Condoms in the U.S. Published by: Packaged Facts A division of MarketResearch.com 38 East 29th Street New York, NY 10016 212-807-2629 / 1-800-298-5699 212-807-2676 (Fax) July 2006 www.PackagedFacts.com CONDOMS IN THE U.S. JULY 2006 Condoms in the U.S. has been prepared by Packaged Facts, a division of MarketResearch.com. Packaged Facts market intelligence reports are specifically designed to aid the action-oriented executive by providing a thorough presentation of essential data and concise analysis. Publisher Editor Research Director Production Coordinator Publication Date Don Montuori Cara Morrison David Sprinkle Lauren Young July 2006 All rights reserved. No part of this report may be reproduced without permission of the publisher. Copyright © 2006 MarketResearch.com, Inc. LA1209580 1-59814-072-8 Packaged Facts Company Background Packaged Facts is a trusted provider of authoritative consumer market research. 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Chapter 1: Executive Summary Condoms in the U.S. Condoms in the U.S. Table of Contents Chapter 1 Executive Summary........................................................ 1 Scope of the Report .........................................................................................1 Report Methodology ........................................................................................1 Market Size and Growth................................................................... 2 Figure 1-1 U.S. Retail Sales of Condoms, 2001-2005 (in million $)......................... 2 Top Marketers...................................................................................................2 Top Brands .......................................................................................................3 Figure 1-2 IRI-Tracked Retail Shares of the Top Condom Brands, 2005 (%).......... 4 Marketing Dynamics......................................................................... 5 Retailing ............................................................................................................5 Advertising .......................................................................................................5 Selected Marketing Initiatives .........................................................................6 Consumers........................................................................................ 7 Low Condom Usage Rates in the U.S.............................................................7 Young Singles and Young Marrieds are Heavy Condom Users ................................. 7 Core Condom Users: Age 18-44................................................................................. 7 Figure 1-3 Percentage of U.S. Adults Using Condoms by Age of User, 2005 (%)... 8 Latex versus Lambskin ............................................................................................... 8 Trends and Factors to Growth ........................................................ 9 Small Consumer Base .....................................................................................9 Focus From Contraception to Pleasure .........................................................9 Marketing to Women ........................................................................................9 Abstinence versus Contraception ................................................................10 FDA Regulations to Tighten Up ....................................................................10 Use of Nonoxynol-9 based Spermicides Decline ...................................................... 10 Product Trends...............................................................................................11 Vibrating Condom Rings ........................................................................................... 11 Glow in the Dark Condoms ....................................................................................... 11 Condoms with Climax Delay Lubricant ..................................................................... 11 Custom Sized Condoms ........................................................................................... 12 Condom Kits.............................................................................................................. 12 Outlook 13 Figure 1-3 Projected U.S. Retail Sales of Condoms, 2006-2010 (in million $)....... 13 July 2006 ©MarketResearch.com, Inc. Page 1 Condoms in the U.S. Chapter 1: Executive Summary Chapter 2 The Market ..................................................................... 15 Scope and Methodology................................................................................15 Product Introduction......................................................................................16 Latex Condoms ......................................................................................................... 16 Polyurethane Condoms............................................................................................. 16 Natural Skin Condoms .............................................................................................. 16 Product Reliability..........................................................................................17 Steady Market Growth ...................................................................................17 Figure 2-1 U.S. Retail Sales of Condoms, 2001-2005 (in million $)....................... 18 Figure 2-2 IRI-Tracked Sales of Condoms, 2001-2005 (in million $) ..................... 19 Factors Influencing Growth........................................................... 20 The Pleasure Principle...................................................................................20 The Serious Side ............................................................................................21 Changes in Consumer Attitudes...................................................................21 Abstinence versus Contraception ................................................................22 Female Condom Little Affect on Male Condom Market ..............................23 Marketing Male Condoms to Women............................................................24 Discussions of Potential Change in Catholic Doctrine...............................24 Outlook .......................................................................................... 26 Figure 2-3 Projected U.S. Retail Sales of Condoms, 2006-2010 (in million $)....... 26 FDA Regulation............................................................................... 27 Pre-marketing Notification Under Section 510(K) .......................................27 Abbreviated 510(k) Requirements ................................................................28 Quality System Regulation of Condoms (Post-Market Regulatory Control).............. 29 Labeling 30 Expiration Date.......................................................................................................... 30 Caution Regarding Natural Rubber Latex and Allergic Reactions ............................ 30 General Labeling Requirements for Medical Devices ............................................... 30 Labeling Recommendations .........................................................................31 Pregnancy ................................................................................................................. 31 Sexually Transmitted Diseases (STDs) .................................................................... 31 Incorrect or Inconsistent Use .................................................................................... 32 Use of N-9 in Condoms with Spermicidal Lubricant ...................................32 Limited Benefits of N-9.............................................................................................. 33 N-9 Does Not Protect Against HIV/AIDS or Other Sexually Transmitted Diseases .. 33 Risks of N-9 Irritation and Transmission of HIV/AIDS ............................................... 33 Risks of Anal Use of Condoms with N-9 ................................................................... 33 Page 2 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Chapter 3 The Marketers................................................................ 35 Top Condom Marketers ................................................................. 35 Church & Dwight Co., Inc. .............................................................................35 SSL Americas, Inc. .........................................................................................35 Ansell Healthcare, Inc. ...................................................................................35 Medtech Products Limited ............................................................................36 Mayer Laboratories, Inc. ................................................................................36 Global Protection Corp. .................................................................................37 Okamoto U.S.A., Inc. ......................................................................................37 Table 3-1 IRI-Tracked Retail Sales of Top Condom Marketers, 2001-2005 (in million $) ................................................................................................................. 38 Marketer Performance Analysis.................................................... 39 Figure 3-1 IRI-Tracked Retail Market Shares of Top U.S. Condom Marketers, 2005 (%)................................................................................................................. 39 Figure 3-2 IRI-Tracked Retail Market Shares of Top U.S. Condom Marketers, 2001 versus 2005 (%) ............................................................................................ 40 Church & Dwight Co., Inc. .............................................................................40 SSL Americas, Inc. .........................................................................................41 Performance Analysis of the Top Condom Brands .................... 42 Figure 3-3 IRI-Tracked Retail Shares of the Top Condom Brands, 2005 (%)........ 43 Table 3-2 IRI–Tracked Retail Sales of the Top Condom Brands (Consolidated by Parent Brand), 2001-2005 (in $ million) .................................... 44 Table 3-3 IRI–Tracked Retail Sales of Top Condom Sub-Brands, 2001-2005 (in $ million) ............................................................................................................ 45 Trojan ..............................................................................................................45 Figure 3-4 IRI-Tracked Retail Shares of the Trojan Brand of Condoms by SubBrand, 2005 (%) ..................................................................................................... 46 Durex ...............................................................................................................46 Figure 3-5 IRI-Tracked Retail Shares of the Durex Brand of Condoms by SubBrand, 2005 (%) ..................................................................................................... 47 Lifestyles.........................................................................................................47 Figure 3-6 IRI-Tracked Retail Shares of the Lifestyles Brand of Condoms by SubBrand, 2005 (%) ..................................................................................................... 48 July 2006 ©MarketResearch.com, Inc. Page 3 Condoms in the U.S. Chapter 1: Executive Summary Chapter 4 Competitive Profiles ..................................................... 49 Church & Dwight Co., Inc. ............................................................. 49 Company Overview ........................................................................................49 Table 4-1 Church & Dwight Co., Inc.’s Family Planning and OTC Brands............. 50 Performance ...................................................................................................50 Figure 4-1 IRI-Tracked Sales of Church & Dwight’s Condoms, 2001-2005 (in million $) ............................................................................................................ 51 Figure 4-2 Sales of Church & Dwight Co., Inc. by Business Segments, 2005 (%) 52 Company Snapshots......................................................................................52 SSL International plc...................................................................... 54 Company Overview ........................................................................................54 Table 4-2 SSL Americas, Inc.’s Condom Brands ................................................... 55 Performance ...................................................................................................55 Figure 4-3 IRI-Tracked Sales of SSL Americas, Inc.’s Condoms, 2001-2005 (in million $) ............................................................................................................ 55 Figure 4-4 Sales of SSL International plc by Business Segments, 2005 (%)......... 56 Company Snapshots......................................................................................56 Ansell Healthcare, Inc. ................................................................... 58 Company Overview ........................................................................................58 Table 4-3 Ansell Healthcare, Inc.’s U.S. Consumer Healthcare Brands ................ 59 Performance ...................................................................................................59 Figure 4-5 IRI-Tracked Sales of Ansell Healthcare, Inc.’s Condoms, 2001-2005 (in million $) ................................................................................................................. 60 Figure 4-6 Sales of Ansell Healthcare, Inc. by Business Segments, 2005 (%)...... 61 Figure 4-7 Sales of Ansell Healthcare, Inc. by Geographies, 2005 (%) ................. 61 Company Snapshots......................................................................................62 Mayer Laboratories, Inc. ................................................................ 64 Company Overview ........................................................................................64 Table 4-4 Mayer Laboratories, Inc.’s Consumer Healthcare Brands ..................... 64 Performance ...................................................................................................64 Figure 4-8 IRI-Tracked Sales of Mayer Laboratories, Inc.’s Condoms, 2001-2005 (in million $) ............................................................................................................ 65 Company Snapshots......................................................................................65 MedTech Products Limited............................................................ 66 Company Overview ........................................................................................66 Table 4-5 Medtech Products Limited’s Condom Brands ........................................ 66 Performance ...................................................................................................66 Figure 4-9 IRI-Tracked Sales of Medtech Products Limited’s Condoms, 2001-2005 (in Thousand $) ...................................................................................................... 67 Company Snapshots......................................................................................67 Page 4 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Chapter 4 Competitive Profiles [Cont.] Global Protection Corp. ................................................................. 69 Company Overview ........................................................................................69 Table 4-6 Global Protection Corp.’s Condom Products ......................................... 69 Performance ...................................................................................................69 Figure 4-10 IRI-Tracked Sales of Global Protection Corp.’s Condoms, 2001-2005 (in Thousand $) ...................................................................................................... 70 Company Snapshots......................................................................................70 Okamoto USA, Inc. ......................................................................... 72 Company Overview ........................................................................................72 Performance ...................................................................................................72 Figure 4-11 IRI-Tracked Sales of Okamoto USA, Inc.’s Condoms, 2001-2005 (in million $) ................................................................................................................. 73 Company Snapshots......................................................................................73 Chapter 5 Marketing Dynamics ..................................................... 75 Condom Advertising Makes it to Prime Time ..............................................75 Family Planning and Intimacy Products Prominent at Retail.....................76 Role of Government Agencies and NGOs in Donor Support .....................77 Table 5-1 Contraceptive Commodity Support by Donor/Agency, 2000-2004 (in million $) ............................................................................................................ 77 Figure 5-1 Major Donors by Donated Amount for Contraceptives and Condoms, 2004 (%)................................................................................................................. 78 Marketing Initiatives ....................................................................... 80 Church & Dwight’s Trojan Condoms............................................................80 Trojan Condoms “Make a Difference” on Prime Time............................................... 80 Acknowledging the Gay Market ................................................................................ 80 Elexa—Trojan’s Angle on “The Woman’s Perspective” ............................................ 81 Ansell Healthcare’s Lifestyles Condoms .....................................................81 “I Know”–Lifestyles’ Social Marketing Effort .............................................................. 81 After Surrogate Advertising in Movies and Targeting Gay Men, Ansell Healthcare Inc. Wants a Change ....................................................................................................... 82 Global Protection’s ONE condom.................................................................82 Okamoto U.S.A.’s Beyond Seven Condoms ................................................83 New Variant and Fresh Look for Okamoto’s Beyond Seven Condoms .................... 83 Mayer Laboratories’ Kimono MicroThin condoms ......................................83 July 2006 ©MarketResearch.com, Inc. Page 5 Condoms in the U.S. Chapter 1: Executive Summary Chapter 5 Marketing Dynamics [Cont.] New Product Introductions/Innovations ...................................... 85 Church and Dwight Introductions.................................................................85 Trojan Mint Tingle ..................................................................................................... 85 Trojan Her Pleasure Warm Sensations..................................................................... 85 Elexa Premium Latex Condoms................................................................................ 86 Asa Products’ X-Treme Ring Vibrating ........................................................87 Durex Premium Latex ....................................................................................87 Durex Tingling Pleasure with Spearmint Tingling Lubricant Condoms ..................... 87 Warming Pleasure Thin with Sensual Warming Lubricant Condoms........................ 87 Durex Play Sensations Assorted Premium Latex Condoms ..................................... 87 SSL Americas Books Winter Advertising for Durex Tingle Condom and Play Lubricant ................................................................................................................... 88 Ansell Healthcare Products, LLC..................................................................88 Lifestyles 4Play ......................................................................................................... 