Tom Branna, Editorial Director05.04.21
Big parties are a big turnoff and bar scenes remain barred in many cities. Movies have moved to the small screen and eating out is, well, out. So, what is there left for consumers to do? More are tuning out the 24/7 news cycle and turning inward. They’re pampering themselves with a bit of self-care that can include applying at-home facials, getting more exercise, eating better and taking a supplement or three, too!
Data from Accenture bears that out. In fact, 69% of consumers are spending more time on self-care, with six in 10 (63%) saying they have started exercising more at home; these stats are the percentage of people doing this at least once a week pre-pandemic. In addition, 27% report exercising at home more than they did pre-pandemic and 66% nowmexercise at least once a week.
Furthermore, 24% are spending more time on self-care than they did pre-pandemic: 72% pamper themselves at least once a week. In fact, more than half of consumers said that they have become a healthier person since the pandemic outbreak. Those are some of the surprising findings in Accenture’s ongoing COVID-19 consumer research tracking the changing attitudes, behaviors and habits of consumers worldwide as they adapt to a new reality during the COVID-19 outbreak. The survey, which encompassed more than 9,500 consumers, was conducted February 25-March 5 2021.
The Accenture study also found that 44% of consumers said that they are eating more fruits and vegetables since the beginning of the pandemic; 36% of consumers said that they have reduced their sugar or fat intake since the beginning of the pandemic; almost a quarter (23%) of consumers said that they are taking virtual fitness classes at least once a week and plan to do so going forward. Three quarters (72%) of consumers said that they are cooking from scratch more that than they did pre-pandemic and 22% are cooking from scratch more often, with 77% doing it at least once a week, and 34% doing it daily (up from 29%).
Attitudes on Wellness
In its most recent global survey on consumer behaviors and attitudes toward wellness, McKinsey & Co. surveyed about 7,500 consumers in six categories and found that they view wellness not just through fitness and nutrition, but also overall physical and mental health and appearance. Furthermore, interest in wellness is growing as 79% of respondents said wellness is important and 42% consider it a top priority. In fact, consumers in every market researched reported a substantial increase in the prioritization of wellness during the past three years. As a result, McKinsey says the $1.5 trillion global wellness market is growing 5-10% a year. Consumers view wellness across six dimensions: better health, better fitness, better nutrition, better appearance, better sleep and better mindfulness.
McKinsey found that, perhaps to chemists’ chagrin, consumers are keen for natural/clean products in an array of areas, including skin care, cosmetics, supplements and even sleep enhancers. But what they want varies by region. For example, Mc-Kinsey found consumers overwhelmingly indicate a preference for natural/clean products in Brazil and China. In the case of dietary supplements, consumers around the world said, by 41% to 21%, that if they had to choose between more natural supplements and more effective ones, they would choose the more natural ones. Same with skin care; by 36% to 21%, consumers said they would choose the more natural option over the more effective one.
Finally, with demand for wellness rising, categories are blurring. But consumers told McKinsey they don’t want a single solution or brand to help them with all facets of wellness, suggesting that targeted extensions are a more effective approach for companies. As a result, McKinsey advises companies to assess M&A opportunities to gain entry into more categories within the wellness ecosystem.
Where To Shop…and Work
According to Accenture’s research, 84% of consumers said that they would feel a sense of loss if a supermarket, pharmacy or other essential retailer were to close for good. That sentiment jibes with the findings from Provoke Insights.
“The small store will come back to towns,” asserted Carly Fink, principal, head of strategy and research, Provoke Insights, New York. “More people are leaving cities which will lead to the revitalization of towns. But that will be tough for malls.”
How tough? Consider that in Paramus, NJ, the unofficial Shopping Mall Capital of the World, Westfield Garden State Plaza is being reimagined as a mixed-use space with retail shops on the ground floor and housing above it. The 2.1 million square foot site, once among the largest shopping malls in the world, has been battered by changes at retail—changes that have transformed the way consumers shop, work and spend their free time.
Tough times for traditional malls create opportunities for others. The pandemic created stress in most consumers’ lives and shoppers took to vitamins and supplements to boost their health. There is a huge online opportunity within the wellness category, according to Fink, who observes that the pandemic forced consumers to rethink their health and as a result, as society moves toward a post-pandemic world, overall, consumers will be healthier than they were in 2019. She may be overly optimistic, but she also predicts that work-from-home isn’t forever.
“By 2023, people will be going to the office, anywhere from three to five days a week,” predicted Fink. “Younger, single employees want an office. It is a place for them to socialize.”
