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  • 1. An exclusive presentation for May 5, 2011Changing Paradigmsin Air Care
  • 2. Candle-making began several hundreds of yearsago out of necessity. Candles were used forlighting and as a way to tell time.
  • 3. A lot has changed in several hundred yearsThe first candle Religious uses William ProcterCirca 500 BCE of candles first candle in the U.S. 1835
  • 4. And there wasLIGHT!In 1879 the light bulb wasborn and candles becamesomewhat obsolete
  • 5. Norway 1927 Erik Rotheim patented an aerosol can On the otherPowerPoint has newlayouts thatglobeyou side of the give a new technologymore ways to present yourbeing images was words, inventedmedia. and United Sates In 1947 two American scientists Goodhue and Sullivan
  • 6. From fighting bugs to fighting mildew(and everything else!) Kills 99.9% of mold and mildew* Kills 99.9% of bacteria on soft surfaces* as a spot treatment Kills 99.9% of odor causing bacteria* Kills 99.9% of viruses and bacteria*
  • 7. From AIR CARE to HOME FRAGRANCES Mike Kittredge 1970s Claire Burke 1960s King of Candles, Harry Slatkin 1990s
  • 8. Leading marketers have changed in the past decade Then Now 2000 2010 S.C.Johnson 1 Yankee Candle Blyth 2 S.C. Johnson Yankee Candle 3 Bath & Body Works Candle-Lite 4 Reckitt Benckiser Henkel (Dial) 5 Procter & Gamble
  • 9. We’ve come a long way Forbidden Fruits Collection (PartyLite)Scentbug, Scentportables, Wallflowers and Figural Boho Jar Gallerie Candles (Slatkin & Co) (Illume Collection Candles) (WoodWick)
  • 10. A very long way….Home Collection No Spill Diffuser Jasmine & Wild Orchid Winter Luxury Wooden Wick (Febreze) reed diffuser Scent Ribbons (Febreze) (Glade) (Air Wick)
  • 11. Market Overview
  • 12. Sales have grown at a healthy 6% CAGRover the past 10 years $ Million 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2000 2010
  • 13. Candle share has declined as diffusershave really stepped up% Of total 100% 90% 80% 70% 60% All other 50% Diffusers 40% Room sprays 30% Candles 20% 10% 0% 2000 2010
  • 14. Innovation has propelled price pointsupwards Now • Candles: $2.99-$35.00 Then • Diffusers: $2.99-$35.00• Candles: $2.99-$12.50 • Room sprays: $2.99-$95.00• Diffusers: $0.99-$5.99• Room sprays: $0.99-$2.99
  • 15. Innovation has helped drive sales in all categories Candles Room sprays• New shapes • New dispersal systems• New forms Diffusers • Multifuntional• Blendables products• Fragrance innovation • Battery operated • Blendables • New forms
  • 16. Scents are proliferating from candles toother categories Candles Diffusers Room sprays
  • 17. Apple Cider (Yankee Candle)Scent Notes: Hot cider, cinnamon, nutmeg, and cloves Green Tree Citrus (Febreze) Scent Notes: Green tea and citrus notes Caribbean Escape (Slatkin & Co.) Scent Notes: Melon, raspberry and coconut Lemon Pound Cake (Village Candle) Scent Notes: Vanilla bean, lemon zest, hazelnut and anise Vanilla Bean (Chesapeake Bay Candle) Scent Notes: Vanilla nectar, sugar cane, lemon
  • 18. Grapefruit Fandango (Aromatique) Scent Notes: Grapefruit, pineapple, mandarin orange and musk Citrus Cilantro (Pier 1 Imports) Scent Notes: Lemon, cilantro, bergamot, and grapefruit Apple Cinnamon (Glade) Scent Notes: Spiced cider and apple pie Pumpkin Chai (Nest Fragrances)Scent Notes: Wild pumpkin, masala chai, cardamom and ginger Lavender & Chamomile (Air Wick) Scent Notes: Lavender essence, and chamomile
  • 19. Candles
  • 20. CANDLESInnovation and newness have helped spark salesYankee Candle Layered Gel/preserve Multiples New Oil caters to gift Mass brands Botanicals candles Bendables Soy shapes candles channel enter market 1980s 1990s 2000s Today
  • 21. Sales continue to grow although albeitat a slow pace $ Million 1,500 1,450 1,400 1,350 1,300 1,250 1,200 1,150 2000 2010
  • 22. Trends in the candles category include: Market leaders: Ambiance with wood wick Odor eliminating 1 Air freshening Smaller sizes of filled candles 2 Unique shaped containers 3 Fragrances, fragrances, fragrances! 4 5
  • 23. Smaller SKUs Wood Wick Petites Small Tumbler Candle Mini 1.6 Oz Filled Candle (Virginia Candle) (Yankee Candle) (Slatkin & Co.) décor value High home Filled Decorative Candle Pier 1 Scroll Candles Gallerie Collection (Slatkin & Co.) (Pier 1 Imports.) (WoodWick) Spicy, fruity gourmand scents and Apple Cider Caribbean Escape Ginger Peach (Yankee Candle) (Slatkin & Co.) (Pier 1 Imports.)
  • 24. Fruit scents and bakery scents are the most popular fragrance types in 2010.Pomegranate Mango Warm Gingerbread Cherry O! (Febreze) (Colonial Candle) (Claire Burke) Bakery Cupcake Apple Pie Pineapple Cilantro (Wood Wick) (Bridgewater) (Yankee Candle)
  • 25. The holiday season is marked byattractive packaging, special promotionsand seasonal scents by mass marketers.