88 Radiance International ‘s Erecxel Condom Plus .........................................89 Chapter 6 The Consumer............................................................... 91 Note on Simmons Survey Data and Figures................................................91 Adult Condom Usage in the U.S. .................................................. 93 Figure 6-1 Percentage of U.S. Adults Using Condoms, 2005 (%) ......................... 93 Condom User Selected Key Demographics.................................................94 Young Singles and Young Marrieds.......................................................................... 94 African Americans Skew High ................................................................................... 94 Geography Matters ................................................................................................... 95 Education and Economics......................................................................................... 95 Family Planning......................................................................................................... 95 Table 6-1 Demographic Characteristics Favoring Use of Condoms, 2005 ............ 96 A Closer Look at Condom Usage by Age.....................................................96 Figure 6-2 Percentage of U.S. Adults Using Condoms by Age of User, 2005 (%). 97 Losing Boomers to Viagra ......................................................................................... 97 Table 6-2 Estimated Numbers of AIDS Cases in the U.S. by Year of Diagnosis and Age of the Persons, 2000-2004.............................................................................. 99 The Touchy Subject of Teens ................................................................................... 99 Table 6-3 Number and Percentage of Births to Unmarried Women in the U.S. by Age, 2003-2004.................................................................................................... 100 Figure 6-3 Percentage of All Births to Unmarried Women by Age, 2004 ............. 100 The Effect of HIV/AIDS on the Population.................................. 101 Table 6-4 Estimated Numbers of AIDS Cases in the U.S. by Year of Diagnosis and Race/Ethnicity, 2000-2004 ................................................................................... 101 Table 6-5 Estimated Numbers of AIDS Cases in the U.S. by Year of Diagnosis and Region, 2000-2004............................................................................................... 103 Condom Preference by Type....................................................... 106 Figure 6-4 U.S. Adults Favoring Use of Condoms by Type of Material, 2005 (%)107 Latex Condom Users versus Natural Skin Condom Users ..................................... 108 Table 6-6 Demographic Characteristics Favoring Use of Condoms by Type, 2005 ............................................................................................................................. 108 Page 6 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Chapter 6 The Consumer[Cont.] Condom Usage by Brand............................................................. 109 Figure 6-5 Usage Rates for Condoms by Brand, 2005 (%).................................. 109 Table 6-7 Demographic Characteristics Favoring Use of Condoms by Brand, 2005 ..................................................................................................................... 110 Durex Users ............................................................................................................ 110 Lifestyles Users....................................................................................................... 111 Trojan Users............................................................................................................ 111 Chapter 7 Trends .......................................................................... 113 Condom Manufacturers Target Women .....................................................113 Marketing Focus Shifts from Contraception to Pleasure .........................114 Lack of Data, High Price Limits Market for Polyurethane Condoms .......115 Female Condom Still a Failure ....................................................................116 Table 7-1 Overall Pregnancy Rates by Type of Contraceptives Used ................. 118 U.S. Policies May Contribute to Reduced Condom Sales ........................118 Prime Time for the Condom ........................................................................120 Changing Trends in Sex Education ............................................................121 Battling Ancient Blue Laws .........................................................................123 Use of Nonoxynol-9 based Spermicides Decline ......................................123 Product Trends ............................................................................. 126 Vibrating Condom Rings .............................................................................126 Glow in the Dark Condoms .........................................................................126 Condoms with Climax Delay Lubricant ......................................................127 Custom Sized Condoms ..............................................................................127 Condom Kits – More than Just Condoms ..................................................128 Appendix: Addresses of Selected Marketers ................................ i July 2006 ©MarketResearch.com, Inc. Page 7 Chapter 1: Executive Summary Chapter 1 Condoms in the U.S. Executive Summary Scope of the Report This Packaged Facts report examines the U.S. market for condoms sold via retail channels (food stores, drug stores, and mass merchandisers) tracked through Information Resources Inc. (IRI). The U.S. market for condoms is comprised of male condoms, which includes latex/natural rubber condoms, polyurethane/synthetic condoms, and natural membrane/skin condoms. Products such as lubricating gels, creams, sex toys and accessories are not included in this report. This report does examine products and trends in the emerging premium condom kits segment, typified by the Trojan Elexa and Durex 4Play brands, although IRI-tracked data is limited in this area. Report Methodology The information contained in this report was obtained from both primary and secondary research from relevant trade, business, and government sources. For the mass-market sector, Packaged Facts has based its sales and market share estimates primarily on data from IRI. The analysis of consumer demographics primarily derives from the Simmons Market Research Bureau (New York, NY) Fall 2005 consumer survey. ProductScan Online provided information on new product introductions and their salient features for 2005. The estimates on consumer advertising expenditure are based on data compiled by TNS Media Intelligence, the leading provider of strategic advertising and marketing communications intelligence. The estimates on advertising expenditure for 2005 cover only the 12 months from January to December. These estimates do not consider promotional expenditure, advertising by direct mail, co-op. advertising in local merchants’ circulars, local print advertising, or advertising on the Internet. July 2006 ©MarketResearch.com, Inc. Page 1 Condoms in the U.S. Chapter 1: Executive Summary Market Size and Growth The total U.S. market for condoms, including sales through all retail channels, stood at $398.3 million in 2005, up 2.8% from $387.6 in 2004. The male contraceptives market recorded a CAGR of 2.8% from 2001 to 2005. Figure 1-1 U.S. Retail Sales of Condoms, 2001-2005 (in million $) 420 398.33 400 387.62 381.81 Sales ($ Million) 380 360 373.59 356.23 340 320 300 2001 2002 2003 2004 2005 Source: Packaged Facts Top Marketers The U.S. domestic condoms market is highly concentrated with a limited number of players who compete and differentiate their products based on quality, innovation and price. The three largest condom marketers in the U.S— Church & Dwight Co., Inc.; SSL Americas, Inc.; and Ansell Healthcare, Inc.— collectively accounted for 98% of total IRI-tracked retail sales ($239 million) of condoms in the U.S. in 2005. Page 2 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. New Jersey-based Church & Dwight Co., Inc. was the market leader in 2005 with sales worth $169.8 million and a market share of 71%. With diverse and popular brands such as Trojan, Elexa, and Naturalamb in its product line, Church & Dwight Co., Inc.’s domination of the market is not surprising. With a market share of 15.3% in 2005, Georgia-based SSL Americas, Inc. has seen steady growth in sales—a CAGR of 2.9% from 2001 to 2005 to reach sales of $36.6 million in 2005. The second largest condom marketer in the U.S., SSL Americas, Inc. still has a very small market share in comparison to Church & Dwight Co., Inc. Except for New Jersey-based Ansell Healthcare, Inc., the top five marketers in the U.S. condoms market recorded growth in sales in 2005. Ansell Healthcare, Inc. has seen declining market shares of its Lifestyles brand since 2002, with sales falling from $31.4 million in 2002 to $27.8 million in 2005. Other leading marketers include Medtech Products Limited (Inspiral Condoms), Mayer Laboratories, Inc. (Kimono Condoms), Global Protection Corp., (includes Pleasure Plus, Night Light, ONE condom brands), and Okamoto U.S.A., Inc. (Crown and Beyond Seven brands). Top Brands Trojan, Durex, and Lifestyles, the leading brands from the top three marketers, were predictably the top three condom brands in the U.S. in 2005. Of these, Trojan and Durex performed significantly well. Sales of Trojan increased 4.1% from $156.8 million in 2004 to $163.3 million in 2005. Sales of Durex increased 9.6% from $33.1 million in 2004 to $36.3 million in 2005. Lifestyles sales fell 2.4% in 2005, to reach $27.4 million. July 2006 ©MarketResearch.com, Inc. Page 3 Condoms in the U.S. Chapter 1: Executive Summary Figure 1-2 IRI-Tracked Retail Shares of the Top Condom Brands, 2005 (%) All Other Brands 1.95% Naturalamb 0.51% Kling Tite Naturalamb 2.04% Inspiral 0.53% Lifestyles 11.46% Trojan 68.33% Durex 15.18% Note 1: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Note 2: Trojan brand includes Trojan Enz, Trojan Magnum, Trojan Her Pleasure, Trojan Ultra Pleasure, Trojan Extended Pleasure, Trojan Plus 2, Trojan Twisted Pleasure, Trojan Supra, Trojan Ultra Thin, Trojan Her Pleasure Warm Sensations, Trojan Naturalube, Trojan Mint Tingle, Elexa, other Trojan male contraceptives. Note 3: Durex brand includes Durex Extra Sensitive, Other Durex, Durex Avanti, Durex Ultimate Feeling, Durex High Sensation, Durex Love, Durex Performax, Durex Intense Sensation, Durex Maximum, Durex Colors & Scents, Durex Play Sensations, Durex Pure Protection, and Avanti Super Thin Duron. Note 4: Lifestyles brand includes Lifestyles Ultra Sensitive, Lifestyles Natural Feeling, Lifestyles Discs, Lifestyles Xtra Pleasure, and other Lifestyles male contraceptives. Note 5: All Other Brands include Kimono, Pleasure Plus, Beyond Seven, Private Labels and others. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. These three major brands have a variety of sub-brands. Trojan, Trojan Enz, Lifestyles, Trojan Magnum, and Durex Extra Sensitive were five of the largest selling condom brands in the U.S. in 2005. Trojan Magnum performed particularly well, with 2005 sales increasing 20.8% over the previous year to $20.5 million. Although Trojan and Trojan Enz were the top performers, sales of these two brands declined in 2005, by 5.8% and 6.8%, respectively. Page 4 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Marketing Dynamics Retailing Family planning items such as condoms, ovulation kits, and pregnancy tests have emerged from behind the pharmacy counter to places that are more prominent and easy to reach. Sales in drug stores, in particular, have consequently increased with these products receiving additional visibility. However, more shelf space and higher visibility are not the only factors supporting the increase in sales. Chain drug retailers have an advantage over other retailers, with pharmacists ready and waiting to address consumer queries regarding the use of such products. Mass retailers such as Walgreen’s, on the other hand, do not limit condoms and other family planning items to the pharmacy but also stock them in other areas of its stores, including the checkout counter. At Walgreen’s, the family planning aisle stocks condoms, pregnancy tests, vaginal moisturizers and accessories like climax control gels. Walgreen’s also have stand-alone Family Planning Centers, which stock the lower priced store brands of lubricating gels, pregnancy tests and ovulation kits. Sexual intimacy products are competing with family planning products for shelf space at mainstream drug stores and other retailers. Personal lubricants, oils and massagers that comprise the bulk of the offerings in the intimacy products category are now being bought in drug store aisles. Retailers now understand the importance of providing shoppers with easy access to intimacy products and have started including these into their merchandise mix. Advertising In 1991, the upstart Fox network ran the first paid condom commercial on a broadcast television network. Several major cable networks, including MTV, Comedy Central, BET, CNN, TNT, USA and TBS, followed suit. However, these advertisements were aired late at night with the obvious intention to keep them away from kids. On June 1, 2005, two television networks WB and NBC broadcasted the first prime time network commercial for male contraceptive devices (Church & Dwight’s Trojan brand of condoms). Trojan’s Vice President of Marketing, Jim Daniels, said, “Network television is an efficient July 2006 ©MarketResearch.com, Inc. Page 5 Condoms in the U.S. Chapter 1: Executive Summary means of reaching consumers, and the prime time hours are probably the best time to do that.”1 Church & Dwight’s “Make a Difference” advertising campaign for its Trojan brand of condoms calls attention to individual accountability and sexual health, citing statistics about STDs.2 Selected Marketing Initiatives In May 2005 Church & Dwight made history launching the “Make a Difference” advertising campaign on prime time television, the first condom advertising campaign to air on television during prime time. The bold and hard-hitting campaign laid emphasis on the health risks of unprotected sex and tried to infuse a sense of urgency among sexually active men and women to practice safer sex and use condoms.3 In a major new product initiative, Church & Dwight targeted the woman condom purchaser in a more focused manner (This product is not to be confused with female condoms, which are inserted into the vagina. Elexa is a condom worn by men, but marketed to women). With the introduction of a premium line of unique sexual health products for women by the name of Elexa, Trojan extends its spectrum and now takes female sexual health under its wing. In special liaisons with the retailers, Elexa was placed on shelves located in the feminine care aisle of the store to make the purchase more comfortable for women. In an attempt to bring together the benefits of social marketing and brand awareness activities, Ansell Healthcare, Inc., donated Lifestyles condoms to the “I Know” campaign in 2005. As a part of this campaign, Lifestyles condoms were distributed in areas of high HIV occurrence, such as major cities like New York, in exchange for one cent or one token that was called the “condom token”. The campaign makes use of a web site (www.iknow.tv) to promote the campaign.4 Global Protection, Inc. launched their new product, ONE condoms, in a unique style by kicking off a consumer condom package design contest held on Valentine’s Day 2005. The contest ended on June 30, 2005. The winning designs were posted on the website and actually used in the packaging of ONE condoms and distributed nationwide. The winning designs also received cash prizes ranging from $100 to $250. The ONE condoms brand brings a fresh look to condom displays with a sleek contemporary circular outer container, attractive colors, and constantly refreshed wrapper images. Global Protection, Inc. positions the ONE condom brand as a classy and reliable choice for men and women 1 ABCNews, June 1, 2005 Drug Store News, Vol. 27, Issue. 10, September 26, 2005 3 Churchdwight.com, News Releases, August 2005 4 Associated Press, May 8, 2005 2 Page 6 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Consumers Low Condom Usage Rates in the U.S. According to the Simmons Fall 2005 Survey, only 15.1% of U.S. adults use condoms. This low percentage seems illogical in the face of government data that cites that approximately half of all pregnancies in the U.S. are unintended5 and that the rate of HIV/AIDS infection was 15.0 per 100,000 in 2004.6 According to the National Opinion Research Center (NORC), which conducts surveys as a part of a larger study known as the General Social Survey (GSS) sponsored by the National Science Foundation at the University of Chicago, the number of sexual encounters declines with age. The frequency of sex is the highest and fairly consistent in the age bracket of 20-30 years. The frequency drops by about 20% with every 10 years increase in age up to age 64. People aged between 65–74 show a 60% drop. It is no surprise then, that younger consumers aged 18-44 years were the heaviest users of condoms. This age segment falls within the 25-50 years age bracket of people at greatest risks of contracting HIV/AIDS. Young Singles and Young Marrieds are Heavy Condom Users Data suggests that both young singles and young marrieds are heavily inclined toward condom use. Both consumer groups may be interesting in curtailing parenthood for the foreseeable future. Condom usage skews particularly high for those aged 18-34 (index of 200+ each) and for unmarried individuals (156). There is also the suggestion of heavy use among newly married young people when you take into consideration to Simmons and Census data. According to Simmons those aged 24-35 skewed very high (203) for condom usage, and according to the U.S. Census Bureau, in 2004 the estimated median age at first marriage for women in the U.S. was 25.8 years and 27.4 for men. So while people are marrying slightly later, Simmons data suggests that family planning is still important for these older newlyweds. Core Condom Users: Age 18-44 According to the SMRB Fall 2005 survey, younger adult consumers aged 18-44 years were the core group of condom users in the U.S. Of this section of the population, consumers aged 25-34 5 6 Family Planning Progress Review (www.healthypeople.gov), December 8, 2004 statehealthfacts.org July 2006 ©MarketResearch.com, Inc. Page 7 Condoms in the U.S. Chapter 1: Executive Summary years represented 35% of total condom users, forming the largest group of condom users in the U.S. in 2005. Figure 1-3 Percentage of U.S. Adults Using Condoms by Age of User, 2005 (%) 34.96 35 % of U.S. Adults Using Condoms 30 23.77 23.42 25 20 15 11.98 10 4.00 5 1.75 0.12 0 18-24 25-34 35-44 45-54 55-64 65-74 75 and Over Age (Years) Source: Simmons Market Research Bureau, Fall 2005 Study of Media and Markets; Packaged Facts. This material is reprinted with permission. Latex versus Lambskin A majority of condom users (89.2%) use latex condoms, known to be and effective method of birth control and the safest kinds of protection against HIV/AIDS and other sexually transmitted diseases. However, consumers often complain that latex condoms reduce sensation during the act. For this reason, many consumers use the thinner, natural skin condoms made of sheep intestines, which can be used to avoid unwanted pregnancies, but not as protection against STDs. This major drawback limits the use of natural skin condoms. According to the SMRB Fall 2005 Survey, only 10.8% of the consumers used natural skin condoms most often. Page 8 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Trends and Factors to Growth Small Consumer Base Although use of condoms is a key determinant of unintended pregnancies, effective family planning and prevention of sexually transmitted diseases, as noted, according to Simmons only 15.1% of U.S. adults use condoms. The low condom usage rate is not all bad news though – it indicates an untapped market that shows good growth potential. Focus From Contraception to Pleasure Condom marketers are focusing on more pleasure-oriented products, which represented a major portion of male condoms market. In 2005, around two-thirds of the condoms on the market were pleasure-oriented products.7 “Novelty” condom products, such as vibrating condoms, condoms with warming gels, climax delaying lubricants and others being bundled with regular condoms, are a trend set to grow bigger. Apart from new product concepts and designs, new bolder packaging, colors and flavors are also building the new found “pleasure accessory” image of condoms. Marketing to Women While men still purchase approximately 70% of condoms, the female consumer is emerging as an important buyer for condoms. In order to reach female consumers, marketers of male condoms are offering products that enhance both the shopping experience and the sexual experience through product development (shaped, textured, flavors, vibrating, etc.) and through more considerate packaging, marketing and retailing. For example, in September 2005, Church & Dwight Co. introduced Elexa, a line of sexual wellbeing products under the Trojan brand that include freshening cloths, vibrating ring, condoms, and intimacy gels. The packaging is comparatively more discreet with dark, subtle colors, delicate print, and a simple line drawing of a woman (versus any sexually suggestive pictures and words). 