Thursday 20 January 2011

Vision Consumer Products 2011: Carlsbad, 10th-12th January

Despite atrocious travelling conditions in many parts of the US about 190 of the 220 delegates pre-registered for this meeting and all but one of the speakers made it to Carlsbad for this annual INDA event, normally held in New Orleans.  Carlsbad, being in one of the very few states unaffected by snow, proved to be an inspired choice of venue. 
In the interests of maximising networking opportunities, moderators minimised after-speech questioning.  The Visionary Award presentations continue to be the unscripted highlight of the conference.

Global Trends
Paul Leinberger of the Futures Company  has identified that consumers are learning to live with increased economic uncertainty and are becoming less frivolous with money.  They are now thinking twice about increasing consumption and prefer to “protect the world”, strengthen relationships, and share responsibility for the consequences of past overconsumption.  In 2010, FC’s  global Monitor survey covered 27,000 consumers in 27 countries:

·         54% of those questioned felt less secure about the financial future than they did a few years ago, and only 26% feel they have enough savings to rely on.

·         69% are now more thoughtful about purchases and 60% do more research before choosing a product.

·         There is a renewed sense of trust in quality brands and less inclination to go for the cheapest products (c.f. 2009 survey)

·         Consumers in Spain, Ireland, France, Italy and Japan are stressed and struggling to cope.

·         Those in the UK, USA, Germany, Russia, Argentina, Mexico and Columbia feel the worst is over but remain cautious, trying to live within their means.

·         Those in India, China, Brazil and Saudi Arabia are now hopeful and optimistic and feeling increasingly well off.  They are least likely to think twice or buy less.

There are three global trends to watch closely:

·         The desire to make a difference in a world where social and environmental issues are causing concern.  However consumers no longer believe corporate environmental puff, and will  boycott businesses seen to be irresponsible.

·         The desire to maintain and improve health.  Consumers feel more positive about their emotional and physical well being and are treating this as a key priority.

·         The desire better to manage the pace, complexity and fluidity of modern life.  Consumers will expect everything to be as convenient and simple as possible.  Minimising mental and physical energy expenditure is becoming more important than saving time.
Global Hygiene Trends
Pricie Hanna of John Starr Inc observed that the emerging nonwoven markets, driven by government stimulus programs and hygiene market growth opportunities – especially in diapers - were recovering from the recession faster than the mature markets.  Her predominantly demographic data included the following statistics:

·         China had 395 million women between the ages of 14 and 49 in 2010 giving a potential feminine hygiene market of 118.4 billion units.

·         China had 16.19 million births in 2010 (12.2% of global), an infant population of 39 million under 30 months and hence a potential diaper market of 71 billion units.

·         India had 335.5 million women between the ages of 14 and 49 in 2010 giving a potential feminine hygiene market of 100.6 billion units.

·         India had 25 million births in 2010 (18.9% of global), an infant population of 59.6 million under 30 months and hence a potential diaper market of 108.5 billion units.

·         In China, diaper use was growing at 21% (CAGR), had reached a penetration of 20% overall and 40-45% in towns and cities, while disposable feminine hygiene products (9% CAGR) had 73% of the theoretical market.

·         In India, diaper use was growing at 6%, had reached a penetration of 6% overall and 21% in towns and cities, while disposable feminine hygiene products (9.5% CAGR) had 70% of the theoretical urban market.

·         Mexico: 10.3 billion unit femcare potential, 71% penetrated; 9.8 billion units diaper potential, 85% penetrated.

·         Brazil: 17.9 billion unit femcare potential, 70% penetrated; 16.3 billion units diaper potential, 61% penetrated.

·         Russia: 11.6 billion unit femcare potential, 61% penetrated; 6.98 billion units diaper potential, 26% penetrated.

·         Turkey: 6.7 billion unit femcare potential, 57% penetrated; 6.35 billion units diaper potential, 25% penetrated.

Expansions of hygiene production in included:

·         Unicharm’s planned diaper start up in India and its 3rd diaper plant in China.

·         P&G value diaper production in India, expansion of its Xiqing plant in Tianjin, a new diaper plant in Vietnam and further expansion in the Phillipines.