  • 26. Home fragrance marketers are increasinglyadding products that are environmentallyfriendly or reflective of the green movement • Candle ingredients • Wick-burning qualities • Reed diffusers • Scented rocks • Essential oils
  • 27. Candles increasingly feature environmentally-friendlywicks, better burn rates, and cleaner burning• WoodWick Candles has a natural wick made form organic wood that offers the sound of crackling fire.• Chesapeake Bay’s Pure & Natural candles have lead- free cotton wicks.• Clean burn is a product claim also made by Bridgewater Candles.• Lumi-Lite private-label products have a patented wick sustainer that allows the candle to extinguish itself one-half inch from the bottom, where most fires from candles are started.
  • 28. Diffusers
  • 29. DIFFUSERSNew innovations have driven the category Battery operated Scented oil plug-ins Blendables New shapesJelly jar Appliances 1990s 2000s Today
  • 30. Scented oil diffusers in 2000 gave birthto a whole new generation of products
  • 31. DIFFUSERSInnovation and newness have helpedelectrify sales over the past 10 years! $ Million 1,200 1,000 800 600 400 200 0 2000 2010
  • 32. Trends in the diffusers category include: Market leaders: Odor eliminating Decorative 1 Dual chamber 2 Convenience/portable 3 Fragrances, fragrances, fragrance! 4 5
  • 33. Battery-operated diffusers spiked salesin 2004
  • 34. Blendable fragrances transfer to the category Yankee and Febreze follow with dualSCJ’s Create-a-Scent launched chamber oil electric diffusers in 2006 in 2005
  • 35. Febreze Scentstories adds a newdimension • $35.00 price tag • Sales tripled in first full year on market • Modeled after CD player • Heavily supported by P&G
  • 36. Reed diffusers fueled category growthfrom 2007 to 2009 • First introduced by The Thymes Ltd. in 2002 • Price points to $75.00 • Now in most home fragrance lines/all channels
  • 37. Mass-market diffusers proliferate Glade Glass Scents (2005) Method Aroma Capsule (2006)
  • 38. Key new product introductions in 2009/2010 are heavily focused in the diffusers category.Renuzit Crystal Elements (Henkel) Slatkin & Co. Scentbug (Limited Brands) WoodWick Spill-Proof Diffuser (Virginia Candle Company)
  • 39. New products range from those with addeddecorative value to pure innovation. ScentPortable Holiday 2010Febreze Home Collection (Bath & Body Works) Flameless Luminary Air Wick i-Motion (Procter & Gamble) (Reckitt Benckiser) Glade Sense & Spray (S.C. Johnson)
  • 40. Room Sprays
  • 41. Reversing a declining market has been anuphill battle $ Million 540 535 530 525 520 515 510 505 500 495 490 2000 2010
  • 42. Products now do more than ever Now • Eliminate odors Then • Neutralize odors• Mask odors • Leave scent behind for up to one hour• Leave scent behind • Sanitize air • Kill airborne bacteria
  • 43. Trends in the room sprays categoryinclude: Market leaders: Odor control Higher price points 1 Unique package designs 2 Long-lasting fragrance 3 Fragrances, fragrances, fragrance! 4 5
  • 44. P&G’s Febreze extended to category in2004 and leads growth • Launched in 2004 • Posts a 8.1% CAGR from 2005 to 2010 • Now third leading brand after AirWick and Glade
  • 45. Fragrances that are nature-based andmade with essential oils continue to gainin popularity • Rose and other floral scents are popular. • “Superfruits” that contain antioxidants like pomelo and pomegranate are in vogue. • Simple, clean scents that are new include citron basil, white thyme and wild poppy, and watercress.
  • 46. Specialty and prestige players showinterest from time to time • Yankee repackages aerosols in decorative boxes • Henri Bendel launches room sprays • Bath & Body Works introduces mood-balancing sprays • Jo Malone introduces “Living Cologne” at $95.00
  • 47. SPECIALTY PRODUCTSThese categories remains quiet Includes • Simmering oils • Incense • Fragrance oil burning lamps • Lamp rings • Sachets • Potpourri Market Trends • Fragmented market • Fragrance oils biggest contributor and growth driver • Small/older consumer base • Sachets important segment • Important “add-on” category for marketers
  • 48. Outlook
  • 49. Industry sales are projected to grow at aslow pace 3,800 $3.7 billion 3,700 CAGR,2.3 % 3,600 3,500 3,400 $3.3 billion 3,300 3,200 3,100 2010 2015
  • 50. Many factors will affect the industry Positive factors Negative factorsContinued growth through mass outlets Strong spending in diffusers and room sprays make it difficult to grow candlesMulti-functional products SLOW GROWTH Opportunity for Need NEW technology to drive value-added products business New channels can provide opportunity
  • 51. Innovation will continue to play a keyrole • Fragrance innovation • New finishes • Products to emphasize flame glow • New diffuser forms
  • 52. Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the chemicals, materials, energy, life sciences, and consumer products industries for over 50 years. For more information, visit www.KlineGroup.com.If you require additional information about the contents of thisdocument or the services that Kline provides, please contact:Karen Doskow Americas Kristy AltenburgIndustry Manager Account Manager ____________Phone: 973-435-3381 Phone: 973-435-3367E-mail: Karen.Doskow@Klinegroup.com E-mail: Kristy.Altenburg@Klinegroup.com Asia ___________Kline & Company, Inc.35 Waterview Blvd. EuropeSuite 305 ___________Parsippany, NJ 07054Phone: +1-973-435-6262Fax: +1-973-435-6291www.KlineGroup.com