Ready for Any & Everything
More than a year since the pandemic forced them to forego the activities they love, consumers are extremely optimistic about the economy and their health, and are ready to get back out into the world again, observed Lisa Mabe-Konstantopoulos, founder and CEO of Green Purse PR.
“They’re saying yes to everything after a year of saying no to everything,” explained Mabe-Konstantopoulos. “People have this ‘You-Only-Live-Once’ mentality.”
YOLO may not be good for their budgets, but it is good for the economy.
“The conservative part of me thinks we will be in trouble long-term, due to the national debt, but most consumers don’t consider that in their day-to-day lives.”
As a result, Mabe-Konstantopoulos predicts that people will not be “supersmart” with their money, and will end up spending money that they don’t have.
In conducting consumer research, respondents told her they will never again be without disinfectants. For now, however, they can do without makeup.
“Some women told me they embraced less makeup and feel more comfortable in their natural state,” said Mabe-Konstantopoulos. “They want to get out there and buy new clothes, but right now, cosmetics aren’t a priority.”
Health, on the other hand, is a definite priority. As a result, they are buying more supplements and vitamins. In fact, one Millennial told Mabe-Konstantopoulos that she was investing in supplements rather than cosmetics. Overall, however, consumers may be more talk than action when it comes to healthy choices.
Vitamins, Supplements & More
“At the beginning of the pandemic, people emptied shelves of vitamin C and immunity boosters and then forgot to take them,” she recalled. “At the same time, they’re buying Oreos, drinking wine and binging on Netflix.”
To get consumers on track, Mabe-Konstantopoulos suggested that L’Oréal and other beauty companies teach people how to use supplements correctly. Store shelves and online markets are awash in powders, pills, chewables and drinks, but consumers don’t know how to incorporate them all into their lives.
“Brands must explain the uses and benefits of supplements as if the consumer has never used them,” she suggested.
One way to do that is to encourage consumers to create a separate wellness space at home where they keep their exercise equipment and supplements so they’ll use them on a regular basis.
A smoothie bar would be a nice addition to any home, too, especially after consumers spent so much time in their cups during the pandemic. Nielsen noted that retail alcohol sales surged 55% in March 2020. According to a recent study published in JAMA Network Open, as the COVID-19 pandemic took off, more people turned to alcohol to cope with unprecedented uncertainty and stress.
The study’s researchers found that alcohol consumption among adults increased by 14% from 2019 to 2020. Women, in particular, exhibited a 41% increase in alcohol consumption over a 2019 baseline.
The good news? Alcohol consumption may be on the decline. Nielsen said total alcohol sales fell 1.9% for the week ended March 13, 2021. It was first time that weekly US alcohol sales fell since the pandemic began.
“We have officially surpassed one year of drastic shifts in consumer and shopping behaviors resulting from the pandemic in the United States,” according to Danelle Kosmal, VP-beverage alcohol, Nielsen-IQ. “At this time last year, alcohol volume experienced massive shifts from the on-premise to the off-premise.”
Now, agitated consumers may be turning to other products to sooth their anxieties.
CBD Waiting Game
Cannabidiol (CBD) has been in the headlines for years; as a matter of fact, Happi has been publishing special issues on the topic with our sister publication, Nutraceuticals World, in the Spring and Fall. While startups and small personal care companies have been eager to capitalize on the popularity of CBD, multinationals are waiting for a definitive word from the US Food and Drug Administration (FDA), said industry experts. They may be waiting, but they’re not standing still. Colgate-Palmolive last month received three patents for oral care formulas that contain CBD. The formulas are suitable for toothpaste, mouthwash, oral gels, chewing gum, mouth sprays and more.
In its filing, Colgate noted “oral care compositions comprising cannabinoids such as CBD, provide antibacterial and anti-inflammatory properties, for example, and are well-suited to treat a variety of oral diseases and disorders.”
According to Mark Elfenbein, chief revenue officer, Socati, most large CPG companies such as Unilever, Nestlé, General Mills and Pepsi have commenced R&D activities during the past few years with CBD ingredients due to pending consumer demand for these products.
“However, these brands are awaiting additional clarity from the FDA that CBD can be integrated into food and drink products and what the regulations around this would be,” he explained.
When FDA finally issues a definitive word on CBD, the market will be wide open for multinationals. According to Provoke Insights, just 10% of US consumers had purchased CBD in the past three months. Among brands they were most aware of, Charlotte’s Web was ranked No. 1, followed by Paw Paw and Mary’s Nutritional’s (see chart).
