Dollars and Scents

By Christine Esposito, Associate Editor | August 27, 2010

With shrinking household budgets hampering sales of candles and air fresheners, environmental fragrance firms are gearing up for the holidays by focusing on value and innovation.

During the real estate boom, everybody wanted their homes to be worthy of a spread in Better Homes & Gardens. Even in modest neighborhoods across America, consumers were installing professional kitchen appliances and granite countertops, turning unfinished basements into media enclaves and opting for $20,000 master bathroom additions. Consumers spared no expense when it came to creating the perfectly styled home, and candles and home fragrance products went along for the ride.

But like many other markets, the environmental fragrance sector has experienced the wrath of an economy ravaged by the real estate bust. And while a candle, plug-in air freshener or reed diffuser may seem like a small purchase, when consumers started thinking about every dollar they spent (or were about to spend), home scenting products were easily pushed aside for household staples.

llume’s Fall Splendor Collection features rich gourmet scents such as Applewood, Heirloom
Pumpkin and Roasting Chestnuts.
According to Mintel International, Chicago, after rising 15% from 2004-07, sales of air fresheners through FDMx outlets declined by 8% from 2007-09. From its peak of $1.05 billion in 2007, sales dipped to an estimated $983 million by 2009 as many consumers migrated to Walmart or cut spending, based on numbers compiled by the market research firm. And the candle market melted as well. U.S. candle sales fell from $4.1 billion in 2006 to $3.3 billion in 2009, with a 10.4% decline in 2008 and an estimated 7.7% drop last year, based on Mintel’s number crunching.

But consumers aren’t snuffing out candles and tossing aside air fresheners entirely. Industry players say consumers are stretching out the time between purchases (as they are with visits to the hair salon) and they’re looking for innovation and value when it comes to environmental fragrance products.

Air Care Unplugged
In fact, many value-oriented options, such as products from the Renuzit franchise, came up smelling like roses in 2009.

According to data from SymphonyIRI Group, a Chicago-based market research firm, sales of Renuzit Longlast adjustable home air fresheners rose 9.67% to $67.1 million for the 52 weeks ended June 13, while Renuzit Super Odor Neutralizer’s sales surged 95% to $23.6 million—and unit sales were up 10.93% and 182.80%, respectively. In addition, Sales of Renuzit’s Crystal Elements line surged an impressive 180.83% to nearly $14 million and unit sales jumped 192%.

According to Wendy Warus, vice president of brand management and commercialization for home care at Henkel, Renuzit’s non-electric options resonated with consumers during the economic downturn more than pricey plug-in devices did.

“The economic downturn has had a major impact in air care. In the downturn, even consumers who truly love fragrance and are loyal to the category had to walk away. The powered segment/higher price candles category took a brutal hit,” she said, noting that the rapid growth the home fragrance market experienced during the past several years was fueled by powered/plug-in products, which typically have higher price points.

“Our strategy is to offer great value to consumers; we have been flourishing in economic downturn when others have been struggling more,” Warus told Happi. “With price points under $5, and 99 cents for Renuzit Adjustables, consumers have turned and focused on us.”

The shift has shed new light on what some considered a staid sector of the marketplace.

“Before the economic downturn, the nonelectric segment was frowned upon; it was lower value,” said Warus, predicting that the market would “heat up” as competitors were “taking a second look at this segment.”

They aren’t just looking. Over in Cincinnati, for example, P&G’s air care team has rolled out Febreze Set & Refresh, which the company says is designed to freshen noticeably longer than cone air fresheners. It has a suggested retail price of $2.99.

“Consumers are still using air freshener in their homes. They are looking for the best mix of performance, convenience and value. [Set & Refresh] answers those three factors in an elegant way,” said Jamie VanderHorst, research and development engineer for Febreze Set & Fresh.

According to VanderHorst, Set & Refresh has a “contemporary, sleek design” and features an innovative membrane technology that allows the scented oils to continuously release over time. The technology is critical to Set & Refresh’s performance and it marks the first time this technology in combination with P&G’s perfume expertise is being used in the air freshener category, she said.

To support the launch, Febreze has partnered with Sandra Lee, best known for her TV series “Money Saving Meals,” and enlisted the help of House Party Inc., a marketing company that develops “consumer activation campaigns.” House Party helped set up 6,000 “parties” during which hostesses and guests tested Set & Refresh months before it hit store shelves.

