Market snapshot: Consumer products

Consumer products companies have spent most of 2009 feeling the pain of their customers’ spending cutbacks. P&G, Unilever, and other giant consumer products makers have slashed prices, reduced costs, and pared back on certain high-end products in an attempt to get people buying again. And for some, it’s working.

It’s tough to get consumers to buy high-end branded products when there are so many products from which to choose, including low-priced store brands. So just how do consumer products companies keep their heads above water in a down economy when consumers are reluctant spenders? Many do it by directly addressing consumers’ economic concerns—for example, by helping them lower food costs through products that extend the life of produce, such as containers and systems that provide easy ways to store food, and by making “brown-bagging” more convenient.

For instance, in August Newell Rubbermaid introduced Lock-its food storage containers for a convenient way to pack and transport foods for busy, on-the-go consumers. As an extension of the brand’s Easy Find Lids system, Lock-its feature four locking tabs and a built-in rubberized gasket to secure the food inside the containers.
 

“In recent months Rubbermaid food storage products have gained share throughout North America as consumers recognize the compelling value proposition of our Easy Find Lids system,” says Steve Pawl, VP of marketing for Rubbermaid. “The Lock-its line of food storage containers is a timely solution for consumers seeking a little financial relief by saving leftovers and preparing affordable meals at home to take to work, and it’s the latest example of how we are using consumer insights to deliver meaningful product innovations to the marketplace.”

Rubbermaid’s market research shows that 93% of Americans who took a combined 8.5 million lunches to work last year said they were motivated by saving money. The containers seal securely so that soups won’t leak and sandwiches and snacks remain fresh until they are eaten.

Jarden Consumer Solutions, a subsidiary of Jarden Corp. (Rye, NY), recently introduced its new FoodSaver Vacuum Sealing System with SmartSeal technology that enables consumers to vacuum-seal all types of food. The new FoodSaver system stands upright to save space and has cutting-edge features such as hands-free operation and automatic bag detection to take the guesswork out of vacuum-sealing freezer foods.

“This year we are introducing the new FoodSaver MealSaver and FoodSaver FreshSaver products, which are designed to serve as everyday kitchen tools, enabling consumers to preserve refrigerated foods that require short-term storage, including leftovers and deli meats,” says Vickki Slavin, director of marketing for Jarden Consumer Solutions. “They’re remarkably easy to use, convenient, and, most importantly, a practical solution for stretching meals and dollars.”

Rexam recently announced that it was chosen to create a new disposable, single-use baby bottle. The BPA-free, ready-to-use MK3 bottle from UK-based Steribottle is lightweight and impact resistant. The three-piece MK3 consists of the bottle, bi-injected nipple, and overcap. The new baby bottle is manufactured and fully packaged aseptically in Rexam’s new, dedicated, state-of-the-art cleanroom facility within its Buffalo Grove, IL location. The BPA-free Steribottle is not currently available in the U.S., but will be soon.
 
Thomas Schleicher, VP sales and marketing for Rexam Home & Personal Care, notes that Rexam played a significant role in bringing this innovative new product to market, “including initial design development, project management, and creating a manufacturing solution that required sophisticated machinery, automation, and packaging.”

Nancy Kane, product manager Home & Personal Care for Rexam Personal Care, notes that when designing products for bi-injection (one part molded with two different materials) or multicomponent products, Rexam always takes recyclability into account.

“Coming from a design and engineering perspective for consumer products, we’re concerned with recyclability,” she says. “We try not to get too many different materials in one product to make recycling easy for the consumer. For many materials there’s an acceptable level or another material that will be compatible in the recycling stream, such as polyethylene and polypropylene, so we are conscious of those levels when designing multimaterial components so the entire product can be recycled.”

Looking at the numbers
Newell Rubbermaid reported its Q2 results, which exceeded earlier company guidance, with strong operating cash flow and gross margin improvement that caused the company to raise its guidance for the full year 2009. While net sales declined 17.6% to $1.50 billion in the second quarter compared to $1.83 billion in the prior year, the sales results are more favorable than the guidance of a 20% decline. Core sales were down approximately 8%, while planned product line exits and foreign currency translation reduced net sales by 6% and 4% respectively.