7 Chain Drug Review, Volume: 28, Number: 4, February 27, 2006 July 2006 ©MarketResearch.com, Inc. Page 9 Condoms in the U.S. Chapter 1: Executive Summary Abstinence versus Contraception Condoms operate in a highly charged socio-political environment. From the Vatican, to Congress, to the local PTA, everyone has an opinion on abstinence versus contraception as the best method for prevention of pregnancy and disease. This ongoing discussion is a constant threat to condom sales and future growth. Moral issues aside, the abstinence stance is clearly not effective, as shown by numerous studies. In spite of this, the U.S. Government has used foreign aid to pressure other governments to adopt abstinence education programs. In 2003, when the U.S. global AIDS bill was passed, Congress added into the law a requirement that one-third of all AIDS prevention funds be spent on abstinence programs.8 The effect of policy promotion such as this will affected condom sales in the U.S. Major marketers like SSL Americas and Church & Dwight Company have suffered less compared to the smaller players. According to IRI, sales of Ansell’s Lifestyles brand of condoms fell 8.4% in 2004 to $28.1 million. In 2005, IRI-tracked sales of Ansell fell by another 1% and unit sales fell by 3.8% since 2004. FDA Regulations to Tighten Up Apart from the existing labeling requirements set by the FDA, a Class II special controls guidance document comprising recommendations for labeling of male condoms made of natural rubber latex has been drafted (not for implementation).9 Recommendations in the draft include indication of the level(s) of packaging and the place on the packaging where the labeling should appear. It also provides examples of labeling statements that adequately address pregnancies, STDs, incorrect use of condoms, and special labeling of condoms coated with N-9 (Nonoxynol–9) lubricant. Use of Nonoxynol-9 based Spermicides Decline A 2000 study of N-9’s effectiveness among sex workers in South Africa and Thailand showed that HIV incidence was actually higher among women using N-9 than among those using other products. The finding questioned the safety of using N-9 for protection against unwanted pregnancy.10 8 OpEd News, April 12, 2006 FDA, Class II Special Controls Guidance Document: Labeling for Male Condoms Made of Natural Rubber Latex, November 14, 2005 10 The Guttmacher Report, Volume 8, Number 2, May 2005 9 Page 10 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Experts at the World Health Organization (WHO) and the U.S. Centers for Disease Control and Prevention (CDC) conducted a review of the evidence. The summary report was released by WHO in October 2001 and the CDC published its public health guidelines for the use of N-9 in May 2002 asking manufacturers to stop adding N-9 to condoms and sexual lubricants. Mayer Laboratories and Durex Consumer Products, Inc. have discontinued production of N-9 condoms and lubricants. Planned Parenthood Federation of America (PPFA) promptly stopped providing N-9 condoms. Ansell Ltd., maker of Lifestyles condoms; and Church & Dwight Company, maker of Trojan have resisted, and claim that N-9 lubrication on condoms provides women with back-up protection against pregnancy in case of condom failure. Product Trends Vibrating Condom Rings The vibrating condom – a condom with a battery operated ring that can be attached at the base (open end) of the condom was one of the central attractions at an inventors’ trade fair in Geneva in 2004.11 The vibrating condom ring was first sold in the U.S. under the name ViCon. Leading condom marketers in the U.S. were quick to launch their own versions of the ViCon. Select brands include Trojan Vibrating Ring, Durex Vibe, Lifestyles 4Play Vibe, The Pleasuring, and Merit Joy Vibrating Ring. Glow in the Dark Condoms Although glow in the dark condoms are not a new product concept, the Night Light brand of glow in the dark condoms is the first one to be approved by the FDA as a safe condom for prevention of STIs and unwanted pregnancies. These condoms need around 30 seconds of exposure to light before use, for the effect of the phosphorescence to show. Condoms with Climax Delay Lubricant For men who suffer from premature ejaculations or who are unable to sustain an erection for long durations now have readily available assistance in the form of climax control lubricants that delay ejaculation. The three biggest condom brands in the U.S. each have an offering in this category (the Trojan Extended Pleasure Lubricated Condoms, Durex Performax Condoms, and Lifestyles Lasting Pleasure Condoms). 11 Daypop, April 3, 2004 July 2006 ©MarketResearch.com, Inc. Page 11 Condoms in the U.S. Chapter 1: Executive Summary Custom Sized Condoms Famed New York City condom store Condomania offers a line of condoms in 55 sizes. Branded as “TheyFit,” this line is touted to be sized-to-fit or custom fit according to the buyer’s size. These condoms are available in 55 combinations of 14 different lengths and 11 different widths. Condom Kits A new trend is to sell condoms with pleasure enhancing accessories along with condoms in a single kit. Designed to enhance foreplay among users, these products will help to create lasting impressions of these products in the users mind. One such offering is the 4Play series of condom kits introduced by Ansell Healthcare Inc. in April 2005. These kits include condoms and accessories such as fruit-scented warming massage oils, fruity edible body paints, edible vanilla dust, feather ticklers, vibrating rings, body glitter lotions and silky warming lubricants. Page 12 ©MarketResearch.com, Inc. July 2006 Chapter 1: Executive Summary Condoms in the U.S. Outlook As consumers’ inhibitions relax regarding condom purchase and its usage and marketers launch condoms with enhanced features, the consumers will be willing to pay a premium. The shift in focus in condom advertising from protection to pleasure will also influence consumer’s attitudes toward condom use. The U.S. market for condoms is expected to reach $444.3 million by 2010. Packaged Facts estimates the market to grow at a CAGR of 2.1% from 2006 to 2010. Figure 1-3 Projected U.S. Retail Sales of Condoms, 2006-2010 (in million $) 450 444.33 435.59 430 425.68 Sales ($ Million) 416.26 410 408.98 390 370 350 2006 2007 2008 2009 2010 Source: Packaged Facts July 2006 ©MarketResearch.com, Inc. Page 13 Condoms in the U.S. Page 14 Chapter 1: Executive Summary ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Chapter 2 Condoms in the U.S. The Market Scope and Methodology This Packaged Facts report examines the U.S. market for condoms sold via retail channels (food stores, drug stores, and mass merchandisers) tracked through Information Resources Inc. (IRI). Generally, “the condom market” and “condoms” reference male condoms, unless otherwise stated, and include which includes latex/natural rubber condoms, polyurethane/synthetic condoms, and natural membrane/skin condoms. Products such as lubricating gels, creams, sex toys and accessories are not included in this report. This report does examine products and trends in the emerging premium condom kits segment, typified by the Trojan Elexa and Durex 4Play brands, although IRI-tracked data is limited in this area. The information contained in this report was obtained from both primary and secondary research from relevant trade, business, and government sources. For the mass-market sector, Packaged Facts has based its sales and market share estimates primarily on data from IRI. The analysis of consumer demographics primarily derives from the Simmons Market Research Bureau (New York, NY) Fall 2005 consumer survey. ProductScan Online provided information on new product introductions and their salient features for 2005. The estimates on consumer advertising expenditure are based on data compiled by TNS Media Intelligence, the leading provider of strategic advertising and marketing communications intelligence. The estimates on advertising expenditure for 2005 cover only the twelve months from January to December. These estimates do not consider promotional expenditure, advertising by direct mail, co-op. advertising in local merchants’ circulars, local print advertising, or advertising on the Internet. Note: Discussion on overall retail sales of condoms (Figure 2-1) and projections (Figure 2-3) reflect sales through all retail channels in the U.S., including sales through specialty stores and other retail channels not covered by IRI. However, category discussions are based only on IRItracked sales through chain supermarkets, drugstores, and mass merchandisers other than WalMart. July 2006 ©MarketResearch.com, Inc. Page 15 Chapter 2:The Market Condoms in the U.S. Product Introduction A condom is a pouch shaped device, generally made of latex or polyurethane that covers a man’s penis during sexual intercourse to prevent the exchange of body fluids, which can lead to pregnancies and sexually transmitted diseases such as gonorrhea, syphilis, and HIV. Condoms are also known as prophylactics and available in three different types: latex, polyurethane, and natural skin. Some condoms are not lubricated at all, some are lubricated with a silicone substance, and some have a water-based lubricant. The lubrication on condoms aims to make the condom easier to put on and more comfortable to use besides preventing condom breakages. Latex Condoms Latex condoms are the most common. They are inexpensive, widely available and offer reasonably good protection against unwanted pregnancies and sexually transmitted diseases. However, they are most likely to cause skin irritation, especially in people who are allergic to latex or natural rubber. Another drawback is that latex condoms can only be used with waterbased lubricants, as oil-based lubricants such as Vaseline or cold cream can deteriorate the latex, thereby, causing breakage. Polyurethane Condoms Polyurethane condoms are made of plastic and a practical option for people allergic to latex. Polyurethane condoms are thinner than latex condoms and claim to heighten sensations during intercourse. Both oil- and water-based lubricants can be safely used with polyurethane condoms. However, these condoms are relatively more expensive, less flexible, and require more lubrication. Scientific data regarding the efficacy of these condoms is not as well documented as that for latex condoms, but generally, polyurethane condoms offer comparable protection against pregnancies and sexually transmitted diseases. Natural Skin Condoms Natural skin condoms or lambskin condoms are made from lamb intestines. These condoms are meant to prevent pregnancies and may enhance sensation during intercourse. They are the most expensive of the three types and do not protect against sexually transmitted diseases. Page 16 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. Product Reliability No condom offers 100% protection from STDs or unwanted pregnancies. According to tests conducted by the Consumers Union (Consumer Reports, May 1995), latex condoms prevent pregnancies approximately 95% of the time or more. However, since the actual use may differ from laboratory conditions, the failure rate for condoms in preventing pregnancies is around 12%. According to the Consumers Union, when used correctly, latex condoms can prevent the transmission of STDs up to 98% or even 100% of the time.12 In the U.S., condoms require the approval of the FDA (Food and Drug Administration). According to another study published in 2004 and conducted over a period of one year, only two of every 100 couples that use male condoms consistently and correctly will experience an unintended pregnancy. The two cases of unwanted pregnancies occurred in an estimated 8,300 acts of sexual intercourse, reflecting a 0.02% pregnancy rate with the use of condoms. The study concluded that with perfect use, 98% women relying on male condoms would remain free of pregnancy. However, with typical use, only 85% would remain free of pregnancy.13 Studies on the effectiveness of condoms in preventing HIV and other STDs, conducted by the Center for Disease Control and Prevention (CDC), showed that in sero-discordant couples, where one partner is HIV-positive and the other is HIV-negative, no uninfected partner became infected among couples using condoms correctly and consistently at every act of vaginal or anal sex over the two-year duration of the study. However, among such couples 10% of the uninfected partners were infected because of inconsistent use of condoms. Among uninfected partners, only 2%, who used condoms consistently, were HIV-infected as compared to 12% of those who used condoms inconsistently or did not use condoms.14 Steady Market Growth The total U.S. market for condoms, including sales through all retail channels, stood at $398.3 million in 2005, up 2.8% from $387.6 in 2004. The male contraceptives market recorded a CAGR of 2.8% from 2001 to 2005. [Figure 2-1] 12 13 14 Consumers Union of U.S., Inc., May 1995 th Contraceptive Technology, 18 edition. New York: Ardent Media, 2004 Centers for Disease Control & Prevention (CDC) July 2006 ©MarketResearch.com, Inc. Page 17 Chapter 2:The Market Condoms in the U.S. Figure 2-1 U.S. Retail Sales of Condoms, 2001-2005 (in million $) 420 398.33 400 387.62 381.81 Sales ($ Million) 380 360 373.59 356.23 340 320 300 2001 2002 2003 2004 2005 Source: Packaged Facts The U.S. condoms market is a stable and mature market that has been growing at a steady rate every year. Increased focus on public education on sexually transmitted diseases and the benefits of long-term condom continue to help growth in this market. Continued consumer response to all such initiatives has contributed to the growth in sales of condoms, as indicated in Figure 2-2 below. Page 18 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. Figure 2-2 IRI-Tracked Sales of Condoms, 2001-2005 (in million $) 250 239 240 232.57 Sales ($ Million) 229.09 230 224.15 220 213.74 210 200 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Source: Packaged Facts Information Resources, Inc. InfoScan Review; Packaged Facts. The information supplied by IRI is based on data believed to be reliable but is neither all-inclusive nor guaranteed by IRI. Without limiting the generality of the foregoing, specific data points may vary considerably from other information sources. Any opinions expressed herein reflect the judgment of MarketResearch.com, Inc., at this date and are subject to change. Reproduction, resale, or other distribution of this document is expressly prohibited without the written permission of MarketResearch.com or IRI. This material is reprinted with permission. July 2006 ©MarketResearch.com, Inc. Page 19 Chapter 2:The Market Condoms in the U.S. Factors Influencing Growth The Pleasure Principle In 2005, around two-thirds of the condoms on the market were pleasure-oriented products.15 A unique product to hit the condom market in recent times is the vibrating condom. Designed to arouse the clitoris as well as the male genitals, the ring may be switched on or off, and used multiple times, lasting generally for around 20 minutes. Select brands include Trojan Vibrating Ring, Durex Vibe, Lifestyles 4Play Vibe, The Pleasuring, and Merit Joy Vibrating Ring. Another unique and entertaining product concept is the glow in the dark condom. After 30 seconds of light exposure, the phosphorus pigments cause the condom to glow. Although glow in the dark condoms are not an entirely new concept, the Night Light brand marketed by Global Protection, Inc. is the first one to be FDA-approved as a reliable prevention for sexually transmitted diseases and unwanted pregnancies. Earlier versions have been mere sex accessories with no real use as contraceptives. The Night Light condom has non-toxic phosphorous pigments between two layers of latex. These products reflect the trend toward pleasure-oriented condoms and accessories. Branching out further, some marketers are selling condom kits that include condoms with pleasure enhancing accessories. In April 2005, Ansell Healthcare Inc. introduced the 4Play series comprising five condom kits: 4Play Touch, 4Play Taste, 4Play Tease, 4Play Vibe, and the 4 Play Ignite. These kits include condoms and accessories, such as fruit-scented warming massage oils, fruity edible body paints, edible vanilla dust, feather ticklers, vibrating rings, body glitter lotions and silky warming lubricants. A similar product is offered by Church & Dwight Co. under its Trojan Elexa brand for women. The Elexa offers condom kits with accessories such as vibrating rings and freshening cloths. 