·         Daio building a new diaper plant in Thailand.

·         New spummelt lines in China from Avgol, Toray Polytech, First Quality and Fiberweb/Chisso (each with 15-20,000 tonne lines?)

·         New card/through-air bond line in China from Chisso, with 4 more planned. (ADL production)

·         Mitsui adding a 6th spunmelt line in Japan.

·         Fibertex building a 24,000tonne/year spunmelt line in Malaysia.

·         New spunmelt lines in Brazil (Providencia – 20,000 t/y); Peru (Fitesa/Fiberweb); USA (Avgol, Fitesa/Fiberweb and Providencia)

·         New diaper lines in Russia (2 at K-C Stupino in June 2010; new SCA plant for diapers and incontinence products in Sept 2010; P&G Pampers expansion in Novomoskovsk)

·         New spunmelt lines Russia (PEREHT Regent’s 2nd line), in Turkey (Gulsan’s 3rd and 4th lines both bico-capable), in Czech Rep. (Pegas 9th line – bico capable)

·         New diaper and femcare lines in Egypt:  P&G’s second plant (by 2020) and a new Unicharm plant for diapers and femcare by 2012.

·         P&G adding a second diaper line in South Africa.

Ms Hanna concluded that strong growth prospects exist and will continue to be driven by penetration of emerging markets (diapers and femcare), ageing of mature market populations (incontinence), and the replacement of older nonwoven production equipment in all regions.
Emerging Markets
Anthony Pannozzo of Continuum claimed to have helped P&G develop Swiffer and Pampers.  He observed that emerging markets were driven by an emerging middle-class, and these new consumers would provide the main growth opportunity for the next 20 years.  Forget the “base of the pyramid”: 

·         Since the war most of the growth in the developed economies is due the middle-classes.

·         Middle-classes have driven innovation.

·         Now the global middle-class is growing by 65 million annually.

·          The World Bank estimates 93% of the world's middle-class live in emerging markets.

It was necessary to rethink conventions to deal in emerging markets.  A series of disconnected examples from Continuum projects were provided:

·         Only 19% of Kenyans have bank accounts but 38% of the population have access to mobile phones.  So, people are buying and selling “minutes” as a way of transferring money, and the phones are providing a form of banking using minutes as currency.  (Nokia has observed this phenomenum and having missed out on smartphones may evolve into a bank.)

·         Even the hard-up will trade-up.  Most people will choose to act wealthy for their chosen hobby.

·         Selling Milk in India:  Western marketing doesn't work.  It had been necessary to live and eat with Indian families to understand how milk is used before effective marketing could be developed.

·         Coke bottle recycling in Brazil involves re-using the bottles for cleaners and detergents.

·         There's no room in Chinese houses to store big packs of diapers.  Also, thick diapers are perceived as insufficiently breathable by mothers used to keeping toddlers in split pants.  Unlike the west, Chinese families have on average 6 people who can act as child carers.  So, cheap US style Pampers did not succeed.  The new Chinese Pampers have an ultra-thin core and sell at 10c each.

·         In India, the Tata Nano car has been launched at a $2000 price point with a 50 hp engine, no electric windows, and one windscreen wiper.  While this would not work in the west, in India the Nano is pitched at motor-cyclists who aspire to a safer and drier form of transport.

·         The Nano can be assembled using adhesives by back-street mechanics.  This will grow a whole new “vehicle assembly” cottage industry.

·         Detergent marketing: whiteness and stain removal are less important than minimising water use.

Asked about environmentalism in emerging markets Mr Pannozzo said it tended to be less important than product safety at present, but the next generation is very aware of the damage being done to the environment by this generation and will demand change.
INDA Report
Rory Holmes of INDA said the global nonwoven market would continue to grow at about 7.8% CAGR to reach 10.3 million tonnes by 2015 ($35 billion).  On an area basis, due to the continuing trend to lighter weights, the growth rate would be 9% reaching 280 billion m2 by 2015.

·         North America used 1.56 million tonnes (35 billion m2 worth $6.2 billion) in 2010, 68% of this tonnage being disposables, and 70% of this being hygiene, wipes and medical.

