Despite annual growth of nearly 7% globally since 2003 not all segments of the personal wipes market offer equal opportunities. Changing attitudes toward the environment and cultural disparities are just two of the difficulties faced by wipes manufacturers. By targeting the right segments and focusing on product innovations which positively affect consumers’ lives, there are still opportunities for manufacturers.
Baby Wipes Continue to Lead the Way
In the U.S., the baby wipes market recorded impressive value and volume growth in 2006 and is now worth in excess of $850 million. This expansion was prompted by new product launches and further segmentation of the market into standard and luxury lines. Kimberly-Clark, for example, launched a premium product under the Huggies Supreme brand, tying in with its premium range of diapers and marketed directly against Pampers wipes. Huggies claims the wipes are 50% thicker than rival brands and are available in tubs, refills and travel packs, coming impregnated with aloe and vitamin E.
Growth in Western Europe was slower in 2006, with value sales increasing by only 3% on the back of volume increases of 7%. Price pressures were not the result of increased penetration of private label products, which actually reduced their marketshare, but instead increased competition between brands. However, Euromonitor International expects value growth to increase in the coming years as these new ranges are made available across Europe, helping to increase penetration of wipes in the home.
The main baby wipe brands have also expanded into more task-specific areas with the launch of children’s toilet wipes, the most successful of which have under the Pampers Kandoo and Kimberly-Clark’s Huggies Cleanteam brands. By leveraging their existing baby diaper brands, P&G and K-C were able to successfully promote these new ranges, while toilet paper manufacturers, which launched almost identical products, failed.
General Purpose Wipes Provide An Opportunity On Both Sides of the Pond
Innovations in the general purpose wipes category have helped to boost sales, with growth rates during the last two years averaging 8% per annum in the U.S. and 7% in Western Europe. Innovation has focused on the development of better quality products, exemplified by Kimberly-Clark’s improved version of Kleenex Moist wipes. These pre-moistened, cloth-like tissues are designed to add convenience to wiping the face and hands around the home. The product is being positioned as more substantial than traditional wet wipes and more effective than a dry napkin or paper towel. They are presented in a container that resembles standard Kleenex, with consumers able to choose from seven different designs, each of which has been created to blend in with a home’s décor. This means they can be kept on display, thereby promoting usage.
Facial Cleansing—An Ideal Use of Wipes
One of the more successful segments has been cosmetic facial cleansing wipes, as it is the only segment in the U.S., other than baby wipes, where total revenue generated exceeds $200 million per annum. However, in 2006 sales stagnated in spite of a number of new and innovative product launches. Dove, for example, introduced gadgets into the category through the launch of its ‘Skin Vitalizer.’ The gadget works with Dove’s Cleansing Pillows and uses a gentle massaging action to soften, cleanse and then revitalize skin. Neutrogena, meanwhile, launched its PureGlow daily cleansing cushions, a second generation dual-sided exfoliating wipe, with two cleansing lotions, a gentle cleansing lather on one side and on the other a conditioning formula.
However, Western Europe, the largest region in terms of value sales of facial cleansing wipes, posted growth in excess of 5% in 2006. This market is substantially larger than that of the U.S., primarily as a result of the different retail channels through which wipes are sold. In the U.S., the discounter channel is a favored method of distribution, resulting in lower revenue streams.
Some Segments Disappoint
One area in which growth has not been as dynamic as expected has been feminine hygiene wipes, value sales of which fell 2.5% in the U.S. in 2006 to less than $13 million. This continues a downward trend first witnessed in 2003. Although there will always be a small group of consumers who purchase these products, the majority of U.S. consumers see the use of hygienic “short cuts”, such as wipes for intimate areas, as a last resort. However, manufacturers are not abandoning the category and recently introduced products including Playtex Petals, which come individually wrapped and impregnated with aloe and vitamin E. In addition, despite seeing its share of the U.S. feminine hygiene market decline from over 50% in 2001 to 16% in 2006, P&G has tried to reinvigorate the category and promote usage by offering combination packs of sanitary towels and wipes under the brand name ‘Always Clean’ (Always Freshelle in Europe).
Deodorant wipes have proved to be very successful in Japan where they generated sales of $128 million in 2006 as they are easy to carry and convenient to use. Busy lifestyles mean that many people tend to travel often so wipes are a good choice when they are on the move. Also with wipes, there is no large container that would be a threat to the environment. This is an advantage for wipes over spray formats as in Japan consideration of the environment is one of the key factors in the purchasing decision. In the other developed regions of the world it is a different story. Ranges in the U.S. were discontinued in 2005 due to a lack of interest from consumers who felt the product unhygienic, while the market in Western Europe appears to be heading the same way, with only US$16 million in sales revenue generated in 2006.