15 Chain Drug Review, Volume: 28, Number: 4, February 27, 2006 Page 20 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. The Serious Side Apart from pleasure-oriented products, some condom manufacturers are addressing more serious intimacy issues such as premature ejaculation and impotency with condoms lined with climax control lubricants on the inner side, designed to delay ejaculation and sustain erections over longer periods. Climax control lubricants generally contain benzocaine – the active ingredient in common analgesics. Benzocaine desensitizes the penis, resulting in delayed ejaculation and longer lasting erections. Trojan Extended Pleasure Lubricated Condoms, Durex Performax Condoms, and Lifestyles Lasting Pleasure Condoms are all condoms featuring climax delaying lubricants. Condom slippage, breakage and leakage are major concerns playing on the condom user’s mind. The primary reason for condom failure is incorrect use and incorrect size or improper fit of the condom. Most condom marketers try to educate the consumers on correct condom use by way of instructions on the condom pack. However, the innovative New York City-based marketer and condom retailer Condomania has done the marketplace one better with a line of condoms in 55 sizes. Branded “TheyFit,” these condoms are available in 55 combinations of 14 different lengths and 11 different widths. Changes in Consumer Attitudes Although use of condoms is a key determinant of unintended pregnancies, effective family planning and sexually transmitted diseases, according to the SMRB, NCS (National Consumer Survey) Fall 2005 Survey, only 15.1% of U.S. adults use condoms. This is set to increase as consumer attitudes toward sex and condom use become more relaxed and open to discussion. The American Sex Survey, released by ABC News in October 2004, charts out the attitudes of consumers toward sex and other topics related to sex in the U.S. The survey indicates that 51% respondents discussed fantasies, 42% considered themselves sexually adventurous, 29% had sex on the first date, and 15% men paid for sex. Among people who were married or living in a committed relationship, 16% admitted to cheating on their partners, 14% indulged in a threesome and 12% had sex at work. The respondents first had sex at an average age of 18 (17 for men, 18 for women). The older adult respondents reported an average age of 19 for first-time sex, while adults below age 25 reported July 2006 ©MarketResearch.com, Inc. Page 21 Chapter 2:The Market Condoms in the U.S. on an average of 16 years old when they first had sex. More women (50%) than men (37%) felt that they were too young when they first had sex. Be it premarital sex, homosexuality or discussing fantasies, the younger adults were sexually more progressive. In the age group of 18 to 29, 71% respondents discussed fantasies, 55% felt they were sexually adventurous, 71% said there was nothing inappropriate about premarital sex and 65% said homosexuality was not inappropriate. These figures decrease as the age of respondents goes up. In the age group of 30 to 39, 55% respondents discussed fantasies, 46% felt they were sexually adventurous, 66% said there was nothing inappropriate about premarital sex and 55% said homosexuality was not inappropriate.16 These relaxed attitudes regarding sex, especially among young adults, have led to a more serious situation where Americans are participating in risky sexual behavior. According to an online survey of 56,000 people by MSNBC.com and Zogby International in October 2005, only 39% of adults ask whether a new partner is infected with HIV. Charles Ebel, vice president of health program resources at the American Social Health Association, explains, “Being able to talk about it is a huge problem. At the heart of it is the fear of rejection; it’s the fear of being labeled undesirable.” Apparently the stigma surrounding sexual infections results in many people being too afraid to be straightforward about their sexual history. According to the survey, 66% respondents have had sex without protection under the influence of alcohol. While this data is disturbing, it nonetheless is an opportunity for condom marketers to get more involved in positive promotions for safe sex practices. Abstinence versus Contraception Government supported global and local sexual education and programs are a hot topic in the U.S. Government programs of late have been focused on a perceived ideal of sexual abstinence in preventing pregnancy and disease, rather than dealing with the reality that runs counter to that ideal. In 2003, when the U.S. global AIDS bill was passed, Congress added a requirement that one-third of all AIDS prevention funds be spent on abstinence programs.17 While the Government Accountability Office (GAO), the Global AIDS Alliance and the U.S. Government debate over the expediency of promoting abstinence before marriage, and the possible ramifications of 16 abc News Primetime Live Poll: The American Sex Survey, October 21, 2004. OpEd News, April 12, 2006 17 Page 22 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. neglecting contraception techniques such as condom use, the negative impact of the policy in the global fight against AIDS is already surfacing. A report from the Government Accountability Office states that the legislation is causing severe difficulties in the execution of AIDS programs in the 15 countries receiving aid through the President’s Emergency Plan for AIDS Relief (PEPFAR). These programs are cutting down spending on services for prevention of HIV transmission from mother to child and condom promotion to prioritize sexual abstinence before marriage and meet the spending targets set by the U.S. Government on abstinence programs.18 At home, the U.S. government is pushing for school sex education programs to focus on abstinence. The abstinence-only sex education program as drafted under the Bush administration has its supporters as well as critics. According to the Kennedy School National Survey on Sex Education,19 15% of Americans believe that schools should teach Abstinence-Only-UntilMarriage Programs and not provide information on how to use or even purchase condoms and other contraceptives. However, in actuality, 30% of public middle schools and high schools that taught sex education taught abstinence-only, 47% taught abstinence-plus and 20% taught a more comprehensive program. While the debate over abstinence versus contraception continues, the focus on abstinence-only programs in schools means young people could be at a higher risk of contracting AIDS, STDs or unwanted pregnancies due to lack of knowledge about safe sex and contraceptive use. Female Condom Little Affect on Male Condom Market The FC Female Condom – the sole female condom brand in the U.S., distributed by Californiabased Mayer Laboratories, Inc. – has been less successful in the U.S. as compared to some developing countries. The IRI-tracked sales of female condoms in the U.S. through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart fell by 19% in 2004, further declining to 22% in 2005 to reach $266,844. The female condom is known to offer less protection from pregnancies as compared to male condoms, and has certain drawbacks that make it uncomfortable to use.20 Protection against sexually transmitted diseases could also be inferior 18 AIDSMap, Thursday, April 13, 2006 The survey, conducted by Princeton Survey Research Associates from September to October 2003, was based on two nationwide telephone surveys conducted among a random sample of 1,759 respondents 18 years of age or older who accurately represent the national population. 20 Health Behavior News Service, Center for the Advancement of Health, February 14, 2006 19 July 2006 ©MarketResearch.com, Inc. Page 23 Chapter 2:The Market Condoms in the U.S. as these condoms are made of polyurethane, which is known to have a higher failure rate as compared to latex condoms.21 Marketing Male Condoms to Women Even though the market for female condoms looks set to go bust, the female consumer is emerging as an important buyer of male condoms. In order to reach female consumers, marketers are offering female-focused products that enhance the condom shopping experience and sex experience for women. Marketers are modifying packaging and brand positioning to make these products more appealing to women. In September 2005, Church & Dwight Co. introduced the Elexa line of sexual well-being products under the Trojan brand that include freshening cloths, vibrating ring, condoms, and intimacy gels. The packaging is discreet and does not bear any sexually suggestive pictures that may embarrass the female shopper. Elexa products are located in the feminine care aisle for the same reason. The principal display package bears the words “a woman’s perspective by Trojan.” The name Elexa is derived from the Greek goddess Alexa - the “protector of mankind.” Discussions of Potential Change in Catholic Doctrine The Vatican has always promoted abstinence and denounced the use of condoms and other contraceptives. However, in 2005 AIDS claimed the lives of three million people worldwide and infected five million more. The AIDS crisis is spiraling out of control. The Vatican is feeling pressure to reconsider its stance regarding condom use. However, unwilling to shift from its blanket ban on contraception, in fall 2005 Cardinal Alfonso Lopez Trujillo, President of the Vatican’s Pontifical Council for the Family, said that condoms actually help spread AIDS. The Church felt that condoms give a false sense of security and do not guarantee protection from AIDS and that complete abstinence was the only certain way of fighting the AIDS epidemic. In defiance of this Vatican policy, the Catholics for a Free Choice, a maverick group, began a pro-condom advertising campaign with slogans such as “Abstinence has a high failure rate.” The $300,000 advertising effort, which included spots on the Washington, D.C., Metro on World 21 U.S. Food and Drug Administration, New Ways to Prevent and Treat AIDS (FDA Consumer Reprint), July 12, 2004 Page 24 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. AIDS Day, soon spread to U.S. newspapers and magazines, outlets in South Africa, the Philippines and other developing countries.22 The World Health Organization also responded by calling the cardinal Trujillo’s statements incorrect and dangerous. The protests finally led the Vatican to conduct a study on whether it could permit condoms to battle AIDS. The project had a very narrow scope and considered the use of condoms only among married Roman Catholic couples in which one partner has the virus. Many scholars, health professionals and others insist that condom use as a defense against HIV infection, under specific circumstances, does not contradict the Catholic ban on artificial birth control. It is unlikely that the Vatican will reverse its opposition to contraception completely, but the Vatican’s official announcement regarding condom use under the conditions specified for the study is eagerly awaited. According to Rev. James Keenan, a moral theologian at Boston College, “It is still not clear if the Vatican will eventually say anything on the subject.” Cardinal Javier Lozano Barragan, who heads the Vatican’s office for health care, only confirmed that there was a “dialogue” under way as part of the study which is a broad examination of bioethical issues. There have been no official announcements of any results of the study but Milan Cardinal Carlo Maria Martini, said that condoms were the “lesser evil” in combating AIDS.23 22 23 Newsweek, December 15, 2005 AP Worldstream, May 4, 2006. July 2006 ©MarketResearch.com, Inc. Page 25 Chapter 2:The Market Condoms in the U.S. Outlook With continued innovation and growth of a more open-minded consumer base, the U.S. market for condoms is expected to reach $444.3 million by 2010. Packaged Facts estimates the market to grow at a CAGR of 2.1% from 2006 to 2010. Figure 2-3 Projected U.S. Retail Sales of Condoms, 2006-2010 (in million $) 450 444.33 435.59 430 425.68 Sales ($ Million) 416.26 410 408.98 390 370 350 2006 2007 2008 2009 2010 Source: Packaged Facts Page 26 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. FDA Regulation Federal Food and Drug Administration (FDA) regulations extend to the marketing and selling of condoms by condom-makers in the U.S. The FDA classifies and regulates condoms as Class II medical devices. Congress brought Class II medical devices under the Safe Medical Devices Act of 1990, subjecting it to optional special controls established by the FDA. However, the FDA has not specified special control measures regarding condoms until now. FDA regulations comprise two regulatory systems: 1. Pre-market controls 2. Post-market controls While pre-market controls regulate condoms when they are introduced in the market and are based on the 510(k) pre-market notification procedures, post-market controls require compliance with the Quality System Regulation. Pre-marketing Notification Under Section 510(K) The Medical Device Amendments of 1976 authorizes the FDA to control the market introduction of all medical devices. One of the ways to legally market a new device is to obtain an order that accepts the new device as “substantially equivalent” to a device previously marketed. To obtain such an order, the manufacturer or importer of the new medical device must provide pre-market notification (PMN) to the FDA under section 510(k) of the act with relevant information that will enable the FDA to determine whether the item is “substantially equivalent” to a previously legally marketed device.24 Condoms are Class II devices not exempted from section 510(k) requirements. Thus, the PMN must be submitted to the FDA before introducing a new male condom in the market or a substantially modified condom existing in the market. Most new latex condoms meet the “substantially equivalent” requirement with respect to condoms that are already in the market, and, hence approved through the “substantially equivalent” classification. 24 National Institute of Allergy and Infectious Diseases, National Institutes of Health, Department of Health and Human Services July 2006 ©MarketResearch.com, Inc. Page 27 Chapter 2:The Market Condoms in the U.S. Abbreviated 510(k) Requirements The FDA also allows abbreviated submissions for condom PMN. Conforming to recognized consensus standards that essentially assure the FDA of the safety and effectiveness of the condoms could achieve this. A 510(k) PMN that states the device to be compliant with the recognized consensus standards will, in most cases, not require an FDA review of the actual test data for those aspects of the product covered in the standards.25 However, compliance with consensus standards is not always a sufficient base for regulatory approval, and the FDA retains the right to seek the actual test data. This usually occurs usually in cases where the new device or intended use of the device may raise safety and effectiveness concerns left unaddressed by consensus standards. Consensus standards26 will also not be adequate for marketing approval in cases where the regulations are more rigorous than consensus standards. A list of approved consensus standards is posted on the FDA website (http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfStandards/search.cfm) and manufacturers can make a declaration of conformity to any of the standards in the list. In case of condoms, the FDA-drafted guidance document for a PMN refers to the ASTM (American Society for Testing and Materials) voluntary consensus standard for condoms and the ISO (International Standards Organization) voluntary consensus standard for biological evaluation of medical devices. A producer can use the guidance document to show compliance with these consensus standards for latex condoms for obtaining “substantial equivalent” status from the FDA. 25 U.S. Food and Drug Administration Consensus Standards are standards recognized by the FDA for use in evaluating medical devices before they are approved for market entry. 26 Page 28 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. Quality System Regulation of Condoms (Post-Market Regulatory Control) The Quality System Regulation is a post-market regulatory control applying to condoms that are already being sold in the market. The regulation requires condom manufacturers to comply with desirable manufacturing practices and adhere to the following standards: 1. Manufacturers must use quality assurance standards for new condom designs. 2. Manufacturers must use valid processes in condom manufacture, so that they conform to design specifications. 3. Manufacturers must apply strict product release criteria to condoms.27 27 www.niaid.nih.gov/dmid/stds/condomreport July 2006 ©MarketResearch.com, Inc. Page 29 Chapter 2:The Market Condoms in the U.S. Labeling Labeling requirements for latex condoms are contained in the following two regulations: 1. User labeling for latex condoms (21 CFR 801.435) 2. User labeling for devices that contain natural rubber (21 CFR 801.437) Additionally, condom manufacturers must ensure that their devices meet the general labeling requirements for medical devices described in 21 CFR Part 801.28 Existing labeling requirements for latex condoms include the following: Expiration Date To address the risk of condom deterioration due to product aging, the retail and primary condom package (individual foil) must include the expiration date that is no later than five years from the date of product packaging. This expiration date must be supplemented by shelf life data compiled by the condom manufacturer. Caution Regarding Natural Rubber Latex and Allergic Reactions Devices containing natural rubber latex pose a significant health risk to some individuals. To address this risk, the packaging of latex condoms and all other devices containing natural rubber latex that come in contact with the human body are required to display the following statement in bold print: “Caution: This Product Contains Natural Rubber Latex Which May Cause Allergic Reactions.” This statement must appear on the principal display panel of the packaging and the primary condom package. In condom packaging, the “principal display panel” is generally the external box and the “primary condom package” is generally a foil. General Labeling Requirements for Medical Devices Condoms are subject to the general labeling provisions described in 21 CFR part 801, Subpart A. Moreover, condoms are OTC devices and are, therefore, subject to the requirements described in 21 CFR Part 801, Subpart C for OTC devices. 28 U.S. Food and Drug Administration Page 30 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. The labeling on latex condoms must include adequate directions for use to ensure their correct usage. An example of acceptable directions for use for latex condoms can be found at the FDA website (http://www.fda.gov/cdrh/dsma/470.pdf.). Labeling Recommendations Apart from the existing labeling requirements, a Class II special controls guidance document comprising recommendations for labeling of male condoms made of natural rubber latex has been drafted (not for implementation).29 Recommendations in the draft include indication of the level(s) of packaging and the place on the packaging where the labeling should appear. It also provides examples of labeling statements that adequately address the following issues: Pregnancy Both the principal display panel of the retail package and the primary condom package should indicate contraception as one of the principal intended actions of the latex condom. The package insert should include similar information titled “Important information.” The package insert should also contain a contraceptive effectiveness table comparing pregnancy rates resulting from condom use with pregnancy rates for other barrier contraceptive methods.30 A sample table published in the “Guidance for Industry – Uniform Contraceptive Labeling (July 23, 1998)” available at (http://www.fda.gov/cdrh/ode/contrlab.html) is recommended for this purpose. Sexually Transmitted Diseases (STDs) The principal display panel, the package insert, and the primary condom package should also indicate protection from Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS) as one of the principal intended actions of the latex condom. The two principal intended uses may be combined into one statement: “When used correctly every time you have sex, latex condoms greatly reduce, but do not eliminate, the risk of pregnancy and the risk of catching or spreading HIV, the virus that causes AIDS.” 29 FDA, Class II Special Controls Guidance Document: Labeling for Male Condoms Made of Natural Rubber Latex, November 14, 2005 30 FDA, Office of Women’s Health, Pregnancy Rates for Birth Control Devices July 2006 ©MarketResearch.com, Inc. Page 31 Chapter 2:The Market Condoms in the U.S. The principal display panel and package insert of condoms should indicate that various STDs can spread through contact with genital organs or genital fluids, and that latex condoms can help prevent the transmission of STDs. The package insert should include specific examples of diseases, such as chlamydia and gonorrhea, which spread in this manner. The retail package labeling should also explain that other types of sexual contact might also spread some STDs. The package insert should indicate that condoms provide less protection for certain STDs, including genital herpes and human papalloma virus (HPV) infection that can also be spread by contact with infected skin outside the area covered by a condom. The statements recommended for the package insert could be combined into one package insert statement that would address all the applicable identified risks of pregnancies and STDs. This should be followed by a statement that provides the user with additional sources of information on STDs, such as a health care provider or other information provided by government public health agencies. Incorrect or Inconsistent Use The package insert should include appropriate precautions regarding the use of condoms, such as: • Use a new condom every time you have sexual intercourse or other acts between partners that involve contact with the penis. • Do not reuse condoms. • Store condoms in a cool, dry place. • If the rubber material is sticky, brittle, or obviously damaged, do not use the condom. • If a lubricant is wanted, use water-based lubricants such as [name of lubricant]. • Do not use oil-based lubricants such as those made with petroleum jelly (e.g., Vaseline), mineral oil, vegetable oil, or cold cream, as these may damage the condom. Use of N-9 in Condoms with Spermicidal Lubricant Special control labeling recommendations apply to latex condoms classified under 21 CFR 884.5310 and containing a lubricant with N-9. Since 1982, the labeling on condoms with N-9 was Page 32 ©MarketResearch.com, Inc. July 2006 Chapter 2: The Market Condoms in the U.S. required to include a statement on the effectiveness of the contraceptive. Subsequently, the potential health hazards of N-9 under some circumstances have become known. FDA recommends appropriate cautionary statements for latex condoms containing N-9 and when this guidance becomes effective as a special control, it will supersede the contraceptive effectiveness statement. Limited Benefits of N-9 The retail package of latex condoms with N-9 should include a statement indicating that the lubricant on the condom contains N-9 and kills sperm, but the effectiveness of pregnancy protection contributed by N-9 has not been calculated. N-9 Does Not Protect Against HIV/AIDS or Other Sexually Transmitted Diseases The retail package should state that N-9, which is present in the product, does not provide protection from HIV/AIDS or other STDs.31 Risks of N-9 Irritation and Transmission of HIV/AIDS The retail package should include a risk statement prefaced by the words “Nonoxynol-9 Warning.” The statement should inform users of the risk of vaginal irritation and possible increased risk of transmission of HIV/AIDS from an infected partner due to the presence of N-9. The retail package should also inform users that even if one of the partners has HIV/AIDS or if the infection status of one is unknown, latex condoms without N-9 should be used. Risks of Anal Use of Condoms with N-9 The retail package of latex condoms containing N-9 should include a statement, “Nonoxynol-9 Warning,” informing users that N-9 can irritate the rectum and condoms with N-9 should not be used for anal sex. This statement may appear on a panel other than the principal display panel. Where package space permits, the FDA encourages a combined N-9 statement such as: “The lubricant on this condom contains the spermicide nonoxynol-9 (N-9), which kills sperm; however, the amount of additional pregnancy protection provided by the N-9 has not been measured. The N-9 lubricant on this condom does not protect against HIV/AIDS or other sexually transmitted diseases.” 