Questions from multinationals include maximum dose level, manufacturing facility requirements and lab testing requirements. Furthermore, recent studies conducted by Valid Care and others regarding the safety of CBD may further accelerate the industry’s comfort in deploying these products.
“Many large chains are now rolling out CBD product tests in various regions and monitoring outcomes very closely,” Elfenbein said.
Socati is primarily in two businesses—producing CBD and private label manufacturing. From its facility in Missoula, MT, the company produces USDA organic CBD in the form of oil and water dispersible powder as an ingredient for brands to formulate into their products. Socati’s customers can customize the minor cannabinoid levels in these products for purposes of formulating down to very specific cannabinoid ratios which are useful for addressing specific use cases such as day time immunity and night time relaxation. Socati also fully manufactures USDA organic finished goods for brands that require an end-to-end solution. Socati’s most popular product are stick-packs, tinctures and gummies. These products come fully manufactured and can be shipped directly by Socati customers to their retail channel partners.
Last month the company launched a CBD formulation and product development division. Socati Formulations promises to provide full concept-to-market service for brands building products that feature customized cannabinoids while also incorporating trending functional ingredients such as elderberry, curcumin and ashwagandha extracts. The move enables brands to select Standard or USDA Certified Organic and custom ratios of CBD, CBG and CBN for these end products with non-detectable THC in emerging forms—such as ready-to-mix powders and ready-to-drink shots, vegan gummies and tinctures.
“We’re seeing new and exciting trends in the CBD space which we’re fortunate to be able to react to quickly and with world-class expertise,” said Elfenbein. “With a sharp focus on wellbeing seen around the world, an increasing number of people are looking for new and innovative products with ingredients they know and trust.”
Socati maintains that all of its ingredients benefit from non-detectable levels of THC (as determined by independent testing with leading US laboratories), high purity CBD, and custom minor cannabinoid ratios. These ingredients are non-GMO, tested and verified by third party labs, produced in a GFSI certified food grade processing facility, kosher and made to ingredient-grade specifications.
Socati has established a team of formulation and product development experts within the new division. Building on the success of its finished goods catalog and the launch of dozens of products including gummies, tinctures, pet products, and its proprietary water-dispersible flavored crystal stick packs, they will provide a turnkey, white-glove service for new and existing customers looking to bring fresh and innovative products to market.
Better Health & Appearance
Earlier this year, Provoke Insights conducted a 15-minute survey among 3,000 Americans between the ages of 21 and 70. Within beauty, L’Oréal had the highest awareness, but Estée Lauder had the highest brand equity score. However, with more people staying home due to COVID-19, consumers may find the category not as relevant.
“Lipsticks is definitely an issue; as the world bounces back, it isn’t returning to what it was; it’s a hybrid, it’s a move toward natural,” observed Fink. “Going out in public and having a dramatic face isn’t appropriate. Brands need to think about that and fit with the appropriateness of the times. Consumers want blush, foundation and eyeshadow.”
Conversely, brands with a connection to hygiene will remain popular for the foreseeable future. Brands that can make an emotional connection stand to gain the biggest following.
“When people think of Dove, they think of self-esteem, of loving themselves—it’s not just about soap. Dove has been able to enter other categories because it has an emotional connection with consumers,” explained Fink.
She warned, however, that the connection must be authentic and brand appropriate.
The pandemic put an emphasis on hygiene, as hand sanitizer sales soared over 620% to top $1.45 billion last year, according to NielsenIQ. But so far in 2021, sales have fallen for the past several months, according to NielsenIQ. In January, hand sanitizer sales fell 38% vs. December. In February they fell 23% compared to January and in March, they fell 3% compared to February. Distilleries and importers have left the market, too. CVS Pharmacy spokesman Matt Blanchette told USA Today that although there is a surplus of sanitizer, demand remains above pre-pandemic levels.
Hand sanitizer is only one way to keep hands clean. Last year, sales of Lifebuoy surged over 50% due to coronavirus concerns. Brand sales also received a lift from its “H is for Handwashing” campaign that is designed to raise children’s compliance with handwashing and hygiene. Most recently, the Unilever brand added a 2-in-1 sanitizer spray that can be used on hands and surfaces. To maintain awareness about the importance of proper hygiene, Unilever launched the #DotheLifebuoy digital campaign which garnered more than 60 billion impressions across 13 countries in a span of less than five months.
