Bringing Up Baby

November 9, 2005

Today's two-income families are willing to indulge their kids with higher-priced baby lotions, massage oils and bath products.

Forget quality time. How about some quality diaper jelly? More manufacturers are trying to convince older, financially secure parents that they can afford a little more luxury when it comes to bringing up baby. As a result, the U.S. baby care category, once dominated by mass market brands such as Johnson & Johnson and Baby Magic, has been reborn thanks to an influx of new, higher-priced products from smaller manufacturers.

“Companies are seeking growth through increased price points,” said Matt Petterson, an analyst at Euromonitor, Chicago. “Consumers are shopping at higher-end locations for their baby care products. There’s been a spread in distribution. Consumers are no longer solely focused on drugstores.”

Mr. Petterson pointed out that retailers as diverse as Sephora, department stores and The Gap offer cosmetics and toiletries for children as well as babies. He noted there is a segment of parents in the U.S. that has the disposable income to spend on high-end clothing and other products for their babies. “Mothers are shopping at Neiman Marcus and Saks for baby clothes these days,” he noted. “That was a very marginal business in the past. But people are having children later in life and today’s first-time parents have more disposable income to spend.”

Whether prestige or mass, baby care product marketers will have a bigger consumer base to target. According to the most recent government statistics, the U.S. birth rate is on the rise again after declining for most of the 1990s. Although there are no hard statistics for baby care product sales in department and specialty stores, the trend toward higher-priced items has trickled down to the mass market. According to Information Resources Inc., Chicago, sales of baby care products rose 3.8% to $410 million for the year ended May 21, 2000. Unit sales, however, were up just 3.1% to slightly more than 170 million units.

“Just as with adult products, both food and non-food, the emphasis is on premium and decadent products,” noted Jennifer Timpe, managing editor, Global New Product Database. “The current economic boom has allowed consumers to splurge on themselves, their pets and their babies.”

According to industry observers, well-heeled parents may be willing to spend upwards of $30 for an upscale diaper rash cream. But for moms and dads who want the best products at a more reasonable price, there is a wave of small, startup companies that offer baby care products for $15 or less. These companies often have a new mother at the helm who got the itch to start a baby care company after being disappointed with the products already available on the market. For example, Heidi Kluzak launched Mom’s Kiss in a Bottle last fall after noticing there was a huge gap between mass market and prestige baby care products.

Quality at an Affordable Price
“There was J&J and a few other brands in the mass market and then there were department store brands such as Origins, Bobbie Brown Essentials and some of the bigger prestige companies,” Ms. Kluzak recalled. But she said neither group was doing a good job making affordable, natural baby care products.

“I looked at the market as a whole and realized I could provide natural products at accessible price points,” said Ms. Kluzak, a mother of two. “All of our products are priced under $10. When you’re talking about babies, anything more than $10 is a major commitment so if you purchase Mustela (a leading, premium-priced line), you’d better like it.”

The Mom’s Kiss in a Bottle line includes shampoo and body cleanser, moisturizing lotion, vaporizing massage and bath oil, rejuvenating massage and bath oil, balancing massage and bath oil, bonding massage and bath oil and a variety of gift sets. The line is available in specialty stores, small chains and on the internet (www.momskissinabottle.com).

The massage oils in the Mom’s Kiss in a Bottle line are derived from soybean, which is less expensive than sweet almond—the oil of choice for many higher priced products. According to Ms. Kluzak, when it comes to performance, however, the two oils are comparable. Like many small, privately-held baby care companies, Mom’s Kiss in a Bottle, Taylors Falls, MN, avoids using mineral oil or petroleum-based products. Ms. Kluzak is also a proponent of infant massage, an idea that is rapidly catching on throughout the U.S. Advocates of infant massage insist the technique is an excellent way for parents to bond with their children very early in their life—especially parents who put their children in daycare for a good portion of the day.

“Mom and dad are at work all day. They need to bond with their babies,” noted Ms. Kluzak. “Massage provides an intense half hour where they get to know baby and baby gets to know them.”

Mom’s Kiss in a Bottle products include a brochure co-written by well-known baby massage expert Vimala McClure. Although Ms. Kluzak is a firm believer in the benefits of massage, she’s also a pragmatist. “The more people you inform about infant massage, the more people buy your oil. This is a business opportunity, but I have the baby’s best interest at heart.”

In the future, the Mom’s Kiss in a Bottle line may be expanded to include ointments, powders and other traditional baby care items. But like many small startups, Ms. Kluzak has to keep a close eye on costs, which has an impact on the variety of containers she can choose from.

“The minimums on stock are so high,” she lamented. “To order 50,000 units for a company my size is a lot. But that’s a development issue for us. We’re trying to decide where to go next. We just launched a gift set and that’s been a strong seller. People are looking for a complete baby gift.”

