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Home Fragrance Still Hot!

By: Karen Doskow, Kline & Company
Posted: November 3, 2008, from the November 2008 issue of GCI Magazine.

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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