According to Euromonitor International, the global air care market has been the most dynamic sector in the household care arena since 2001. Sales of household care products, excluding air care, have grown by 14% over the past five years, however, revenues from air care products alone have increased by nearly 30% over the same period—reaching $6.4 billion in 2005. This increased dynamism is being driven by consumers’ changing attitudes toward the home environment and a slew of new product developments.
Reign of the Big Three
Three players dominate global air care: SC Johnson, Reckitt Benckiser and Sara Lee Corp. The three control nearly 60% of the market, and each of these companies’ share of the market has remained stable since 2001—apart from Reckitt Benckiser, which saw a 4% jump in its share. This was as a result of the popularity of new products, such as Air Wick Mobil’ Air and Air Wick Freshmatic, launched during 2004 and 2005 respectively.
However, the makeup of the industry is likely to change as a result of P&G’s decision to enter the market in 2004 with its Febreze brand. Febreze was already a powerful brand within fabric fresheners, and P&G decided to extend its range into the air care arena, initially through the launch of a traditional spray. The range now has been extended to include plug-in devices. Spray fresheners are the largest subsegment globally, generating revenues of $1.8 billion in 2005. While the device has changed little over time, the range of fragrances available and how the spray interacts with odor have changed considerably. Air Wick Odourstop and SC Johnson’s Oust promote a new air treatment philosophy where the spray destroys the odor-causing bacteria instead of simply masking the smell. Although this new fragrance technology was initially only available in traditional sprays, new delivery systems now are becoming commonplace—notably, electric devices.
The Lion’s Share
Western Europe and North America dominate global air care sales; combined, they command a 71% market share. According to Euromonitor International, Western Europe was the largest region, generating $2.3 billion in 2005. This compares to $2.2 billion spent in North America. The largest subsegment in Western Europe is spray air fresheners, which represent nearly a third of the overall market. The sector has been boosted in recent years by the development of concentrated sprays that offer a longer-lasting fragrance than standard aerosols. Most manufacturers simply have extended existing spray brands into this format rather than create new brands, new odor busting sprays for example.
In North America, sprays account for approximately a fifth of total air care. This is considerably less than the revenue generated in Western Europe, which may reflect different attitudes across the two regions. In the U.S., the largest category is electric air fresheners, which commanded a 37% market share in 2005. This difference indicates that consumers in North America are more likely to want a permanent scent presence in their homes, while Western European consumers like the flexibility offered by spray fresheners. The launch of Air Wick Freshmatic in 2005 created a totally new area within sprays—automatic battery-operated sprays. These devices allow the user to select the interval at which the fragrance is released.
Differing distribution patterns also have affected the way in which the market has developed in these two regions. In North America, discounters—such as Wal-Mart and Target—account for 46% of the market. While in Western Europe, the supermarket/hypermarket channel is the largest channel, accounting for a 67% market share. This disparity results in differing prices, affecting consumer behavior. The Airwick Mobil’ Air device, for example, costs the equivalent of $11 in the U.K., while in the U.S., thanks to the prevalence of discounters, consumers pay approximately $3. Truly Portable
Growth within electric air fresheners has been aided by the recent development of battery-powered devices, such as Air Wick Mobil’ Air and SC Johnson’s Glade Wisp. Battery power means the top of the range devices are truly portable for the first time, and can be placed anywhere in the home. In the last two years, sales of electric devices in North America have grown by 38%, thanks mainly to the introduction of the battery feature.
This is not the end of plug-in products, however, and North America has seen the introduction of more elaborate devices. In 2004, P&G launched its revolutionary Febreze ScentStories. The device itself resembles a CD player and features a fan that circulates the fragrance. Consumers can choose between seven different “CDs,” each featuring five scent combinations such as Exploring a mountain trail or Relaxing in the hammock. Each scent is “played” for 30 minutes, and can last for a total of 50 hours. P&G claim that ScentStories allows the user to experience candle-like scents without having to strike a match.
Design Targets Lifestyles
Companies also are paying greater attention to consumers’ desire to create a more relaxing and welcoming home environment. In order to help satisfy this shift, SC Johnson launched Glade Scented Oil Candles in 2005. Initially launched in the U.S., the product features a traditional candle that melts into a pool of oil that emits a fragrance. This product is based on the “Scenterior” design concept that SC Johnson is heavily promoting. “Scenterior design” literally means personalizing your home with scents that fill an entire room and complete the interior design. Glade Scented Oil Candles boosted sales of candle air fresheners by nearly 30% in 2005. The product hit supermarket shelves in the U.K. in early 2006, and currently is being supported by an extensive marketing campaign. The launch of Glade Scented Oil Candles also reflects a trend toward combining air care with light and color—an extension, again, of interior design. SC Johnson’s Glade Scented Oil Light Show is designed to satisfy this desire. Recently launched in the U.S., this product is marketed for use specifically in the bedroom, and is aimed primarily at teenagers. The concept of improved aesthetic design also is reflected in the improved shape of such products as SC Johnson’s Glade Wisp. This is a battery powered device that automatically releases a puff of fragrance into a room every couple of minutes. The device is fully adjustable to allow consumers to regulate the amount of fragrance it delivers. Glade Glass Scents combines the trend for improved design. It is a gel air freshener—a more traditional device—of natural fragrance oils set in an etched glass design.