Clean hands are one thing; idle hands are another. During the pandemic, consumers put a little elbow grease into keeping their homes clean and germ free. According to IRI, sales of disinfectants in US mass markets soared more than 60% for the year ended March 21, 2021. Overall, sales of household cleaners jumped nearly 27% during the period, which may explain why newcomers are entering the category and one infamous player sees an opportunity to go public.
The Honest Co., the consumer-products company founded by actress Jessica Alba, has filed for an initial public offering valued at $1.5 billion. The Los Angeles-based company filed to sell about $110 million worth of shares. In its prospectus, Honest said its sales grew 27.6% to $300.5 million in 2020, from $235.6 million in 2019. It lost $14.5 million in 2020, or 85 cents a share, compared with a loss of $1.83 a share in the previous year. The company has never been profitable. In fact, in its prospectus, the company admitted, “...we may not be able to achieve or maintain profitability in the future.”
Last year, while all product categories grew from 2019 to 2020, The Honest Co.’s household and wellness revenue increased by 116.5% to $32.5 million. The company credits the gain to sales from the sanitization and disinfecting products that were introduced in 2020, in particular through the retail channel.
“Authenticity is our authority,” the company said. “When the COVID-19 pandemic hit and we went into lockdown, people became more aware of their health and what they bring into their homes. Honest never wavered in being there for them.”
Well, not quite. In 2017, the company settled a lawsuit that claimed it fraudulently labeled some of its products as “natural,” “plant-based,” or “no harsh chemicals (ever!).”
Overall, diapers and wipes accounted for 63% of the company’s total 2020 revenue. Last year’s revenue growth was driven in part by a bump in digital sales, which represented 55% of its revenue. Digitally-native brands like Honest, which sells products on Honest.com and retailers like Amazon, benefited from an overall shift to e-commerce last year as brick-and-mortar stores shut down during the coronavirus pandemic. US e-commerce sales jumped 32.4% in 2020 to $791.7 billion, according to the US Census Bureau.
“We see consumers increasingly self-educating on the benefits of clean and natural products through social media, influencers and other online content, driving digital engagement and purchasing that supports continued outsized growth of the e-commerce channel,” the company wrote in its prospectus.
The Honest Company got its start in 2012 when Alba teamed up with Christopher Gavigan, Brian Lee and Sean Kane to launch an eco-friendly line of family essentials offered through a monthly subscription service at Honest.com. At the time of the launch, the founders contended they were “committed to making safe, sustainable products more convenient, beautiful and affordable,” and would offer consumers products ranging from personal care to baby needs like diapers wipes to household cleaners.
“I’ve spent way too many hours researching products and driving around trying to find safer, eco-friendly options for my kids,” said Alba at the launch. “I knew that most people didn’t have that kind of time, nor the means to pay the premium prices. We had to make it easier.”
The Honest Company’s biggest shareholders include L Catterton, IVP, Lightspeed Venture Partners, Fidelity and General Catalyst.
In March, reality stars Kris Jenner and Chrissy Teigen and their fashion friend Emma Grede—all of whom insist they are obsessed with cleaning—teamed up to launch Safely, a home cleaning line consisting of six products including hand sanitizer ($6), laundry detergent ($14), Universal Cleaner ($6) and hand soap ($6). The line is available at getsafely.com.
“In my DNA is the extremely strong desire to always be cleaning everything,” said Jenner. As a young mother with four children, she was an enthusiastic Pine-Sol user. “If I had that smell, that meant my house was clean,” she told The New York Times. “I’ve done a 180 in the way I identify what clean means to me.”
Safely containers are simple, with barely any type; the logo, the only discernible graphic, is a large white water drop shape. The different cleaners come in a medley of glowing, minty greens. The uniform color scheme works on Instagram, and as Jenner noted, why not have a coherent array of bottles under your sink, instead of “a bunch of mishmash or doodads that don’t go together?”
The Honest Company IPO and Safely launch are two high-profile entrepreneurial efforts to cash on the cleaning craze. A national online consumer survey conducted by Ipsos on behalf of the American Cleaning Institute found that 85% of respondents are very or somewhat likely to maintain the same level of cleaning practices initially adopted in March 2020, even when the pandemic has passed. Results from the survey shed light on how and why Americans plan to continue their cleaning and disinfecting behaviors. Americans report an increase in use of the following products since the pandemic began: hand sanitizer (72% vs. 59%), disinfectant wipes (55% vs. 44%) and spray disinfectant (42% vs. 36%).