Another small company that’s made a big splash in baby care gift sets is Baby Spa, Secaucus, NJ. Less than two years after it started, Baby Spa’s products are available in approximately 500 doors, such as Sephora, Buy Buy Baby, boutiques and independent retailers. The Baby Spa line is also available on the internet at sites such as babystyle.com, 1-800-FLOWERS. com and planetrx. com.

A diaper jelly, which retails for $12 for a 4-oz. tube, is the most recent addition to the Baby Spa line that includes massage oil, lotion and bubble bath. Company founder Missy Chase told Happi that Baby Spa products are aimed at discerning customers who have learned the benefits of certain ingredients and the potential harm of mainstream ingredients such as sodium lauryl sulfate. “Parents want the best for their babies. They educate them, play Mozart for them and try to enhance their world from birth. They want products that don’t contain harmful ingredients.”

Playing with the Big Kids
With more consumers willing to spend a little (or a lot) more on baby care needs, more players are expected to enter the upscale baby care market. At the same time, many of the well-established, mass market brands are updating their collections to capitalize on the latest formulating and marketing trends. Johnson & Johnson, for example, has introduced Johnson’s Bedtime Bath with lavender and chamomile. The product is designed to help soothe and relax fussy babies and toddlers at bedtime. The formula is enriched with lavender, chamomile and other natural herbs, which are known for their relaxing and soothing properties, according to J&J.

In recent months, J&J has also rolled out Baby Powder with Aloe & Vitamin E. It combines the natural absorption of pure cornstarch with 10% zinc oxide, the ingredient used most for the treatment of diaper rash.

Also new is Johnson’s Baby Oil with Chamomile and Multi-Vitamin Complex. The mass market leader has also introduced new forms of its best-selling shampoo line. J&J has added new gel variants of its baby shampoo detangling formula and moisturizing formula. The gels let parents squeeze out just the right amount of concentrated product without spills or slippery messes. Finally, J&J zeroed in on the antibacterial trend with new Johnson’s antibacterial towelettes. The 100% alcohol-free towelettes are billed as safe and gentle enough for babies.

J&J survived a public relations headache last year when California environmental activists filed a lawsuit claiming that the use of baby powder posed a threat to children’s health. J&J quickly issued a statement in defense of its best-selling product, but the bad publicity may partly explain why baby powder sales slipped during the past year.

New product activity is coming from large, mass market firms as well as small, specialty companies which can only mean store shelves will continue to get more crowded. “The number of births isn’t up that much, but the number of new product entries are,” noted Parker Gilbert, brand director of Baby Magic. “New products are trending toward the adult cosmetics market in terms of ingredient and usage. More adult-type ingredients such as chamomile, vitamin E and lavender are finding their way into baby care formulas.”

Playtex Revamps Baby Magic
Baby Magic has been getting a makeover since it was acquired by Playtex Products last year. Playtex launched a national TV ad campaign in May, increased sampling and is working on several new products, according to Mr. Gilbert. “We didn’t buy Baby Magic to remain static. We’re looking at all of our options to drive growth,” he noted.

Several Baby Magic SKUs could benefit from a growth spurt. According to IRI, dollar sales of Baby Magic lotions slipped 8.4% for the year ended May 21, 2000. In contrast, sales in the baby lotion category rose 5.1%.

The new Baby Magic ad campaign, featuring The Drifters’ Magic Moments, marks Baby Magic’s return to television advertising for the first time in seven years. In addition to a bigger advertising budget, Playtex will leverage the synergy between Baby Magic and its well established infant care line of bottles and pacifiers, Diaper Genie and Chubs baby wipes. According to Mr. Gilbert, Baby Magic still has a strong following among consumers, even though there has been a lack of marketing and innovation in recent years.

Although he wouldn’t provide specific details about pending new product launches, Mr. Gilbert did tell Happi that aromatherapy “is a bit of a gimmick.” According to the Playtex executive, lotion and bath products will always be the mainstay of the segment. “We have a strong base that we’re looking to build without being gimmicky. We’re building value for the customer and her baby.”

While the Baby Magic brand remains under construction, new players have rushed into the mass market. During the past year, Fisher-Price, the well-known maker of children’s toys, entered the market and already managed to become the No. 9 player in the baby lotion category, according to IRI data. More impressive has been the rise of the Gerber Wellness baby care line which made its debut in March. In just two months, Gerber has managed to crack the top 10 in several key segments including: lotion (No. 5), oils (No. 5), ointments and creams (No. 8), powder (No. 10) and soap (No. 4). Gerber’s strong entry into the category is due to its well-known name, according to Henna Inam, marketing director, Gerber Wellness. In fact, in food stores, where Gerber dominates the baby food segment, the Gerber baby care line has surpassed Baby Magic sales, according to company officials.

“In a consumer loyalty test, Gerber was the No. 1 brand, ahead of Disney,” noted to Ms. Inam. “Our share in the baby food category is greater than 70%. We have a strong heritage and moms trust our knowledge of babies.”

