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- Continued innovation and improvements will boost future sales for room sprays.
- Diffusers will continue to dominate, especially in mass channels.
- New fragrances, particularly nature-mimicking and clean-laundry style scents, will aid sales.
Fueled by a strong sales boost in multifunctional room sprays and reed scent diffusers, the U.S. home fragrance market posted a very strong 6.2% sales gain for 2007, with total market retail sales reaching $5 billion. The latest data from Kline & Company’s study, Home Fragrances 2007: U.S. Market Analysis and Opportunities, indicates the market will continue on its upward trend during the next five years, with continued innovation and the incorporation of natural/sustainable products playing an important role in the uptick through 2012.
Sprays, Diffusers Steal the Show—and Share
Leading the pack in terms of sales growth, room sprays posted a whopping 18% growth during the past year—growing nearly three times faster than the overall market. The skyrocketing historical growth in this category is largely the result of innovative air-sanitizing and odor-control products, such as Procter & Gamble’s Febreze and S.C. Johnson’s Oust. In 2007, market leader Reckitt Benckiser introduced its Air Wick Freshmatic Mini, contributing to the company’s banner sales year in which it saw a strong double–digit gain.
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Gains in the room spray category are largely attributed to growth in sales through mass channels, with strong support coming from P&G, Reckitt Benckiser and S.C. Johnson. On the coattails of their success, mass-market channels now account for 52% of total market sales, up 3% from just five years ago.
Likewise, scent diffusers posted sales gains of nearly 10% greater than in 2006—thanks mostly to the growing popularity of reed diffusers, which are simple to use and can be left unattended without risk of fire. The novelty, safety and long-lasting fragrance of reed diffusers have attracted consumers away from traditional candles. In fact, reeds have become so popular that Yankee Candle Company, the second largest home fragrance player, has incorporated more than 20 of their top-selling scents into this product line.
Candles’ Glow Continues to Fade
Still the largest category with a 45% share of the U.S. home fragrances market, candles continue to command a large presence. However, facing stiff competition from reed diffusers and other more worry-free products, the candle category added only 2.4% in sales for the year. Lack of innovation and stiff competition for shelf space from trendier products have impacted the category for several years.
One bright spot in the candle category arrived in 2007, courtesy of the innovation leaders at Procter & Gamble and S.C. Johnson. Both companies launched candle versions of their respective Febreze and Oust products. These popular odor-elimination room spray lines claim to remove odors, rather than masking them, to leave the room smelling fresh and clean. Kline estimates that P&G’s Febreze candle generated considerable retail sales during its first year, following the company’s multi-year absence from the candle market.
New scents that are reminiscent of vacation destinations also became quite prevalent in 2007. Perhaps a result of tightening consumer budgets with less to spend on vacation plans, the most popular new fragrances from Yankee Candle— Sun & Sand and Island Spa—evoke relaxing summer holidays on the beach. Marketers focused on providing customers with experiential scents, including products named after popular destinations and featuring corresponding fragrances. Adding to the rest and relaxation trend, aromatherapy candles grew in importance during the year.
Nevertheless, meager growth in the candle category is likely a contributing factor in the significant number of consolidations and acquisitions in the market, with core candle companies seeking to diversify their portfolios and shore up profits. Recent examples include the 2007 American Greetings sale of its candle line to Light House Candles in order to concentrate on its stationery business, while Blyth sold its mass-market candle business to MVP.
The embattled potpourri category continued its downward spiral in 2007, posting a net loss of -1.8%. So sharp are the losses in this category that Esscentual Brands’ Claire Burke actually closed up shop for the summer in order to reorganize, only to re-emerge in September as property of Rich Brands Canada, Inc. It remains to be seen what this new ownership will mean for this stalwart of the potpourri market. Even long-time potpourri maker Harry Slatkin has virtually eliminated all potpourri from his brands carried in Bath & Body Works and upscale retail venues.
Eco-friendly Movement at Home in Home Fragrances
Evidence of products and companies “going green” is apparent in nearly every industry, and the home fragrance market is certainly no exception. As consumers become more environmentally conscious, they are increasingly demanding more eco-friendly products. And, in most cases, product manufacturers are obliging—either with sustainable manufacturing practices, eco-friendly ingredients, responsible packaging, or encouraging environmental activism among employees and customers.
Truly green products represent a very small segment of the home fragrance market. However, there is a movement among many brand marketers toward adopting eco-friendly practices in their product formulation, processing, fragrances and packaging.
Ironically, the candle business may have both benefited and suffered the most from this movement. Partly in response to customers’ demands and partly as a result of the rising cost of paraffin, candle companies have certainly been at the forefront of developing cleaner-burning formulas made from renewable sources such as pure soy, soy-blends, beeswax, palm oil and even olive oil. Fragrances derived from nature and made with essential oils gained in popularity over the last year—including simple, clean scents such as citron basil, white thyme and wild poppy, rose and other florals, and antioxidant-packed superfruits such as pomelo and pomegranate. Environmentally friendly wicks made with organic wood or lead-free cotton have helped to reduce unwanted emissions.
However, despite its overt efforts toward greening the industry and new safety technologies such as self-extinguishing wicks that help prevent fires, the candle market has still suffered at the hands of reed diffusers. These offer more consumer confidence in terms of safety and environmental impact, require less packaging and even convey a more holistic image based on aromatherapy principles. Expect to see further innovation and growth in the availability and popularity of passive diffusers (those that do not require electricity or batteries), such as recently introduced aroma rings from companies such as Bath & Body Works and Method. Marketers in other categories, such as room sprays and active diffusers, face a more significant challenge in their green efforts. Pressurized aerosol packaging and battery or electricity dependent dispersion techniques have sent manufacturers looking to assess ingredients to meet customers’ demands. But, it’s a delicate balance—customers may try a product in an effort to support the green movement, but the product must deliver comparable performance to non-green options in order to ensure repeat purchases.
Innovative Delivery to Lead Strong Industry Growth
Looking forward, certainly innovation will continue to drive sales, with room sprays and scent diffusers leading the way. Updated dispersal systems, leading-edge packaging design and value-added technologies such as finer misting action, concentrated and longer-lasting fragrances, and odor-eliminating technologies will boost future sales for room sprays. Diffusers will continue to dominate as well, especially in mass channels, where retailers will likely increase shelf space for this high-margin product. Marketers will strive to leverage the appeal of reed diffusers with decorative bottle shapes and designs coupled with new fragrances, particularly nature-mimicking and clean-laundry style scents as consumers seek greater variety. Additional R&D investment is expected by major marketers striving to develop eco-friendly products to meet the increasing demands of environmentally conscious consumers. For many marketers held back by less-than-green packaging requirements and delivery systems, expect to see greater emphasis on nature-based scents.
Karen Doskow manages Kline’s annual research study Home Fragrances: U.S. Market Analysis and Opportunities. For more information and consumer products industry research, visit www.klinegroup.com.