Japan’s Style over Substance
Asia Pacific is the only other region that generates more than a billion dollars a year in air care sales, with Japan accounting for 74% of those sales. Local manufacturers dominate the Japanese market, with Kobayashi Pharmaceutical Co., Ltd. and S.T. Chemical Co., Ltd. accounting for 64% of total sales.
Japanese consumer behavior is similar to that displayed by consumers in Western Europe and North America. They demand much more than simply odor masking capabilities. Consumers are particularly interested in lifestyle aspects, such as outer appearance and odor-destroying features.
In Japan, gel fresheners are the most popular format, and sales rose by 16.5% in 2005, generating $213 million in revenue. Liquid fresheners proved to be the second most popular format. The leading brand is Kobayashi Pharmaceutical Co Ltd’s Sawaday, which commands a 25% market share. Electric air fresheners were expected to be a big hit when first launched in Japan. However, they proved to be so unpopular that some manufacturers discontinued production within 24 months. In order to try and boost sales of electric devices, some manufacturers have released novel combination products. First made available in 2004, Hakugen Mezamashi’s Aromu product combines air care with an alarm clock. This gadget releases fragrance half an hour before the alarm time—reportedly, this helps the user to wake up feeling more relieved and relaxed.
Japanese consumers also are interested in limited edition products, and a number of manufacturers have focused on providing limited edition fragrances in an effort to boost market share. Kobayashi launched limited edition fragrances according to seasons, such as sakura during the spring and a snow fragrance during the winter. Apart from fragrances, Kobayashi also put extra effort into the packaging design of the limited editions.
Minor Markets See Growth
The dynamics in the minor regional markets of Eastern Europe, Latin America and Africa/Middle East differ largely from those of more developed regions. Disposable income levels are lower, and air care is considered less of a priority. The traditional spray freshener is the most prevalent device in all of these regions—with SC Johnson’s Glade and Reckitt Benckiser’s Air Wick continuing to be the most popular brands.
As economic conditions improve, the popularity of devices other than traditional sprays will grow. In Eastern Europe, for example, liquid air fresheners are becoming increasingly popular, with a staggering growth of 293% during the past three years—albeit from a low base. This growth has been facilitated by the introduction of Sara Lee’s Ambi-Pur brand in 2002 and the 2004 introduction of Glade liquid air fresheners.
In Latin America, the continued expansion of the spray segment has been the trend in recent years—driven mainly through the introduction of concentrated sprays. Since 2002, Reckitt Benckiser, Clorox and SC Johnson all have introduced new concentrated products to the market. Gel fresheners are growing in popularity in the Africa/Middle East region, particularly in South Africa—the region’s largest market. The introduction of SC Johnson’s Glade Secrets Gel has helped invigorate the market. Other introductions of slow-release air fresheners are seen as higher cost variants that are ensuring value, if not volume growth. Due to the availability of novelty formats, existing products such as standard sprays are being commoditized, with large scale discounting ensuring a surge in volume sales.
Euromonitor International predicts that, by 2010, the overall market will have grown to $7.2 billion annually. This increase will be driven primarily by two main segments—sprays and electrics, which are set to reach sales of $2 billion and $1.8 billion respectively. Western Europe and North America are nearing volume maturity; therefore, manufacturers need to concentrate on developing value-adding features to their products in order to drive revenue growth. The development of P&G’s ScentStories device demonstrates this. Manufacturers also should focus on developing more powerful concentrated sprays that are better able to destroy odor-causing bacteria instead of simply masking odor. They should also concentrate on continually developing new fragrances to keep more traditional formats—sprays, gels and liquids—appealing to consumers.
As design becomes more important, manufacturers are likely to continue to invest in devices that form an integral part of home interiors. Consumers will be increasingly looking for designer products, and will pay a price premium to secure them. This strategy should enable manufacturers to benefit from value gains in an increasingly volume-stagnant market. In the less developed regions, it is unlikely that large markets will develop for the more advanced electric devices or lifestyle items in the short term. Therefore, manufacturers need to focus on introducing cheaper alternatives, mainly sprays, and improving distribution networks to establish firmer positions in smaller, yet more appealing, markets.