Proliferation of battery-powered devices drives market forward
A proliferation of battery-powered products, particularly those that drain batteries rapidly, is contributing to a significant growth in sales. Examples of products which have seen increased ownership during the past four or five years include electric toothbrushes, personal CD players and digital cameras. Battery-powered products which utilise a microprocessor are the most power-hungry and a new generation of “extra-power” batteries have emerged to cater for these voracious devices.
Battery Directive threatens to rain on industry's parade
The 'Battery Directive', currently progressing through the European Parliament, threatens to be an enormous influence on the battery industry, since one of its aims is to force the industry to recycle the products it manufactures. How this will be achieved has yet to be decided but such a move would clearly have significant implications for an industry where, historically, consumers have thrown their used products in the dustbin.
A £0.75 billion industry
In 2004, the UK consumer market for batteries is set to exceed £750 million, making batteries an extremely substantial market. Sales of batteries grew by 18% in value terms between 1999 and 2003, with a further 5% increase predicted for 2004. In volume terms, the market has grown even more rapidly, increasing by 20% between 1999 and 2003, although in recent years this trend has been reversed, with value growth now outstripping volume gains. In 2004, the battery market is forecast to grow by 2.6% in volume terms.
Trading up prompts renewed growth in ASPs
Although average selling prices were marginally lower in 2003 than they were in 1999, they are on an upward trend at present and are likely to exceed their 1999 level in 2004. The reason for this is that the new generation of power-hungry devices has encouraged (or forced) consumers to trade up to higher-quality, longer-lasting and more expensive batteries.
Alkaline consolidates dominance of market
Alkaline batteries remain the most popular type of cell on the market and since 1999 have consolidated this position. They now account for more than two thirds of sales by volume and just over half by value. The other main sector of the market, zinc carbon, has seen a decline in sales as the market moves towards more power-hungry devices. The other growth areas, particularly in value terms, have been button and other (eg lithium) cells and secondary (rechargeable) batteries.
Five cell types account for nine in ten sales
The top five cell types – AA, AAA, C, D and 9V – account for almost 90% of volume sales of batteries. Of these, AA is by far the most popular, taking more than 60% of volume sales alone. On five, it is these two sizes which are displaying the strongest volume sales growth. However, within: overall market it is other sizes which have recorded the best growth rates, due to the fact that there been a boom in demand for specialist sizes of battery, particularly those for high-drain devices.
Adspend fluctuates but price remains main marketing tool
The amount spent on advertising for batteries in the main media has fluctuated somewhat during the past five years, reaching a low point in 2002 but recovering in 2003 to a level 50% higher than in 1999. The bulk of promotional activity for batteries is centred on price. This is typified by 'buy for get four free' promotions but more recently it is three-for-two or BOGOF offers which have been prevalent.
Supermarkets main outlet but convenience counts for distress buys
Supermarkets account for the largest sham of battery sales and they have also seen the strongest growth in sales since 2002. The main reason for this is that they have been among the most aggress when it comes to running price promotions, while they benefit from consumers making planned purchases as part of their regular grocery shop. However, distress purchases – when a battery has n out and needs to be replaced – are focused more on convenience outlets such as CTNs, petrol forec outlets etc. This sector continues to be a valuable retail distribution channel for the industry. Other important outlets include variety stores such as Woolworths and Argos, electrical retailers and other stores such as chemists, DIY shops and toy stores.
Eight in ten consumers use batteries
Data from TGI show that nearly eight in ten adults are battery users. The largest proportion (around 40% of adults) are termed as light users, in that they spent Ł4 or less in the past three months. Medium users (who have spent Ł4-5.99) account for just over a quarter of adults, while heavy users (Ł6-15) represent around one in ten. Heavy users are most likely to be male and to be aged 25-44. Key influences on propensity to be heavy users include affluence, lifestage and presence of children.
Prognosis for market is good
The prognosis for the battery market – both in the short and long term – is good, due to the fact that ownership of battery-powered devices is increasing and there are a growing number of battery powered devices finding their way onto the market. In addition, the promising news for manut ; that many of these devices are high-drain and require batteries which are premium-priced. A the market is unlikely to be hugely assisted by prevailing trends in the age structure, the popular. becoming more affluent and this will benefit sales, both of battery-powered devices and the ba themselves. Additionally, there are unlikely to be significant changes in the sales mix or the distribution of sales between the major manufacturers.