Gerber’s baby care line includes 12 SKUs ranging in price from $3 for baby wash to $12 for gas drops. Several products in the line contain aloe vera and chamomile. Gerber’s baby lotion contains natural vitamin E, aloe vera and chamomile to moisturize and soothe baby’s skin. The baby oil also contains natural vitamin E and aloe vera whereas the baby powder is 100% talc-free and specially designed with cornstarch powder to help treat and prevent diaper rash. Gerber baby shampoo has aloe vera and chamomile in a gentle, tear-free formula. Gerber Vapor Bath contains natural menthol, eucalyptus and chamomile to gently soothe and comfort babies with colds. Gerber Diaper Rash Ointment gently treats and prevents diaper rash. The rich, thick formula contains zinc oxide. Gerber Diaper Rash Lotion glides on clear to form an invisible barrier that protects a baby’s skin from further diaper rash irritation. The Gerber line also includes products that are not traditionally found in a baby care line, including tooth and gum cleanser, gas drops, vitamin drops and a pediatric electrolyte drink to prevent a baby from becoming dehydrated.

Us vs. Them
Many of the newest products from the larger companies may boast natural ingredients such as chamomile, aloe vera and vitamin E, but the smaller baby care product companies insist that they are the standard bearers when it comes to natural baby care products. “Gerber insists it is the first and only baby wash with lavender and that really annoys me,” said Ms. Chase. Her Baby Spa line introduced a lavender-laced baby wash more than a year ago. “J&J has followed our lead in aromatherapy. They can serve the mass market because their product doesn’t compare to mine.”

Like other small companies, Baby Spa doesn’t use mineral oil or petrolatum in any of its products. As a result, it can take years to find effective alternatives for these and other ingredients. It took Ms. Chase and her team nearly a year to develop a diaper jelly that was petrolatum- and zinc-free, but Ms. Chase didn’t want to introduce the jelly until it met her requirements. Now Baby Spa is trying to develop a cornstarch-free baby powder because cornstarch can cause yeast infections, according to Ms. Chase. Apparently, there are plenty of parents who agree with Ms. Chase’s philosophy. Baby Spa easily exceeded its sales goal last year and is trying to triple it this year thanks to demanding parents who will spend the money to assure the best quality in every aspect of their child’s life, said Ms. Chase.

Creating a Buzz with Babies
Burt’s Bees may have gotten its start in beeswax candles, but the company was reborn after Baby Bee, its line of baby care products, made its debut. Since the company was formed in 1991, the Baby Bee line has grown to 15 SKUs and is considered a major brand at the company, according to Roxanne Quimby, president. “We represent an alternative to J&J,” said Ms. Quimby. “The younger generation is looking for alternatives as they seek more natural products. J&J doesn’t try to be natural.”

Environmental-friendliness plays a key role in the company’s formulation policies. Ms. Quimby told Happi that she’s been trying to add a shampoo to the Baby Bee line for years. Unfortunately, no test formula has been able to reach the 90% natural level, required in order to be called a Burt’s Bees product. For now, baby lotion is the best-selling SKU in the Baby Bee line.

“Science is not the master of the universe,” added Ms. Quimby. “Consumers are back tracking and moving toward gentle, uncomplicated ingredients for their complicated lives.”

If products are gentle enough for babies, they’re certainly gentle enough for adults too. With so many consumers convinced they have sensitive skin, many products designed with baby in mind end up in the hands of mom and dad too. In fact, Jeanne Winer founded Bambini Soul (New York, NY) last year after discovering a unique formula in Italy. The Bambini Soul line includes lotions, diaper rash creams, face and body cream, body oil, shampoo, body wash, cradle cap oil and sunscreen.

According to Ms. Winer, the products contain ingredients such as lavender oil, shea butter, sweet almond oil and cabbage rose water. Ms. Winer expects the line to achieve $1 million (wholesale) in its first year. The nine products in the Bambini Soul line range in price from $13.50 to $16.95. Bambini Soul is available at Sephora, Bergdorf-Goodman and Saks Fifth Avenue as well as through internet sites such as Ibeauty.com.

“Baby care is igonored in this country. The high-end products were available in Italy and France,” insisted Ms. Winer. “There were no choices in the U.S. beyond J&J and Baby Magic.”

Ms. Winer said she is targeting older mothers with more disposable incomes as well as working mothers who may have a little guilt and want to indulge their children. The brand has already become a hit with several celebrities including Sharon Stone, Vanessa Williams and Madonna. That star-attraction helped Bambini Soul get some press in Town and Country, Allure and InStyle.

The best-selling products in the line include the bodywash and moisturizing cologne, the latter a product that, while popular in Europe, has never caught on in the U.S. where parents prefer that their babies smell, well, like babies.

“I don’t believe in fragrance for babies. That’s a European trend,” said Ms. Kluzak of Mom’s Kiss in a Bottle. “We’ll never do a perfume for babies; they smell good already. We’ll create products that are needed, necessary and not overdone.”

Some may wonder if babies are really in need of multi-SKU personal care lines, but as long as moms and dads are willing to indulge their kids, the baby care market should continue to enjoy a growth spurt.

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