Declining consumer spending and climbing input prices pressured profit margins
Los Angeles, CA (PRWEB) November 06, 2012
The increasingly essential nature of sunscreen has been a boon for the Sunscreen Manufacturing industry. Despite declining disposable income during the recession, the industry has grown an average 4.2% per year to $1.3 billion by year-end 2012. Because of consumers' growing penchant to purchase sunscreen, downstream demand from drugstores has remained resilient and is expected to push revenue up 5.2% in 2012 alone. “Although the recession did little to hurt industry revenue growth, it did hurt profitability,” says IBISWord industry analyst Nikoleta Panteva. “The combination of declining consumer spending and climbing input prices pressured profit margins during the height of the recession.” The world price of crude oil – a key input into most of the industry's products – jumped more than 36.0% in 2008 and has remained above historical levels since.
Mounting labeling and testing regulations have also defined a hallmark trait of the Sunscreen Manufacturing industry over the past five years. In 2011, the Food and Drug Administration issued a rule outlining proper procedures for testing and making claims, says Panteva. “Label changes were not effective immediately, but still created production alterations for industry players.” Some brands that were not able to comply with the new rule, including industry player Coppertone (owned by Merck), have faced lawsuits. Other major companies include Johnson & Johnson, with its Aveeno, Lubriderm and RoC brands; and Energizer Holdings Inc., which owns Banana Boat and Hawaiian Tropic.
The five years to 2017 are looking bright for the Sunscreen Manufacturers industry. Consumers' growing spending power will allow shoppers to buy more and higher-priced sun protection products, increasing downstream demand from retailers. US currency's anticipated appreciation will increase external competition from imports, though, diverting demand away from domestic products. This trend, in addition to the industry's impeding saturation, will push up competition for existing players. Industry concentration is projected to continue declining, a trend of the past five years, as the number of companies expands. For more information, visit IBISWorld’s Sunscreen Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Manufacturers in this industry prepare, blend, compound and package sun protection products, including those that have a sun protection factor but are not marketed as sunscreen (e.g. moisturizers). Sunscreen comes in lotion, cream, spray or other topical applications and is used to protect the skin from the sun’s harmful rays, limiting sunburns and helping prevent skin cancer. This industry does not include revenue generated through the manufacture of sun amplification products.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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