31 WHO/CONRAD Technical Consultation on Nonoxynol-9, June 25, 2002 July 2006 ©MarketResearch.com, Inc. Page 33 Chapter 2:The Market Condoms in the U.S. In case the space on the primary condom package is insufficient, the primary package may include a statement referring the user to other parts of the package or package insert for detailed information. Even though this guidance is not meant for condoms made of materials other than latex, FDA recommends that manufacturers of synthetic condoms using N-9 should also follow all the labeling suggestions related to N-9. FDA also advocates manufacturers of natural skin condoms with N-9 to follow all the N-9 labeling suggestions except the anal use warning. Page 34 ©MarketResearch.com, Inc. July 2006 Chapter 3: The Marketers Chapter 3 Condoms in the U.S. The Marketers Top Condom Marketers The trend toward pleasure-enhancing products and accessories has added a new dynamism to the mature U.S. condoms market, providing marketers with a new opportunity to push sales, as evidenced by the 2.8% market growth (including Wal-Mart) in 2005. This compares to a 1.5% growth in the market in the previous year. Church & Dwight Co., Inc. New Jersey-based Church & Dwight Co., Inc. was the market leader in 2005, with sales worth $169.8 million and a market share of 71%. With diverse and popular brands such as Trojan, Elexa, and Naturalamb in its product line, Church & Dwight Co., Inc.’s domination of the market is not surprising. [Table 3-1] SSL Americas, Inc. With a market share of 15.3% in 2005, Georgia-based SSL Americas, Inc. has seen steady growth in sales—a CAGR of 2.9% from 2001 to 2005 to reach sales of $36.6 million in 2005. The second largest condom marketer in the U.S., SSL Americas, Inc. still has a very small market share in comparison to Church & Dwight Co., Inc. Ansell Healthcare, Inc. Except for New Jersey-based Ansell Healthcare, Inc., the top five marketers in the U.S. condoms market recorded growth in sales in 2005. Ansell Healthcare, Inc. has seen declining market shares of its Lifestyles brand since 2002, with sales falling from $31.4 million in 2002 to $27.8 million in 2005. [Table 3-1] July 2006 ©MarketResearch.com, Inc. Page 35 Chapter 3: The Marketers Condoms in the U.S. Medtech Products Limited Medtech Products Limited develops and manufactures innovative male and female barrier contraceptives at a FDA-approved manufacturing facility in India. The company carved out a niche in the U.S. market with some innovative designs. Indian physician Dr. AVK Reddy, a.k.a. ‘the Leonardo da Vinci of condoms’, created these condoms. The epithet first appeared in a quote in an April 11, 1999 New York Times article, which named him so in appreciation of his innovative Pleasure Plus condom which had a pouch at the head of the condom. The extra folds of the pouch moved against the underbelly of the penis head, creating a friction against the sensitive nerve endings in that area. Boston-based Global Protection Corp. bought the rights to the Pleasure Plus condom and reintroduced the Pleasure Plus condom in 1999. Dr. Reddy then introduced a new spiral shaped, spring action condom called the Inspiral condom, which hit stores in June 1999.32 Designs that currently sell under the Medtech Products Limited banner include the Inspiral, ND 04 (a sinusoidal design in place of a spiral), Double Spiral, Multi Spiral, and the Spring Spiral. The company also makes a latex female condom called the VA-Feminine condom (approved for distribution in India and Europe), which awaits FDA approval. This condom contains a soft sponge that holds it in place inside the vagina and has a V-shaped external rim. Medtech Products Ltd., and Intellx, Inc. (distributor of Inspiral, headquartered in Michigan), introduced it in Germany and Spain in 2002, as the first female condom made of latex.33 Constant innovation and sharp focus on a niche market that seeks condoms that are more of pleasure toys/products has helped the company grow. IRI-tracked retail sales of Medtech Products Limited increased from $63 thousand in 2001 to $1.3 million in 2005. Mayer Laboratories, Inc. California-based Mayer Laboratories, Inc., built its reputation in the U.S. with its Kimono brand of male condoms and its customer-centric approach to the market. The company launched the Kimono brand of condoms in 1987 and marketed it to women, as opposed to the industry norm at the time and in stark contrast to some of the male-centered brands like Sheik, Ramses, and Trojan dominating the market. Mayer was the first condom producer to air television advertisements specifically targeted toward gay men, and to launch the first large condom in the U.S., MAXX, in 1988. In 1991, Mayer launched the Kimono 32 33 Rediff On The Net, News, U.S. Edition, June 6, 1999 Information & Knowledge for Optimal Health (INFO) Project, (www.infoforhealth.org) Page 36 ©MarketResearch.com, Inc. July 2006 Chapter 3: The Marketers Condoms in the U.S. MicroThin, which effectively created a new segment in the condom market for ultra thin condoms. In 2002, Mayer became the first condom company in the U.S. to discontinue production of all condoms coated with the Nonoxynol-9 (N-9) spermicide in response to newly discovered public health risks associated with N-9.34 Global Protection Corp. Massachusetts-based Global Protection Corp., manufacturer of the Pleasure Plus, Night Light, Custom Condoms, ONE condom, Seasonal/Fun Condoms, and Atlas condom brands, was awarded Inc. Magazine/ICIC’s Inner City 100 honor, in recognition of it being one of the fastest growing inner-city businesses in the U.S. in 2002 and 2003. The company achieved 137% growth from 1997 to 2001 to register 2001 revenues in excess of $2.3 million.35 However, condom sales at Global Protection Corp. have been falling recently; IRItracked sales of condoms fell from $1 million in 2003 to $0.9 million in 2005. Even the February 14, 2005, launch of its newest product line, ONE condom, with a new concept in packaging and brand image failed to revive sagging sales.36 Okamoto U.S.A., Inc. Okamoto U.S.A., Inc., based in Connecticut, is a wholly owned subsidiary of Japan’s Okamoto Industries, Inc., and made its mark in the U.S. condoms market with very thin condoms such as the Crown and Beyond Seven brands. However, with almost every other marketer offering similar products, Okamoto U.S.A., Inc. does not have any unique products on the shelf. IRItracked sales of Okamoto U.S.A., Inc. fell at a CAGR of 14.8% from 2001 to 2005 to reach $0.8 million. 34 Mayer Laboratories, Inc. Company Website (www.mayerlabs.com) Global Protection Corp., Press Release, April 30, 2003. 36 ONE Condom, Press Release, February 14, 2005. 35 July 2006 ©MarketResearch.com, Inc. Page 37 Chapter 3: The Marketers Condoms in the U.S. Table 3-1 IRI-Tracked Retail Sales of Top Condom Marketers, 2001-2005 (in million $) 2001 2002 2003 2004 2005 CAGR 2001-2005 (in %) $143.63 $152.58 $159.52 $166.09 $169.76 4.27% SSL Americas, Inc. 32.72 32.14 33.12 33.34 36.61 2.85 Ansell Healthcare, Inc. 29.59 31.37 30.65 28.09 27.82 -1.53 Medtech Products Limited 0.06 0.64 0.80 1.19 1.27 111.91 Mayer Laboratories, Inc. 0.71 0.91 0.86 0.93 1.09 11.10 Global Protection Corp. 0.32 0.66 1.02 1.00 0.94 31.17 Okamoto USA, Inc. 1.56 1.51 1.25 0.96 0.82 -14.80 Private Label 0.19 0.19 0.18 0.21 0.29 10.90 All Others 4.96 4.16 1.68 0.75 0.40 -46.62 $213.74 $224.15 $229.09 $232.57 $239.00 2.83% Marketer Church & Dwight Co., Inc. Total Note: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. Page 38 ©MarketResearch.com, Inc. July 2006 Chapter 3: The Marketers Condoms in the U.S. Marketer Performance Analysis The U.S. domestic condoms market is highly concentrated with a limited number of players, who compete and differentiate their products based on quality, innovation, and price. The three largest condom marketers in the U.S— Church & Dwight Co., Inc.; SSL Americas, Inc.; and Ansell Healthcare, Inc.— collectively accounted for 98% of total IRI-tracked retail sales ($239 million) of condoms in the U.S. in 2005. [See Table 3-1] Figure 3-1 IRI-Tracked Retail Market Shares of Top U.S. Condom Marketers, 2005 (%) Ansell Healthcare 11.64% All Others 2.01% SSL Americas, Inc. 15.32% Church & Dwight Co., Inc. 71.03% Note: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. July 2006 ©MarketResearch.com, Inc. Page 39 Chapter 3: The Marketers Condoms in the U.S. Figure 3-2 IRI-Tracked Retail Market Shares of Top U.S. Condom Marketers, 2001 versus 2005 (%) 80 2001 71.03 2005 67.20 70 60 50 40 30 20 15.31 15.32 13.84 11.64 10 2.32 0.17 0 Church & Dwight Co., Inc. SSL Americas, Inc. Ansell Healthcare All Others Note 1: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Note 2: All Others include Mayer Laboratories, Inc., Medtech Products Limited, Global Protection Corp., Okamoto USA, Inc., Private Label, and others. Source: IRI InfoScan Review; Packaged Facts. This material is reprinted with permission. Church & Dwight Co., Inc. As per IRI-tracked retail market shares of the top three marketers over the 2001-2005 period, only Church & Dwight Co., Inc., the largest condom marketer in the U.S., managed to expand its market share (by more than three percentage points) and now commands 71% of the U.S. condom market. The formula of combining protection with pleasure has proved successful for the Trojan brand. In 2005, products such as the Trojan Extended Pleasure, Her Pleasure, Twisted Pleasure, Shared Pleasure (introduced in 2004), Trojan Mint Tingle (flavored lubricated condom introduced in 2005), and Magnum with Warm Sensation lubricant (introduced in 2004) certainly have helped Church & Dwight retain its market domination. Page 40 ©MarketResearch.com, Inc. July 2006 Chapter 3: The Marketers Condoms in the U.S. In 2005, the company launched Elexa, a premium line of sexual health products for women that includes condoms, moist wipes, intimacy gels, and other accessories. The product is located in the feminine care aisle of retail stores. Church & Dwight intends to further expand the Trojan product line in 2006 with several new products, including a new ultra-thin condom.37 SSL Americas, Inc. SSL Americas, Inc., which makes the Durex brand, saw no change in its 15.3% market share of the U.S. condom market over the 2001-2005 period. However, this does not mean that sales are stagnant, as the size of the overall U.S. market for condoms increased in that period. The company has manufactured condoms since 1929; its Durex brand commands a 29% share of the global branded condoms market.38 In the U.S., SSL Americas is the second largest condom marketer. The company also has the largest condom production capacity in the world, with manufacturing facilities in the U.S., U.K., Spain, China, India, and Thailand.39 According to CEO Garry Watts, the company prefers positioning Durex as a brand that provides safety and at the same time helps consumers live a happy, healthy and fulfilling sex life. Watts states that the strategy is to focus on three core elements of the Durex range: premium condom brands such as Pleasuremax and Performa, personal lubricants, and introduction of the Durex ‘Play’ range of vibrators. Apart from innovative product development, advertising has helped drive key markets.40 SSL’s advertising initiatives are mainly focused on the print and radio. The company spent $1.4 million on advertising Durex condos in 2005.41 For instance, the Durex Tingling Pleasure condom was first advertised in Maxim magazine in August 2005, while the Durex Warming Pleasure condom was advertised in FHM magazine in July 2005. 37 Church & Dwight Co., Inc., Annual Report 2005 SSL International plc, Annual Report 2005 39 Total Access Group (California based Total Access Group, Inc. helps community and non-profit organizations in education and protection efforts and enables these organizations to distribute more prevention materials at warehouse prices.) 40 SSL International plc, Annual Report 2005 41 TNS Media Intelligence, 2005 38 July 2006 ©MarketResearch.com, Inc. Page 41 Chapter 3: The Marketers Condoms in the U.S. Performance Analysis of the Top Condom Brands Trojan, Durex, and Lifestyles, the leading brands from the top three marketers, were predictably the top three condom brands in the U.S. in 2005. Of these, Trojan and Durex performed significantly well. Sales of Trojan increased 4.1% from $156.8 million in 2004 to $163.3 million in 2005. Sales of Durex increased 9.6% from $33.1 million in 2004 to $36.3 million in 2005. Lifestyles sales fell 2.4% in 2005, to reach $27.4 million. [Table 3-2] These three major brands have a variety of sub-brands. Trojan, Trojan Enz, Lifestyles, Trojan Magnum, and Durex Extra Sensitive were five of the largest selling condom brands in the U.S. in 2005. Trojan Magnum performed considerably well with 2005 sales increasing 20.8% over the previous year to $20.5 million. Although Trojan and Trojan Enz were the top performers, sales of these two brands declined in 2005, by 5.8% and 6.8%, respectively. [Table 3-3] Page 42 ©MarketResearch.com, Inc. July 2006 Chapter 3: The Marketers Condoms in the U.S. Figure 3-3 IRI-Tracked Retail Shares of the Top Condom Brands, 2005 (%) All Other Brands 1.95% Naturalamb 0.51% Kling Tite Naturalamb 2.04% Inspiral 0.53% Lifestyles 11.46% Trojan 68.33% Durex 15.18% Note 1: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Note 2: Trojan brand includes Trojan Enz, Trojan Magnum, Trojan Her Pleasure, Trojan Ultra Pleasure, Trojan Extended Pleasure, Trojan Plus 2, Trojan Twisted Pleasure, Trojan Supra, Trojan Ultra Thin, Trojan Her Pleasure Warm Sensations, Trojan Naturalube, Trojan Mint Tingle, Elexa, other Trojan male contraceptives. Note 3: Durex brand includes Durex Extra Sensitive, Other Durex, Durex Avanti, Durex Ultimate Feeling, Durex High Sensation, Durex Love, Durex Performax, Durex Intense Sensation, Durex Maximum, Durex Colors & Scents, Durex Play Sensations, Durex Pure Protection, and Avanti Super Thin Duron. Note 4: Lifestyles brand includes Lifestyles Ultra Sensitive, Lifestyles Natural Feeling, Lifestyles Discs, Lifestyles Xtra Pleasure, and other Lifestyles male contraceptives. Note 5: All Other Brands include Kimono, Pleasure Plus, Beyond Seven, Private Labels and others. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. July 2006 ©MarketResearch.com, Inc. Page 43 Chapter 3: The Marketers Condoms in the U.S. Table 3-2 IRI–Tracked Retail Sales of the Top Condom Brands (Consolidated by Parent Brand), 2001-2005 (in $ million) 2001 2002 2003 2004 2005 % Change 2004-2005 Trojan $130.33 $140.30 $148.76 $156.81 $163.30 4.14% Durex 29.87 30.93 32.42 33.11 36.27 9.56 Lifestyles 29.41 31.00 30.52 28.06 27.38 -2.44 Kling Tite Naturalamb 8.36 8.32 8.17 8.21 4.89 -40.43 Inspiral 0.06 0.64 0.80 1.19 1.27 6.54 Naturalamb 0.00 0.00 0.00 0.00 1.22 N/A Kimono 0.67 0.87 0.82 0.91 1.00 10.11 Pleasure Plus 0.32 0.57 0.76 0.98 0.92 -6.44 Beyond Seven 1.12 1.10 0.93 0.72 0.64 -11.93 Private Label 0.19 0.19 0.18 0.21 0.29 37.41 Other Brands 13.40 10.23 5.72 2.37 1.82 -23.29 $213.74 $224.15 $229.09 $232.57 $239.00 2.76% Brands Total Note 1: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Note 2: Trojan brand includes Trojan Enz, Trojan Magnum, Trojan Her Pleasure, Trojan Ultra Pleasure, Trojan Extended Pleasure, Trojan Plus 2, Trojan Twisted Pleasure, Trojan Supra, Trojan Ultra Thin, Trojan Her Pleasure Warm Sensations, Trojan Naturalube, Trojan Mint Tingle, Elexa, other Trojan male contraceptives. Note 3: Durex brand includes Durex Extra Sensitive, Other Durex, Durex Avanti, Durex Ultimate Feeling, Durex High Sensation, Durex Love, Durex Performax, Durex Intense Sensation, Durex Maximum, Durex Colors & Scents, Durex Play Sensations, Durex Pure Protection, and Avanti Super Thin Duron. Note 4: Lifestyles brand includes Lifestyles Ultra Sensitive, Lifestyles Natural Feeling, Lifestyles Discs, Lifestyles Xtra Pleasure, and other Lifestyles male contraceptives. Note 5: Kimono brand includes Kimono Plus, and other Kimono male contraceptives. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. Page 44 ©MarketResearch.com, Inc. July 2006 Chapter 3: The Marketers Condoms in the U.S. Table 3-3 IRI–Tracked Retail Sales of Top Condom Sub-Brands, 2001-2005 (in $ million) Brand 2001 2002 2003 2004 2005 % Change 2001-2005 Trojan $61.94 $62.77 $60.29 $58.67 $55.30 -5.75% Trojan Enz 40.12 39.38 39.13 37.85 35.29 -6.76 Lifestyles 24.55 23.63 21.98 20.99 21.45 2.21 Trojan Magnum 8.29 11.34 13.65 16.93 20.45 20.83 Durex Extra Sensitive 14.76 15.00 15.46 13.09 13.23 1.10 Durex 0.00 0.00 0.60 6.55 10.67 62.83 Trojan Her Pleasure 0.00 3.10 8.32 9.81 10.33 5.32 Trojan Ultra Pleasure 10.30 10.53 10.25 9.50 8.72 -8.23 Trojan Extended Pleasure 2.97 5.88 6.65 7.10 7.09 -0.19 Trojan Plus 2 0.41 0.40 0.15 4.96 6.41 29.15 Trojan Twisted Pleasure 0.00 0.00 3.27 5.30 5.72 7.93 Kling Tite Naturalamb 8.36 8.32 8.17 8.21 4.89 -40.43 Trojan Supra 4.70 5.27 5.14 4.51 4.67 3.46 Lifestyles Ultra Sensitive 2.19 4.66 6.29 4.94 4.17 -15.54 Trojan Ultra Thin 1.58 1.63 1.91 2.18 3.20 46.98 Other Brands 33.57 32.24 27.83 21.98 27.41 24.68 $213.74 $224.15 $229.09 $232.57 $239.00 2.76% Total Note: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. Trojan Trojan Enz, a no frills, lubricated condom with a reservoir tip is one of the leading sellers from the Trojan stable, accounting for 21.6% of Trojan condom sales in the U.S. in 2005. Trojan Magnum has essentially the same features, but is larger than the standard size and tapered at the base for a secure fit. Trojan Her Pleasure condoms are available in two variants: one with a spermicidal lubricant, and another with a warming lubricant. Both variants have a prominent ribbing pattern of raised rings near the open end of the condom to provide additional sensations to the female partner during sexual intercourse. The success of Trojan Her Pleasure condoms marks a significant development in the condom market toward designing male condoms that are more pleasurable for the female partner. IRI-tracked sales of Trojan Her Pleasure condoms grew 5.3% in 2005 to reach $10.3 million. [Figure 3-4] July 2006 ©MarketResearch.com, Inc. Page 45 Chapter 3: The Marketers Condoms in the U.S. Figure 3-4 IRI-Tracked Retail Shares of the Trojan Brand of Condoms by Sub-Brand, 2005 (%) Trojan Supra 2.86% Other Trojan Brands 39.57% Trojan Twisted Pleasure 3.50% Trojan Plus 2 3.92% Trojan Extended Pleasure 4.34% Trojan Ultra Pleasure 5.34% Trojan Her Pleasure 6.33% Trojan Enz 21.61% Trojan Magnum 12.52% Note 1: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Note 2: Others Trojan Brands include Trojan Ultra Thin, Trojan Her Pleasure Warm Sensations, Trojan Naturalube, Trojan Mint Tingle, Trojan Elexa, and other Trojan brands. