First there was ‘shrinkflation.’ Now, consumers are confronting ‘upflation’ as companies seek to turn around the $100 billion personal care and beauty market.
Procter & Gamble Co. is charging $14 for all-over body deodorant — double the cost of a standard stick. Gillette sells a $15 intimate razor specifically for “tricky areas” for $5 more than the regular Venus. And Carefree’s newest pads are meant to catch all sorts of leaks. Those cost more than the old version, too.
The spate of new uses for old products is a somewhat awkward attempt by some of the world’s biggest packaged goods-makers, including P&G, Unilever Plc and Edgewell Personal Care Co. to claw back sales in the US’s more than $100 billion personal care and beauty market. In the high-inflation, post-pandemic years, cost- and waste-conscious consumers have cut back on what were once essential items. P&G, Unilever, Edgewell and most every other packaged good company has posted multiple quarters of slow or declining sales volumes.
Industry wide, retailers sold 20% fewer razor blades last year compared to 2019, according to market researcher Circana. Deodorant sales dropped 6.5% during the same period. In grocery aisles, bread, milk and beloved salty snacks are on the decline, too.
Packaged-goods giants kept revenue up for years by raising prices and reducing package sizes, a practice known as ‘shrinkflation.’ But consumers only tolerate that for so long before seeking out alternative solutions. In some cases, shoppers are trading down to cheaper options, like Amazon’s in-house brand, Amazon Basics. Others are buying fewer essential items altogether. To win those people back, companies have come up with a fresh tactic: ‘upflation,’ an attempt to create new applications for things consumers have decided they no longer need as much of — and upcharging for them.
“It’s getting more difficult to come up with a whole new territory of unmet needs,” said Bill Chidley, co-founder of brand consultant ChangeUp. “How much cleaner, how much better smelling, how much quicker, how much -er or -est adjectives can you lean into with these innovations?”
Companies say these new products are performing better than forecast, but won’t share specific sales figures. P&G’s most recent earnings report highlighted an almost two-year trend where revenue growth came from people buying fewer things at higher prices. The consumer-goods giant did, however, post higher than expected sales in its grooming division, which it partly attributed to its total body shaving and intimate hair removal products. In an interview, the company said the total body deodorants are growing, too.
Not all shoppers are convinced they need or want these things. “Is this really something new or are they just marketing this as something different?” said Maia James about the all over body deodorant. The 44-year-old, who runs a product review site Gimme the Good Stuff, has considered buying something to manage her night sweats. But she suspects a standard stick will do the trick.
Companies insist they’re solving real problems. Manscaped, a startup that makes personal groin trimmers, describes its shavers like a toothbrush: “everyone needs it, no one wants to share it.” Dermatologists Bloomberg spoke with say only the second half of that statement is true.
“I don’t think most people need them,” said Aleta Simmons, a dermatologist in Nashville, referring to all-over-body deodorants. Anyone with moderate or severe body odor should see a doctor, she said. Everyone else can likely manage with different clothing choices or antibacterial soaps. Though for people who want a quicker fix, whole body deodorants could be an option, she said.
New Odors, New Products
Facing an industry-wide decline in antiperspirant and deodorant sales, P&G executives had a hunch about how to bring in customers for their Secret, Old Spice and Native products.
The company had been hearing anecdotes about other body odors for years and wanted to put more concrete data behind it. “People don’t want to talk about money. People don’t want to talk about death. People don’t want to talk about body odor, either,” said Maiysha Jones, during an interview in P&G’s 2 million square foot research and innovation center in Ohio, which houses a Swedish-style sauna to help induce sweating during deodorant trials and a special underarm residue testing room.
Jones, the director of scientific communications for P&G’s North American personal care business, said the company surveyed about 4,000 people to find out exactly which body smells gave people the most anxiety. Armpits ranked the highest, but nearly one-third of women mentioned chest odor concerns and about half of men said smelly feet. Researchers spoke with consumers who went to extreme measures to manage odor, including people who took three showers a day, layered 12 different body products to mask smells, or used baby powder between their butt cheeks.
After trial and error with different products — powders and wipes — the company this year launched all-over body deodorants. It now has more ways to lure consumers: Antiperspirants to quell underarm sweat, whole body deodorant sticks and sprays for other smells and creams designed for freshly shaven areas and the bikini line.
The pullback on essential items is a global phenomenon. European consumer-packaged goods makers Unilever and Reckitt Benckiser Group Plc have reported multiple quarters of unit sales pressure just as their US counterparts have over the last two years. In China, retail sales of daily use articles has shrunk from double-digit growth before the pandemic to the low-single-digits this year, according to government data, as disposable income growth has slowed.
Yet, so far, upflation seems to be a mostly American phenomenon. London-based Unilever, for example, introduced an all over body deodorant for its Dove brand this May, but only for US consumers. In China, people are trying to get more for their money by gravitating to products with multiple benefits. Top sellers include: A “three minute miracle” conditioner for damaged hair and Sam’s Club laundry detergent with anti-bacterial properties and a longer lasting scent.
Companies aren’t just confronting inflation-weary shoppers, but many who simply want less stuff — a nightmare for brands that have long-relied on the country’s voracious appetite for buying things.