While deodorant wipes have proved a success in Japan, facial wipes have had a trickier time. They were expected to develop into a major segment but sales of products, such as Kao Corp’s market leading Bioré Make Otoshi Fukudake Cotton, peaked in 2003 at a value of $162 million and declined by nearly 10% thereafter as consumers found that the product was too expensive for the benefits provided.
The Future Could be Tough
Although the use of wipes for household cleaning purposes is a fairly new concept, in personal care many product segments are considered mature. As such, value sales are expected to come under increasing pressure from less expensive brands. Manufacturers should react by producing less expensive alternatives to ward off the threat of customers’ churning while at the same time segmenting the market more aggressively into standard and premium brands in order to extract more revenue from the top end of the market.
Private label is also likely to take an increasing share of the market before the end of the decade, particularly in Western Europe, where the large retailers have spent much time and resources developing their own brands and where consumers seem more accustomed to buying private label products. In the U.K., Tesco supermarket offers a pack of store brand children’s toilet wipes at half the cost of similar branded products from Pampers Kandoo and Huggies Cleanteam.
Growth in the baby wipes segment will start to be directly affected by declining birth rates across Western Europe. In order to replace lost revenue, manufacturers should continue to segment the market, offering products across the full price spectrum. We have already seen the start of this with the launch of K-C’s premium Huggies Supreme range of wipes. Further opportunities exist to develop new products under existing brand names. K-C has had success with its Huggies Little Swimmers training pants, developed for use in the swimming pool or on the beach, and could possibly extend these with a range of wipes containing sunscreen.
In contrast to the strong growth exhibited between 2001 and 2006, revenue generated through the sale of facial cleansing wipes in the U.S. is expected to decline by 9% between 2006 and 2011. Furthermore, since 2005 there has been a definite trend toward the return of the three-step beauty regime of cleansing, toning and moisturizing as many consumers no longer believe that wipes are effective enough. That said, consumers will continue to purchase these items, particularly as a travel accessory because of their ease of use.
Western Europe, on the other hand, will continue to experience solid growth rates of 3% per annum between 2006 and 2011, due to the less developed nature of the market and the lack of wider distribution through discounter channels, allowing prices to remain stable.
In order to try to gain ground, it is likely that manufacturers will try to expand the range of facial cleansing wipes available into other application areas such as moisturizers and nourishers/anti-agers. Indeed, a number of cosmetics companies have launched tanning wipes featuring an anti-aging component, such as Caudalie Vinosun’s Anti-Aging Suncare SPF 25.
Consumer interest in feminine hygiene wipes will continue to decline, especially in the U.S. where the category is expected to lose a further 6% in value between 2006 and 2011. The situation in Western Europe will be the complete reverse, with annual growth of 10% forecast over the next five years. The continual growth of feminine hygiene wipes in Western Europe can partly be explained by their staggered introduction across the continent. Indeed, feminine hygiene wipes were not available in Germany until the beginning of 2005 when Reckitt Benckiser introduced Liasan Intimpflegetücher, followed later in the year by Johnson & Johnson with its Carefree Intimpflegetücher (Intimate care cloths).
Eco-friendly Features On The Rise
Brands will also increasingly try to tap into the consumer trend toward more environmentally-friendly solutions by launching flushable and biodegradable wipes. While this will overcome the objections some prospective customers have concerning wipes, it will also mean that wipes are even more convenient in terms of disposal and when combined with less bulky packaging wipes they could become an ideal travel accessory.
The market is also likely to see the introduction of several new materials which have been specifically developed due to their biodegradability. Fibers constructed from sources such as soy beans or even scrimps are likely to be introduced toward the end of the decade as they will provide a sustainable alternative to the fossil fuel-based synthetic fibers currently used.
Emerging Markets The Way Forward
It is unlikely that any wipe category will ever achieve the same level of penetration as has been achieved by baby wipes. Indeed prospects for growth in the coming years will be hard to come by, particularly as the novelty factor of using wipes wears off and consumers start to look seriously at the cost of these products compared to traditional application methods. Therefore, even facial wipes will, in effect, remain a niche product.
In order to develop their businesses, manufacturers need to look to emerging markets, such as China, Brazil and India, which offer brands potentially large customer bases, particularly for the sale of baby wipes. To fully exploit these opportunities, brands will need to offer more cost-effective solutions, as disposable income levels in these countries are far below those of Western Europe and the U.S. It may even be the case that some products, such as feminine hygiene wipes, which have proved relatively unsuccessful across the U.S. and Western Europe, could prove to be a hit in warmer markets such as Brazil.
More information: Adrian Atterby, Industry Analyst Disposable Paper Products; firstname.lastname@example.org.