Since the explosion of candles sales in the 90’s there have been some major developments driving the market place, some news good some news not so good. Declines in the economy after September 11, 2001 has been universally felt in every category of discretionary spending, save a few. The good news is that the environmental fragrance market has actually increased sales volume in each year since that date and continues to grow, albeit, at a slow rate. This market includes scented candles, potpourri, reed diffusers, and incense.
Market growth – early years
Although considered by some to be a mature market the environmental fragrance market has been growing steadily since the 90’s boom and is estimated to be a $2.4 billion market at this time.
Heidi Kessler and Richard Roth decided to make their own soybean wax and start an organic candle business, Lumia Organic Inc., in the summer of 2003. Roth said soy wax candles started seven years (eleven years today) ago when people became aware of the fact that paraffin candles emitted large amounts of pollutants into the air. The trend for ecologically friendly or green technologies has grown and soy wax fits the specification nicely.
“The market for soy wax candles perhaps is growing at a rate of 80 percent per year,” Roth said. “Its the fastest-growing segment of the candle marketplace.”
Another perspective from the director of marketing at Hanna’s Candle Co is that the hottest product segment in the home fragrance category is scented candles, and the hottest trend in scented candles is soy.[1]
“It is amazing how quickly soy has soared in popularity among consumers,” says Annett Davidson.
The sudden increase in consumer awareness of and demand for soy candles is another manifestation of the class to mass trend that is driving the overall fragrance category, Davidson believes.
“Consumers want to be able to buy prestige fragrances at affordable prices, and the place they expect to do that is in a mass market retail store,” she says. “The same dynamic is apparent in home fragrances. Shoppers are turning to discount stores, drug stores and supermarkets to find the upscale soy candles they could only buy in department stores and other prestige outlets before.”[2]
The natural movement that is bringing new life to many mass market categories is also delivering shoppers to the $2 billion plus candle business. Retailers say the business is propelled by the true users, who tend to burn candles within a week of purchase. Many of these consumers are drawn to aromatherapy products and more and more demand “green” products.
“We see an opportunity with a great product line to start small and keep up with demand for candles that are all natural and fit into the channels dealing with wellness,” explained Rick Ruffolo, senior vice president of brand, marketing and innovation at Yankee Candle Co.,
Grocery and drug store chains and the ranks of natural-only stores such as Whole Foods, which are adding more mini clinics and boosting a health care image, are also logical doors for more aromatherapy and natural candles.
“We are looking at the channels who have embraced natural and wellness, and to align our efforts,” said Ruffolo. Among the retailers extending natural sets are Shaw’s, Fred Meyer, Harris Teeter, Dominick’s and Wegmans. Candles are merchandised in natural areas near foods and health and beauty aids.
A major conclusion according to some studies is that certain pockets of the country are populated by so-called ‘natural lifestyle’ consumers that could represent as much as 30 percent of the population. This means that consumers who are looking for healthier groceries will also want candles that will enhance their overall wellness. The candles carry attractive gross margins and are priced between $6 and $21.
Natural candle products are building sales rather than cannibalizing from existing candle sales, said Ruffolo. Yankee Candle Co.does think more and more shoppers have a burning desire for its natural formulations.[3]
Market Growth – today
A higher importance on comfort in lifestyle has consumers spending more money on home decor, creating a gain in 2005 candle sales. Shoppers who place higher emphasis on quality are willing to pay top dollar to make their homes look and smell nice with premium products. Scented candles have become a large home fashion category as people equate lighting and fragrant environments with a “feel good” factor. Candles have also become a popular gift trend, as the top-selling segment in the giftware industry last year was home decorative accessories. The category had $14.9 billion in sales, a 13% increase from $13.2 billion in 1998, according to Unity Marketing, Stevens, Pa.[4]
Annual United States retail sales of candles are estimated at about $2.4 billion. There are more than 400 commercial, religious and institutional manufacturers of candles in the U.S., plus many more small craft producers. About half the candle sales in the U.S. are of foreign-made products, with China the largest supplier nation.[5]
The National Candle Association (NCA) estimates that candles are used in seven of 10 households in the United States, with two-thirds of candle purchasers saying they use them once a week or more. Fragrance is by far the most important characteristic impacting candle purchases today, according to the NCA, with 75% of candle buyers saying it is either “extremely important” or “very important” to the selection process.
Market analysts at Mintel International claim that candle sales have fallen at an inflation-adjusted rate of 7 percent over the past five years, to $2.34 billion in 2006. They also predict sales will decrease another 1 percent by 2010 and that brand loyalty is sparse. According to one of Mintel’s surveys published earlier this year Some 36 percent of consumers said they were unaware of the brand of candle they bought in the past two years.
