KLINE STUDY SHOWS THAT SCENT DIFFUSERS SWEETEN PROFITS IN HOME FRAGRANCES

LITTLE FALLS, NJ, June 22, 2005 – New, innovative diffuser products brought a fresh wave of profits to the home fragrances market for 2004, pushing the overall growth rate to a five-year high, according to a market study just published by Kline & Company.

Kline’s study, HOME FRAGRANCES USA 2004, recorded an exceptional year for diffusers and room sprays, which compensated for continually slipping sales in the mass-market candle sector.

A number of factors converged to create this scenario, according to Lenka Contreras, vice president of Kline’s research division and head of its Consumer Products practice.

“The market leaders hit it big with battery-operated diffusers and found that consumers were willing to pay a premium for them,” says Contreras. “Unit volume has basically been flat, so marketers are introducing higher-priced, value-added products, and their strategy has been successful.”

Oil diffusers also continued to perform well in 2004, and while they aren’t as expensive as the newly introduced battery-operated products, which often feature double-digit price tags, they are sold at a relatively higher price point than other product types in this market space like mass-market candles and candle imports.

Market leaders took notice of the winds of change and diversified their product lines. Since introducing oil diffusers into the mass market in 1999, S.C. Johnson has been focused on creating new entries within the diffuser category. It introduced the battery-powered Glade Wisp diffuser in 2004, as well as a diffuser product under the Oust label.

The Yankee Candle Company expanded into the electric oil diffuser business in late 2003. The company made a national push with its Housewarmer Electric Home Fragrancer system in 2004 and saw a large jump in sales as a result.

Reckitt Benckiser also did well in 2004, showing a growth spurt due to the introduction of three new oil scents and its Airwick Mobil’Air battery-powered diffuser.

Perhaps most notably, though, Limited Brands has made a series of significant moves in an attempt to diversify its home fragrance offerings and capture a greater share of the market. It recently acquired the Slatkin & Co. home fragrance business and is opening six additional C.O. Bigelow apothecary stores to feature high-end specialty home fragrance products. Home fragrance guru Harry Slatkin will be in charge of Limited Brands’ home fragrances division and should add a new burst of creativity to the company’s offerings.

Specialty stores and mass merchandisers remained the leading channels for home fragrance products for 2004, but the largest product segment––candles––saw very different results in these two purchase channels.

“Candle sales stayed flat instead of declining only because the high-end specialty products performed well,” says Susan Babinsky, senior vice president and head of Kline’s Consumer Products consulting practice. “Mass-market candle sales have been declining consistently, making it even more important for home fragrance marketers to focus on innovation, adding new product forms to their portfolios, and raising price points by creating higher perceived value for their new products.”

Kline & Company’s HOME FRAGRANCES USA 2004 market survey is the ninth edition of this authoritative source of industry information for the home fragrance market. It provides market share and retail sales data, channel breakdowns, and forecasts for product categories such as candles, potpourri, diffusers, room sprays, and specialty wardrobe products.

For more information on this study, go to www.klinegroup.com/y324.htm or contact at +1-973-435-3407. In Europe, contact at +32-2 776 0738.

To learn more about Kline’s customized consulting capabilities for the consumer products market, contact at +1-973-435-3365.

Established in 1959, Kline & Company (www.klinegroup.com) is a management consulting and market research firm serving clients worldwide in the consumer products, chemicals, life sciences, and energy sectors.