·         Compared with 2000-05, 2005-10 NA growth rates declined dramatically in wipes (23% to 5.5%), and in  hygiene (8% to 2%) but wipes share (up from 19% to 25%) continues to gain over hygiene (down from 37% to 30%)

·         Spunmelt accounted for 49% of the total NA tonnage, PET Staple 17%, PP staple 13%, other synthetics including bico 8%, woodpulp 9% and rayon 4%.

·         Europe used 1.6 million tonnes (50.7 billion m2) in 2009, 53% of the tonnage being disposables, and 89% of this being in hygiene, wipes and medical.

·         Asia used 2.6 million tonnes (35 billion m2; $6.2 billion) in 2009, 64% of the tonnage being in disposables.  65% of the production was in China, with Japan 2nd at 11%, Korea 8% and India 6%.

VA Finalist: Huggies Jeans
Julianne Gonzalez of Kimberly Clark listed the commercial, technical and process innovations which led to the successful launch of the Little Mover Jeans-style diaper last summer.

·         Pre-seeding the market by sampling bloggers and celebrities who wrote enthusiastically about the new design.

·         A fashion show in New York hosted by Rececca Romijn, where kids could parade on a catwalk, play in a gym and pose in front of a green screen to allow parents to take photos.

·         The product was featured on the Ellen Show, the Today Show, on Good Morning America and on Mall media in over 150 malls in the USA and Canada.

·         Jeans diapers were promoted at all the leading retailers in June and July just as consumer attention was grabbed by the marketing activities.

·         The launch made the “Forbes Top 10 product launches for 2010”.

·         Registration of the pigment-print denim pattern with waistband, fasteners and landing zone while obtaining consistent colours, all blue outside and all white inside.

·         Flexographic printing of the stitching and label.

·         The vision control system had to be improved with “masked OB and UV registration marks”.

·         The improved vision system is now used on standard diapers.

·         Overall, the colours in the laminated backsheet work together with the surface printed detailing to create a realistic 3D denim look.

In the first 6 weeks the Jeans-style diaper achieved a 2.5% ($) share and the program improved the Huggies brand share by 2.7 points mainly by attracting customers from lower-priced competition.
VA Finalist:  Readi Mask
Karen Conte and John Schwind of Global Safety First demonstrated and described their particle mask with integrated eye-protection which uses adhesive around the edge to seal the product across the forehead, down the sides of the face and under the chin.  The upper anti-fog eye-shield is welded to the lower electretted meltblown filter sheet sandwiched between two layers of Del-Net.  Claims include:

·         Removes 99.9% of dust, bacteria, viruses, allergens and dry spores over 3 hours of usage. (Testing carried out by CDC, Nelson Labs and the Australian government.)

·         Fits all face sizes and shapes (but comes in 2 sizes, child and adult)

·         Excellent breathability (proved by John Schwind who wore one throughout his talk.)

·         Protects wearer from external contamination and prevents wearer spreading any airborne infections.

·         Now used in Morgan Stanley, T-Mobile and Deutsche Bank offices where Readi-Kits for all staff are mounted in special cabinets near stairwells.

·         Being stockpiled by authorities for use in pandemics and other emergencies.

The police demanded a demonstration of its ability to resist a direct hit from pepper spray applied at close range.  John Schwind was the guinea-pig and the video of the event was convincing.  Usage by first responders in emergencies is anticipated.  The Red Cross are interested.
VA Finalist:  Simply Soy®
Cathy Horton of Nutek Green Chemistry said she founded the company in 2007 and patented the idea of a biodegradable lubricating wipe powerful enough to clean rust from old tools and yet safe enough to use in food preparation, schools and hospitals.  The 12” square Simply Soy wipes are made from heavyweight hydroentangled cotton and are recommended for rust removal, cleaning grills and lubricating chains, cables, sliding doors and windows.  They come in individual pouches or canisters of 24.  The lubricant is food-grade soy oil.

