According to Euromonitor International, in terms of the $9 billion global wipes market, the developing regions of Eastern Europe, Latin America and the Middle East and Africa account for a very small share, at just under 10% combined. However, this is up from 5% at the beginning of the decade, indicating that although the global significance of the emerging regions remains relatively small, they are quickly growing in importance.
Continuing the trend, Euromonitor reports that Latin America, the Middle East and Africa and Eastern Europe are predicted to drive global growth of the category to 2013, with predicted average annual value growth of 7%, 6% and 3%, respectively, all above the forecast average annual category growth of 2%.
Personal Wipes Account For
The Majority Of Sales
Personal wipes currently account for 65% of the global wipes market, and it is this category that also commands the majority of sales in developing regions, but here by much bigger margins. In Latin America personal wipes account for 99% of total wipes sales, while in Eastern Europe and the Middle East and Africa personal wipes account for shares of 97% and 96%, respectively.
Latin America Forges Ahead
In Personal Wipes
Latin America has the largest value sales of personal wipes of the emerging regions, standing at $329 million. According to Euromonitor, the region is also predicted to have the fastest average annual growth in personal wipes to 2013, at almost 8%. In particular, this growth is likely to be driven by Brazil, which is also the region’s largest market, standing at $166 million, while Mexico and Argentina are also predicted to achieve healthy growth rates. As a result of this potential, Brazil and other burgeoning personal care wipes markets in Latin America have been the focus of plenty of activity from manufacturers of late, which are looking to capitalize on the region’s potential. In particular, manufacturers such as Kimberly-Clark, which have been long established in other categories, have focused their attention on expanding their brands and portfolios into personal wipes.
Baby Wipes Dominate The Category
Euromonitor finds that baby wipes underpin sales of wipes in all developing markets, accounting for 62% of personal wipes sales in Eastern Europe, 72% in the Middle East and Africa, and 93% in Latin America. Baby wipes are the only product in the category that does not have a rival substitute product that can compete in terms of convenience. Furthermore, baby wipes are strongly linked to the consumption of nappies/diapers, and as consumers in developing markets are increasingly considering diapers to be necessity items, baby wipes sales are growing by association.
Despite the category’s success, baby wipes still have relatively low penetration in many developing markets as many low-income consumers continue to opt for wet cloths because of relatively high unit prices. However, this does mean that there remains plenty of room for further growth in the category. In line with this, baby wipes are predicted to see strong growth in every emerging region throughout the forecast period, driven by higher disposable incomes widening the consumer base and relatively high birth rates. Euromonitor reports that Romania, Egypt, South Africa and Russia are all expected to register double-digit average annual growth to 2013.
Feminine Hygiene Has Niche Potential
While baby wipes are the dominant force in personal wipes, it is the relatively new category of feminine hygiene wipes that is predicted the highest average annual growth in every developing region over the forecast period. In the Middle East and Africa, Euromonitor finds that the average annual growth of 24% is predicted to 2013, while in Latin America the figure is 28%. Despite the growth rate of the category being exaggerated by the low sales base, for the short term the category at least holds potential.
Although the novelty factor of a new product certainly accounts for some of the strong growth, the category is also benefiting in many developing countries from women’s rising disposable income levels and widening distribution, and consumer awareness of the products. Furthermore, as a result of the product’s potential, more manufacturers are investing in the category, offering trial packs of wipes along with sanitary product purchases, for example a tactic used by Lil-lets in South Africa, which is in turn driving consumer interest.
Consumers Remain Cautious About Household Care Wipes
Although there have been some success stories, household care wipes have so far had much less of an impact in developing markets than personal wipes. The category suffers from a lack of a product that could be deemed a necessity, such as baby wipes, as well as a multitude of easily available and cheaper alternatives. While lower-income consumers in developing markets are simply unable to afford the luxury of a household care wipe, even for those on a higher income, wipes are regarded as nice to have but nevertheless non-essential items that are commonly replaced by cloths. Few consumers will consider household care wipes to be essential products worth paying a premium for.
This lack of consumer interest is at times a heavy investment from manufacturers in product launches and advertising. In Argentina, for example, household care wipes have been taken off the market due to disappointing sales in spite of SC Johnson investing a large amount of time and money in the category. Adding to the difficulty for household care wipes is that consumers in emerging regions who can afford these products tend to have maids to do the cleaning, and therefore consider this type of product to be unnecessary.
Opportunities Will Arise
for Carefully Targeted Products
Despite this slow start, household care wipes do have opportunity for growth and most likely will, in line with global trends, eventually become more accepted as more products come to market, disposable incomes grow, and convenience takes over as a purchase driver. In both Eastern Europe and the Middle East and Africa the category is expected to grow at a quicker rate than personal wipes, with Euromonitor reporting the predicted average annual value growth of 5% and 8% for each region, respectively.
To capitalize on any potential, manufacturers must be careful to target the right product at the right market. For example, Clorox has driven growth of the category in both Saudi Arabia and Colombia by expanding into all-purpose cleaning wipes, leveraging brand recognition from its chlorine bleach, while SC Johnson has been successful in developing household wipes in Ukraine by launching furniture polish wipes under the Pronto brand. Some manufacturers have found success proves that potential remains for the right product at the right price point—the challenge for manufacturers is to find that niche cleaning need first.
Cost Remains More Important
Looking ahead, Euromonitor found that despite predicted strong growth rates for feminine hygiene products across the developing regions and localized strong growth for certain household care wipe segments (impregnated wet wipes in the Middle East, for example), as the emerging markets develop it is unlikely that any wipes category will ever reach the same level of penetration as will be achieved by baby wipes.
While the major selling point of wipes is the added convenience for the consumer, there is no doubt that as disposable incomes grow, convenience will become a more important purchase driver. There remains a vast number of consumers in emerging markets who, for the short term at least, cannot afford to prioritize on the grounds of convenience. In addition, even if consumers can be persuaded to enter the category, for many the novelty factor of using wipes may eventually wear off and the cost of the products compared to traditional cleaning methods will again loom large in their minds. In short, for manufacturers looking to fully exploit the potential of wipes in emerging markets, the present cost must be the number one concern.
Developing Markets Hold Both
POTENTIAL AND CHALLENGES FOR WIPES MANUFACTURERS
By Magdalena Kondej, Head of Household Care Research for Euromonitor International
Published April 12, 2010