A Customer for Life
Enticing consumers to try a home fragrance item is critical in FDMx outlets, which is often the point of entry for category newcomers. The bevy of fragrance choices and delivery forms in the supermarket aisle could easily overwhelm a first-time shopper who is typically there for one reason only: odor.

Jo Malone’s Pine & Eucalyptus luxury candle hits counters in October.
“People the enter category when they have odor issues,” noted Cathy Beros, a senior scientist and Febreze scent trends expert. “They are driven to the air care aisle because they have a problem.”

And that is when a company can capture a consumer for life. As people enter the air care category, there is a “natural progression,” according to Beros. “People start as more casual users, and they grow into using more product because they like to create an ambiance in their home.”

Environmental fragrance firms fawn over those heavy users—consumers who believe unique/long-lasting scents and décor items are integral to their home life, and purchase products year-round. Yet, in today’s economy, companies targeting this population are also talking up value when it comes to their new product offerings.

Gold Canyon, a Chandler, AZ-based direct seller of home fragrance and body care products, has rolled out ScentMate Personal Scent Diffuser, which offers consumers a new way to scent their own personal space.

“We were inspired in this type of application looking for a product for use in personal space. We are known for strong fragrance throw; but this is more for personal space like a cubicle or bathroom,” said Lynae Parrott, marketing director.

The battery operated device works with Gold Canyon’s concentrated home fragrance oils; consumers can opt for just a few drops of fragrance and mix and match oils to create scent all their own, according to the company. In addition, the device can be personalized with embellishments, such as a turquoise stone, rhinestone or even a skull and bones charm.

“We have tried to make products versatile and deliver more value. Our niche is the strong fragrance. Because it is strong, it lasts longer—that is our value proposition,” according to Parrott, who added that Gold Canyon’s business has remained steady in the recession.

“We have been happy about our business this year and where it is taking us,” she said, pointing out that Gold Canyon demonstrators are having more parties. “Customers are spending a little bit less, but they are still having parties. It is a win-win model for us in this type of economy.”

Burning Bright
Other home scent companies appear to be faring well too despite the recession, and are in the process of expanding their operations.

Illume—a maker of premium candles and home fragrance founded in 1990 in Los Angeles—recently completed the expansion of its U.S. manufacturing and distribution facility in Minneapolis, MN.

The additional square footage brought the total size of the facility to just over 100,000 square feet. The project called for remodeling a former post office annex to create a new order fulfillment center and finished goods warehouse. As part of the expansion, Illume implemented energy-efficient temperature control, lighting and air circulation throughout its production facility and warehouse and installed flooring made from recycled materials. In addition to the company’s product development, sourcing and marketing initiatives, the Minneapolis facility also houses Illume’s R&D facilities.

“We were growing out of our space, and the breathing room is making us much more efficient. We also have temperature control throughout our facility, which is very important when manufacturing candles,” said Liz Barerre, senior vice president brand management and product development at Illume, which also makes candles and home fragrances for private label retailers like Anthropologie and Target.

“We are very excited for the future of our private label and branded businesses,” Barerre noted.

Pacific Trade International (PTI), a global marketer of candles, home fragrance and décor products and the company behind the Chesapeake Bay Candle brand—continues to make progress on its new North American facility in Glen Burnie, MD.

The firm tapped Todd Green, a candle industry expert with more than 18 years of experience, to lead the operations of the new facility, which is its first U.S. production site. Equipped with a state-of-the-art testing laboratory, the new facility is scheduled to be operational in the fourth quarter, according to Marie Finck, public relations and marketing manager.

The U.S.’s largest candle company—Yankee Candle—is also seeing positive signs in 2010. For the second quarter ended July 3, 2010, sales increased 5.5% to $125.4 million. Wholesale business jumped 5.8% and retail sales rose 5.2%. For the six months ended July 3, 2010, retail sales rose 9.6% to $145.4 million, driven primarily by an increase in new stores opened after the second quarter of 2009, an increase in comparable store sales and an increase in sales in its fundraising business. Wholesale sales increased 14.8% to $121.0 million, according to the firm, which was founded in 1969 by Michael Kittredge.

