Driven by consumers desire for their homes to smell good, approximately 80% of all adult Americans purchased some type of air care product in the past year, including candles and candle accessories, sprays, plug-ins, room fresheners,

potpourri, air fresheners, air purifiers and more.

A tremendous shift has occurred among home fragrance consumers, as people realized that having a pleasant smelling home is not just for holidays or special occasions anymore. People expect their homes to smell great year around, thus

buying and using home fragrance products has become an everyday necessity for more Americans.

Most home fragrance products are targeted towards women, and women are reporting higher rates of usage when compared to their male counterparts, according to a 2006 study conducted by Mintel. Men do, however, report a

much higher rate of using air sanitizers than do women, suggesting that hygienic reasons for using such products are more appealing to men than women.

Mintel also analyzed survey responses by different demographic groups in order to gain more insight into higher-than-average users of air freshener products. The highest reported usage of air fresheners is from those who are

both busy and likely on a budget: working women, single moms and teen-dominated families. They may have less time to clean but nevertheless want a fresh smelling home.

Offering a wide variety of fragrances is very important to fragrance centric shoppers, according to Rick Ruffolo, senior vice president of brand, marketing and innovation at Yankee Candle. Providing consumers with fragrances that follow the hottest fragrance trends is important, however Ruffolo feels it is critical to provide candle consumers with complementary home fragrance products, such as electric and reed diffusers for example, so they can layer their

favorite fragrances throughout the home.

There is also a seasonality when it comes to a consumers fragrance preference. Popular fragrances in the fall are not the top fragrances during spring or summer, as many consumers look to reflect the season and surround themselves

with whats going on in nature during the particular time of year.

Marketing Data:What Consumers Want

Marketing Data:Air Care Market Overview

The overall global retail sales of all air care products, which includes candles, aerosols, electric diffusers, gels, solids, sachets, potpourri, reeds and automobile air fresheners, was valued at more than $6 billion in 2006 and is forecast to

reach $7.3 billion by 2010. While candles remain the favorite choice for fragrancing the home, mass candle sales have recently fallen partly due to the development of new innovative air freshener products that feature great home fragrances

coupled with decorative design and ambiance.

According to Information Resources Inc., The U.S. mass air freshener market was worth $979.1 million in 2006, which reflects a 5.7% increase vs. 2005. The market is divided into three segments, home air fresheners, car air fresheners and

potpourri/sachets. The largest segment, home air fresheners, accounts for over 91% of total air freshener sales, with $889.2 million in sales. The car air freshener segment makes up 6% of the market with a $61.2 million, while

potpourri/sachets have a 3% share with $28.6 million. All three segments have experienced significant growth over the past five years largely due to the number of innovative new product launches.

Estimated at $2.2 billion in 2006, U.S. candle sales have yet to return to their 2000 peak of $2.3 billion. Mass candle sales remained relatively flat at $714.6 million, although the category did post a 2.7% increase vs. last year. Although sales have been stagnant over the past few years, the category is still growing. According to the National Candle Asso-

ciation, the category is expected to continue to grow a steady 2% to 3% annually over the next few years. The National Candle Association also suggests that the increase of candle as gift items has resulted in a growing willingness for con-

sumers to pay more for candles they would give as a gift. This emphasis on giftable candles has pushed consumers into specialty stores and home dcor stores in search of more upscale and unique offerings.

Global Cosmetic Industry, 12/1/06

Market Trends:Lifestyle

Green lifestyle and design are an important trend in all markets as more and more people become aware of environmental concerns. Some designers are taking a fresh approach towards creating sustainable products by using ordinary materials in unusual ways. As green design grows, it will eventually become not just a niche market, but a

lifestyle where everyday products blend the eco-conscious with the style-conscious, shedding the fanatic stereotypes typically associated with going green.

Color association, February 2007, Happi, January 2007, Happi November 2006

Fragrance Trends:

Fragrances reflect individual personalities within the home and choosing the right fragrance has become increasingly important to home fragrance consumers. Once based strictly on fragrance trends in fine fragrance and personal care,

todays home fragrance trends flower wider consumer trends like food, drinks, travel and fashion.

Chicago Sun Times, January 10, 2007, IRI, Candle Report, 52 Weeks Ending 12/31/06, Gifts & Accessories, 2/1/07

Citrus notes such as lemon, orange, lime a n d grapefruit, which were t r a d i -tionally perceived as functional, are now blending with sophisticated floral, fruity and vanilla notes to create a fresh, clean sensation. These new citrus fragrances create a natural feel and are designed to induce a mouthwatering sensation.