Wellness, personal hygiene and home care converged in 2020; savvy marketers must find ways to keep all three top-of-mind for pandemic-weary consumers in 2021 and beyond.
Data from Accenture bears that out. In fact, 69% of consumers are spending more time on self-care, with six in 10 (63%) saying they have started exercising more at home; these stats are the percentage of people doing this at least once a week pre-pandemic. In addition, 27% report exercising at home more than they did pre-pandemic and 66% nowmexercise at least once a week.
Furthermore, 24% are spending more time on self-care than they did pre-pandemic: 72% pamper themselves at least once a week. In fact, more than half of consumers said that they have become a healthier person since the pandemic outbreak. Those are some of the surprising findings in Accenture’s ongoing COVID-19 consumer research tracking the changing attitudes, behaviors and habits of consumers worldwide as they adapt to a new reality during the COVID-19 outbreak. The survey, which encompassed more than 9,500 consumers, was conducted February 25-March 5 2021.
The Accenture study also found that 44% of consumers said that they are eating more fruits and vegetables since the beginning of the pandemic; 36% of consumers said that they have reduced their sugar or fat intake since the beginning of the pandemic; almost a quarter (23%) of consumers said that they are taking virtual fitness classes at least once a week and plan to do so going forward. Three quarters (72%) of consumers said that they are cooking from scratch more that than they did pre-pandemic and 22% are cooking from scratch more often, with 77% doing it at least once a week, and 34% doing it daily (up from 29%).
Attitudes on Wellness
In its most recent global survey on consumer behaviors and attitudes toward wellness, McKinsey & Co. surveyed about 7,500 consumers in six categories and found that they view wellness not just through fitness and nutrition, but also overall physical and mental health and appearance. Furthermore, interest in wellness is growing as 79% of respondents said wellness is important and 42% consider it a top priority. In fact, consumers in every market researched reported a substantial increase in the prioritization of wellness during the past three years. As a result, McKinsey says the $1.5 trillion global wellness market is growing 5-10% a year. Consumers view wellness across six dimensions: better health, better fitness, better nutrition, better appearance, better sleep and better mindfulness.
McKinsey found that, perhaps to chemists’ chagrin, consumers are keen for natural/clean products in an array of areas, including skin care, cosmetics, supplements and even sleep enhancers. But what they want varies by region. For example, Mc-Kinsey found consumers overwhelmingly indicate a preference for natural/clean products in Brazil and China. In the case of dietary supplements, consumers around the world said, by 41% to 21%, that if they had to choose between more natural supplements and more effective ones, they would choose the more natural ones. Same with skin care; by 36% to 21%, consumers said they would choose the more natural option over the more effective one.
Finally, with demand for wellness rising, categories are blurring. But consumers told McKinsey they don’t want a single solution or brand to help them with all facets of wellness, suggesting that targeted extensions are a more effective approach for companies. As a result, McKinsey advises companies to assess M&A opportunities to gain entry into more categories within the wellness ecosystem.
Where To Shop…and Work
According to Accenture’s research, 84% of consumers said that they would feel a sense of loss if a supermarket, pharmacy or other essential retailer were to close for good. That sentiment jibes with the findings from Provoke Insights.
“The small store will come back to towns,” asserted Carly Fink, principal, head of strategy and research, Provoke Insights, New York. “More people are leaving cities which will lead to the revitalization of towns. But that will be tough for malls.”
How tough? Consider that in Paramus, NJ, the unofficial Shopping Mall Capital of the World, Westfield Garden State Plaza is being reimagined as a mixed-use space with retail shops on the ground floor and housing above it. The 2.1 million square foot site, once among the largest shopping malls in the world, has been battered by changes at retail—changes that have transformed the way consumers shop, work and spend their free time.
Tough times for traditional malls create opportunities for others. The pandemic created stress in most consumers’ lives and shoppers took to vitamins and supplements to boost their health. There is a huge online opportunity within the wellness category, according to Fink, who observes that the pandemic forced consumers to rethink their health and as a result, as society moves toward a post-pandemic world, overall, consumers will be healthier than they were in 2019. She may be overly optimistic, but she also predicts that work-from-home isn’t forever.
“By 2023, people will be going to the office, anywhere from three to five days a week,” predicted Fink. “Younger, single employees want an office. It is a place for them to socialize.”