Having exited the business in 1998 when he sold Yankee Candle for $550 million, Kittredge is making a comeback in the candle market. He and his son (Michael III) have founded The Kringle Candle Company, which will sell hand-poured candles from a facility in Bernardston, MA. Kringle Candle started production during the summer and at press time, planned to have samples ready by early September.

Another home fragrance firm that’s making changes is Tod Young, Inc., which touts Palettes By Tod Young, a line of six fragrances that correspond to and complement the colors used to decorate a home, regardless of interior design or furniture style.

The firm’s exclusivity with Frontgate has expired, and as such, founder Tod Young is taking Palettes to retailers, which he notes will be good for his unique, upscale range.

“We have discovered that a lot of retailers are cutting back on their orders; they want to streamline. What sets us apart is that we are offering something different,” he said.

In addition, Young told Happi that the firm is also involved in “preliminary conversations” regarding licensing its range for the mass market.

‘Tis the Season

The 2010 holiday lineup at Yankee Candle includes Holiday Garland, Winter Wonderland and Christmas Tree scents.

Whether it is a small hand-pouring start-up or environmental fragrance maker with products sold at nearly every mall in America, Fall is the most wonderful time of the year in the sector. As Autumn nears, firms begin to release the scents and holiday designs they hope will woo heavy users as well as the more casual buyer who wants to get in the mood with an affordable product that matches their decor and throws a scent that smells like the holidays, whether that is Halloween, Thanksgiving or Christmas.

“Consumers love to decorate for Fall and holidays—and switch it up for the season,” noted Beros, who said that within Febreze’s diverse scent options, seasonal varieties—think Apple Spice & Delight—will become top sellers during the Fall. P&G’s autumn lineup will also include fragrances such as Orange Pear Spice and Ginger Snap Vanilla.

In the luxury end of the marketplace, seasonal scents also play a role. Nest Fragrances will stock a special edition fall candle—Pumpkin Chai—at Neiman Marcus doors and the retailer’s website, and Jo Malone’s Pine & Eucalyptus luxury candle will hit counters in October.

Also timed for Fall, Chesapeake Bay Candle has two new collections rolling out. The firm has formed partnership with Susan G. Komen for the Cure to launch the Susan G. Komen for the Cure Collection inspired by three powerful sentiments (Inspire, Imagine, and Hope) featuring three sophisticated, nature-inspired fragrances (Cherry Blossom, White Peach Bamboo and Vanilla Rice Flower). The collection is available online starting this month.

And just in time for gift-giving season, PTI is adding The Journeys Collection, a year-round program centered on eight sentiments including Love Sweetly, Give Freely, and Imagine Wildly, which tie in with colors and fragrances. From PTI’s Blissliving Home line is Vital Voices, a range of candles in novelty tins made by Rehab Craft, which trains and employs people with disabilities.

At Illume, Fall 2010 fragrances include rich gourmet scents such as Applewood, Heirloom Pumpkin and Roasting Chestnuts within its Fall Splendor Collection, as well as Persimmon & Spice, Quince Cypress, White Thyme & Pear and Earth Rose in the Modern Naturals collection.

Also new to the Illume scent stable is Woodfire. “Wood-blended fragrances have been up-trending for a few years…the influence is coming from nature and the trend of natural and rustic woods in home décor,” said Barerre.

Yankee Candle is also going rustic with Mountain Lodge, which features cedarwood and sage. Additional Fall scents include gourmand mixes such as Creamy Caramel, Spiced Orange, Apple Cider and Cranberry Orange. For holiday, Yankee Candle will stock Holiday Garland, a mix of fresh cut pine and cranberry, Winter Wonderland and Christmas Tree, which teams pine and eucalyptus.

Febreze Set & Fresh delivers value and design, according to P&G.
At S.C. Johnson, the 2010 Glade holiday lineup will include 10oz. three-wick soy-based candles, a 2oz. soy-based candle and a 10oz. gift pack in two scents—Pomegranate & Cranberries and Fresh Pine & Cedar—within the Fragrance Collection by Glade range.

A Good Buy
While seasonal scents entice consumers as the weather cools, value will remain paramount. As the economy goes through what looks to be a very slow recovery, marketers need to make consumers feel comfortable about their purchase, even in the environmental fragrance market.

“[The economy] is still a big issue for consumers,” said Warus. “They are out of work or have limited funds. They ask themselves ‘Do I need an air freshener?’ You need to make them feel good about the purchase.”

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