Citrus:

Fruity fragrances take on a new direction. What used to be sweet and sticky, is now crisp, refreshing and healthy. There has been an emergence of a new antioxidant superfruits to hit the home fragrance market. Exotic fragrances such as mango-steen, guava, lychee and pomelo are creat-ing a stir in the marketplace and many of the major home fragrance companies are featuring these scents in their new introductions.

Fruit:

Scents inspired by nature will continue to be a prominent trend in air care as the social trend towards a healthy, active lifestyle continues. Nature inspired scents such as woods and spices, as well as fresh fruits, herbs and botanicals, will continue to command attention because they connect the consumer with nature.

Derivedfrom nature:

Fragrance Trends:(cont.)

Another hot trend is featuring fragrances from exotic, far away places from around the world. Fragrances are taking consumers to places that theyve never been before because, even if they cannot physically visit a destination, they can travel there via olfaction. Home fragrances are now transporting consum-ers to Balinese Jungles, African Rain Forests and to the shores of Bora Bora. Fantasy fragrances such as rainforest, outback, tropical paradise and mountain stream have become a growing segment of the home fragrance palette and incorporate all of active families in the theme.

Destination:

Gourmand scents continue to attract consumer attention, largely due to the fact that they tap into two senses, smell and taste. The Fragrance Foundation recently hosted Temptations and Libations during Fine Fragrance Week in New York City and the showcase shed light on how smells and tastes draw from one another and how closely the palettes are related. Gourmand fragrances continue to be top sellers in the candle market and have grown substantially in the air freshener segment as well. Vanilla and vanilla based fragrances continue to be top sellers. Other favorites in this category include cinnamon, coffee, mocha, gingerbread, pumpkin, apple pie, brown sugar, and hazelnut.

Edible:

Fresh & Clean: One of the hottest and surprisingly hippest themes in home fragrances is the nauti-cal & coastal trend. What began with the smell of fresh ocean breezes, later branched out to include almost every aspect of life by sea. From surf & sand, to coral and shells, nautical and coastal scents are making a big splash in the home fragrance market. Fresh & clean scents such as fresh linen and cool breeze will also continue to be an important category in the air care market.

Nautical& Coastal:

Chicago Sun Times, January 10, 2007, IRI, Candle Report, 52 Weeks Ending 12/31/06, Gifts & Accessories, 2/1/07

Candles are not heavily advertised or promoted in the United States. Candle purchases are usually made on impulse. Passionate candle consumers tend to have favorite brands that come from repeated positive experiences. While true

candle lovers may visit large candle retailers such as Yankee Candle and White Barn, most candle consumers are spontaneous purchasers and are unlikely to comparison shop for candles.

Brand awareness in the candle market may be a result of positive experiences with the same brand in other product forms, such as Glade air fresheners or Bath & Body Works personal care products. Availability of candles, great location

placement and variety are the most significant factors influencing candle sales.

Celebrity endorsement has been a major trend over the past few years and is beginning to drive sales for candles. Both designers and celebrities with product lines in the fashion and fragrance worlds have turned their attention to the candle market. Kathy Ireland, who launched her own candle brand in April 2005, suggests that Candles are the

jewelry in the home. They bring life to a room. Lending her name to Hannas Candle brand, the launch of Irelands line of candles included over 300 soy and wax candles in 13 distinct collections. Kathys brand targets the mass consumer

with upscale aspirations.

Cause marketing has also become a mayor feature of candle company advertising and promotion. Particularly among dcor and prestige brands, such as Natures Finest, whose sponsorship of the Susan Komen Breast Cancer Foundation

has become a very common place practice. Yankee Candle was one of the sponsors of the American Heart Associations womens heart health awareness initiative, Go Red for Women. Similarly, the Slatkin company has

released a line of candles and potpourri rocks called Elton Rocks, using the Elton John Fragrance Collection, whose proceeds benefit the Elton John AIDS Foundation. While this type of marketing does not necessarily act as a direct sales

enticement, it may help sway a swing voting consumers to purchase or remain loyal to a particular brand.

Aside from the most enthusiastic candle users, candle purchases tend to be made most often during particular seasons and demonstrate far stronger sales during the Fall/Christmas holiday seasons. Well aware of this trend, candle

manufacturers have brought a wealth of holiday themed candle products to the market. During the holiday season, candles are used for spiritual and decorative purposes, and have become very popular gift items as well. This has

helped grow strong sales during the fourth quarter.

Mintel Candle Report, February 2006, MMR, February 20, 2006

Candle Trends:

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