Ready for Any & Everything
More than a year since the pandemic forced them to forego the activities they love, consumers are extremely optimistic about the economy and their health, and are ready to get back out into the world again, observed Lisa Mabe-Konstantopoulos, founder and CEO of Green Purse PR.
“They’re saying yes to everything after a year of saying no to everything,” explained Mabe-Konstantopoulos. “People have this ‘You-Only-Live-Once’ mentality.”
YOLO may not be good for their budgets, but it is good for the economy.
“The conservative part of me thinks we will be in trouble long-term, due to the national debt, but most consumers don’t consider that in their day-to-day lives.”
As a result, Mabe-Konstantopoulos predicts that people will not be “supersmart” with their money, and will end up spending money that they don’t have.
In conducting consumer research, respondents told her they will never again be without disinfectants. For now, however, they can do without makeup.
“Some women told me they embraced less makeup and feel more comfortable in their natural state,” said Mabe-Konstantopoulos. “They want to get out there and buy new clothes, but right now, cosmetics aren’t a priority.”
Health, on the other hand, is a definite priority. As a result, they are buying more supplements and vitamins. In fact, one Millennial told Mabe-Konstantopoulos that she was investing in supplements rather than cosmetics. Overall, however, consumers may be more talk than action when it comes to healthy choices.
Vitamins, Supplements & More
“At the beginning of the pandemic, people emptied shelves of vitamin C and immunity boosters and then forgot to take them,” she recalled. “At the same time, they’re buying Oreos, drinking wine and binging on Netflix.”
To get consumers on track, Mabe-Konstantopoulos suggested that L’Oréal and other beauty companies teach people how to use supplements correctly. Store shelves and online markets are awash in powders, pills, chewables and drinks, but consumers don’t know how to incorporate them all into their lives.
“Brands must explain the uses and benefits of supplements as if the consumer has never used them,” she suggested.
One way to do that is to encourage consumers to create a separate wellness space at home where they keep their exercise equipment and supplements so they’ll use them on a regular basis.
A smoothie bar would be a nice addition to any home, too, especially after consumers spent so much time in their cups during the pandemic. Nielsen noted that retail alcohol sales surged 55% in March 2020. According to a recent study published in JAMA Network Open, as the COVID-19 pandemic took off, more people turned to alcohol to cope with unprecedented uncertainty and stress.
The study’s researchers found that alcohol consumption among adults increased by 14% from 2019 to 2020. Women, in particular, exhibited a 41% increase in alcohol consumption over a 2019 baseline.
The good news? Alcohol consumption may be on the decline. Nielsen said total alcohol sales fell 1.9% for the week ended March 13, 2021. It was first time that weekly US alcohol sales fell since the pandemic began.
“We have officially surpassed one year of drastic shifts in consumer and shopping behaviors resulting from the pandemic in the United States,” according to Danelle Kosmal, VP-beverage alcohol, Nielsen-IQ. “At this time last year, alcohol volume experienced massive shifts from the on-premise to the off-premise.”
Now, agitated consumers may be turning to other products to sooth their anxieties.
CBD Waiting Game
Cannabidiol (CBD) has been in the headlines for years; as a matter of fact, Happi has been publishing special issues on the topic with our sister publication, Nutraceuticals World, in the Spring and Fall. While startups and small personal care companies have been eager to capitalize on the popularity of CBD, multinationals are waiting for a definitive word from the US Food and Drug Administration (FDA), said industry experts. They may be waiting, but they’re not standing still. Colgate-Palmolive last month received three patents for oral care formulas that contain CBD. The formulas are suitable for toothpaste, mouthwash, oral gels, chewing gum, mouth sprays and more.
In its filing, Colgate noted “oral care compositions comprising cannabinoids such as CBD, provide antibacterial and anti-inflammatory properties, for example, and are well-suited to treat a variety of oral diseases and disorders.”
According to Mark Elfenbein, chief revenue officer, Socati, most large CPG companies such as Unilever, Nestlé, General Mills and Pepsi have commenced R&D activities during the past few years with CBD ingredients due to pending consumer demand for these products.
“However, these brands are awaiting additional clarity from the FDA that CBD can be integrated into food and drink products and what the regulations around this would be,” he explained.
When FDA finally issues a definitive word on CBD, the market will be wide open for multinationals. According to Provoke Insights, just 10% of US consumers had purchased CBD in the past three months. Among brands they were most aware of, Charlotte’s Web was ranked No. 1, followed by Paw Paw and Mary’s Nutritional’s (see chart).