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. Durex Most of the condoms under the Durex banner are thinner than regular condoms or have some pleasure/sensation-enhancing features. Durex Extra Sensitive condoms claim to be 20% thinner than regular condoms, with less of a latex scent. These condoms accounted for 36.5% of total Durex condom sales in the U.S. in 2005. Durex Avanti is a colorless polyurethane condom that is thinner than latex. Meant for people allergic to latex, these condoms are also used by those who want the greater sensation offered by the thin polyurethane film. Durex Ultimate Feeling and Durex High Sensation are both ribbed. Durex Love is a thin condom with less of latex scent launched in 2004; the product accounted for 4.5% or $1.6 million of Durex condom sales in the U.S. in 2005. [Figure 3-5] Page 46 ©MarketResearch.com, Inc. July 2006 Chapter 3: The Marketers Condoms in the U.S. Figure 3-5 IRI-Tracked Retail Shares of the Durex Brand of Condoms by Sub-Brand, 2005 (%) Durex Maximum 1.43% Durex Intense Sensation 3.88% Durex Colors & Scents 1.07% Other Durex Brands 31.72% Durex Performax 4.40% Durex Love 4.54% Durex High Sensation 5.05% Durex Ultimate Feeling 5.25% Durex Avanti 6.19% Durex Extra Sensitive 36.47% Note 1: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Note 2: Other Durex brands include Durex Play Sensations, Durex Pure Protection, Avanti Super Thin Duron, and other Durex brands. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. Lifestyles Launched in 2002, Lifestyles Natural Feeling is a very thin condom with a lubricant that enhances sensation. The sub-brand represented only 3.8% of total U.S. sales of Lifestyles condoms in 2005. However, it is growing quickly and one of the few Lifestyles brand showing growth in 2005. IRItracked sales of Lifestyles Ultra Sensitive condoms (with a market share of 15.2%) fell 15.5% from $4.9 million in 2004 to $4.2 million in 2005. [Figure 3-6] July 2006 ©MarketResearch.com, Inc. Page 47 Chapter 3: The Marketers Condoms in the U.S. Figure 3-6 IRI-Tracked Retail Shares of the Lifestyles Brand of Condoms by Sub-Brand, 2005 (%) Lifestyles Xtra Pleasure 1.12% Other Lifestyles Brands 78.36% Lifestyles Discs 1.46% Lifestyles Natural Feeling 3.82% Lifestyles Ultra Sensitive 15.24% Note 1: Sales through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart. Source: Information Resources Inc. InfoScan Review: Packaged Facts. This material is reprinted with permission. Page 48 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Chapter 4 Condoms in the U.S. Competitive Profiles Church & Dwight Co., Inc. Company Type: Public (NYSE: CHD) President, CEO, and Director: James R. Craigie 2005 Sales: $1.7 billion 2005 Employees: 3,700 Fiscal Year-End: December Company Overview Founded in 1846, New Jersey-based Church & Dwight Co., Inc. is the world’s leading sodium bicarbonate producer. The company has three main business divisions: Consumer Domestic, Consumer International, and Specialty Products. The company markets a host of consumer and specialty products under the well-known Arm & Hammer and Trojan brands. The company operates facilities in the U.S. (Alabama, California, Illinois, Iowa, Missouri, New Jersey, Ohio, and Wyoming), Brazil, and the U.K. In 2005, the U.S. contributed to approximately 78% of the company’s net sales, a decline from 91% in 2003.42 In Fiscal 2001, Church & Dwight Co. entered the condoms market via the acquisition of CarterWallace and its famous brand, Trojan Condom, through Armkel, LLC which was a 50/50 limited partnership between Church & Dwight Co. and the private equity group, Kelso & Company.43 In 2004, Church & Dwight Co. further acquired Armkel’s 50% ownership interest. Condoms, which form a part of the company’s personal care products, accounted for approximately 29% of its total 42 43 Church & Dwight Co., Inc., 2005 Annual Report Church & Dwight Co., Inc., 2002 Annual Report July 2006 ©MarketResearch.com, Inc. Page 49 Chapter 4: Competitive Profiles Condoms in the U.S. sales in 2005. Trojan Condom continued its dominance in the U.S. condoms market in Fiscal 2005 with an approximate 70% share.44 Table 4-1 Church & Dwight Co., Inc.’s Family Planning and OTC Brands Brand Trojan Naturalamb Elexa Class-Act Product Line Intimacy Products & Condoms Condoms Feminine Intimacy Products & Condoms Condoms Source: Church & Dwight Co., Inc., 2005 Annual Report; www.elexabytrojan.com Performance Church & Dwight’s condom performance may seem impressive in absolute terms, as sales grew by 18.2% from 2001 to 2005. Closer scrutiny shows that sales of the company grew at a diminishing rate over that time. IRI-tracked sales of the company’s products have increased, but at a declining rate. However, the growth rate has been on par and sometimes better than the overall market growth rate, except in 2005 when market growth stood at 2.7% but company sales grew by 2.2%.45 [Figure 4-1] 44 45 Church & Dwight Co., Inc., 2005 Annual Report; Information Resource Inc. Information Resource Inc. Page 50 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-1 IRI-Tracked Sales of Church & Dwight’s Condoms, 2001-2005 (in million $) 169.76 170 166.09 165 159.52 Sales ($ Million) 160 155 152.58 150 145 143.63 140 135 130 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores and mass merchandisers other than Wal-Mart. Brand subtotals might not add up to marketer totals due to rounding and unspecified brand sales. Source: IRI July 2006 ©MarketResearch.com, Inc. Page 51 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-2 Sales of Church & Dwight Co., Inc. by Business Segments, 2005 (%) Specialty Products Division 9% Household Products 8% Consumer International 12% Personal Care Products 21% Consumer Domestic 50% Source: Church & Dwight Co., Inc., News Release, February 7, 2006 Company Snapshots • The company’s growth in the condoms segment for 2005 can be attributed to new product introductions. Church & Dwight introduced several new products in the Family Planning and OTC (FP & OTC) market (Elexa Premium Latex, Elexa Intimacy, Trojan Mint Tingle, and Trojan Magnum Large), which makes it the only company with more than two new product launches in this category for 2004-2005.46 The company also plans to launch several new products in 2006 under the Trojan line. In its 2005 annual report, the company declares that it would continue to be “the innovation leader with the introduction of Trojan ‘Ultra Thin’, the thinnest condom available in the market.”47 46 47 ProductScan Online Church & Dwight Co., Inc., 2005 Annual Report Page 52 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles • Condoms in the U.S. Church & Dwight may suffer a setback in FP & OTC category sales if it is confirmed that spermicide nonoxynol-9 (N-9), which is present in some of its condoms, may cause injury if used rectally.48 However, the FDA has still not reached a decision on whether special warnings should be placed on condom packs regarding the hazards of using N-9 coated condoms. • With respect to the FP & OTC category, another cause for concern for Church & Dwight is the price increase in the Trojan Condoms product line, due to the increase in prices of certain raw materials, packaging materials as well as certain commodity chemicals. The increase in the price may result in lower margins from the product line.49 • The company is the leading advertiser in the U.S. condoms market. In 2005, it launched the “Make a Difference” advertising campaign to promote safe sex and change the minds of non-users. The advertisement was aired during primetime, after 10 p.m., a feat not undertaken by any condom company since 1991.50 48 Church & Dwight Co., Inc., 2005 Annual Report Business Wire, May 10, 2005 50 FD (Fair Disclosure) Wire, August 11, 2005 49 July 2006 ©MarketResearch.com, Inc. Page 53 Chapter 4: Competitive Profiles Condoms in the U.S. SSL International plc Company Type: Public (London: SSL) Group Chief Executive, and Board Member: Garry Watts 2005 Sales: $861.9 million 2005 Employees: 5,000 Fiscal Year-End: March Company Overview In 1999, Seton Scholl Healthcare plc and London International Group plc merged to form London-based SSL International plc. The company has production hubs spread across the world, either wholly owned, joint ventures, or third party facilities. The company operates in 130 countries through 35 commercial offices and generates more than 75% of its sales from European markets while the North American market, which comprises the U.S. and Canada, contributes approximately 5.6% to the company’s annual turnover.51 The company operates in the U.S. thorough its subsidiary company, SSL Americas, Inc. SSL calls itself a ‘consumer healthcare brands company’ and has worldwide presence in varied consumer categories. SSL’s Durex brand of condoms accounts for 29% of the branded condoms market, making it the world’s leading condom brand.52 The company’s OTC segment consists of local brands such as Syndol, Meltus, and Full Marks, which are marketed in the U.K. The Scholl brand encompasses footwear and footcare products sold worldwide. The company markets mother and baby products under the brands Mister Baby and Proxima Baby for the Italian and Spanish markets, respectively. Its Sauber brand encompasses compression hosiery and deodorant products sold in Southern Europe.53 51 SSL International plc, 2005 Annual Report www.ssl-international.com 53 www.ssl-international.com 52 Page 54 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. Table 4-2 SSL Americas, Inc.’s Condom Brands Brand Product Line Durex Condoms Lubricants Play Vibrations Merchandise Source: www.durex.com Performance IRI-tracked sales of SSL’s condom sales stood at $36.6 million in 2005, a notable increase as compared to the$33.4 million recorded in 2004; condom sales have increased at a compound annual growth rate of 2.9% from 2001 to 2005. Figure 4-3 IRI-Tracked Sales of SSL Americas, Inc.’s Condoms, 2001-2005 (in million $) 36.61 37 36 Sales ($ Million) 35 34 33.12 33 33.34 32.72 32.14 32 31 30 29 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores and mass merchandisers other than Wal-Mart. Brand subtotals might not add up to marketer totals due to rounding and unspecified brand sales. Source: IRI July 2006 ©MarketResearch.com, Inc. Page 55 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-4 Sales of SSL International plc by Business Segments, 2005 (%) 2.23% 10.58% 34.27% 16.96% Branded condoms Footwear Footcare 20.01% 15.95% Locally Branded Consumer Other Consumer Third Party Supply Source: SSL International plc Annual Report 2005 Company Snapshots • In 2005, SSL completed divestment of its gloves and wound management business that was initiated in 2003, to provide undivided attention to the development of its consumer brands.54 • SSL has experienced growth in the consumer business largely due to concentrated efforts on Durex and Scholl footcare. Both brands demonstrated increases in sales by 4.4% and 5.3%, respectively, over 2004. • The company has introduced a variety of products over the past two years to complement its condoms product range. New product introductions in the U.S. condoms market in 2005 include Durex XXL and Tingling Pleasure Condoms. 54 www.ssl-international.com and SSL International plc, 2005 Annual Report Page 56 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles • Condoms in the U.S. SSL seeks to position Durex as the “sex expert” in the condoms segment through emphasis on the Play range of products, which includes vibrators and lubricants. This is due to increasing consumer knowledge of sexual intimacy products. While referring to the growth family planning category, Tim Cleary, SSL VP Sales said, “Much of this growth has come from consumer awareness of the sexual wellness/intimacy range of products, including condoms, lubricants and massage gels.”55 55 Chain Drug Review, February 27, 2006 July 2006 ©MarketResearch.com, Inc. Page 57 Chapter 4: Competitive Profiles Condoms in the U.S. Ansell Healthcare, Inc. Company Type: Public (NASDAQ: ANSL [ADR]) Managing Director and CEO: Douglas D. Tough 2005 Sales: $832.5 million 2005 Employees: 11,059 Fiscal Year-End: June Company Overview With a history dating back to the 19th century, Australian company Pacific Dunlop Limited adopted the new name, Ansell Limited, in 2002. The company manufactures and markets rubberbased products. The change in name also brought a change in strategic focus: Ansell Limited devoted its attention to the healthcare segment and divested non-core businesses.56 Ansell Limited has 18 manufacturing concerns in seven countries, including packaging and warehouse facilities in South Africa, the U.K., France, and Mexico. The condoms are manufactured at facilities in India, Sri Lanka, and Thailand.57 Ansell Limited’s businesses can be broadly divided into Professional Healthcare, Occupational Healthcare, and Consumer Healthcare. The Consumer Healthcare division contributed to approximately 16% of revenues, while the Americas’ regional sales were approximately 48% of total company sales in 2005.58 56 www.ansell.com www.ansell.com 58 Ansell Ltd., 2005 Financial Report 57 Page 58 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. Table 4-3 Ansell Healthcare, Inc.’s U.S. Consumer Healthcare Brands Brand Product Line LifeStyles Condoms, Lubricants, Pleasure Products 4Play by Lifestyles Condoms and pleasure enhancing accessories Warm Lovin' from LifeStyles Lubricant EXCITE Sensual Gel by LifeStyles Lubricant Sustain For Men by LifeStyles Male performance enhancer Source: www.lifestyles.com Performance After peaking in 2002, company sales dwindled from $31.4 million to $27.8 million in 2005. The company has faced tough competition in the U.S. condoms market. According to IRI, condom sales for Ansell Healthcare, Inc. declined steadily from 2002-2005. In the 2005, CEO Douglas D. Tough said, “Our consumer business was down slightly due to competition in the UK and US and the postponement of a major condom tender in Brazil.” July 2006 ©MarketResearch.com, Inc. Page 59 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-5 IRI-Tracked Sales of Ansell Healthcare, Inc.’s Condoms, 2001-2005 (in million $) 32 31.37 31 30.65 Sales ($ Million) 30 29.59 29 28.09 28 27.82 27 26 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores and mass merchandisers other than Wal-Mart. Brand subtotals might not add up to marketer totals due to rounding and unspecified brand sales. Source: IRI Page 60 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-6 Sales of Ansell Healthcare, Inc. by Business Segments, 2005 (%) Professional Business 34% Bid Condoms 4% Consumer Business 16% Retail Condoms 9% Household Gloves 3% Occupational Business 50% Source: Ansell Healthcare, Inc. Website Figure 4-7 Sales of Ansell Healthcare, Inc. by Geographies, 2005 (%) 14.87% 47.98% 37.15% Americas Europe Asia Pacific Source: Ansell Healthcare, Inc. Annual Review 2005 July 2006 ©MarketResearch.com, Inc. Page 61 Chapter 4: Competitive Profiles Condoms in the U.S. Company Snapshots • In 2005, Ansell Healthcare, Inc.’s Consumer Healthcare sales declined by 2%, due to “a difficult first half in the branded retail condoms market.”59 • The company planned to introduce new products in the U.S. condoms market in 2006. In the 2005, CEO Tough said, “Of note, we are branching out from the traditional condom focus to include new products, which expand our channels and range. We enjoyed good success with this strategy in Australia in 2005 and are poised for more upside in 2006.” • In keeping with its strategy to concentrate on the healthcare business with new product launches, Ansell introduced the 4Play range of condom kits in April 2005, and brand extensions Good Lovin’ and Warming Pleasure lubricated latex condoms in 2005.60 The company also launched ‘Sustain For Men by LifeStyles’ supplements and ‘Excite! pleasure balm for women’ in the Americas and Australia.61 • On the eve of National Women's Health Week in 2005, Ansell promised to donate up to one million condoms to the National Coalition of STD Directors (NCSD). Carol Carrozza, Vice President of Marketing, Consumer & Professional, Ansell Healthcare, Inc. for North America, said, “Women are up to five times more likely to become infected and suffer serious consequences. We need women to be aware of this information so that they can make informed decisions about their health.”62 • In June 2005, Ansell had donated 100,000 LifeStyles condoms to be available at participating shops, restaurants and bars in New York City to kick-off the “…‘I Know’ campaign to renew awareness of the HIV/AIDS battle among the city's youth.” The company also signed a contract in February 2005, for supplying LifeStyles condoms to approved New York City agencies for three subsequent years.63 59 Ansell Ltd., 2005 Financial Report ProductScan Online Securities and Exchange Commission, Ansell Ltd, 6-K, February 15, 2006 62 PR Newswire, May 11, 2006 63 OBGYN & Reproduction Week, June 6, 2005 60 61 Page 62 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles • Condoms in the U.S. Ansell Limited made inroads into the Chinese condom market through the acquisition of Wuhan Jissbon Sanitary Products Company Ltd., in 2006. CEO Tough reportedly said that this was “Ansell’s first acquisition since 2000 and is a meaningful move into the expanding Chinese consumer market and lays the groundwork for future growth.” The acquisition gave Ansell Limited unprecedented access to the highly lucrative Chinese retail market for condoms.64 64 th Ansell Limited, News Release, 30 March, 2006 July 2006 ©MarketResearch.com, Inc. Page 63 Chapter 4: Competitive Profiles Condoms in the U.S. Mayer Laboratories, Inc. Company Type: Private President: David Mayer Annual Sales: $1.1 million Total Employees: 12 Fiscal Year-End: December Company Overview David Mayer established California-based Mayer Laboratories, Inc. in 1986. The company is engaged in the marketing and distribution of products that cover the U.S. consumer healthcare market. Mayer Laboratories, Inc. has partnership manufacturing facilities in Japan, the U.K., Thailand, and the U.S. Table 4-4 Mayer Laboratories, Inc.’s Consumer Healthcare Brands Brand Product Line Kimono Condom FC Female Condoms Condom Aqua Lube Personal Lubricant Digitex Examination Gloves Source: www.mayerlabs.com Performance Mayer Laboratories, Inc.’s condom sales stood at $1.1 million in 2005, an improvement of 16.5% over 2004 sales of $0.9 million. In September 2002, the company ceased manufacturing products that contained spermicide Nonoxynol-9.This action might have affected sales in an adverse manner, which declined by 5.2% to touch $0.9 million in 2003. Page 64 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-8 IRI-Tracked Sales of Mayer Laboratories, Inc.’s Condoms, 2001-2005 (in million $) 1.09 Sales ($ Million) 1.00 0.80 0.91 0.93 0.86 0.71 0.60 0.40 0.20 0.00 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores and mass merchandisers other than Wal-Mart. Brand subtotals might not add up to marketer totals due to rounding and unspecified brand sales. Source: IRI Company Snapshots • In 2005, Mayer Laboratories placed ads on cable television. This was the first time the company advertised on television media since 1991, with a view to reach the niche audience of “educated female and metrosexual male.”65 • The company discontinued manufacturing products containing spermicide Nonoxynol -9 in 2002. In 2004, Mayer Laboratories, Inc. destroyed more than one million condoms that contained nonoxynol-9.66 These condoms included remnants from the company’s inventory as well as returns from the market. With respect to the use of spermicide N-9 in condoms, Dean Goishi, Director of California AIDS Clearinghouse, said, “But we now know that spermicidally-lubricated condoms create an unnecessary risk of HIV infection. From a moral and public health perspective, the solution is clear. Mayer Laboratories, Inc. has exerted leadership by discontinuing the manufacture of all condoms containing N-9. Other companies must follow that example.”67 65 Business and Industry Broadcasting & Cable, September 19, 2005 Mayer Laboratories Inc., Press Release, March 22, 2004 67 Mayer Laboratories Inc., Press Release, March 22, 2004 66 July 2006 ©MarketResearch.com, Inc. Page 65 Chapter 4: Competitive Profiles Condoms in the U.S. MedTech Products Limited Company Type: Public Limited Company (Closely Held) President: Ravi Reddy Annual Sales: $2.1 million68 Fiscal Year-End: March Company Overview Founded by Dr. AVK Reddy, India-based Medtech Products Limited