At midnight, I light a soy candle with a sweet orange scent. The candle flickers, the aroma lingers, and the room is instantly filled with a soothing fragrance, lulling me into a peaceful slumber. Scented candles, with their unparalleled sense of ceremony and ambiance, have found their way into the homes of young consumers.
Is the scented candle business a good one? If so, why hasn’t it produced a dominant brand after all these years? Why hasn’t it transitioned from niche to mainstream? For entrepreneurs, is it a track where you can overtake the competition on the bends? For institutions, will the fragrance industry witness a full-scale breakout?
1.In the early stages, the scented candle market was pioneered by high-end salon brands. However, due to high pricing and serving only a small segment of the population, it failed to create a breakout effect.
2.In the mid-term, scented candles were still not the preferred category for large commercial brands. Due to relatively low profit margins and non-essential demand, it was challenging for them to enter the core product portfolio of commercial brands. This resulted in a lack of substantial market education, and consumers had limited awareness of this category.
3.Recently, due to economic pressures, sales of high-end salon brands abroad have declined. Consumers have shifted towards more powerful and affordable alternatives. Simultaneously, commercial brands have been exploring niche category markets in search of a second growth curve, making Q2 of 2022 a high point for scented candle growth.
4.Scented candles are now entering a phase of rapid development, but the growth rate and scale ultimately depend on the collective investment of brands in this category.
5.Currently, the popular scented candles on the market are primarily of the basic variety and are still in the early stages of widespread adoption. This presents an opportunity for established lifestyle brands, but the window for niche and independent designer brands has not fully opened yet.
When breaking down the brand sales structure, it can be divided into six major brand types, each corresponding to three product categories and target audiences.
By analyzing changes in product categories and consumer demographics, we can summarize the current landscape of the scented candle market as follows:
At the brand level, with the recent trends in consumer upgrading and market segmentation, various salon brands have successfully targeted a specific group of consumers. However, due to relatively weak brand influence, smaller scale, slow growth, and higher prices, more consumers are still seeking more affordable options, making it challenging to lead the market.
On the product front, imitation brands and OEM (Original Equipment Manufacturer) branding still dominate a significant portion of the market. However, due to compromises between profit margins and marketing expenses, there is an inverted market structure. Mainstream consumers in the market tend to prefer purchasing basic models, while products with unique designs and aesthetic appeal have lower market recognition.
Regarding consumer demographics, those who prioritize lower prices and practicality continue to be significant in the scented candle market. These consumers are more inclined to seek relatively budget-friendly alternatives with broad social value recognition. The segment of consumers with independent aesthetic preferences is smaller, and they have limited purchasing power.
Comparing the sales changes in the scented candle market, it can be observed that the market is experiencing a slight contraction. From a macro perspective, this can be attributed to three main reasons:
Increased overall brand recognition in the market. This is reflected in the rapid reduction of the space for OEM branding. Even though the market share of imitation products has seen some growth, the absolute proportion of unbranded products has decreased.
Squeeze on both domestic and international salon brands, with a decrease in consumer loyalty among category trendsetters for specific products. Economic downturn and low brand and product awareness, along with the impact of the essential nature of the category and consumers’ purchasing power, have resulted in a decline in product sales.
Some commercial brands are aggressively entering the market, and the loyal customer base of these commercial brands will become a strong force for localized market growth.
Let’s take a closer look at the specific development status of the six types of brands mentioned above.
First, the OEM branding category has seen a significant decline in indicators compared to the previous quarter, including sales, prices, and the number of products. This indicates that such businesses are being rapidly phased out from the market, and the scented candle category is transitioning towards becoming more brand-oriented on platforms like Tmall.
Secondly, imitation brands have experienced a slight decrease in sales, but price fluctuations are not pronounced. This suggests relative stability in the supply and demand in the market. However, the substantial increase in the number of products may lead to heightened competition from new players, potentially sparking price wars that could dilute the overall profitability of the brand group.
As for small-scale salon brands, they have experienced moderate losses in sales, prices, and the number of products. Some enterprises have been forced to exit the market due to the challenging economic environment. Existing brands, facing cash flow difficulties, have resorted to discount promotions, causing a decrease in prices.
In the case of small commercial brands, their sales have also decreased, but the number of products hasn’t changed significantly. This demonstrates that the price increases within the brand group can almost offset the risk of declining sales.
Turning to large salon brands, sales have significantly slowed down, and price growth is limited. This is primarily due to declining consumer spending and consumers no longer being willing to pay a premium for high-end brands.
Finally, large commercial brands have witnessed a substantial increase in sales. This is because they have leveraged their price advantage compared to small commercial brands while introducing new products to tap into additional market opportunities.
Large commercial brands are growing against the trend, with basic models achieving sales in the millions.
Even in the sluggish scented candle market, some foreign commercial brands have managed to achieve rapid growth, such as ZARA, IKEA, and MUJI.
ZARA’s growth in the first quarter primarily stemmed from basic models in Zara Home, while the second quarter’s rapid expansion came from their new basic product series, generating sales of over 6 million.
By comparing the products of Zara Home and Zara, it can be observed that the former has a more unique design style with a smaller target audience, while the latter features a more universal style with higher market acceptance, which is why it experienced rapid growth in Q2.
As for the rapid growth of ZARA in the short term, the primary reasons include: being a lifestyle brand with a significant influence, it has generated incremental sales through brand strength and appeal to consumers. Simultaneously, a portion of offline sales has shifted to online Channels.
Conclusion:
Generating 6 million in revenue in a single quarter, it’s hard to argue that scented candles aren’t a good business. It is indeed a rapidly growing category in the home and lifestyle market, opening up a second growth curve for traditional commercial brands and providing incremental opportunities for established lifestyle brands.
While the category shows promise, it requires a significant amount of time and investment in market education. Currently, it may not be the best time for new brands to enter, as it requires a readiness for long-term perseverance.