Questions from multinationals include maximum dose level, manufacturing facility requirements and lab testing requirements. Furthermore, recent studies conducted by Valid Care and others regarding the safety of CBD may further accelerate the industry’s comfort in deploying these products.
“Many large chains are now rolling out CBD product tests in various regions and monitoring outcomes very closely,” Elfenbein said.
Socati is primarily in two businesses—producing CBD and private label manufacturing. From its facility in Missoula, MT, the company produces USDA organic CBD in the form of oil and water dispersible powder as an ingredient for brands to formulate into their products. Socati’s customers can customize the minor cannabinoid levels in these products for purposes of formulating down to very specific cannabinoid ratios which are useful for addressing specific use cases such as day time immunity and night time relaxation. Socati also fully manufactures USDA organic finished goods for brands that require an end-to-end solution. Socati’s most popular product are stick-packs, tinctures and gummies. These products come fully manufactured and can be shipped directly by Socati customers to their retail channel partners.
Last month the company launched a CBD formulation and product development division. Socati Formulations promises to provide full concept-to-market service for brands building products that feature customized cannabinoids while also incorporating trending functional ingredients such as elderberry, curcumin and ashwagandha extracts. The move enables brands to select Standard or USDA Certified Organic and custom ratios of CBD, CBG and CBN for these end products with non-detectable THC in emerging forms—such as ready-to-mix powders and ready-to-drink shots, vegan gummies and tinctures.
“We’re seeing new and exciting trends in the CBD space which we’re fortunate to be able to react to quickly and with world-class expertise,” said Elfenbein. “With a sharp focus on wellbeing seen around the world, an increasing number of people are looking for new and innovative products with ingredients they know and trust.”
Socati maintains that all of its ingredients benefit from non-detectable levels of THC (as determined by independent testing with leading US laboratories), high purity CBD, and custom minor cannabinoid ratios. These ingredients are non-GMO, tested and verified by third party labs, produced in a GFSI certified food grade processing facility, kosher and made to ingredient-grade specifications.
Socati has established a team of formulation and product development experts within the new division. Building on the success of its finished goods catalog and the launch of dozens of products including gummies, tinctures, pet products, and its proprietary water-dispersible flavored crystal stick packs, they will provide a turnkey, white-glove service for new and existing customers looking to bring fresh and innovative products to market.
Better Health & Appearance
Earlier this year, Provoke Insights conducted a 15-minute survey among 3,000 Americans between the ages of 21 and 70. Within beauty, L’Oréal had the highest awareness, but Estée Lauder had the highest brand equity score. However, with more people staying home due to COVID-19, consumers may find the category not as relevant.
“Lipsticks is definitely an issue; as the world bounces back, it isn’t returning to what it was; it’s a hybrid, it’s a move toward natural,” observed Fink. “Going out in public and having a dramatic face isn’t appropriate. Brands need to think about that and fit with the appropriateness of the times. Consumers want blush, foundation and eyeshadow.”
Conversely, brands with a connection to hygiene will remain popular for the foreseeable future. Brands that can make an emotional connection stand to gain the biggest following.
“When people think of Dove, they think of self-esteem, of loving themselves—it’s not just about soap. Dove has been able to enter other categories because it has an emotional connection with consumers,” explained Fink.
She warned, however, that the connection must be authentic and brand appropriate.
The pandemic put an emphasis on hygiene, as hand sanitizer sales soared over 620% to top $1.45 billion last year, according to NielsenIQ. But so far in 2021, sales have fallen for the past several months, according to NielsenIQ. In January, hand sanitizer sales fell 38% vs. December. In February they fell 23% compared to January and in March, they fell 3% compared to February. Distilleries and importers have left the market, too. CVS Pharmacy spokesman Matt Blanchette told USA Today that although there is a surplus of sanitizer, demand remains above pre-pandemic levels.
Hand sanitizer is only one way to keep hands clean. Last year, sales of Lifebuoy surged over 50% due to coronavirus concerns. Brand sales also received a lift from its “H is for Handwashing” campaign that is designed to raise children’s compliance with handwashing and hygiene. Most recently, the Unilever brand added a 2-in-1 sanitizer spray that can be used on hands and surfaces. To maintain awareness about the importance of proper hygiene, Unilever launched the #DotheLifebuoy digital campaign which garnered more than 60 billion impressions across 13 countries in a span of less than five months.
