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Euromonitor International is pleased to announce publication of the new Home Care 2012 system, now live on Passport. The updated research provides insight into how the home care industry is performing and how a changing operating environment – which sees income growth in the developing world and economic instability across much of the developed – is affecting spending patterns and the broader competitive environment.
In spite of a difficult year, which saw disaster in Japan, a crisis in the Eurozone, as well as political unrest in the Middle East, the home care industry posted US$8 billion of incremental growth pushing the industry to US$145 billion. With impressive value growth of almost 6% in 2011 this was the highest annual growth recorded since the post Lehmann crash. Whilst the headline statistics make for encouraging reading, a fair portion of this growth has been encouraged by the return of commodity price inflation in 2011, as well as a number of high inflation economies such as Venezuela and Belarus, which also helped to inflate regional growth totals.
The story of 2011, as for most of the previous decade, has been the extent to which developing markets have picked up the growth baton from the developed world. Developing markets reported 11% value growth in home care in 2011, which was a welcome return to rapid growth similar to the heady days of the pre-crash era, driven for the most part by expanding incomes throughout Asia Pacific and Latin America. Such has been the veracity of growth in these territories that the share of global sales taken by developing markets has jumped sharply since 2006, from 38% to 47% in 2011, and looks certain to grow to be the dominant grouping towards the end of 2012. Indeed, home care is only one of a small number of fmcg markets which is close to or has achieved this tipping point milestone, tissue and hygiene being another. Click to tweet! Tipping point is testament to the success manufacturers have had in getting their products to market in a format lower income consumers both desire and can afford.
In keeping with this migration, the leading six manufacturers continued to see a larger share of their sales going to the developing world, with Unilever the pace setter in 2011, with 65% of its global sales generated from emerging markets. Chief rival Procter & Gamble, as well as other household names including Henkel and SC Johnson, have all looked to follow this pattern and, in the case of Reckitt Benckiser, restructure, in order to make the best of emerging market opportunities.
International manufacturers have become increasingly sophisticated in the way they sell into these markets using a wide variety of techniques, Unilever, for example, has developed direct selling under its Aviance brand in South East Asia whilst utilising local entrepreneurs/sales agents in India to establish broader distribution in what are notoriously difficult markets to gain traction in.
Other developments have seen emerging markets skip entire product stages. Latin America, for example, has seen the development of liquid laundry detergents in markets which have yet to establish the presence of standard automatic laundry detergents. Manufacturers such as Procter & Gamble have invested in promotional campaigns in a bid to push development more quickly than might ordinarily be expected. Other developments have seen the further establishment of brands designed specifically for emerging markets rather than extensions of existing brands from the developed world.
Whilst the developing world is playing catch up, developed markets appear to be harmonising. This has been seen in legislation, the US banning phosphates in detergents in 2011 and the EU set to follow suit in 2013; there also appears to be broad agreement (at least in principle) for a ban on non-flushable substrates that go into household cleaning wipes. Whilst regulation appears to be harmonising in some areas, the greatest influence on trends across the developed world has been the inexorable rise of sustainability as a key industry objective. With this in mind, there has been a significant dash to compaction across laundry where the switch over (notably in Western Europe) has been pronounced and likely to harmonise laundry trends to concentrated liquids, which will make up the majority of loads over the medium term.
While consumers remain somewhat suspicious of the efficacy of green products in general, heightened by the general stagnation in incomes, the elevation of efficiency as the primary objective in laundry has been much easier to sell. The latest evolution of faster washing times and low water temperature washing linked with the growing popularity of high efficiency washing machines in North America and Japan (they are already standard in Western Europe) indicates a not too distant future where the laundry trends in all three key developed territories will finally merge. This will ultimately be good news for larger international manufacturers who still see a significant portion of their income emanating from these markets.
Retail development through 2011 continued to see supermarkets and hypermarkets maintain their leading position at the expense of discounters. Hard discounters had, until recently, experienced rapid growth that was enough to suggest they might become challengers to the status quo in developed markets. Although markets such as Germany are still dominated by discounters such as Aldi and Lidl, the expansion of these chains has been checked by incumbent supermarket chains such as Tesco in the UK which have developed a strategy that is not too dissimilar from hard discounters and allowed them to curb their encroachment.
With consumers still balancing price and efficacy in their purchasing decisions, private label products have benefitted relatively little from the recession and stagnating incomes. Brands have benefitted from consumers looking for value-based efficacy, the opportunity to save money by using less detergent or reducing washing temperatures, with traditional discount brands being as a consequence. The long awaited release of Tide PODs in 2012 was evidence of just how much the leading corporations are willing to invest in new product development and back their brands with promotional spending. The success, or otherwise, of Tide PODs in North America may well be defining; will consumers in the current economic situation look to innovation or rely on tried and trusted formats? A success for Tide PODs will likely herald a more concerted era of innovation and new product launches which will be good for the home care industry over the medium term.
In the latest edition, we have continued to invest heavily in our global research network, strengthening and improving the coverage across all 80 geographical markets.