Balmy Breezes

Expect harsh winter winds to churn up more sales for lip care products.

Retailers can expect to enjoy a fourth-quarter sales spike in the mature and well-developed lip care category, with demand holding through the winter months.

It's at this time that food shoppers may turn down the HBC aisle looking for a balm to moisturize, heal and soothe their dry, cracked lips and cold sores brought on by winter's harsh and windy weather.

Supermarkets could take a cue from drug stores and mass merchandisers by drawing attention to the category with in-aisle signage, and displays or placement at checkout, say marketers.

In keeping with the category's seasonal nature, shoppers like to pick up lip balms as gifts and Christmas stocking stuffers, contributing to the end-of-year sales hike.

Scott Pakula, EVP at EOS, a New York-based beauty company founded in 2008 to develop innovative products specifically formulated and designed for women, says the week before Christmas is the biggest lip balm week of the year.

EOS, a natural/organic product, broke from the traditional lip balm packaging of sticks, tubes and pots to introduce a colorful, uniquely packaged egg sphere-shaped lip balm container in 2009.

In three years, EOS has risen to become the No. 6-selling brand on SymphonyIRI Group's top 20 brands list for lip balms and cold sore medications for the 52-week period ending Nov. 4. During that period, EOS generated $25.5 million in sales at mass-market retail channels, including c-stores and Walmart, according to the Chicago-based market research company.

Pakula says that within the last five weeks, from late November to early December, EOS sales rose 125 percent. "We are driving category growth," he declares. "The checkstand business has been phenomenal for us and given us tremendous exposure."

EOS' success in achieving distribution in all major supermarket chains, coupled with new product entries and promotional pushes from the large CPG players, has given a big boost to what some say had become a "sleepy and tired" category.

SymphonyIRI puts total lip balm and cold sore medication sales at $808 million, up nearly 10 percent for the period tracked.

Balms for All Seasons

Some retailers, mostly in the drug and mass-merchandiser channels, have capitalized on seasonal demand by selling limited-edition gift packs or introduced special flavors. For example, ChapStick, manufactured by New York-based Pfizer, marketed holiday flavors of Candy Cane, Apple Cider and Chocolate Truffle.

Not all seasonal flavors are winners, however. MacKay Jimeson, a spokesman for Pfizer, was quoted by a local news source as saying that ChapStick's White Hot Cocoa, a holiday flavor from the previous year, "was not a favorite."

Orchard Park, N.Y.-based Mentholatum Co. also was out with two holiday flavors — Jack Frosting and Peppermint Stick — in its Softlips line in holiday gift packs priced under $5. "Our goal is to provide new products for new occasions, all year long," the company's Katherine Tocheff says.

Marketers look for every opportunity to drive usage and awareness of their lip care brands.

Westlake, Ohio-based Bonnie Bell last July rolled out limited-edition flavors, a cupcake lover collection and special consumer value promotions in recognition of Lip Smacker's 40th anniversary. Introduced in 1973, Lip Smacker has spawned a new segment in lip care: flavored lip gloss.

Lip gloss, popular with teens, has grown to just above $204 million, but was down 8.3 percent, reports SymphonyIRI for the period tracked.

Lip Innovations

The category of lip balms, jellies and treatments is forecast to post moderate gains over the next five years, according to Kline & Co.'s annual Cosmetics & Toiletries Report.

New product introductions, particularly focused on products that improve lip quality, will continue to drive consumer interest, notes Nancy Mills, consumer products practice industry manager for the Parsippany, N.J.-based company. "Tinted lip balms, as well as additional formulations based on moisture elements, were popular among newly launched products," she says.

In another report last year on the lip care market in the United States, Global Industry Analysts Inc. (GIA), a research company based in San Jose, Calif., pointed to product innovation as essential to category growth. "Manufacturers are pursuing a strategy of persistent innovation and product development in order to please consumers, while retailers are seeking an improved distribution network and logistics for more shelf space and product stocking," the report observes.

According to GIA, retailers and manufacturers are adopting category management techniques to increase sales of the high-impulse category. The drug retail channel, in particular, has been out front with lip care products, backing the category with strong marketing and merchandising, as well as partnerships with producers for unique, customized promotions at stores, GIA reports.

EOS teamed with Disney last year to develop a three-flavor pack inspired by the classic animated film Alice in Wonderland, for sale at Walgreens, Target and Ulta Beauty.

Pakula says he believes women have made lip care part of their regular beauty regimen, which is driving growth. Age demographics for EOS users are 15 to 40, he adds.

Drug chains' efforts to build the category have paid off, capturing a 40 percent share of mass-market retail sales, according to SymphonyIRI figures. In comparison, supermarkets take just 16 percent of lip balm sales, and mass merchandisers, more than 40 percent.

Jim Wisner, president of Wisner Retail Marketing/MarketHealth in Libertyville, Ill., doesn't believe supermarkets can move the needle much on lip care.

"Lip balm is a high-margin product and viscerally fits better in the drug chain environment. I don't see food increasing their share. It's a product category that tends to be out of sight and out of mind [for supermarkets]," Wisner says. Supermarkets are challenged with less space and less labor to properly manage the category in comparison to drug chains, he adds.

Drug chains and retailers like Target and Walmart have been better able to capitalize on the impulse nature of the category with front end merchandising. Lip care items' small size and high profit make them perfectly suited for checkstand sales, GIA reports.

Lip care retail sales can also be driven by multiple display locations, GIA further notes: "Offshelf display of lip products, and placing the item at strategic locations such as the cough/cold department, enables retailers to increase sales."

Top Five

The five leading dollar-volume individual brands, not total brand listing, tracked by Chicago-based SymphonyIRI are as follows:

• Abreva from GlaxoSmithKline, based in Parsippany, N.J., the only cold sore medication approved by the FDA to shorten healing time, generated $117.3 million, up 2.6 percent in sales during the year ending Nov. 4. Abreva Conceal, a clear non-medicated patch, was introduced last year to conceal cold sores and allow women to apply makeup.
• ChapStick Classic lip balm, made by New York-based Pfizer, produced $99.7 million during the sales period SymphonyIRI tracked, but dollar volume fell 4.3 percent.
• Burt's Bees, owned by Oakland, Calif.-based Clorox, sold $67.1 million in lip balm, up 3.8 percent. Positioned in the growing natural HBC segment, Burt's Bees released Ultra Moisturizing Lip Treatment with Kokum Butter and enhanced its Lip Shimmers collection with antioxidant-rich fruit seed oils and moisturizing shea butter. It also updated the line's shade color range.
• Carmex from Milwaukee-based Carma Labs generated $57.8 million. Sales were essentially flat, down 1 percent from the previous year. The company introduced orange-flavored Carmex creamy lip conditioner and added a pomegranate flavor to its ultra-moisturizing balm line.
• Blistex, based in Oak Brook, Ill., sold $51 million of product. Sales were down 6.6 percent from the prior year. However, last November, the company introduced Moisture Melt, formulated with suspended "soft beads" of aloe and shea butter, and Simple and Sensitive, a product formulated not to cause irritation from added dyes or fragrances.

"The checkstand business has been phenomenal for us and given us tremendous exposure."

—Scott Pakula, EOS

"Lip balm is a high-margin product and viscerally fits better in the drug chain environment."

—Jim Wisner, Wisner Retail Marketing/MarketHealth