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Deodorant Market Smelling Rosy

By: Carrie Lennard, Euromonitor International
Posted: July 31, 2009, from the August 2009 issue of GCI Magazine.

According to Euromonitor International, the deodorants sector was one of the few segments to post growth in 2008 (8% globally; up from 5% in 2007) and outperformed the global cosmetics and toiletries market, which saw 5% growth in the same period. (See Figure 1.) This success is evidence of a shift in global consumer perception of deodorants—from a product with relatively low usage among consumers globally to one that is fast becoming a necessary part of daily grooming regimens. Despite strong growth rates, deodorants still only account for $17 billion in total sales worldwide, or just 5% of the overall market. This compares rather unfavorably with the 23% share held by skin care products, proving that there is still much work to be done if deodorants are to reach their full potential.

Latin America’s Love of Scent Key to Growth

Latin America was the strongest regional contributor to the growth of deodorants in 2008, with a 17% value increase over 2007, according to Euromonitor International. This growth was driven primarily by a boom in sales in Argentina (28% value growth), Venezuela (27%) and Brazil (18%). Brazil was the largest single market for deodorant sales, with sales of $2.9 billion in 2008, accounting for 17% of sales globally. The country’s dominance in retail sales of deodorants stems partly from its love affair with fragrances, which accounts for nearly one-fifth of its total cosmetics and toiletries sales. Deodorants are often used as a more affordable substitute for fragrances by lower-income consumers. The strong cultural emphasis placed on the importance of smelling good, combined with the increasing purchasing power of lower socioeconomic groups, contributed to the 18% rise in value sales in 2008 Gradual consumer trade-up from less expensive pump formats, as favored by domestic deodorant leader Natura, to more expensive sprays has also been a key factor in Latin America, leading to 59% growth in the sprays category in 2008. Leading companies such as Unilever, with its Rexona brand, are focusing on spray deodorants, with strong marketing activity and new product development. The main reasons behind this emphasis on sprays are that consumers who try the spray format rarely revert to less expensive deodorants such as pumps, and more importantly, profit margins are higher for sprays than for pump deodorants.

Sachets Boost Sales in Low-income regions

As many of the world’s consumers have considerably lower incomes than those in developed Western regions, sachet marketing has become a valuable tool for deodorant manufacturers to increase sales in low-income regions. In India, for example, Unilever has successfully marketed small Rexona deodorant sticks for a fraction of the cost of products sold in Western markets.

Mature Western European Market Posts Modest Rise

As the most mature region for deodorants, Western Europe accounts for the largest share of the global market, with sales worth $5.6 billion in 2008 (33%). In most Western European countries, there is a strong social stigma attached to not using deodorant, and this has kept product penetration very high for many years. Conversely, it is now difficult for manufacturers to make significant category gains in Western Europe. The market has reached strong maturity levels, and growth has been comparatively slow in recent years. The majority of consumers already use the more expensive spray deodorant format, so there is less scope for trade-up in that respect—although even the mature U.K. market still reported growth of 6% for deodorant sprays in 2008. Instead, marketers are increasingly focusing on offering consumers value-added products such as deodorants with antiaging (Unilever’s Dove Pro-Age) or ultra long-lasting benefits (notably Sure, also from Unilever).