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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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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.