Advertising in the batteries market is heavily seasonal, Mintel reports over 60% of all expenditure in the sector in 2005 coming in the last quarter of the calendar year, reflecting the importance of the pre-Christmas period. This makes Christmas a time when wholesalers should make sure their supplies are stocked and POS is in place.
The consumer need for batteries is inevitably linked to the demand for products that rely on them. According to the latest report from Mintel the penetration of consumer electronic items such as MP3 players, battery powered toys, digital cameras and electronic toothbrushes is clearly on the rise. There is also multiple ownership of products such as TVs and DVD players, items which require batteries for their remote controls.
Digital cameras have certainly made a mark on the industry with companies developing new batteries specifically for digital cameras and using this as a USP. Mintel reports that digital cameras now make up 86% of the total camera market by value. A new impact on the battery market, however, is that many products such as cameras are now supplied with integral rechargeable batteries, rather than requiring them to be purchased separately.
The number of high-drain electronic devices owned by consumers is likely to continue to grow, and more products will come supplied with integral rechargeable batteries, which will present challenges and opportunities to manufacturers.
Another impact on the battery market is the European Directive on Batteries, which has finally been agreed and will come into force in 2008, introducing recycling to the market.
Deputy general manager of Uniross Simon West says: “We have become a nation on the move taking our gadgets with us when we travel. On trains, planes and in cars we use laptops, mobile phones, CD players and other ‘essentials’ of today’s lifestyle, all of which use batteries.” Uniross only makes rechargeable batteries and is endorsed by the World Wildlife Fund. Use of rechargeable batteries cuts down on waste and West says people are starting to see the change in rechargeable. “The capacity that rechargeable batteries have has risen considerably. Eight years ago the top capacity for an AA rechargeable battery was 500mAh, now it’s 2700mAh.”
“People are recognising that a charger and batteries makes sense for their pocket as well as the environment.” According to Uniross more than one billion throw-away batteries are going into landfill in the UK each year. Uniross is offering consumers a rechargeable and ‘greener’ form of battery.
West also says that more wholesalers need to talk to Uniross. “We can tailor a range for them, looking at the make up of their customers, the competition and demographics. It is important that wholesalers talk with the brands they sell in order to understand more about the market size and opportunities for the product they handle.”
Uniross has launched the Hybrio battery that is packaged ready to use. It can be used straight away and acts like an alkaline battery, but it can be recharged at least 500 times. West says: “We can say the Hybrio is unique with absolute confidence. There is no battery in the world which combines such convenience with economy and energy saving.”
According to Mintel, Duracell dominates the market with over a third of volume sales. Brand manager of Duracell, Martin Gormley, says: “There is definite growth in the battery market with volume sales increasing year on year. The prospects for this category remain positive with the increased popularity of MP3 players and digital cameras.”
Duracell has announced its latest innovation in the battery category with the launch of Duracell PowerPix earlier this year. Gormley says: “It is a disposable digital camera battery that delivers up to three times as many pictures as an ordinary alkaline battery. Powered by advance NiOx technology, the new battery is specifically formulated to meet the needs of today’s digital camera users.”
According to Duracell, its market share in the UK is currently 52.8% making it a highly prominent brand. “With such substantial market share, it remains clear that Duracell is the consumer’s preferred choice of battery brand and should remain front-of-mind for retailers,” says Gormley.
Regarding the wholesale channel he says: “It is very important to Duracell as it is an invaluable way to gain distribution among key independent or smaller retailers that account for a large proportion of impulse sales.
“Many independent stores lack the category knowledge or tools that could boost their battery sales and thus profitability. Wholesalers that offer pre-packaged displays such as counter units will help boost sales for the retailer by encouraging visibility and impulse purchases.”
H-Squared has been a supplier of batteries to industrial, commercial and public sector organisations for 30 years. Commercial director of H-Squared Tim Champion says: “These organisations have come to rely on our high service levels, while also enjoying the benefits of competitive pricing, quality products and an extensive range of support services. We believe strongly that the wholesalers and independent retailers, which account for some 20% of the pound;500m-plus retail battery market, have these same requirements too. We intend to bring the virtues of reliability, availability, value and support, which have been so important to our success, to this market.”
Champion has noticed that the increase in digital cameras and other devices like them has given rise to new variants of batteries. He says high drainage devices need high-powered batteries and this is where the category has seen new product development, including the Duracell PowerPix and the Toshiba Alpha. Champion says: “Toshiba is a well known name but not necessarily in the battery sector. Toshiba batteries are new to the UK and only available from H-Squared. We are particularly excited about the opportunities that a household name like Toshiba, with its high consumer recognition and reputation for advanced technology, offers the retailer.”