Cathy sees the main market as replacing the blue shop towels and oily rags in mechanic bays and garages across the USA.  Her product is made in Ohio and all the materials used are sourced in Ohio.  The main customer appeared to be Home Depot.  Nutek was bought by Hoover in 2010.
VA Finalist:  Pampers with Dry Max™
Lisa Sanchez of Procter and Gamble hailed the Dry Max core as the biggest innovation in diapers of the last 25 years.  It had taken 10 years to develop and now allowed diapers to be ultra-thin and ultra-dry.  The resulting Swaddlers and Cruisers with Dry Max were “twice as dry and 20% thinner”, and the most tested diapers ever, the core being evaluated in 300,000 diaper changes before launch.  The Dry Max core had a top layer designed to acquire and absorb urine rapidly before the pulp-free superabsorbent bonded-powder core locked the fluid away.  Consumer appeal had been demonstrated by a 92% response to a 10,000 user survey where the Cruisers with Dry Max were preferred to current Cruisers.  The new diapers also addressed sustainability issues by using 12% less raw material, 27% less packaging and 23% fewer trucks for transportation.

VA Finalist: Equate Flushable Wipes
Cathie Petak of Rockline Industries described the challenge set by WalMart to develop a wipe to match K-C's “Cottonelle” flushable moist wipes.  She introduced the result, the Equate wipe based on Ahlstrom's “Hydraspun” dispersible nonwoven.  Technically the key issue had been to develop an attractive embossing pattern without affecting performance compared with the flat version.  However embossing weakened the Hydraspun and the only practical solution was to increase the basis weight so that the strength after embossing was satisfactory.  The extra weight and thickness gave a more substantial hand which proved attractive to users while doing nothing to spoil  the main claims of  water dispersibility and 95%+ biodegradability.

Flushability Update
David Powling of Kimberly-Clark provided an update from the INDA and EDANA flushability groups:
·         INDA opposed the Feb 2010 California AB2256 legislation to regulate on-pack flushable claims because of a lack of evidence that the sewage pump blockage problem in the Bay area was caused by flushable wipes.

·         The Bill passed through Assembly but not the Senate.

·         INDA convened a meeting with the Central Contra Costa Sewage Department and UC Berkeley to review pump blockage history at the Moraga pumping station and as a result initiated a 1 month study of the materials causing blockages (June 2010)

·         Debris from screens and pump blockages was segregated into product categories by UCB after INDA training on identification.

·         Materials removed by the screens comprised paper hand towels (54%) personal hygiene wipes (17%) household cleaning wipes (13%), feminine hygiene wipes (8%) flushable wipes (4%) and “others” (4%).

·         The one pump blockage analysed was a “rope” of debris, hard to segregate but mostly made up of long fibre materials typically found in household and personal care wipes (70%),  feminine hygiene wipes (19%) and others (10%) including 1 paper towel.  No flushable wipes were found.

Interim conclusion:  Non-flushables are causing the problem, not flushables.

Holland reported a €55m pump-block problem in 2007 and so EDANA, who published their Flushability Guidelines in 2008, has now added a sewer pump test which has demonstrated that flushable products will not block pumps.  The test, developed in collaboration with RIONED (Netherlands Centre of Excellence for Sewage and Drainage) and Flygt Pumps measures the increase in power consumption during pumping water to which a wipe is added every 10 seconds. (Total 300 wipes in 5 runs).

In the UK, snagging leading to clogging of sewers is the main concern and the Water Research Centre’s CP311 protocol for assessing the flushability of disposables (2008) has been endorsed by Water UK.  Water UK has also conducted a consumer study of flushables and embarked on a “What not to Flush” campaign in collaboration with the EDANA flushability group.  An EDANA/UK Water Industry Research Project will analyse sewage farm screenings and blockages along the lines of the INDA/Moraga study and will work on combining the INDA/EDANA guidelines with the Water Research Centre protocol.
The 3rd edition of the INDA/EDANA guidelines should incorporate the conclusions of all the above.  The “tiered” testing approach of the 2nd edition is likely to be replaced by a “straight-line” series of tests including a municipal pump-clog test, all of which a product has to pass to be labelled flushable.  Non-dispersible products are unlikely to pass.

Asked if paper hand towels will have to labelled as “non-flushable” in future, Mr Powling said this remained to be decided.