“Although business conditions remained challenging during the quarter, we were pleased and encouraged to deliver second quarter earnings and cash flow ahead of expectation,” says Mark Ketchum, president and CEO of Newell Rubbermaid.

Over the past decade, Jarden Corp. has acquired companies that include Coleman, Mr. Coffee, Crock-Pot, Oster, Sunbeam, Rawlings, and branded consumables including Ball, Bicycle, First Alert, and Kerr, among others. The company’s second quarter ending June 30, 2009, saw net sales decrease by 6.6% to $1.3 billion compared to $1.4 billion for the same period a year earlier. Approximately $48 million of the $90 million decrease in net sales was due to foreign exchange fluctuations. Jarden recorded net income of $44.9 million, compared to net income of $43 million in the same period in 2008.
 
Martin E. Franklin, chairman and CEO of Jarden Corp., says, “Our exceptional cash flow during the quarter was reflective of a number of management initiatives during this tough macro economic time. Jarden’s success is built around owning leading brands spread across diverse, niche markets with three similar characteristics: market leadership positions, strong cash flow, and good management.
 
“Our belief is that our businesses will continue to outperform their categories in good as well as difficult market conditions,” he continues, giving credit to what he called the company’s most important assets, its employees.

Home organization and food storage containers are in big demand, and companies like Newell Rubbermaid and Jarden are benefitting from an increased demand in the United States. A Freedonia Group report recently released shows that demand for home organization products in the U.S. will increase 4.3% annually to $8.9 billion in 2013. The demographics driving this, according to The Freedonia Group, is the baby boomer generation becoming empty-nesters, moving to smaller homes, and looking for ways to organize their possessions in these tighter spaces. Additionally, the sharp downturn in the housing market in 2007 and 2008 also caused many homeowners to adjust the way they spend money on their homes, leading many to invest in built-in organization systems either to upgrade homes they plan to stay in or to differentiate homes that are being sold.
 
Garages are the number one area for organization, with the sales of organization products designed for garages posting the largest gains through 2013. Bins, baskets, and totes accounted for the largest share of home organization product sales in 2008 at 38% of the total market, said The Freedonia Group report. Sales of modular units are expected to post the strongest gains, and a continued interest in organizing garages and closets—where the majority of these systems are used—will benefit modular unit sales.

Obstacles to growth in home organization products are expected to come from the commoditization of these products, noted the Freedonia Group report, as well as competition from producers in China and other low-cost countries, and an expected decline in prices of many raw materials. —Clare Goldsberry

R&D/Leverage adds value by adding consumer research director
Finding ways to add value for their customers is a primary goal for many molders and moldmakers. R&D/Leverage (Lee’s Summit, MO; www.rdleverage.com) has led the way in adding value to its customers in the food, beverage, healthcare, home, and personal care industries with packaging solutions to support branded products, including concept development, design, model making and prototyping, mold manufacturing, and contract molding.

Recently, R&D/Leverage added Tamara Christensen as director of research. She is an instructor and doctoral candidate at Arizona State University, and will enhance the company’s ability to provide brand-building packaging solutions through a deeper understanding of consumer behavior.

“Our customers will benefit from the addition of Tamara’s advanced level of consumer-driven insight to our development of proprietary research processes,” says Corwyn Strout, R&D/Leverage’s creative director. “Our richer understanding of consumer behaviors will ensure superior packaging solutions, and is the logical, next step in our company’s ever-growing idea-to-tool approach.”

R&D, Integrated Solutions in Plastics is a full-service plastic product solutions company, and Leverage, Integrated Industrial Design is R&D’s full-service consumer packaging design component, located in a separate facility within the R&D campus. The one-stop configuration of the R&D/Leverage full-service packaging capability—first announced last year—begins with robust consumer research to pre-validate conceptual designs, then extends to retail audits, prototypes, unit tool development, and subsequently to full production molds.

R&D/Leverage’s holistic approach to integrated plastic packaging solutions will become more appealing to brand owners with its new value-add service. It will give customers access to cutting-edge research methodologies vital to their success in today’s marketplace. Christopher Yows, business unit manager–Leverage, comments, “Combined with our pioneering idea-to-tool approach, Tamara’s expertise will result in greater efficiencies and breakthrough designs that truly support speed to market.” —Clare Goldsberry