The UK retail battery market is large, with Mintel estimating volumes in 2007 at 669.2 million units with a retail sales value of £416.8 million.
Yet the market is also relatively mature and the onset of multi-packs and discounting has caused retail sales to fall back in recent years.
Prices are a clear example of the impact of competition. Mintel calculated average cell prices in 2003 at 67p, compared with 62p in 2007 and 2008.
Volumes are under pressure although it’s a combination of factors that are dragging down the market – in particular the growth of built-in rechargeable batteries with many modern electrical devices, from toothbrushes to iPods.
One of the key developments within the battery market is the rise in rechargeable cells. These are becoming more popular as NiMH (Nickel Metal Hydride) chemistry has made rechargeable an easier option for consumers to select.
The continued development of primary cell technology, driven by more power-hungry devices such as digital cameras. The result is a new range of cells based on technologies such as lithium.
Specialist batteries remain important as new appliances requiring them are developed. For example, products aimed at older adults and the home healthcare sector continue to provide opportunities.
Of note is the move towards smaller batteries within the standard battery market. Whereas AA remain the most popular cell overall, smaller AAA cells are growing their share of sales as smaller appliances increasingly demand smaller cells.
Digital technology offers useful opportunities
Batteries have a place in a wide variety of consumer products, with Mintel’s consumer research putting remote controls as the most popular device.
In recent years the arrival of high drain items such as music and media players along with cameras has placed new demands on manufacturers.
Digital cameras have grown into a market in their own right, helping stimulate the rechargeable and high-performance primary cell market.
Media players have also impacted, although these are increasingly being produced with in-built rechargeable cells.
- The UK battery market is dominated by a small number of manufacturers with Duracell, Panasonic and Energizer the most notable.
- Smaller manufacturers have largely been unable to establish themselves in the consumer market because of competitive rivalry and the importance of distribution agreements with major retailers.
- As a result, those on the margins of the market typically specialise in dealing with particular customers/appliances or offering specific battery technology such as rechargeable or button cells.
- A notable development within the market in recent years has been the growing profile of own-label batteries, sales of which are particularly benefiting from changing shopping habits.
Advertising is dominated by mass-market channels
Promotional spend is relatively low as a share of sales, hinting at the already strong brand awareness amongst consumers, or the use of other methods such as in-store promotion.
Television dominates advertising revenues, although overall advertising spend is down.
Because of the distress nature of much consumer expenditure, advertising is concentrated in the run-up to Christmas when the purchase of games and digital technology is greatest.
- Consumer use of batteries appears relatively stable despite the arrival of new appliances that require batteries over the past decade.
- Expenditure has, however, fallen back, reflecting price competition and the multi-pack activities of manufacturers.
- Consumers cite suitability for an appliance, brand name and price as the three factors they most seek out when purchasing batteries.
- However considerable confusion is evident especially on which battery is most appropriate and on the use of rechargeable batteries.
- Mintel has identified three groups of individuals that exist within the battery market: Price Persuaded; Brand Influenced; and Battery Bygones.