Adult Absorbents

Nancy Muller of the National Association for Continence reviewed the demographic trends impacting the demand for adult incontinence products:

·         Boomers are now turning 65 and becoming Medicare recipients.

·         By 2030, 57.8 million Americans will be between the ages of 66 and 84.

·         Chronic disease has replaced infectious disease and accidents as the main cause of death.

·         Chronic diseases increase the prevalence of incontinence.

·         Obesity contributes to stress incontinence.

·         Medical technology is failing to keep up with increased prevalence of incontinence: medication fails for one third of sufferers of over-active bladder, and surgery fails for one third of stress incontinence sufferers.

Ms Muller had a list of improvements which producers could make to their pads:

·         P&G’s Dry Max™ would be great as an adult inco core.

·         Apertured film topsheets for improved uptake.

·         Side-opening and refastening anywhere on the product to reduce wastage due to misapplication and to allow adjustments for comfort.

·         Tailoring acquisition rate to the type and severity of incontinence.

·         Breathability is essential for healthy skin: quietness, comfort, odor control and fit are all important.

·         Packaging which is easy to carry and open, with clear instructions and a 1-800 number for help.

·         System cost, calculated to include the economics of skin breakdown, waste and the effects of impaired sleep should guide design rather than simply achieving the lowest price.

Washington Update

Jessica Franken of INDA predicted Washington would become more receptive to industry needs  and the development of a more aggressive free trade policy would open up new opportunities.  Policies which have hindered economic growth will be avoided:

·         The climate-change bill is dead for the 112th Congress

·         The EPA will suffer more oversight and there will be attempts to derail its unilateral efforts to address GHG’s.

·         TSCA reform is now unlikely.

·         Consumer product safety issues:  visit (after March 2011) to be notified of complaints about your products.
Networking Strategies
Joan Izzo of Joan Izzo Communications LLC provided a collection of strategies to enable individuals to get the most out of networking opportunities e.g. at conferences.  She also ran a session of Speed Networking during the lunch break where 50 pre-registered participants spent 3 minutes introducing themselves before moving on to the next contact.  Among the strategies for effective networking were:

·         Use no more than 15 words to describe yourself.

·         A short personal story makes you memorable.

·         Highlight one key personal achievement.

·         Offer help, take notes and follow up within 24 hours.

·         Never sit with anyone you know.

·         Be the last person to fill a table.

·         Never eat alone.

·         Stay current: keep posting updates on social sites (Facebook, Twitter, Linkedin).

Sampling Bloggers

Kevin Burke of Lucid Marketing observed that traditional marketing methods such as TV, Newspaper and Magazine advertising were in decline, but social media and bloggers in particular were proving to be trendsetters with a powerful influence on their readers.  Advertisements had much less impact than being given a sample of a product to try.  Handing out samples in a store or shopping mall had the following results:

·         2 out of 3 consumers will try a sample

·         1 out of 4 who try an unfamiliar product buy it later.

·         1 out of 5 who try a product they’ve heard of but not bought before will buy it later.

·         1 out of 3 who have bought it will buy it again.

·         1 out of 4 sampled buy the sampled product rather than the competitive product they came in for.

When sampling is combined with social media spectacular results can be achieved.  Moms drive 73% of the consumer spend in the USA and they are keen to chatter about their views on purchases.  Blogging gives them a great opportunity to do this and there are now numerous mum-bloggers who have loyal readerships of ~ 100,000/month.   These bloggers can be given samples and while the risk of negative reports cannot be avoided, positive reports rapidly reach a wide audience via follow-on blogs and posts on Facebook, Twitter etc.  Tupperware used the technique to their advantage via parties and Lucid had given samples of Boiron homeopathic remedies to mothers who blog and reached 1.9 million on-line with much additional off-line chatter.  Unlike traditional advertising, social media chatter is regarded as trustworthy, much like a personal recommendation.