develops and manufactures innovative male and female barrier contraceptives. The company operates a state-of-the-art manufacturing facility in Tamil Nadu, India, approved by the U.S. FDA. The company holds the proprietary rights for manufacturing the barrier contraceptives.69 Table 4-5 Medtech Products Limited’s Condom Brands Product Line Male Condoms Brands Inspiral Twisted Pleasure Yet to be named Female Condoms VA-Feminine Condom Description Single Spring design Double Spring design Condoms with Multi Spiral, Sinusoidal, and Spring Spiral designs A pouch in a tubular form that has a V frame at the open end. Source: www.medtechproducts.org Performance Medtech Products Limited’s sales enjoyed an upward trend through 2005. There was a sudden spurt in company sales in 2002, peaking to $638,000. Fashion and lifestyle magazines such as Cosmopolitan, Playboy, Glamour, Maxim, etc. that reviewed the Inspiral condoms as an innovative pleasure-enhancing condom may well have contributed to the popularity of the 68 69 Note: Provided by the company office based in India. www.medtechproducts.org Page 66 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. brand.70 Medtech registered a single digit growth rate in 2005 (6.5%), the lowest for the 20012005 period. Figure 4-9 IRI-Tracked Sales of Medtech Products Limited’s Condoms, 2001-2005 (in Thousand $) 1,400 1,271.31 1,193.23 1,200 Sales ($ Thousand) 1,000 804.44 800 637.61 600 400 200 63.04 0 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores and mass merchandisers other than Wal-Mart. Brand subtotals might not add up to marketer totals due to rounding and unspecified brand sales. Source: IRI Company Snapshots • Medtech’s Dr. AVK Reddy is credited with starting a revolution in the condom industry with the introduction of the Inspiral condoms, which have bold seashell-shaped spirals near the tip of the condom, which operate in a patented “spring-action.” In the U.S., Trojan and Intellex market the company’s condoms under the brand names Pleasure Twist and Inspiral, respectively.71 • In its February 2006 issue, Cargo Magazine, a trendy men’s monthly, rated Inspiral Condom as the best new condom shape.72 70 www.inspiral.tv www.inspiral.tv 72 The Cargo, February 2006 71 July 2006 ©MarketResearch.com, Inc. Page 67 Chapter 4: Competitive Profiles Condoms in the U.S. • Inspiral commercials feature real people describing why they like the product. Brian Osterberg, President of Intellx, which markets the Inspiral brand in the U.S., said, “We need young people talking about why Inspiral's patented spiral-action technology is the best thing since (children's TV character) Sponge Bob and discount airlines; not old ‘suits’ trying to advertise condoms with tepid advertising gimmicks about how good they are.”73 73 Brand Republic news wire, August 31, 2004 Page 68 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. Global Protection Corp. Company Type: Private President, Treasurer: Davin T. Wedel Annual Sales: $2.8 million Total Employees: 16 Company Overview Founded by Davin Wendel in 1988, Massachusetts-based Global Protection Corp. manufactures condoms and markets them through NGOs and healthcare agencies, retailers and private labels. The company has condom product lines that include novel products such as glow-in-the-dark condoms and condom Smiley Pops.74 Among its wide array of products, the firm holds patents for Pleasure Plus and Night Light condoms. Table 4-6 Global Protection Corp.’s Condom Products Product Line Brands Condoms Pleasure Plus, Night Light, Custom, Atlas, Seasonal/Fun Condoms, ONE Condom Condoms & Lubricants Distributed Products Accessories Condom Keypers, Condom Pops, Education & Outreach, T-Shirts, Boxers, etc., Project Management Special Projects Source: www.globalprotection.com and www.onecondoms.com Performance Global Protection Corp. charted an impressive growth rate for the period 2001-2003, with sales increasing from a mere $316.7 million in 2001 to cross the $1-million-mark in 2003. During this period, the company launched two unique products in the U.S.: Pleasure Plus and Night Light condoms.75 74 75 Global Protection Corp. Website Global Protection Corp. Website July 2006 ©MarketResearch.com, Inc. Page 69 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-10 IRI-Tracked Sales of Global Protection Corp.’s Condoms, 2001-2005 (in Thousand $) 1,200 1,020.74 1,004.34 937.57 1,000 Sales ($ Thousand) 800 662.47 600 400 316.76 200 0 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores and mass merchandisers other than Wal-Mart. Brand subtotals might not add up to marketer totals due to rounding and unspecified brand sales. Source: IRI Company Snapshots • Global Protection has always been innovative in marketing its condom products. In June 1992, the company introduced the condom store concept, ‘Condomania.’76 The company has interesting product lines, such as Custom condoms, where client companies can print their logos on the condom for promotional activities. • Global Protection featured as the fastest growing inner city organization in The Initiative for a Competitive Inner City (ICIC) and Inc. Magazine’s ‘The Inner City 100 List’ for 2002 and 2003.77 76 77 Condomania Online; Global Protection Corp. Website Global Protection, Inc., Press Release, April 30, 2003. Page 70 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles • Condoms in the U.S. In 2005, the company introduced a new product line called ONE Condoms©, with a unique packaging and brand concept. Every wrapper sports an image with a coinciding statement, such as a view of the Earth from outer space has the caption "Believe in one.” According to Stephen Mare, Vice President, Sales and Marketing, “Condoms represent more than just a necessary health device.” He further said, “They're consumer products that should be distinctive in their own right. Forging an emotional connection with the people who buy your brand of condoms should be as important as delivering the quality they need and deserve. We're confident that the ONE Condom line accomplishes both of these goals.”78 78 PR Newswire, February 14, 2005 July 2006 ©MarketResearch.com, Inc. Page 71 Chapter 4: Competitive Profiles Condoms in the U.S. Okamoto USA, Inc. Company Type: Private President: Hisayuki Naito 2005 Sales: $19.2 million Company Overview Connecticut-based Okamoto USA, Inc. is a wholly owned subsidiary of Japanese company Okamoto Industries, Inc., Tokyo. The company manufactures rubber and plastic products at the Ibaraki plant in Japan. Its product line includes brands Crown and Beyond Seven. Performance Okamoto USA, Inc.’s sales have been steadily declining, down from $1.6 million in 2001 to $0.8 million in 2005, a huge drop of 47.3%. This may be due to other marketers, including private label brands, eating into the shares of Okamoto USA, Inc. in the highly competitive U.S. market. Page 72 ©MarketResearch.com, Inc. July 2006 Chapter 4: Competitive Profiles Condoms in the U.S. Figure 4-11 IRI-Tracked Sales of Okamoto USA, Inc.’s Condoms, 2001-2005 (in million $) 1.60 1.56 1.51 1.40 1.25 Sales ($ Million) 1.20 0.96 1.00 0.82 0.80 0.60 0.40 0.20 0.00 2001 2002 2003 2004 2005 Note: Sales through chain supermarkets, drugstores and mass merchandisers other than Wal-Mart. Brand subtotals might not add up to marketer totals due to rounding and unspecified brand sales. Source: IRI Company Snapshots • In 2005, Okamoto USA, Inc. came up with updated packaging and product line extensions for Beyond Seven condoms and Beyond Bodi Heat Pads. Jennifer Jordan, Marketing Manager, Okamoto USA, Inc., said, “We wanted to create a fresh new look for both our product lines that really stands out on the shelves.”79 79 Business and Industry Chain Drug Review, June 6, 2005 July 2006 ©MarketResearch.com, Inc. Page 73 Chapter 4: Competitive Profiles Condoms in the U.S. Page 74 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Chapter 5 Condoms in the U.S. Marketing Dynamics Condom Advertising Makes it to Prime Time Through the 1970s, televised condom advertisements were banned. In the 1980s, as the spread of AIDS reached epidemic proportions, the then-Surgeon General Everett Koop appealed to television networks to run public service spots on the use of condoms to help prevent STDs. In 1988, three major television networks (CBS, NBC and ABC) decided to broadcast a public service advertising campaign created by the Advertising Council in association with the American Foundation for AIDS Research and the National AIDS Network that encouraged the use of condoms to thwart the spread of AIDS. The networks still did not accept commercial advertisements specifically for condoms. In 1991, the upstart Fox network ran the first paid condom commercial on a broadcast television network. Several major cable networks, including MTV, Comedy Central, BET, CNN, TNT, USA and TBS, followed suit. However, these advertisements were aired late at night with the obvious intention to keep them away from kids. On June 1, 2005, two television networks, the WB and NBC, broadcasted the first prime time network commercial for male contraceptive devices (Church & Dwight’s Trojan brand of condoms). Trojan’s Vice President of Marketing Jim Daniels, said, “Network television is an efficient means of reaching consumers, and the prime time hours are probably the best time to do that.”80 Church & Dwight’s “Make a Difference” advertising campaign for its Trojan brand of condoms calls attention to individual accountability and sexual health, citing statistics about STDs.81 According to Linda Kaplan Thayer, CEO of the advertising agency Kaplan Thayer Group, “A plan for serious-minded ads that focus on disease prevention and could run in network prime time was the pitch that won the (estimated $15 million) account for Kaplan Thaler in March.” WPP Group’s Maxus, New York, handled media planning and buying.82 Marketers of condoms have an unwritten obligation to include a socially responsible message in their advertisements. In keeping 80 ABCNews, June 1, 2005 Drug Store News, Vol. 27, Issue. 10, September 26, 2005 82 Advertising Age, June 6, 2005 81 July 2006 ©MarketResearch.com, Inc. Page 75 Chapter 5: Marketing Dynamics Condoms in the U.S. with that spirit, the “Make a Difference” advertisement shows a frisky couple but states that “40% of people who know they are HIV positive do not tell their partners. Use a condom every time.”83 Family Planning and Intimacy Products Prominent at Retail Family planning items such as condoms, ovulation kits, and pregnancy tests have emerged from behind the pharmacy counter to places that are more prominent. Sales in drug stores, in particular, have consequently increased with these products receiving additional visibility. However, more shelf space and higher visibility are not the only factors supporting the increase in sales. Chain drug retailers have an advantage over other retailers, with pharmacists ready and waiting to address consumer queries regarding the use of such products. Chain drug retailers are now leveraging this advantage to the fullest. For example, a CVS store in New York displays condoms, family planning items and products such as warming lubricants and massage oils in a prominent location in front of the pharmacy. The assistance of CVS pharmacists is readily accessible to consumers who may be otherwise hesitant to seek out information about products associated with sex.84 Mass retailers such as Walgreen’s, on the other hand, do not limit condoms and other family planning items to the pharmacy but also stock it in other areas of its stores, including the checkout counter. At Walgreen’s, the family planning aisle stocks condoms, pregnancy tests, vaginal moisturizers and accessories like climax control gels. Walgreen’s also have stand-alone Family Planning Centers, which stock the lower priced store brands of lubricating gels, pregnancy tests and ovulation kits. As indicated above, sexual intimacy products are both promoting and competing with family planning products for shelf space at mainstream drug stores and other retailers. Personal lubricants, oils and massagers that comprise the bulk of the offerings in the intimacy products category are now being bought in drug store aisles. Retailers now understand the importance of providing shoppers with easy access to intimacy products and have started including these into their merchandise mix. British Columbia-based London Drugs was the first drug chain in North America to include SSL America’s line of Durex Play personal massagers as part of its family planning section, alongside condoms, spermicides and contraceptive sponges. 83 84 Brandweek, June 6, 2005 Chain Drug Review, August 15, 2005 Page 76 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Condoms in the U.S. Role of Government Agencies and NGOs in Donor Support Total donor support for contraceptives and condoms for STD/HIV prevention to developing countries was $203 million in 2004—3% less than the donor support received in 2003. Of the total donor support in 2004, 43% were provided through bilateral funding, 32% through the United Nations Population Fund (UNFPA), and 25% through social marketing organizations. The United States Agency for International Development (USAID) was the largest individual donor in 2004, contributing $71.2 million or 35% of total donor support. Table 5-1 Contraceptive Commodity Support by Donor/Agency, 2000-2004 (in million $) Type of Donor/Agency Donor/Agency Bilateral BMZ/KfW CIDA DFID Japan USAID Total UNFPA Total IPPF MSI PSI Total EU Netherlands SIDA UNAIDS WHO DKT Total Multilateral Social Marketing Organizations Others Grand Total 2000 2001 2002 2003 2004 35.48 4.81 7.32 1.66 58.09 107.36 16.72 16.72 3.81 N/A 0.46 4.27 0.05 N/A N/A N/A N/A 4.87 4.92 133.26 16.39 0.21 6.13 0.34 67.91 90.97 89.21 89.21 3.67 3.72 22.36 29.74 0.31 N/A N/A N/A N/A 7.85 8.16 218.08 20.12 0.26 16.40 0.18 49.63 86.59 41.21 41.21 4.23 3.84 30.94 39.00 N/A N/A N/A N/A N/A 9.64 9.64 176.45 26.91 1.69 22.29 0.25 69.40 120.54 57.46 57.46 1.86 1.03 28.15 31.04 N/A N/A N/A N/A N/A N/A N/A 209.03 8.69 N/A 6.71 0.15 71.23 86.77 65.03 65.03 2.61 0.51 47.83 50.95 N/A N/A N/A N/A N/A N/A N/A 202.75 Total Aid up to 2004 175.56 18.14 102.19 3.91 510.73 810.53 393.69 393.69 39.75 10.60 144.08 194.43 30.76 5.28 1.26 0.22 6.33 31.27 75.12 1,473.78 Note: N/A means information was not procured or information was not available. Note: In 2004, 38% of the support received for contraceptives was for male and female condoms. BMZ/KfW: Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung/Kreditanstalt für Wiederaufbau, CIDA: Canadian International Development Agency, DFID: Department for International Development, EU: European Union, IPPF: International Planned Parenthood Federation, MSI: Marie Stopes International, PSI: Population Services International, SIDA: Swedish International Development Cooperation Agency, UNAIDS: Joint United Nations Programme on HIV/AIDS, UNFPA: United Nations Population Fund, USAID: United States Agency for International Development. Source: UNFPA 2005, Donor Support for Contraceptives and Condoms for STI/HIV Prevention July 2006 ©MarketResearch.com, Inc. Page 77 Chapter 5: Marketing Dynamics Condoms in the U.S. Figure 5-1 Major Donors by Donated Amount for Contraceptives and Condoms, 2004 (%) DFID Others BMZ/KfW 3.31% 1.61% 4.29% USAID 35.13% PSI 23.59% UNFPA 32.07% Source: UNFPA 2005, Donor Support for Contraceptives and Condoms for STI/HIV Prevention In the U.S., there is much debate around the issue of government involvement in condom distribution and safe sex discussions. It touches on hot buttons in American society: abstinence versus birth control, AIDS, teen pregnancy, just to name a few. While many state and city health departments take the initiative to distribute condoms and spread awareness about AIDS and safe sex practices, it is often bookmarked by emotional pro and con arguments. Often government and special interest group initiatives to promote condom use struggle to get off the ground or are mired in politics, but when they work, they can truly make a difference. For example, in New York City, the latest initiative by the city health department is to create an official condom for New York City in 2006, as part of the “I know (AIDS)” public service announcement (PSA) begun in May 2005. The campaign handed out thousands of condoms and spread the message of safe sex. Building on the precedent set by this campaign, the New York City health department distributes more than 1 million free condoms a month to combat the spread of sexually transmitted diseases. In 2005, the city doubled the number of condoms it gives away, distributing them through over 500 community agencies and 16 city clinics. Page 78 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Condoms in the U.S. Among other cities that provide free condoms to the public are San Francisco, Houston, Los Angeles and Washington, D.C. According to officials, the New York City health department is considering designing its own condom packaging and brand. According to New York City health department spokeswoman Sandra Mullin, “Condoms save lives. We think it is important to get these out, free of charge, to as many people as possible.” Explaining the need for exclusive packaging, she added, “A unique packaging could help the city track the effectiveness of its safe-sex programs, for instance by asking people in its annual survey whether they had seen or used its condoms.”85 85 USA TODAY, February 15, 2006 July 2006 ©MarketResearch.com, Inc. Page 79 Chapter 5: Marketing Dynamics Condoms in the U.S. Marketing Initiatives Church & Dwight’s Trojan Condoms Trojan Condoms “Make a Difference” on Prime Time In May 2005 Church & Dwight made history launching the “Make a Difference” advertising campaign on prime time television, the first condom advertising campaign to air on television during prime time. The bold and hard-hitting campaign laid emphasis on the health risks of unprotected sex and tried to infuse a sense of urgency among sexually active men and women to practice safer sex and use condoms.86 On June 9, 2005, Church and Dwight announced the next step in the “Make a Difference” campaign. The new advertisement for Trojan brand of condoms focuses on the fact that one in four people with HIV are not aware they have been infected. The advertisement also highlights the fact that, other than abstinence, the only way to protect oneself is to use a condom every time.87 To create this advertisement and deliver the public health message in an effective way, Trojan consulted the National Association of People with AIDS (NAPWA). According to Trojan’s Jim Daniels, “We believe there is an urgent need to articulate important sexual health messages in a way that personalizes the risks and, hopefully, forms the basis for changing behavior so that consumers who are sexually active use condoms consistently.”88 The total advertising expenditure for Trojan condoms was $10.5 million in 2005. The brand was advertised in magazines, network television, spot TV, cable TV networks, network radio, and national and spot radio.89 Acknowledging the Gay Market Church & Dwight, aware of the potential that the gay market presents, is working toward creating a stronger presence in a consumer marketplace where it is now only functioning modestly. Trojan’s ad budget has increased and Church & Dwight is testing the waters in this market with a new lubricant brand extension and with condom giveaways. The initial promotions commenced in 2004 at Gay Pride events in Houston, Washington DC, and San Francisco with booths giving away more than 100,000 rubbers. However, much more work needs to be done, as the brand’s 86 Churchdwight.com, News Releases, August 2005 Chain Drug Review, August 15, 2005 88 National Association of People With AIDS (www.napwa.org), June 9, 2005 89 TNS Media Intelligence, 2005 87 Page 80 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Condoms in the U.S. profile in the gay market is inconsistent. By significantly restructuring some of its strategies and tactics, such as reconsidering the usage of language on its packaging to make it more gay friendly, Trojan may better reach out to the gay market.90 Elexa—Trojan’s Angle on “The Woman’s Perspective” In a major new product initiative, Church & Dwight targeted the woman condom purchaser in a more focused manner (This product is not to be confused with female condoms, which are inserted into the vagina. Elexa is a condom worn by men, but marketed to women). With the introduction of a premium line of unique sexual health products for women by the name of Elexa, Trojan extends its spectrum and now takes female sexual health under its wing. In special liaisons with the retailers, Elexa was placed on shelves located in the feminine care aisle of the store. It includes condoms and other products designed to provide women the freedom to pursue a healthy and fulfilling sex life. Church & Dwight has wisely recognized the hesitancy displayed by females in purchasing condoms. Furthermore, it has realized how the stereotypical manly packaging, clinical merchandising or its latex odored, intimacy-quashing attributes disappoint women. The launch was accompanied with widespread advertising, display and other marketing support. 