Another entry into the digital camera battery section is Panasonic’s Digital Xtreme Power Oxyride batteries, specifically designed to meet the demand created by the explosion in digital appliances. Tim Clark, marketing manager of Panasonic Batteries, says: “This revolutionary technology delivers up to three times more energy than alkaline batteries in digital equipment. Eight years in the making and powered by the ground-breaking Oxyride technology, the Digital Xtreme Power range is designed to cater for the rapidly growing market of high-drain appliances.” Looking at the issues affecting the market Clark comments: “The battery market is currently being driven by the growth in high-drain appliances such as digital cameras and MP3 players. Additionally, consumers growing concerns about the environment is driving an increase in the market for chargers and rechargeable batteries. Although, despite strong growth, this sector only accounts for 3.5% of all volume sales.”
Panasonic has recently introduced its Power Station counter display aimed at convenience retailers who have limited space. Clark says: “We are delighted with our new Power Station and the response from our wholesale customers has been overwhelming. We believe it will be a big hit with convenience retailers who we know are interested in maximising sales from this profitable category.”
One of the key factors in selling our product is about ensuring availability of the best selling batteries.”
Sarah Richardson, marketing manager of Energizer says that while AA are still the biggest sellers there has been an increase in the amount of AAA batteries being sold. As devices are getting smaller they need smaller and smaller batteries. Richardson also mentions that consumers are becoming more aware of rechargeable batteries. “Consumers are used to recharging their phones and laptops and this has made them more aware of using rechargeable batteries for cameras and MP3 players.” Energizer’s Ultra Compact Charger can charge two to four AA or AAA rechargeable batteries and can slide shut when not in use, reducing its size by half. “It simply slides, slots and charges. Its compact size offers total travel convenience,” she says.
Energizer’s main focus at the moment is on its Lithium batteries, designed for high power devices such as digital cameras. Richardson says: “Energizer’s Ultimate Lithium promises to take over 600 photos in a digital camera versus just 90 when using a standard alkaline battery, and last 5.5 hours in an MP3 player. Ultimate Lithium has been a huge success as it is specifically designed for today’s high-tech devices. The extensive research that we have carried out has identified target audiences that we need to be speaking to.”
Regarding wholesalers selling of batteries Richardson comments: “The most important thing is for the batteries to be seen. They need to be where consumers can see them. Consumers want branded batteries because they trust them to be reliable.” She adds that consumers have bought their camera or toy and they want to be able to use it, so they want a battery that they know will work.
The wholesale sector is strategically important to Energizer, as independents are likely to be where consumers pick up distress purchases of batteries. She says: “Energizer has developed a counter unit for the trade, perfect for the cash and carry market as it has a central message, does what it says on the box, and will have POS material to accompany it.”
=== Buyer’s viewpoint ===
The battery category is very flat in Bestway. The category is dominated by the big player (Duracell), with their closest competitor (Energizer) in decline. The remaining recognised brands (Panasonic and Sony) are investing in this sector for the first time, and can only compete on price.
All suppliers support the wholesale sector physically with great POS. The problem with promotions in this category is that it is very difficult for manufacturers to persuade consumers to increase their consumption of batteries.
More positively, batteries are an impulse product that should fit well with the independent trade’s target market. All suppliers offer the ubiquitous 4+4 promotion on AA batteries in the run up to Christmas.
If the alternative brands want to focus on their lower pricing versus Duracell (which they should, it is their key USP) then they must support independents by advising of their lower price point through price-parked packs.
Evidence across categories in Bestway proves that PMPs often drive a minimum of 50% sales uplift and regularly double sales. We would recommend to suppliers that they should enter into a dialogue with buyers before they set price points to maintain the relatively healthy margins that batteries can offer
=== Buyer’s viewpoint ===
The battery category is showing steady growth year-on-year, and the most significant trend we have seen is the growing demand for AAA size batteries.
Despite the overall growth in the category, we are currently noticing a decline in all branded batteries.
Energizer and Gold Universal have been the most supportive suppliers. They are always prepared to meet stock demands and lead times.
To help drive the category forward we are looking for more initiatives and stronger promotional activity from our suppliers.
This will help us communicate more effectively with our customers and develop further brand loyalty.