Neither snow nor rain nor heat nor gloom of night stays sun care market executives from a potential sale. With apologies to the US Postal Service, intrepid sun care companies slogged through one of the worst years ever in 2013, as wicked weather pounded beaches from coast to coast. Yet, despite the gloom, Steve Taylor, CEO of Sun & Skin Care Research, Cocoa, FL, maintains a sunny outlook on the industry in general, and his company in particular.
“When you think about the March-to-August timeframe, we had severe weather during 17 of those 26 weekends,” recalled Taylor. “There was even a snowstorm in New England on Memorial Day.”
It was just too cold and rainy for Easterners to head to the beach during much of Summer 2013. At the same time, the Left Coast was ablaze with extreme heat conditions while severe weather plagued much of the Midwest in June.
No wonder that sun care product sales in mass markets fell nearly 3.5% for the 52 weeks ended Aug. 11, to $1.1 billion.
Meanwhile, unit sales dropped 5.1% to just under 138 million, according to Information Resources Inc., Chicago, which notes that Playtex Products (Banana Boat and Hawaiian Tropic brands) is the No. 1 player in the segment, with sales of about $281 million, followed by Merck & Co. (Coppertone). For a look at the top 10 brands, according to IRI, see the chart on p. 52.
For some executives, competing against Mother Nature and multinationals may be daunting, but Taylor insists he relishes competition within the sun care segment.
“I love being involved in a product category that is doing something healthy for folks and is fun at the same time,” he told Happi. “Sun and skin care are tough, competitive businesses but fun, too.”
Focused, Fast and Flexible
Citing IRI data, he noted that the global sun care business is worth $2.5 billion worldwide and remains very splintered with 130 different brands. That enables smaller companies such as Sun & Skin Care Research, which has annual sales of less than $40 million, to compete against much larger competitors.
Of course, in most cases, size does matter when it comes to fast-moving consumer goods companies. But Taylor insists, however, that being bigger isn’t necessarily better.
“The good news for us is that we are single-mindedly focused on sun and skin care,” he noted. “We don’t have to concern ourselves with pharmaceuticals or how battery sales are doing. We only have to worry about one thing. We are focused and try to be faster and more flexible in how we go to market.”
Focused, fast and flexible is the mantra at Sun & Skin Care Research, according to Taylor.
“Everything we do must deliver against that; whether that’s developing a new product or a new marketing strategy or a new trade partner.”
From its headquarters in Cocoa, the company develops, packs and ships a variety of products under the No-Ad, Ocean Potion, Bullfrog and Parrot Head labels. All of them have helped Sun & Skin Care Research become one of the largest players in the US market and now the CEO wants more.
“Our strategy is to build not just national brands, but global brands as well,” said Taylor. “We are excited about the potential for Ocean Potion and No-Ad.”
He pointed out that No-Ad was one of the few brands to post sales gains during Summer 2013. That’s because No-Ad costs less than most sun care brands, giving consumers more product for their money, which helps ensure that consumers apply enough sunscreen initially and keep applying it throughout the day.
“No-Ad really taps into the smart shopper insight,” said Taylor. “It is known as a good quality product with a strong following.”
In fact, No-Ad has been selected as a “best buy” for several years in a row by a leading consumer review magazine.
Ocean Potion’s success is due, in part, to the growing consumer awareness about the need to not only protect, but to nourish skin as well with a unique formula that’s enriched with vitamin D3. At the same time, Ocean Potion’s unique “creamsicle-like” scent is winning over consumers on a regular basis.
The Bull Frog brand was acquired in February from Chattem, which had grown Bull Frog from a surfer favorite to a national brand. Add to that the fact that Bull Frog Mosquito Coast controls 83% of the UV/insect repellent category and Taylor is confident that there is plenty of room for Bullfrog to jump higher in the coming years.
“With the recent challenges caused by mosquito infections, we can provide a lot of upside without diluting the brand,” he explained. “Secondly, we will bring Bull Frog back to its surfer roots and promote its water-repellent properties.”
Taylor explained that Chattem took Bull Frog Surfer Gel off the market several years ago, and yet, there are still thousands of requests for it every year. Sun & Skin Care Research may introduce a similar product in the future.
