By Ian Bell , Head of Home Care, Tissue and Hygiene Research, Euromonitor International | June 7, 2011

Still a Relevant Format in the Post-Recession Era

The market for retail wipes is quite unique as it sits at the junction of some of the largest, or at least some of the most familiar, categories in FMCG—namely tissue and hygiene, home care and personal care. Although broadly performing in a similar way to its parent categories, due to their specialty footing, many wipes formats continue to plow their own furrow in terms of performance and geographical presence.

Sales of wipes through retail outlets rebounded strongly in 2010, a 5% increase in value terms over 2009. This was positive news for a category which had been hit by the recession in developed markets, as these account for roughly 80% of retail sales. While other product categories such as laundry care have experienced a similar downturn in the developed world, growing penetration in developing regions had resulted in positive growth, despite problems in Western Europe and North America. Wipes were not afforded this luxury.

Growth in wipes (+5%) was lower than posted by home care (+6%) and personal care (+7%) but still a welcome rebound from the -2.5% posted in 2009. Perhaps a truer measure of the performance of wipes against its peer industries comes from a review which excludes developing nations. This comparison reveals that wipes was actually the most positive performer with 2% value growth in 2010 as opposed to the 1.5% seen across personal care and tissue and hygiene, or indeed home care, which lagged behind with only 0.5%.

Wipes clearly still have something to offer consumers even in more austere times.

Personal Care Formats Gain—Home Care In Decline
While the wipes market saw a large gap in terms of geographical (economic) distribution, there continues to be a clear leaning towards personal care products, which accounted for 70% of sales in 2010, a figure which has declined only a few percentage points over the last decade. The relative performance of these two sides of the industry was also markedly different; indeed there was no better indication of how consumer attitudes have changed through the recession.

Consumers Want Convenience, But Are Disinclined To Pay A Premium
Personal care wipes proved the key driver posting in excess of +5% value growth in 2010, whilst home care orientated products saw ongoing declines. True, losses in 2010 were much shallower than the -4% by value reported in 2009, but sales continued to be undermined by the lackluster performance of the key territories; North America and Western Europe.

Consumers, on the whole, proved unwilling to pay a premium for convenience or, the difficult to quantify, improved efficacy wipes can offer. Unwilling to increase expenditures on home care, consumers once more appeared satisfied with multipurpose cleaners used in conjunction with cloths or paper towels. Indeed, kitchen towel manufacturers have highlighted the tensile strength of their products and applicability for cleaning tasks perhaps more normally associated with wipes or traditional cloths.

The suggestion that consumers are reevaluating the disposable aspects of their lifestyles is misleading; time poor consumers are still looking for convenience, but since the recession, these same consumers are now also classified as cash strapped, or at least lacking financial confidence. There were, however, some exceptions to this rule with specialist window and glass care proving popular in some markets such as the U.K. as consumers looked to do odd jobs around the home, thus saving on the expense of using tradesmen.

Electrostatic Wipes—Still Alluring To Many
Electrostatic wipes have proved an interesting category as they represent 38% of value sales of home care wipes globally, and although seeing sales stutter in 2009 and 2010 due to the recession, have grown quickly in developed markets since the millennium, with brands such as Swiffer promising greater efficacy to a growing band of house-proud consumers under the influence of the cocooning trend.

It can also be argued that this growth is linked to the prevailing trend of health and wellness with consumers better informed on allergies and problems associated with house dust and mites in the home. Ultimately, however, these products offer consumers perceived greater efficacy against traditional polish and duster type cleaners, which continues to appeal to many, especially in North America. Sales in 2010 saw +2% value growth (opposed to -6% 2009) and were in part driven by respectable +3% growth posted by the key North America market following a concerted period of product promotion by
Procter & Gamble, for example. A poor performance by Japan and Western Europe undercut more impressive growth rates due to poor economic times discouraging consumers from spending, most notably in economies which have been more widely exposed to the financial crisis such as Portugal and Greece.

Baby Wipes Dominate Sales And Prove Popular In Emerging Economies
Personal care proved quite the antithesis to the depressed spending trend in home care, with sales reporting +4% value growth in 2010, despite the global recession. The key driver here came from the popularity of baby wipes which accounted for 63% of personal care wipes value sales in 2010.

At least part of the success of baby wipes has come from expansion into developing markets where they are relatively inexpensive and, importantly, held in high regard by a growing band of consumers. The category has also benefited from close association to the nappies/diapers industry, which has invested heavily in developing countries. Baby wipes have ridden on the coat tails of this trend towards disposables and as a result saw 25% of value sales generated from emerging markets in 2010.

With impressive growth of +18% year-on-year, baby care wipes certainly point the way to a future for wipes which has less of a focus on the more saturated Western economies, where growth was a more modest +3%. That said, in developed markets where birth rates are on the whole declining, penetration rates have also been seen to grow. This has been encouraged by notable uptake of baby wipes as a substitute for more expensive cosmetic wipes or other personal wipes, as consumers look for safe, often natural, products. This trend has not been the preserve of wipes; baby, skin, bath and hair care products have all reported better than expected sales in many developed markets, despite the less than helpful overall trend for birthrates.

Japan Spurs Growth For Cosmetic Wipes
In part due to this trend for down trading, born out of the recession, cosmetic wipes saw sales struggle in 2009. However, the category had something of a comeback in 2010 with 5% value growth emanating from a somewhat unusual source. 2010 saw a particularly long and hot summer in Japan; social convention dictates that high levels of personal hygiene are anything but discretionary, particularly in the workplace, causing a surge in sales of deodorants through May to October 2010. New launches and promotions form leading brands such as Mandom’s Gatsby and Kao’s Bioré in the more specialist deodorant wipes category were so successful that they accounted for roughly half the growth reported across the global market for cosmetic wipes. This proved a welcome boost to a category that was still struggling to keep up with average category growth due to consumers’ unwillingness to change their purchasing patterns or indeed their beauty regimes.

Wine Wipes are just one of a number of clever new product introductions driving wipes growth.

Forecast Growth Dependent On New Territories
With the world economy seemingly bouncing back from recession and even the Western European and North American markets seemingly over the worst of the financial crisis, wipes can perhaps look forward to further stable growth over the medium term, expected to be in the region of a +2% CAGR to 2015. This figure is half the growth achieved during 2005-2010, but is indicative of saturation in some areas plus the difficulty in persuading developing nations to expand their wipes repertoire beyond baby wipes, which will represent half the additional $1 billion of additional revenue likely to enter the category over the coming five years.

In order to move the category forward at a more rapid rate, manufacturers will face some major obstacles; chiefly, they will need to convince consumers to trade in their cloths for disposable alternatives. Indian consumers, for example, are typically loath to dispose of products in the same manner as Western consumers and this kind of attitude will take some changing.

Alternatively, at a time when sustainability is a watch word for FMCG as a whole, the more sustainable leanings of these populations, whether economically driven or otherwise, may be something that needs to be preserved. To date, almost to a product, NPD hails from leading Western nations, but the future health of the category may well require developments which are specific to consumers in emerging markets rather than the ‘transplantation’ of products originally conceived and designed for a Western audience.

Sustainability To Be Key Consideration In More Developed Areas
Looking at developed markets there is also the threat of legislation in the form of a ban on non flushable formats, which may not be too far off following attempts in the U.S. and Europe to try and regulate the industry more closely. Sustainability will also become more of an issue for manufacturers to tackle due to the apparent severity of global supply problems for energy, raw materials and water. This will be imperative, not least to maintain competitive pricing in what promises to be a future where input costs – including water – can be expected to escalate and intensify.

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