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The socioeconomic tailwinds that drove growth in air care in recent years went sharply into reverse during 2008 as credit markets froze and housing values went into free fall in a number of markets. According to Euromonitor International data, the global air care market was worth just under $8 billion during 2008. However, the rate of annual growth in value sales slowed from 4.8% in 2007 to 2.9% during 2008, well below its CAGR of 5.4% during the 2003–08 period.
The role played by the residential housing market in the current economic crisis is of particular importance to the air care industry, as evidenced by the fact that some of the worst-performing air care markets in 2008 were also those with the weakest housing markets.
For example, in the U.S., growth in sales of air care products fell from 2.3% in 2007 to -0.4% during 2008. Since peaking during 2006, the Case-Schiller 20-City Housing Index has lost more than 40% of its value. This decline in housing values has gone hand-in-hand with a surge in housing repossessions, helping to push the rate of home ownership in the U.S. down to 67.5% during the first quarter of 2009, its lowest level since 2000. Meanwhile, in Germany, which has been hit at least as badly by the downturn as the U.S., sales growth in air care was relatively stable between 2007 and 2008, easing from 1.2% to 1.1%. Crucially, Germany avoided a boom-and-bust housing cycle. In Spain and Ireland, two Eurozone economies that are suffering housing busts, the performance of the air care segment deteriorated markedly between 2007 and 2008. In Ireland, the rate of annual growth almost halved, down from 7% to 3.8%, while annual growth collapsed from 10.2% to 1.7% in Spain. This strong correlation is most likely the result of a combination of a negative wealth effect and a reduction in levels of home ownership.
Rapid rates of urbanization and economic development, particularly in the BRIC economies (Brazil, Russia, India and China), have helped to support growth in sales of air care products in developing markets. As a result, double-digit rates of value growth in air care were maintained in the Indian (12.2%), Eastern European (15%) and Latin American (10.8%) markets during 2008.