Contradicting the studies and reports by Mintel International Procter & Gamble Co., based on its own research, says the sales trend is actually up, not down. The Cincinnati-based consumer-products giant estimates scented-candle sales have been growing about 7 percent each year for the past four years.
So sure of its findings that nearly 90 years after the rise of electric lighting forced the company to stop making candles, P&G is selling candles again. This time around, though, the company says its candles will do more than just light a room. The candles are the latest addition to P&G’s Febreze line of room sprays and plug-in deodorizers and represent an interesting experiment in brand extension. Febreze, though, is aiming to attach itself to a concept — freshness — rather than any specific item.
The candles also are P&G’s bid to make the leap from keeping house into decorating it. While Febreze’s plug-ins and spray cans are typically hidden in wall outlets and cupboards, P&G hopes its candles will wind up in more prominent places, such as on counters and end tables.[6]
A different Mintel study reports that the high-end segment is the only candle segment that continues to see strong growth, in large measure because luxury manufacturers have positioned their products as home decor items. As a result, the sales in the luxury segment rose from $132 million to $772 million in the period from 2004 through 2006.
The expansion of candles in the mass market has accounted for a significant proportion of the high-end growth. Initiatives such as the creation of Yankee Candle boutiques in Bed Bath & Beyond and Linens ‘N Things certainly helped raise awareness of the luxury part of the business and help lead their sales for fiscal 2006 to $687.6 million, a 14.4% increase over fiscal 2005.
The same Mintel study indicated that the percentage of people who purchase candles rose from 64% in 2002 to 77% in 2006 and reported that 65% of men said that they purchase candles. Almost one-third of consumers said that they now purchase candles once per month or more. Also, Mintel identified that companies still suffer from a lack of product distinction. In the study, even Yankee Candle got only 39% of responses regarding the candle brands purchased within the last two years, while 36% of candle buyers were hard pressed to name any brand they have purchased at all in the time period.[7]
Products and Sales
The consensus among retailers recently surveyed is that consumers are choosing candles by scent.
“It’s very seasonal,” says Tom Valentine, co-owner of Valentine’s, Newburyport, MA, “The old scents…like vanillas… no one seems that interested in anymore.”
“I don’t really see a trend,” agrees Stephanie Roe, owner of Mima & Co., Doylestown, PA. “If they smell the scent or like the shape they’ll pick it up.”
Lynni Megginson of LM Designs, Gaithersburg, MD, feels that color is as important as scent, at least when it comes to dissuading a buyer.
“Some of these way-out colors don’t translate well because they don’t fit with most customers’ home decor. The manufacturers try to coordinate the color of the candle with the scent, but I don’t think that’s important”, she says.
Retailers also reported strong sales for alternative sources of home fragrance, especially those without an open flame. Potpourri, plug-ins and candle warmers are popular, as are reed diffusers and fragrance lamps. Only one retailer felt that scent delivery systems were replacing candles sales, however. The rest said supplemental fragrancers are either purchased by customers who can’t burn candles (such as college kids in dorms or senior citizens), or for use where candles aren’t practical, such as in a bathroom.
Container candles are the big winners for almost everyone. That includes traditional, lidded jar styles as well as filled glass in smaller, design-oriented shapes, ceramics, tins and other options.
“Anything in a beautiful glass container,” explains Leigh Gill, George Watts & Son, Milwaukee, WI, when asked about her best sellers. “Something that’s more that just a candle, [like] a vase or a decorative piece that just happens to be a candle.”
Votives are also popular, in some stores eclipsing even container sales in numbers, if not dollars. The “sweet spots” for candle pricing are $10-$20 for basic consumers, $20-$30 for mid-range, and $30-$45 for high-end or luxury stores (sometimes even higher for a large piece that has home decor elements). When buying smaller, cheaper candles like votives and tarts, says Coppola, customers generally buy three or four at a time, bringing the total sale to the $10 range.[8]
[1] Mickel Brown Daily Camera, June 25, 2004
[2] “On-trend showers want what’s hot at affordable prices” 2003 Racher Press, Inc
[3] “Natural Products Rekindle Candle Sales”, Faye Brookman, WWD, June 1, 2007 p8
[4] “Category Management (Part 2)”,Fairchild Publications, Inc., 2006
[5] “Scent-Sations rises above the competition”, Ron Bartizek , Times Leader (Wilkes-Barre, PA), March 11, 2007
[6] “P&G Rekindles Old Flame For Candles Marks Move Into Home Decorating”, Ellen Byron, Wall Street Journal, 2007
[7] “Candle market needs a hint of brand recognition”, Mike Duff, Home & Housewares, 2007
[8] “Burning Bright”, Meredith Schwartz, Gifts & Decorative Accessories, Sept 1, 2006 v107 i9 p46
