Just how much depends on which data source you're referencing. A new report from Mintel estimates that overall candle sales declined by 7%, to $2.3 billion, last year. Kline & Company, Inc. reports that the total market grew at a 1% annual compound rate between 2000 and 2004, to $3.1 billion, and saw 2% growth in 2005 (latest available data).
But the sources agree that premium scented candles are where the action is. Mintel reports that sales of both low- and mid-priced candles are on the decline, while pricier versions ($10+) grew their total market share from 25.5% in 2001 to 31.9% in 2006, with sales of $746 million last year. Kline estimates that the premium segment showed 3% compound annual growth between 2000 and 2004, to reach $1.7 billion.
Mintel attributes the category's overall slowness to a "wave of lower-cost, lower-quality products" (including private-label entries) starting in this decade, which are affecting dollar growth even as unit volume and the numbers of consumers buying candles are on the upswing. (Mintel's proprietary surveys between 2002 and 2006 showed consumers who report ever buying candles rising, from 64% to 77%--a 20% jump in the number of buyers.)
How does a candle marketer continue to succeed and differentiate itself in this increasingly competitive and commoditized market?
Yankee Candle--which plays only in the premium space, but is nevertheless the leader in overall market share, ahead of Glade--has a head start because of the unusually strong brand awareness it's built since its founding in 1969. Mintel's surveys found that 39% of candle-buying respondents reported buying one of Yankee's products during the past year, whereas other leading brands have little or no awareness (36% of buyers couldn't name any brands they'd purchased in the past two years).
Mass-media advertising has little to do with this awareness, or with Yankee's overall 14.4% jump in sales, to $688 million, last year, points out Rick Ruffolo, senior vice president/brand marketing and innovation for Yankee. According to Nielsen Monitor-Plus, Yankee spent just $441,000 on major media advertising last year, compared with Glade's $55.4 million for its various Scented Oil Candles (including the Trio line).
Instead, Ruffolo points to factors such as the brand-building cache of Yankee's branded retail stores (420 in the U.S. as of year-end 2006), close marketing work with Yankee's wholesale customers such as Bed, Bath & Beyond and Hallmark (17,000+ specialty store outlets in all), development of direct-to-consumer channels such as catalogs and the Internet, and innovation and value-added extensions that expand on its strengths.
Yankee's main differentiator over the years has been its very broad range of scents (175+), and it continues to focus on fragrance, Ruffolo reports. "Candles are a discretionary item and, fortunately, they are one of those categories that are driven by the experience rather than a desire for lower price for many consumers," he says. "It's all about the fragrance. Our tagline is 'A passion for fragrance,' and we work very hard at making sure our fragrances are on trend, and also that we always have the right seasonal assortment."
An example of innovation in building on the fragrance strength: Yankee's just-released product line, The World Collection, which capitalizes on incorporating real extracts and oils from exotic locales. One, for instance, features vanilla extract from Vera Cruz, Mexico, which is known for producing the highest-quality vanilla extract in the world. Sales for the new line, which debuted in Yankee's branded stores a week ago and will roll out to other retail outlets over the next month, are exceeding expectations, reports Ruffolo.
Similarly, Yankee considers non-candle scent products an opportunity, rather than competition. The company has launched a reed diffusers line, for example. "Different scent products have different uses and strengths, and these others, like reed diffusers and electronic products, collaborate with candles," Ruffolo says. "It's an important opportunity for us to expand sales by offering the same scent that someone loves in one of our candles through other types of products."
Yankee's July 2006 acquisition of Illuminations, which sells scented candles and other home décor items through the same types of channels, including branded stores, but which has a younger customer profile, represents another big opportunity. "Illuminations offers a unique design sensibility," Ruffolo says. "It's a great brand that's been under marketed, and therefore has had low awareness."
In February, Yankee was itself being bought out by an affiliate of Madison Dearborn Partners for $1.6 billion.