Bloggers who receive compensation for reviewing a product must declare this on the blog.  Failure to do so results in the FTC prosecuting the sampler, not the blogger!
Innovation Metrics
Chris Andrews of Forrester Research observed that the last decade has seen the emergence of several new large companies with innovation at the front of their strategic thinking.  Best known are Apple, Google, Facebook, Amazon, Target, Whole Foods, SW Airlines and Cognizant.  However while 80% of executives say innovation is a priority in their company, 50% are dissatisfied with the return and 68% are unsure of how to measure innovation.  Forrester finds the definition “Innovation = Invention + Commercialisation” works, and sees successful innovation arising from teams staffed with senior and junior risk-taking rule-breakers who are passionate about work, creative and have the necessary skills for the project.  These teams have rotating leadership, are tightly linked into corporate strategy and  report direct to a CEO who celebrates and honors innovation.
 Successful companies have found that it is necessary to give up some control to liberate the creativity of employees.  Google is lauded for giving employees 20% free time to work on anything that appeals to them, and P&G were praised for their Connect and Develop program.  More companies were throwing their development challenges to a global audience for anyone to solve (for a pre-determined fee paid on success) through websites such as Innocentive.

“Stage-gate” management and control of innovation is now regarded as too bureaucratic and too slow.  Mr Andrews recommended the exploitation of social media such as Facebook to allow continuous cross-functional conversations to occur outside management control and suggested that these technologies would transform all businesses in the next 5 to 10 years.
Boomer Demographics
Lori Ross of Boomer Magazine defined the 78 million Boomers who now possess 70% of the nation’s wealth as the generation born between the end of World War 2 and the availability of the contraceptive pill (1964).  Their parents had led “linear” predictable lives similar in structure to their grandparents, but Boomers led cyclical lives (school, college, marriage, divorce, back to college, remarry etc).  They are the most educated group in history; racially, culturally and sexually diverse and are more familiar with change than any previous generation.  However, they do seem to focus on nostalgia and tradition and appear too long for what they found safe and comforting in their childhood and which no longer exists.

Marketing to Boomers requires sensitivity:

·         They are sophisticated consumers who expect more from old-age than past generations.

·         They don’t like to be called seniors or be reminded about senior moments!

·         They feel at least 10 years younger and respond to ads illustrating 40-50 year olds.

·         They also respond to “Boomer friendly” products and services (e.g. easy to read, easy to open packaging)

·         They value relationships, experiences and the need to “give something back” .

·         They are huge participants in social networking and spend the most on technology products.  (An Accenture study shows Boomers embracing technology nearly 20 times faster than the younger generation.)

·         So, Facebook and Twitter etc are, perhaps surprisingly, great ways to market products to  Boomers.
Social Media
Sally Witzky of the Traction Group gave us a double dose of social media, filling in for Keith Crisco who failed to escape the snows of North Carolina.  She covered Facebook, Twitter, Linkedin and others as ways of developing personal brands, and ways of creating a buzz for new consumer products, with and without paid-for advertising.  Traditional media consumption between 2005 and 2010 had been static (TV) or declining sharply (radio, papers, magazines) while internet use had grown 121% so that Americans were now spending as much time on the web as they do watching TV.  Social networking users exceeded email users in June 09, and the time spent on social media exceeded time spent with emails in 11/07. 

For the future, smart phones will encourage growth in mobile shopping assisted by geo-location to allow ads targeted to specific areas of a shopping mall to be received.  Mobile social networking (e.g Foursquare, a cross between social networking, city guide, friend finder and game with rewards for doing interesting things) is growing very quickly now - US mobiles are creating 600 billion geo-tagged calls and messages a day.

Asked about value of social media in the sort of business to business marketing most INDA members were involved in, Ms Witzky thought it could be useful in creating closer contacts between companies as well as individuals.  See or for more details.

Profit from Regulation

Joanne Mattiace of Joanne Mattiace Law Offices argued that smart companies welcomed new regulations because they shook up a market sector and provided new opportunities for the innovative to comply faster and move ahead of established producers.  Past problems with mattresses, children’s sleepwear, baby walkers and bunk-beds all led to market shake-ups where those who had collaborated with the regulator - on new test development in the case of mattresses – survived and prospered.  The new Consumer Products Safety Commission website where consumers will be able to post safety complaints about products uncensored and online was a potential gamechanger.  She suggested that the trends towards ever safer products and ever cheaper products were on a collision course.


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