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Markets and Dichotomies

By: Briony Davies
Posted: September 6, 2007

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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.
Per capita expenditure in Asia-Pacific, Latin America and Eastern Europe in 2006 was $1.8, $7 and $5.1, respectively, in comparison to $16.1 and $18.9 across Western Europe and North America. In Eastern Europe and Latin America, particularly, government initiatives have focused on promoting good oral care generally, while advertising campaigns by manufacturers have concentrated more on promoting greater frequency of changing brushes and higher consumption of toothpaste. In the Philippines, domestic personal care manufacturer Lamoiyan Corp. supported a dental outreach project in 2005, the message being that oral hygiene is a basic human right.

In encouraging sales in rural communities and among less affluent urban dwellers (the United Nations estimates suggest at least one billion people live in slums, mostly in Asia-Pacific, Africa and Latin America), manufacturers also need to concentrate on keeping costs down. Procter & Gamble’s Gillette has launched a cheaper manual toothbrush targeted at less affluent consumers in Brazil. Small pack sizes for toothpastes are also ke y, and the affordable sachet format that revolutionized India’s hair care sector could also be applicable in oral hygiene. Local suppliers are better positioned to offer products for less, and there are also opportunities for retailers in the private label segment, where comparable products are offered at lower prices. However, educational campaigns backed by multinationals are instilling brand loyalty among the world’s emerging market consumers.

Dynamism in Baby Care Fueled by Health and Wellness

Global baby care sales grew at 6.8% in 2006, making the category the second most dynamic behind sun care. Demographics and economic factors are the vital drivers of baby care. Increased wealth clearly is a spur to sales, with parents trading up from adult toiletries, but higher birth rates, which theoretically should spur demand, are not always a positive. In some markets, it has actually been the slowing of the birth rate combined with women giving birth later in life that drove growth. These mothers are more informed, more protective and are generally further ahead in their careers, giving them more money to spend on their children. Health and wellness is one of the key secondary drivers of growth in this area. In baby care, fear about the possible side effects of the chemicals used in cosmetics and toiletries is most acute, given the delicate nature of baby skin. Continuing reports that point to the potential harm of some ingredients is expected to spur demand for natural and organic baby care.

As natural and organic baby care sees increasing demand, new products in this niche are expected to proliferate, causing manufacturers to look for new ways to differentiate their brands from competitors. Food ingredients are likely to be one such way. The links between nutrition and health are already well understood, and many parents would feel more comfortable purchasing products with clearly identifiable ingredients. Local players in countries such as China and India, where there is a tradition of natural medicine, could also exploit health-giving herbs and plants to give their products an edge in their domestic markets. Looking forward, the market is likely to see an increase in ethical brands, those that are sustainably sourced or use biodegradable or recyclable packaging, as well.

Sun Care a Hot Spot