Church & Dwight: Pregnancy Test Sales Show Consumer Confidence Strong Despite Pandemic
Source : 'HBW Insight'
US consumers’ economic uncertainty during the COVID-19 pandemic hasn’t extended to OTC pregnancy tests, Church & Dwight Co. Inc. is finding as sales of its First Response brand grew in 2020 and have so far in 2021.
The consumer health, personal care and household care product manufacturer and marketer has seen a sales slump for some product categories but pregnancy test isn’t one. The brand delivered an unexpected surprise as the segment’s sales have not slowed despite market uncertainty, says president and CEO Matthew Farrell.
“Pregnancy kits, we also expect to fall back, but that hasn’t happened just yet,” Farrell said on 8 June during the Deutsche Bank dbAccess Global Consumer Conference conducted online.
“I think with the strength of the economy and the strength of the consumer balance sheet, et cetera, that that has affected the consumer interest in expanding the families.”
In addition to First Response, Ewing, NJ-based C&D markets the Pre-Seed sexual lubricant brand.
The North American pregnancy kit market reached almost $500m in 2020 and is expected to grow at 4.5% a compounded annual growth rate through 2025 to $610m, according to Indian market research firm Market Data Forecast.
First Response and the Clear Blue Easy brand marketed by Swiss Precision Diagnostics GmbH are among the US category leaders.
While surprised by First Alert sales, Farrell said C&D’s expectations have been met for sales growth to rebound for products for that had slumped as consumers stayed at home.
“The ones we thought would recover are recovering, so dry shampoo, condoms, these are things that are directly tied to consumer mobility. And so dry shampoo, condoms, water flossers – even in the first quarter, women’s grooming was up 2.5%,” he said.
C&D markets condoms under the Trojan brand and dry shampoo under Batiste, the top-selling product in the category globally, according to the firm.
Sales for the firm’s NAIR depilatories brand also are increasing as consumers continue at-home hair removal rather than return to salons. The Waterpik water flossers brand has doubled in size since the company acquired it in 2017. ("Church Dwight Expects 35 Growth In 2019 On Line Extensions Price Increases" "HBW Insight" )
Product categories that stayed “steady” included Arm & Hammer toothpaste, as well as toothbrushes and laundry products, Farrell added.
The underperforming segment includes the Zicam homeopathic cold remedies line C&D acquired in December. ("Church Dwight Takes Homeopathic Turn For OTC Sales Driver Acquires Zicam Marketer Matrixx" "HBW Insight" )
Cough and cold product sales are down on slow demand as consumers’ use of masks to prevent the spread of COVID-19 also prevented the spread of the common cold. Sales also are down on comparisons with to a year ago when consumers stocked up.
C&D lowered its expectations for Zicam in 2021 to be “way down” compared to 2020, Farrell said.
“The silver lining is that Zicam will contribute meaningfully to organic growth in ’22 versus ’21 when things get more back to normal. And in the meantime, it has maintained its 70-plus percent market share in cold shortening,” he added.
C&D’s personal care category, which includes the vitafusion and L’il Critter gummy lines, showed nearly 13% growth in sales in the first quarter to $447.2m, leading the firm’s overall net sales, which grew 6.3%. ("Sales Grow Across CDs Products And Regions But Increasing Supply Costs Stunt Income" "HBW Insight" )
C&D continues to feel the squeeze of rising commodity costs it noted in February, as well as inflation. With its first-quarter results, the company said it expected tight supply and higher input costs would continue for the rest of the year.
During the Deutsche Bank conference, chief financial officer Richard Dierker said the transportation market is “extremely tight” with higher costs for trucks and containers.
Farrell expects consumers will accept related product price increases due to “pent up” demand. “We see the consumer balance sheet being healthy. Personal savings rates the last few years have been extremely elevated,” he said, noting the unemployment rate is under 6%.
“When you think about the price increases that are happening across lots of categories, that the consumers actually is in a position to absorb those increases.”
By Eileen Francis