indian government, covers about 18,000 villages in eight states to reach 70 million rural dwellers and teach the importance of hand washing. In the country’s more affluent western states, body wash/shower gel is beginning to find demand, although in the country, as a whole, it remains nascent, with sales of just $9 million, or less than 1% of total bath and shower products sales.

Oral Hygiene Education Key in Emerging Markets

Oral hygiene is the largest of the toiletries sectors at $27.7 billion, although it is also among the least dynamic, both historically and in forecast terms. Despite attempts to add value through high-tech innovations and pricey additions to oral care routines, including tooth whiteners and dental floss, growth in per capita expenditure in mature markets—including North America, Australasia and Western Europe—is tailing off.

Manufacturers will, therefore, perform better by focusing attention on underdeveloped markets.