A 150% hike in sales of Duracell rechargeable batteries through the grocery channel has taken a heavy toll on the take-up of its rivals’ products, reports Vince Bamford

Less is more in the case of rechargeable batteries, at least. Supermarkets have been rationalising their fixtures, pulling out smaller brands and devoting increasing amounts of shelf space to Duracell, resulting in a whopping 149.5% uplift in value sales, according to the latest SymphonyIRI data at the expense of every other rechargeable.

So is the spectacular growth predicted for the sub-category last year destined to remain confined to one brand? And will non-rechargeables continue to benefit from the retailers' recession-related shift to cheaper cells?

Last year, the experts were forecasting a sizeable uplift in sales of rechargeables on the grounds that, although upfront costs were higher, they saved consumers money in the long term and were more environmentally friendly. But the supermarkets have taken the view that recession and rechargeables don't mix and that it's better to scale back their offers for the time being and put all their eggs in one basket.

They were no doubt swayed by NPD such as Duracell's stylish Fast 1 Hour Charger, and cells designed to "help boost sales and encourage new entrants into the category", and their decision seems to have been vindicated. Although sales of rechargeables have risen 8.7% to £11.8m, volume has fallen 0.5% [SymphonyIRI 52w/e 26 June] suggesting that, while more people are buying Duracell, fewer are buying into the sub-category as a whole.
The downside is that there has been a heavy price to pay as far as the smaller brands are concerned. With fixtures rationalised, many have lost listings and brands such as Uniross and Sony have seen their supermarket sales nosedive more than 85% [SymphonyIRI]. Even the market leader, Energizer, has experienced a 17.9% slump.

But, assures Uniross MD Mike Doole, the outlook is not as bleak as it seems. "We've seen a lot of aggressive trading activity from Duracell in the past year, but the grocery retail sector only accounts for about 25% of rechargeable battery purchases."

Vince Armitage, divisional vice president of Varta Consumer Batteries UK, also suggests looking only at grocery does not give an accurate picture of the market for rechargeables, claiming sales of his company's rechargeable products across all retailers have grown year-on-year.

Rechargeables are also proving popular with younger consumers as they tend to use more products that require recharging, he adds: "Recharging has always been part of their life and this is something they are applying to their use of batteries as well."

Like mobiles, rechargeables have come a long way. Some cells, such as Duracell Staycharged, are sold ready-charged so they can be used straight from the packet. Rechargeable cells can now hold their charge for many months when not in use and there are cells suited to high-drain devices such as digital cameras.

The biggest impediment to the growth of the sector has been the lack of shopper education, says Armitage. "Lack of awareness of how the product has been transformed in recent years means consumers only have price to base decisions on. Many consumers view the initial price of rechargeables as a deterrent rather than thinking of the longer-term cost benefits."

It hasn't helped that cheaper zinc carbon batteries have been so heavily promoted, says Doole. "Some consumers are looking for short-term value batteries without understanding that rechargeable batteries offer them the best long-term savings and most environmentally friendly option," he says.

The multiples are in danger of driving down the value of the category by pushing consumers towards cheaper batteries, warns Armitage. "The high street is overlooking an opportunity by offering products such as zinc batteries, which are at the opposite end of the price spectrum to rechargeables," he says.

The recession had encouraged many shoppers to snub not just rechargeables but also alkaline cells for lower-priced zinc carbon ones.

In the year to 14 June 2009, volume and value sales of zinc cells rose while those of alkaline cells declined and over the past year zinc cells have shot up 25.9% in volume and 4.6% in value, while alkaline sales have risen a more modest 1.5% and 6.2% respectively [Kantar].

Sales have been boosted by extensive promotions and bulk packs of cheap batteries sold at discounters. Promotions have also helped ensure volume growth in alkaline batteries, despite price rises.

"We have seen shoppers, driven by the economic situation, searching for the best deal," says Armitage. "Many have turned away from their usual retailers, looking for a bargain in discount shops. Unfortunately, consumers are still not fully educated about batteries and are tempted by quantity rather than quality, buying cheap multipacks of batteries imported from the Far East from discount stores."

The poor performance and lifespan of these cells means shoppers end up buying more. "This adds up to a false economy, increased environmental issues and a dissatisfied end consumer," he says.

It's a view echoed by Nick Powell, MD of Energizer UK, though he insists there has been no discernible shift from alkaline to zinc within his company's branded products. "It's been more of a shift at the bottom end of the market," he adds, "with shoppers buying packs of 24 batteries for £1."

And any change in shopper habits has not been enough to impact market share figures year-on-year, with alkaline still holding 89% while zinc retains 9% [Kantar Worldpanel 52w/e 13 June].

