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Bath & Body
The Realities of Washroom Economics
By: Diana Dodson
Posted: January 10, 2008, from the January 2008 issue of GCI Magazine.
page 3 of 4Global Opportunities
The outlook is not all doom and gloom, however. While the key value markets of North America and Western Europe have reached saturation (their bath and shower products categories contracting by a combined $1 billion in 2001–2006), emerging markets are still enjoying dynamism. And as they grow, these markets are becoming increasingly important to the global market, cushioning the effects of the maturing developed countries. With booming new economies such as China, India and Thailand, for example, Asia-Pacific is forecast to have succeeded Western Europe as the largest region for bath/shower products in 2007, according to Euromonitor International.
Bath and shower products are one of the first beauty categories to benefit as undeveloped economies start to grow. Players hoping to benefit from the dynamism need to focus on offering affordable options and educating consumers on hygiene routines. Sachets are a popular method for bringing down unit prices in less affluent markets, and Procter & Gamble is just one manufacturer that offers many of its big-name bath/shower brands in a single-use packet. Unilever’s Lifebuoy bar soap has captured 13% of India’s bath and shower products category through its Swasthya Chetna (health awakening) program, which has taught over 70 million consumers about good hygiene practices since its 2002 launch in the region.
Key international players such as Unilever, which leads the global bath/shower category with a 21% share, are not the only companies seeing the benefits of fast-expanding emerging markets. Local manufacturers are ideally placed to offer cost-effective options, and through their wide distribution networks, they are better able to reach even remote rural dwellers. In Brazil, for example, global leaders Unilever, Colgate-Palmolive and Avon rank in the top 10, but the other seven players are all home-grown—including Natura, Indústria Matarazzo de Óleos e Derivados and O Boticário. According to Euromonitor, six of the 10 largest bath and shower products providers in China are local, whereas in India, there is a 50/50 split between international heavyweights and domestic rivals.
The multinationals are trying inventive approaches to selling in emerging markets and make the most of the opportunities. Procter & Gamble has introduced hanging product displays in Latin America, where small mom-and-pop stores still predominate, and utilizing ceiling space has become the solution to overcrowded shelves in the region. The company is also offering benefits to stores that stock more of its brands and display them front-of-counter and in more desirable places, including the “hot zone” around the cashier.
Longer term, however, the going is set to get easier as modernizing retail environments and more affluent consumer markets see consumers in the emerging markets trading up to the big-name international brands. The trend toward higher priced bath/shower products is already starting to take effect in India, the least developed of the booming BRIC markets. Euromonitor International statistics show that while the $1.2 billion bar soaps sector declined over 2001–2006, body washes and shower gels more than doubled in value to $11 million. Liquid soaps also enjoyed strong growth over the period (36%).