Clean hands are one thing; idle hands are another. During the pandemic, consumers put a little elbow grease into keeping their homes clean and germ free. According to IRI, sales of disinfectants in US mass markets soared more than 60% for the year ended March 21, 2021. Overall, sales of household cleaners jumped nearly 27% during the period, which may explain why newcomers are entering the category and one infamous player sees an opportunity to go public.
The Honest Co., the consumer-products company founded by actress Jessica Alba, has filed for an initial public offering valued at $1.5 billion. The Los Angeles-based company filed to sell about $110 million worth of shares. In its prospectus, Honest said its sales grew 27.6% to $300.5 million in 2020, from $235.6 million in 2019. It lost $14.5 million in 2020, or 85 cents a share, compared with a loss of $1.83 a share in the previous year. The company has never been profitable. In fact, in its prospectus, the company admitted, “...we may not be able to achieve or maintain profitability in the future.”
Last year, while all product categories grew from 2019 to 2020, The Honest Co.’s household and wellness revenue increased by 116.5% to $32.5 million. The company credits the gain to sales from the sanitization and disinfecting products that were introduced in 2020, in particular through the retail channel.
“Authenticity is our authority,” the company said. “When the COVID-19 pandemic hit and we went into lockdown, people became more aware of their health and what they bring into their homes. Honest never wavered in being there for them.”
Well, not quite. In 2017, the company settled a lawsuit that claimed it fraudulently labeled some of its products as “natural,” “plant-based,” or “no harsh chemicals (ever!).”
Overall, diapers and wipes accounted for 63% of the company’s total 2020 revenue. Last year’s revenue growth was driven in part by a bump in digital sales, which represented 55% of its revenue. Digitally-native brands like Honest, which sells products on Honest.com and retailers like Amazon, benefited from an overall shift to e-commerce last year as brick-and-mortar stores shut down during the coronavirus pandemic. US e-commerce sales jumped 32.4% in 2020 to $791.7 billion, according to the US Census Bureau.
“We see consumers increasingly self-educating on the benefits of clean and natural products through social media, influencers and other online content, driving digital engagement and purchasing that supports continued outsized growth of the e-commerce channel,” the company wrote in its prospectus.
The Honest Company got its start in 2012 when Alba teamed up with Christopher Gavigan, Brian Lee and Sean Kane to launch an eco-friendly line of family essentials offered through a monthly subscription service at Honest.com. At the time of the launch, the founders contended they were “committed to making safe, sustainable products more convenient, beautiful and affordable,” and would offer consumers products ranging from personal care to baby needs like diapers wipes to household cleaners.
“I’ve spent way too many hours researching products and driving around trying to find safer, eco-friendly options for my kids,” said Alba at the launch. “I knew that most people didn’t have that kind of time, nor the means to pay the premium prices. We had to make it easier.”
The Honest Company’s biggest shareholders include L Catterton, IVP, Lightspeed Venture Partners, Fidelity and General Catalyst.
In March, reality stars Kris Jenner and Chrissy Teigen and their fashion friend Emma Grede—all of whom insist they are obsessed with cleaning—teamed up to launch Safely, a home cleaning line consisting of six products including hand sanitizer ($6), laundry detergent ($14), Universal Cleaner ($6) and hand soap ($6). The line is available at getsafely.com.
“In my DNA is the extremely strong desire to always be cleaning everything,” said Jenner. As a young mother with four children, she was an enthusiastic Pine-Sol user. “If I had that smell, that meant my house was clean,” she told The New York Times. “I’ve done a 180 in the way I identify what clean means to me.”
Safely containers are simple, with barely any type; the logo, the only discernible graphic, is a large white water drop shape. The different cleaners come in a medley of glowing, minty greens. The uniform color scheme works on Instagram, and as Jenner noted, why not have a coherent array of bottles under your sink, instead of “a bunch of mishmash or doodads that don’t go together?”
The Honest Company IPO and Safely launch are two high-profile entrepreneurial efforts to cash on the cleaning craze. A national online consumer survey conducted by Ipsos on behalf of the American Cleaning Institute found that 85% of respondents are very or somewhat likely to maintain the same level of cleaning practices initially adopted in March 2020, even when the pandemic has passed. Results from the survey shed light on how and why Americans plan to continue their cleaning and disinfecting behaviors. Americans report an increase in use of the following products since the pandemic began: hand sanitizer (72% vs. 59%), disinfectant wipes (55% vs. 44%) and spray disinfectant (42% vs. 36%).
Wellness, personal hygiene and home care converged in 2020; savvy marketers must find ways to keep all three top-of-mind for pandemic-weary consumers in 2021 and beyond.