Powell goes so far as to predict that the success zinc cells have enjoyed over the past few years is a short-term phenomenon. "The long-term trend is a slow and gradual decline in sales of zinc batteries and that won't change," he insists.

One of the biggest challenges for battery brands is that most consumers don't understand the differences between zinc and alkaline batteries that zinc cells are best suited to low-drain devices such as clocks and torches and alkaline more suitable for use in remotes, radios and toys.

A third of shoppers come away from the battery fixture empty-handed, because they're not sure what to pick. There is a "high degree of ignorance" about the right battery to use, and "60% of battery buyers, mainly aged 16 to 34, seem ignorant, even disengaged, from the market", according to the Mintel Batteries Market Intelligence report, published in February.

In a bid to take the mystery out the fixture, many suppliers have overhauled packaging, PoS and merchandising over the past year.

Panasonic and Energizer both unveiled new packaging this April. Among Panasonic's alterations are new names, colours and pack designs, to make products easier to identify, and icons to highlight suitable uses. Icons on Energizer's new packaging indicate the type of device the battery is most appropriate for.

Those on Energizer Ultra+ packs, for example, depict devices such as a clock, while on higher-performance Energizer Ultimate Lithium they show more demanding devices such as gaming controllers and digital cameras. "Our approach provides a solution to help consumers and retailers better understand battery performance and make informed decisions," says Powell.

Varta also adopted colour coding and icons for its Tri-Energy range last year. Yellow represents long-lasting power for low-current devices that need consistent energy over longer periods of time, such as alarm clocks, baby monitors and remote controls; blue is for cells to power energy-hungry devices such as remote-controlled cars and portable music players; while red represents cells designed for hi-tech gadgets, including digital cameras and Mp3 players.

Duracell has used colour-coding on the base of its batteries to denote different sizes since 2003. Mintel's report highlighted colour-coding as a way for brands to trade consumers up. "The use of colours (rather than just sub-brand names or numbers) could make life much simpler for consumers and encourage them to buy more premium batteries for high-power devices."

Another factor boosting battery sales, according to Mintel, is the continual decline in average household size. Thanks to the ageing population and people having children later, there are more single and two-person households.

This is good news for the battery market as many battery-powered devices are purchased by the household rather than the individual. For example, it is normal for every household to have at least one TV remote control: if there are more households there are more gadgets requiring batteries.

"With many one-person households likely to comprise young adults or the elderly, specific devices requiring batteries are likely to be present," says the Mintel report. "Gaming console remotes, toys and home healthcare devices are product lines largely reliant on portable batteries."

Energizer has identified gaming as the fastest-growing area for battery-operated devices. Last year it ran ads claiming its Energizer Ultimate Lithium can last up to 60 hours in a Nintendo Wii remote compared with 35 hours for a standard AA alkaline battery.

Suppliers suggest the recession has helped to increase battery use in many home gadgets. As people opt to stay in for an evening rather than go out, there's a pretty good chance they'll be using their TV remote or video game controllers.

Those avidly playing video games are also likely to want the latest gadgets, which can in turn help to drive battery sales.

"A feature of technology markets is the rapid adoption of new products and the equally rapid discarding of technology perceived as out of date," says Mintel. "There is a stream of new portable products, any of which is capable of cult market adoption, which may result in increased demand for portable batteries."

Batteries producers can also take heart from the switch to products sold with inbuilt rechargeable cells such as iPods and mobile phones not being as significant as might have been expected.

"If we take mobiles as an example of this, as every phone comes with a clock and alarm, it was predicted 20 years ago that watches and alarm clocks would be a thing of the past," says Armitage. "In some quarters, such a threat was used as a catalyst for innovation among watch manufacturers."

The threat posed by inbuilt rechargeables is now bringing about innovation among battery manufacturers, with many developing products to complement rechargeable devices.

Last year Varta launched the V-Man Power Pack, a rechargeable device that can be plugged into a smartphone or other gadget to charge it up when the user can't get to a power point (see Innovations, p50). Other Varta products include the Back-up Charger, which also charges AA or AAA cells, and a solar-powered device.

Energizer's equivalent is the Energi To Go line-up, a wide range of products that includes devices to keep netbooks and laptops running, while Uniross products range from the budget Emergency 2 phone and iPod charger to the lithium-power Ready-to Phone. Duracell also offers a range of such devices and says on-the-go power has become a greater focus for its R&D.

It will be interesting to see what Panasonic brings to the market in the future. It acquired a majority stake in Sanyo which is renowned for its expertise in rechargeable power sources in a £2.8bn deal last December and has now made a bid to buy the remaining shares.

With such developments and a constant flow of NPD, it's a safe bet that the battery market won't be running out of juice any time soon.

Focus On Batteries