Peaking in 2015, strong consumer and government support formed in favour of the removal of the UK’s 5% VAT on sanitary protection products – the so-called “Tampon Tax”. UK consumers engaged very strongly with the idea that, while items such as razors and Jaffa Cakes were zero-rated, the VAT on tampons specifically, and the cost of sanitary protection in general, was an unfair burden placed onto women. In fact, in 2015, over 300,000 people signed a petition calling for an end to the tax, which was debated in parliament. Despite the headline-grabbing lobbying efforts of UK interest groups, students, activists and members of parliament (MPs), the UK’s levy on sanitary protection remained unchanged. While parliament had come out in favour of removing VAT on these products, MPs were hamstrung due to EU restrictions on member states’ ability to modify the rate at which VAT is charged.
While failing to tangibly affect VAT on sanitary protection, an unexpected yet highly significant consequence of the UK’s tampon tax debate was its impact on UK consumers’ awareness of price. Specifically, the debate gave consumers an emotionally charged reason to pay close attention to affordability within sanitary protection. This produced greater price transparency as the media made consumers aware of large price differences in the prices paid for sanitary protection in different formats, brands and countries. More women were thus encouraged to seek cost savings and very seriously consider switching the brands and formats of sanitary protection to which they had become accustomed.
Fierce debate promotes price transparency and greater switching among UK consumers
Given the significant potential for discomfort if an unsuitable product is chosen, the process of selecting a brand and format of sanitary protection is taken quite seriously by consumers. As a result, UK consumers have tended to be at best hesitant to experiment once they have found an adequately performing product.For many, this has meant that from puberty late into adulthood, they might have switched brands only once or twice and very likely never have changed product formats. In the UK, an entrenched bias towards tampons with applicators, a format that, per box of 20, is far more expensive than comparable digital tampons, stems from this “if it ain’t broke don’t fix it” attitude.
Over time, however, rising consumer education, boosted by the discreet access to information provided by the internet, has eroded some of this bias and sped up the dissemination of information. Despite this, due to the personal and often sensitive nature of the topic, UK consumers have remained slow to take an active role in frank and open discussions about their sanitary protection; greatly hampering the diffusion of information about the comparative price and quality of different brands and formats. Manufacturers of sanitary protection have thus enjoyed an operating environment characterised by a high degree of freedom to price discriminate due to consumer loyalty to brands and/or formats.
The UK’s tampon tax debate is expected to produce an accelerated erosion of this loyalty among UKconsumers. This is likely to be its truly lasting legacy. In 2015, the high degree of media attention thus drawn to affordability within sanitary protection created a highly emotive reason for a public and frank comparison of the prices and quality of sanitary protection across different brands, different markets and different product formats. Interestingly, with much of the impetus for the debate coming from online and social media, millennials, who demonstrate some of the highest internet penetration and social media engagement of any consumer group, were the most active participants and the most likely to tangibly alter their retail behaviour.
Manufacturers move to generate goodwill, but price concerns will dominate
The strength of the emotions attached to the debate provoked quick reactions from more nimble players, which moved to capitalise on the opportunity to show solidarity with consumers. Notably, Pravera UK Ltd, the UK distributor for Corman Spa’s Organyc line of green sanitary protection, launched a well-received 5% reduction in its prices for the month of November. Over 2016-2020, similar campaigns are expected to be launched by larger manufacturers of hygiene products looking to capitalise on the opportunity to generate goodwill and differentiate their brands from rivals.
In fact, in February 2016, a similar move was replicated on a larger scale. Denouncing the 5% VAT rate as “unfair”, health and beauty specialist retailer Superdrug announced its intention to give consumers up to 10 points on their loyalty cards for every purchase of Superdrug’s own private label sanitary protection. The move generated significant positive publicity for the retailer, particularly online, where the campaign was lauded by many in the same publications that had initially led the debate.
Over the longer term, however, similar measures are expected to increasingly become standard fare as players look to ensure that they do not belong to a minority of companies that have not taken a position against the tax. As a result, these measures are likely to lose their ability to generate headlines and goodwill for players in hygiene. Manufacturers and retailers can thus expect to be left to contend with a UK consumer, particularly among millennials, who is noticeably more price aware and more likely to switch brands or formats should cheaper or better-quality alternatives come to market.
As a result of this increasing focus on price, leading manufacturers such as Procter & Gamble UK Ltd, with its Always brand, will likely be forced to lower prices at a somewhat accelerated pace or lose a rising share of sales to cheaper brands and private label. According to Euromonitor International data, unit prices of sanitary protection are set to show a marginal decline, and forecast volume growth of sanitary protection will clearly outpace constant value growth between 2015 and 2020. This divergence in growth rates tends to indicate this overall shift towards somewhat cheaper sanitary protection as players adjust to the changing competitive environment.
UK sanitary protection, retail value and volume, % year-on-year growth, 2013-2020