This year, the Bull Frog brand got a lift from the launch of WaterArmor Sport InstaCool, a water-resistant formula that contains methyl lactate to cool overheated skin. Also new is Bull Frog Kids Sunscreen that features SpongeBob SquarePants and is water resistant, enriched with vitamin E and aloe and hypoallergenic.
Whether its Ocean Potion, Bullfrog or No-Ad, all three brands have excellent opportunities for growth outside the US, according to Taylor. While the US is growing about 5-6% a year (with 2013 being a notable exception), the global sun care segment is expanding 8-9%.
Thanks to its strong value proposition and the good support it receives from pharmacists and dermatologists, No Ad is the No. 1 or No. 2 brand in most South American countries. Now, the brand will try to build the same following in Asia, according to Taylor.
Ocean Potion is expanding in Asia, where consumers are attracted to its novel scent, and it is also making headway in many European markets, according to Taylor.
“Ocean Potion is popular in Asia because it is a bright, vibrant, fun brand,” he explained. “In the Caribbean, Ocean Potion is a strong No. 2 brand across the entire region.”
To build up its new Parrot Head business, Sun & Skin Care Research will continue its close ties to Jimmy Buffet and his Margaritaville mystique.
“Jimmy is an iconic entertainer, but he also has a billion-dollar business that extends from casinos and restaurants to beverages and sun care,” noted Taylor. “Parrot Head is a premium-priced brand that uses extremely high quality ingredients.”
All Margaritaville Parrot Head products contain a proprietary Aloe Hydrating Complex billed as a foundation for one of the most technically advanced moisturizing sun care lines available, according to the company. Parrot Head offers six lines of high quality, PABA-, paraben- and oxybenzone-free sun care products, with names like Floridays Moisturizing Sunscreen Lotion, Fins Up Sport, Parakeet Kids and Licensed to Chill. Light-hearted names aside, the formulas back some serious science. For example, Floridays Moisturizing Sunscreen lotion blends proprietary Aloe Hydrating Complex 300 with deeply moisturizing olive squalane and vitamins A and E to combat free radical damage. Meanwhile, Fins Up is formulated with Aloe Hydrating Complex 200, vitamins A and E plus long-lasting WetSkin Tech technology, a super water-repellant polymer that bonds to skin for the most durable water resistance possible (80 minutes), according to the company.
To get the word out about Parrot Head, Sun & Skin Care Research is following Buffet’s Margaritaville Trail, the annual concert tour he takes through the US and Caribbean.
No one can predict what the weather will be like for Summer 2014, but the Sun & Skin Care Research team is confident that several new products will prove to be popular with consumers. Without getting into specifics, Taylor said the company will build on the Bullfrog brand and its mosquito repellent positioning with new after-sun products that also keep the bugs at bay.
For Ocean Potion, Sun & Skin Care Research has developed a platform that enables users to spray sunscreen on wet or dry skin—a formula that should appeal to parents with squirmy kids. Also in the works is an everyday sun care line for the face and body that provides real nourishment to the skin, which is a key component of Sun & Skin Research’s long-term plans.
As Taylor noted, 80% of the world’s population requires sun care, which makes him very bullish on sun care, even as the US Food and Drug Administration drags its heels in approving new UV filters.
“We are using technology that is 10 years behind Europe, which makes it very difficult to create, new effective products.”
As Sun & Skin Care Research executives expand their sun care business to markets around the world, they are also focused on entering new categories.
“The next big step in our journey is to become a player in the skin care market,” explained Taylor. “We are looking at acquisitions, new technologies and new brands to move into that space.”
He pointed out that sun care is a complex and regulated product category. “Typically, if you can make sun care products, you can make anything in skin care. Research is the last part of our name and we will invest in that to build broader, deeper research capabilities,” he said.
Sun & Skin Care Research is owned by Source Capital, a private equity firm headquartered in Atlanta. Like other PE companies, Source Capital builds businesses with the intent to sell them down the road. For now, Sun & Skin Care Research has no exit strategy, but as Taylor noted, “nothing is not for sale. Our plan is to build a company with a platform and a business model that anyone would be interested in.”
With popular brands in its stable, a commitment to international growth and a variety of new technologies in the works, the Sun & Skin Care Research CEO is confident that interest in his company will rise as surely as the sun.