“I think a lot of people are craving simplicity,” said Kathryn Kellogg, who runs a lifestyle brand called Going Zero Waste. One of her most popular series is called “Things I Don’t Buy Anymore,” an ever-growing list that includes: aluminum foil, paper towels, Febreeze, disposable razors and K-Cup coffee pods. She’s replaced them with more eco-friendly options, like reusable dish towels and her own fabric refresher spray made with vodka.
Kellogg is part of a growing cohort of Americans preaching a low consumption lifestyle. Local “Buy Nothing” Facebook groups, where people give away old stuff for free to their neighbors, have proliferated. Too Good To Go, an app where people can buy discounted food that restaurants and stores plan to throw away, has amassed a large following on Reddit. Some adherents to this way of life want to spend less money or limit their environmental impact while others have realized that they don’t need to use certain products, like shampoo or shaving cream, as much as previously advertised — or at all.
To tap into that less is more mindset, some companies are trying to rejigger products to generate less waste and simplify ingredients. When P&G started looking into shifting shampoo habits behind a 16% drop in industry-wide retail unit sales, the company learned that people didn’t want to use Head & Shoulders every day because it seemed too medicinal or too chemical laden. A 20-ingredient list, including things like glycol distearate and cocamidopropyl betaine, was sending “not a small portion” of the dandruff suffering population to Google or TikTok for DIY solutions, said Jeni Thomas, head of global science communications for P&G hair care.
P&G saw an opportunity to meet a new need: “They’re looking ultimately for something that is simple and familiar,” Thomas said.
Over two years, the company tried more than 100 different prototypes with fewer ingredients. One version turned a strange lavender color from a metal that oxidized. It didn’t look natural. Another was the consistency of glue — too thick to spread. A zero-fragrance version smelled bad to testers.
In January, after finally hitting on the right formula, P&G launched Head & Shoulders Bare, an anti-dandruff shampoo with just 9 ingredients nationwide. It also comes in a slimmer bottle that uses less plastic. At roughly $12, it costs about double the original.
The high cost of these items may seem counterintuitive for brands trying to reach consumers who are cutting back to save money. But the new uses allow companies to market these items as premium products and to differentiate from the CVS, Walgreens or Amazon versions that sell for cheaper. “Consumers are willing to pay for innovation,” said Andrea Wilkerson, vice president of P&G’s skin and personal care analytics and insights. And, even if fewer people buy them, they end up boosting revenue because of the high price tag.
A Dark Cloud
Food companies are wrestling with similar problems.
“Volume” was the dark cloud hanging over the annual Consumer Analyst Group of New York conference, where the biggest packaged food makers gathered earlier this year. Investors all had one thing on their minds: When will declines in how much food people were buying reverse, or at least flatten out? “That is the question that everybody is plying us with these days,” General Mills Chief Financial Officer Kofi Bruce said on stage. “It is hard to say.”
To spur people to buy more, the food companies were trying to gin up ever more creative versions of what they like to call new “occasions” for old products. Ice cream isn’t just a dessert, according to General Mills’s Chief Executive Officer Jeff Harmening, but can be a snack for between meals with Haagen-Dazs Bites. Kellogg executives said they were trying to get people who want to save money to eat cereal for dinner, showcasing a slide during a presentation that said “Give chicken the night off.” PepsiCo’s CEO pushed Doritos and Tostitos as a side dish.
Demand for Salty Snacks Is on a Steady Decline
PepsiCo is going all in on the snacks-for-dinner market. A team monitors social media channels, like TikTok, for ideas on late-night food creations like Cheetos dust, or Cheetle in company parlance, as chicken seasoning.
The “younger demo,” as Chief Marketing Officer at PepsiCo Foods North America Brett O’Brien described it, likes to “engage before they unwind, before they go to bed,” he said. At the end of 2022, the company even launched its first in a series of limited-time Doritos After Dark menus to order through DoorDash and other vendors, featuring items like Doritos Flamin’ Hot Cool Ranch Corn Puppies.
The idea was not just to take something fans are doing online and sell it to them pre-made, but to create a fourth, late night meal. Voila, another occasion has been created.
Sometimes a brand does happen on an unmet need. Simmons, the dermatologist in Nashville, said she does recommend the Gillette SkinGuard, a kind of razor meant to reduce irritation that costs more than other Gillette options, for patients prone to ingrown hairs. Unlike a standard blade, the SkinGuard cuts the hair at the skin level instead of below, helping prevent ingrown pieces and razor bumps.
In other cases, companies are leaning into the non-consumer to simply reframe their marketing. Late last year, Conagra Brands Inc. launched a campaign for its Birds Eye frozen vegetables that sells them as the waste-conscious choice. “Did you know that over 8 million tons of the fresh produce that’s grown ends up in here?” asks a farmer popping out of a garbage can. Why waste money on fresh vegetables that you’ll throw away when you can buy frozen ones that will pretty much never go bad?
Market share for the brand is up, CEO Sean Connolly said in a recent earnings call, as the company shows the value of frozen vegetables, compared to more expensive fresh options. The company doesn’t share specifics on marketing performance, but a spokesperson said the ads brought new buyers.
No matter the tactic, companies have to do something to try and boost sales — or else they might lose the coveted American shopper forever. “A lot of this type of behavior is sticky,” said Steve Cahillane, CEO of snack maker Kellanova. “When people learn how to save money, if it’s not uncomfortable to them, they tend to be habits that stick.”
Source: https://www.bloomberg.com/