With global sales of $23.3 billion in 2005 and growth of almost 6% on the previous year, bath and shower appears to be picking up the pace and taking advantage of the opportunities in emerging markets. In developed markets, where competition is toughest, manufacturers are innovating to drive value sales and find a unique selling point that will give their brands an edge.
Rising Sophistication: Latin America and Eastern Europe
In 2005, bath and shower products saw rapid expansion in Latin America, albeit from a small base and accounting for less than 11% of total global value sales. By 2010, the region is expected to experience value growth of 15%, a slight comedown from the 2001–2005 period (17%) but nonetheless dynamic. Bar soap has commonly been the main driver of sales—accounting for almost 85% of sector value in 2005, a 17% growth, and outselling value-added liquid soap and body wash varieties—but this is beginning to change. As in other developed markets, the most dynamic area for Latin America in 2005 was body wash/shower gel with 26% growth, reflecting the increasing popularity of the format perceived as more convenient and luxurious among affluent urban consumers.
Eastern Europe represents strong growth prospects in the bath and shower products sector, as economic conditions across the region improve and the market consistently returns dynamic year-on-year value sales. Eastern Europe is also showing real signs of sophistication, and consumers have proved to be willing to pay more for luxury items such as bath additives and value-added shower gels. Staple bar soap, as well, continues to expand in value terms—with products such as Dove’s array of “one quarter moisturizing cream” products offering more for slightly higher unit prices.
Russia, Ukraine and Poland are the largest markets in the region, accounting for 29%, 23% and 15% of value sales, respectively, in 2005. In Russia and Ukraine, recent years were marked by the growing availability and popularity of more sophisticated bath and shower products such as bubbling bath salts, sparkling tablets, at-home spa sets and products made from natural ingredients.
Consumers in the region increasingly strive for the same luxury products enjoyed by their Western counterparts—due, in part, to their increased exposure to Western advertising and media imagery. In Poland, the Czech Republic and Hungary, bar soap is still considered a household staple, but value growth in bar soap has suffered from value-added product and liquid format sales.
Two-tiered Market: Asia-Pacific
Japan, India and China lead the bath and shower products sector in Asia-Pacific, accounting for 30%, 22% and 18% of regional sales, respectively, in 2005. The sector is mature in Japan, and the slowing growth has forced marketers to focus on adding value to retain an edge. India and China, on the other hand, are underdeveloped with huge growth prospects, and the emphasis is on raising penetration rates.
A major value generator with a modest upturn in 2005, Japan proved not to be the drag on Asia-Pacific’s growth that it had been in previous years (when growth was viewed in local currency terms). However, the country’s bath and shower products sector is not out of the woods yet. Sales of talcum powder, liquid soap and bar soap all declined in 2005 due to falling birth rates, commoditization and strong price competition; though, as in other developed countries, body wash/shower gel was the one sector that showed strong value gains. The sector benefited from the development of pampering at-home spa and aromatherapy variants—such as Lux Spa Moist Orange Bloom Body Soap by Unilever, launched as a Japanese brand extension in 2005.
In India, value growth is being driven by bar soap. Manufacturers are dropping pack sizes to reduce unit prices, thereby bringing products within the reach of the country’s less affluent majority. There also is a push to widen penetration to India’s rural poor. Unilever’s Swasthva Chetna (“health-awakening”), launched in partnership with the Indian government, teaches the importance of hand washing in approximately 18,000 villages (in eight states) and reaches 70 million rural dwellers. Bar soap sales in India rose by almost 7% in 2005 to $1.1 billion.
In the country’s more affluent western states, body wash/shower gel is beginning to find demand, although it remains nascent with sales of just $9 million (or less than 1% of total bath and shower products sales) in the country as a whole. The importance of India as a region for multiproduct growth will wane as consumers continue to focus their spending on bar soap and talcum powder—two areas with limited scope for value-adding innovations.
Looking forward, China will continue to top Asia-Pacific growth tables, even as Indonesia is expected to emerge as a dynamic new market—with potential coming from its improved economy, political stability and large population base—through 2010. South Korea is also a key market to watch, being relatively undeveloped in bath and shower products despite having a large and relatively affluent population.
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