91 The print and TV advertising, begun in October 2005, were created by The Kaplan Thaler Group, which won the estimated $15 million Trojan account in March 2005. The Elexa print and TV campaign has a health-conscious positioning, akin to the “Make a Difference” campaign but directed at female consumers. Ansell Healthcare’s Lifestyles Condoms “I Know”–Lifestyles’ Social Marketing Effort In an attempt to bring together the benefits of social marketing and brand awareness activities, Lifestyles donated condoms to the “I Know” campaign in 2005. As a part of this campaign, Lifestyles condoms were distributed in areas of high HIV occurrence, such as major cities like New York, in exchange for one cent or one token that was called the “condom token.” The campaign makes use of a web site (www.iknow.tv) to promote the campaign.92 Over a 100,000 Lifestyles brand condoms were exchanged for this token in Manhattan bars and restaurants. Ansell Healthcare Products donated the condoms, which had stickers on the wrappers that informed the user of an HIV testing center in the vicinity of the neighborhood where the 90 The commercial closet, July 2005 Strategy Magazine, October 2005 92 Associated Press, May 8, 2005 91 July 2006 ©MarketResearch.com, Inc. Page 81 Chapter 5: Marketing Dynamics Condoms in the U.S. condom was distributed.93 The campaign is funded by the MAC AIDS Fund established in 1994 by M.A.C Cosmetics, to support people affected by HIV/AIDS globally. Although the campaign was not conceived at Lifestyles, its involvement with the campaign and the donation of condoms will generate positive PR for Lifestyles. After Surrogate Advertising in Movies and Targeting Gay Men, Ansell Healthcare Inc. Wants a Change Universal Pictures entered into a corporate sponsorship deal with Ansell Healthcare/Lifestyles Condoms in 2004. The agreement included product placement in the movie American Pie (and all its sequels), an Internet promotion, a sweepstakes, and joint television commercials.94 This effort by Ansell at cross-promoting its Lifestyles brand was thwarted to some extent as the MPAA (Motion Picture Association of America) declined to approve television spots for the film and LifeStyles condoms. Consequentially, Universal Pictures dropped one portion of the deal with Ansell Healthcare Inc. for the teen sex comedy “American Pie 2”. In 2005, Ansell Healthcare placed Lifestyles advertisements in gay magazines. Even though gay men seem an obvious target in the condom market, marketers have not fully embraced this target audience, to their detriment. Ansell’s Lifestyles condoms brand was one of the first to make an appearance in the gay magazine The Advocate, albeit on a small scale due to a lean ad budget.95 In 2005, Ansell Healthcare spent $113.9 thousand on advertising Lifestyles condoms in magazines, and national or spot radio.96 Global Protection’s ONE condom Global Protection, Inc. launched its new product, ONE condoms, in unique style by kicking off with a consumer condom package design contest held on Valentine’s Day 2005. The winning design was used in the packaging of ONE condoms and distributed nationwide. The ONE condoms brand brings a fresh look to condom displays with a sleek contemporary circular outer container, attractive colors, and constantly refreshed wrapper images. Global Protection, Inc. positions the ONE condom brand as a classy and reliable choice for men and women. The ONE product line includes the CLASSIC ONE, the STUDDED ONE, the ROOMIER ONE, the BIGGER ONE, the COLORED ONE, and the GLOWING ONE, which uses a patented technology to make the condom glow in the dark.97 93 Coinbooks.org, May 10 2005 Alternet.org, 2004 The Commercial Closet, July 2005 96 TNS Media Intelligence, 2005 97 Dexigner.com, February 2005 94 95 Page 82 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Condoms in the U.S. ONE condoms’ unique circular-shaped packaging and full-color graphics are accompanied with a tag line or a “ONE Liner”. For instance, One wrapper features an image of a 1950’s car tail fin with the one-liner “ONE for the road”. Global Protection is banking on this creativity to distinguish it from other brands, positioning it as more than a tool of protection, but also as a creative experience which transcends into the “art” of love making. Other examples include: • The BIGGER ONE with the Empire State Building and a caption that reads, “ONE singular sensation”. • One of the packages featured a picture of the American Flag with the caption “ONE Nation.” • Another displayed a photo of two men kissing with the words, “Two for ONE.” Okamoto U.S.A.’s Beyond Seven Condoms New Variant and Fresh Look for Okamoto’s Beyond Seven Condoms Based on retailer input, Okamoto USA Inc., marketer of Beyond Seven condoms, has repackaged the Beyond Seven brand, which includes Lightly Lubricated, Spermicidal Lubricant, and Studded condoms and introduced a line extension, the new Aloe Enriched condoms. The launch of the Aloe Enriched condoms is a specific effort to cater to a female need. According to Jennifer Jordan, Marketing Manager for Okamoto USA Inc., “We found that the majority of women are looking for a lubricant that is gentle to the body. Aloe is known to prevent irritation, pain and itching, and helps retain moisture.” She adds, “We wanted to create a fresh new look that really stood off the shelves. Since we were in the process of introducing line extensions for the brand, this was the perfect time to update its look. We also felt strongly about soliciting feedback from our customers on what they wanted to see, which really helped us achieve our goal.”98 Mayer Laboratories’ Kimono MicroThin condoms Mayer Laboratories, which manufactures Kimono MicroThin condoms, launched a poker-themed advertising campaign in 2005. The company bought airtime on national cable in October 2005 to feature advertisements on cable networks: Oxygen, VH1, ESPN, MTV, and Comedy Central. 98 Chain Drug Review, June 6, 2005 July 2006 ©MarketResearch.com, Inc. Page 83 Chapter 5: Marketing Dynamics Condoms in the U.S. Mayer Laboratories planned to run spots for Kimono on WB stations in New York, Boston, and Washington. The campaign comes as sales of Kimono have doubled in the past year as a result of deals with major East Coast retailers. The television advertising campaign, Mayer’s first, cost $500,000. The 30-second spot, which will run during late night, has been inspired by the current poker craze on cable television. The advertisement shows an attractive woman running out of chips during a poker game. The woman then slides a Kimono condom instead of a chip into the pot. This is followed by the tagline that reads “Kimono condoms. When the stakes are high.” The reason the company decided to use cable as a media was that niche networks like Oxygen can enable the targeting of specific demographics with a limited budget. According to Mayer president David Mayer, “The goal is to push Kimono as a sophisticated choice to a mainly educated female and metrosexual male audience. We are selling condoms as a lifestyle. Part of a sophisticated young-adult wardrobe is the condom they wear.”99 99 Broadcasting & Cable, September 19, 2005 Page 84 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Condoms in the U.S. New Product Introductions/Innovations Church and Dwight Introductions In 2005, Church & Dwight Co. was by far the most active of the condom marketers when it came to product launches, with three different product introductions in 2005. In 2005, the company launched the trend setting Elexa line of premium sexual health products targeted at women. This line of condoms and accessories is rather unconventionally located in the feminine care aisle of stores. There will be several new additions to the Trojan product line in 2006, including a new ultra-thin condom. 100 Trojan Mint Tingle Trojan responds to a true consumer need, with the May 2005 introduction of Mint Tingle condoms, a mint flavored lubricated condom. According to the second annual Trojan Sexual Health Monitor, a national survey of sexual health attitudes conducted by StrategyOne for Trojan, a chief reason why gay men do not use condoms for oral sex is that they don’t want to taste the latex. The survey also found that 41% women do not use condoms during oral sex for the same reason.101 Trojan Mint Tingle, the brand’s first flavored condom, features a food-grade mint flavor, mint aroma, bright green color, and a non-greasy, water-based lubricant. According to Trojan’s Jim Daniels, “We positioned Trojan Mint Tingle to bring the protection elements of condoms into the areas of foreplay and oral sex. This product extends the window of protection beyond just intercourse with a superior, technologically advanced product.”102 Trojan Her Pleasure Warm Sensations Trojan launched a new Her Pleasure variant in 2005, the Trojan Her Pleasure condom with Warm Sensations lubricant. The condom itself is designed to provide greater sensation for both partners with unique ribbing near the base of the condom. The condom also features a flared head. The Warm Sensations lubricant is a special moisture-activated lubricant that is touted to release gentle, warm sensations during sexual intercourse. Designed to provide extra sensation for women during sexual intercourse, the condom is sold in a lavender colored pack.103 100 Church & Dwight Co., Inc. Annual Report 2005 Trojan Condoms website (www.trojancondoms.com),Press Release, May 19, 2005 102 Chain Drug Review, August 15, 2005 103 Website of online condom retailer, (www.condoms.com) 101 July 2006 ©MarketResearch.com, Inc. Page 85 Chapter 5: Marketing Dynamics Condoms in the U.S. Elexa Premium Latex Condoms Church & Dwight launched the new upscale, female-targeted Elexa line of Premium Latex Condoms and intimacy products after extensive consumer research revealed that women want sexual health products that help them connect more intimately with their partners and allow them to enhance their sexual pleasure in a responsible, health-conscious way.104 Promoted as “a woman’s perspective by Trojan,” the Elexa line of lubricated, low latex odor condoms is available in three variants: Ultra Sensitive, Natural Feel, and Stimulating. Elexa is also available with the hugely popular soft silicone vibrating condom ring that is powered by an ultra-light battery designed to enhance pleasure for both partners. The Elexa line is sold in the feminine care aisle and distribution includes drugstores as well as a major mass merchants. According to Cassandra Johnson, Elexa Product Manager for Church & Dwight, “Advertising has already hit several women’s magazines.” She adds that, “Women are challenged by buying condom products because they are obviously condoms. If you take an Elexa package to the cashier, it is not screaming anything, it looks like any feminine care product. It’s very discreet.” 105 Elexa marks a new approach in marketing condoms to women. Johnson says that “women told us that they wanted more control over their sexual well-being, but that they feel largely marginalized by the decidedly male nature of sexual health products currently on the market. By creating a brand just for them, we hope that women will enjoy more intimate sexual experiences and gain new awareness that practicing responsible, safer sex is crucial to their long-term health.”106 The collection currently contains the following products: Elexa Natural Feel Condoms, which are ribbed and incorporate a premium water-based lubricant; Elexa Intimacy Gel, a clear non-greasy warming gel; Elexa Stimulating Condoms, which are uniquely ribbed and offer a premium “ultra silky” lubricant for greater intimacy and comfort; Elexa Freshening Cloths, lightly scented, premium-quality cloths; Elexa Ultra Sensitive Condoms, ultra thin but strong condoms with low latex odor and a premium lubricant; Elexa Vibrating Ring, a silicone condom ring powered by a light battery and bundled with one premium Elexa condom. 104 MMR, August 22, 2005 HFN, October 3, 2005 106 Drug Store News, September 26, 2005 105 Page 86 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Condoms in the U.S. Asa Products’ X-Treme Ring Vibrating The X-Treme Ring Vibrating Ring & Condom, manufactured by California-based Asa Products Inc., is a condom ring, to be worn on the base of the latex condom provided with it. The ring emits vibrations that act as a stimulant. Package text reads “Maximize your pleasure! Vibrating enhancement — Maximum stimulation and pleasure. May increase and strengthen erectile dysfunction. The ultimate satisfaction for both partners simultaneously.” Durex Premium Latex New versions of Durex Premium Latex Condoms were launched in 2005. The company introduced three SKUs of Durex Premium Latex Condoms in 2005. Durex Premium Latex Condoms were offered in 12-count boxes and are said to be 20% thinner than standard condoms but reliable as the condoms are electronically tested for reliability. Durex Tingling Pleasure with Spearmint Tingling Lubricant Condoms Launched in 2005, the Durex Tingling Pleasure with Spearmint Tingling Lubricant Condom is transparent, and features a special Spearmint Tingling Lubricant that has a spearmint scent. The product claims to “help provide an intensifying experience for both partners.”107 Warming Pleasure Thin with Sensual Warming Lubricant Condoms Another version of the Durex Premium Latex Condoms, the Warming Pleasure Thin with Sensual Warming Lubricant Condoms, was also launched in 2005. The condoms are reportedly 20% thinner than standard condoms but do not compromise on protection. The Warming Pleasure Thin with Sensual Warming Lubricant Condoms claim to “help provide a more sensual experience for both partners.”108 Durex Play Sensations Assorted Premium Latex Condoms Durex Play Sensations Assorted Premium Latex Condoms feature a box containing 12 condoms with assorted lubricants. The assortment include “Play Warmer” gentle warming lubricant, “Play Tingling” spearmint lubricant, “Natural Feeling” long-lasting lubricant for a natural feel, and Her Sensation Condoms with “Play Flavor” sensual berry-scented lubricant.109 107 Productscan Online (www.productscan.com), August 22, 2005 Productscan Online (www.productscan.com), August 22, 2005 109 Productscan Online (www.productscan.com), August 22, 2005 108 July 2006 ©MarketResearch.com, Inc. Page 87 Chapter 5: Marketing Dynamics Condoms in the U.S. SSL Americas Books Winter Advertising for Durex Tingle Condom and Play Lubricant Georgia-based SSL Americas, Inc. planned a detailed press campaign in men’s and women’s consumer magazines for the Durex Tingle condom and Play lubricant running alongside sampling activity leading up to the end of 2005.110 Ansell Healthcare Products, LLC Lifestyles 4Play In keeping with the new trend of selling condoms with pleasure enhancing accessories in a single kit, Ansell Healthcare Products, LLC launched the 4Play series of condom kits in April 2005. The 4Play series comprises five products that are condom kits bundled with pleasure-enhancing paraphernalia. LifeStyles4Play Condom Kits are promoted in full-page ads, displayed in rack display boxes, and available in “five great new ways to Feel Good and Play Safe.” The five kits are 4Play Touch, 4Play Taste, 4Play Tease, 4Play Vibe, and 4 Play Ignite.111 The 4Play Touch Vibe features three lubricated latex condoms, two fruit-scented warming massage oils and some massage tips. The 4Play Taste includes three lubricated ultra-sensitive condoms and two fruity edible body paints. The 4Play Tease includes three lubricated latex condoms, edible vanilla dust with a feather tickler. 4Play Vibe includes one lubricated latex condom and a vibrating ring with battery. The 4Play Ignite features three lubricated latex condoms, body glitter lotion and three sachets of silky warming lubricant. According to Dahai Guo, Business Development Manager at Ansell, “The condoms provided in the Vibe, Touch, Tease and Ignite kits are our next-generation condoms. They are among the thinnest condoms on the market and provide much higher sensation, but also provide optimal strength and reliability.”112 Akin to many products in the budding intimacy products segment, the 4PlaybyLifeStyles kits are primarily targeted at men and women less than 35 years of age. However, Guo notes that the line has generated interest among older consumers as well. The launch of the 4Play line of condom kits generated a lot of media interest. According to Guo, Glamour magazine requested samples of the kits to conduct trials among readers. Glamour featured the product in its September 2005 issue, while Essence, Jane, and Shape covered the kits in their September, November, and 110 Community Pharmacy, October 13, 2005 Productscan Online (www.productscan.com), August 22, 2005 112 MMR, August 22, 2005 111 Page 88 ©MarketResearch.com, Inc. July 2006 Chapter 5: Marketing Dynamics Condoms in the U.S. December issues, respectively. Ansell is supporting the line with a variety of merchandising units and freestanding inserts. Print advertisements were placed in Cosmopolitan in September 2005. Radiance International ‘s Erecxel Condom Plus Manufactured by California-based Radiance International, the Erecxel line of intimacy enhancement products includes products such as erection enhancement products, premature ejaculation solutions, and penile enhancements. The erection enhancement products include penile constricting bands, which are now bundled with condoms under the Erecxel Condom Plus brand. The Erecxel Condom Plus features penile bands and three premium latex condoms in a box. The Erecxel Band is an externally used plastic split ring that can be fastened together; the ring can be adjusted to permits easy adjustment of constrictive pressure. The band can be washed and reused. The label copy for Erecxel Condom Plus reads “Innovative health & intimacy products for men— Protection and confidence for enhanced intimacy—Promotes safe sex and greatly improves erection. Erecxel CP is a convenient pack of 2 invaluable products for your best protection and maximum confidence during intimacy.”113 113 Productscan Online (www.productscan.com), August 8, 2005s July 2006 ©MarketResearch.com, Inc. Page 89 Chapter 5: Marketing Dynamics Condoms in the U.S. Page 90 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Chapter 6 Condoms in the U.S. The Consumer Note on Simmons Survey Data and Figures Data and analysis in this chapter is based on inputs provided by Simmons Market Research Bureau (SMRB), New York. The data has been derived from the NCS (National Consumer Survey) Fall 2005 (January 2005 – September 2005) survey, based on a sample of 211,425 U.S. adults who represent a statistically accurate cross-section of the U.S. adult population. Based on the survey, it has been possible to derive detailed demographic profiles of consumers using a particular product. Simmons has also developed an index system to calibrate use of a product by a given segment of the population, compared to the population as a whole. These indices give an indication of the preference or usage characteristics of certain demographic groups and facilitate relative comparisons with other groups. If, for example, 10% of the overall sample report use of a product, but 12% of the age group 18-24 years report use, this age group would have an index of 120, or 20% above the norm. Generally speaking, Packaged Facts considers an index of 110 or higher to be significant, or an indicator. Indices falling below that level or any findings that Simmons has classified as statistically unstable or unreliable are considered ‘not significant.’ While normally, index values above 110 are considered a significant indicator, in case of relative comparisons between categories, index values lower than 110 are also displayed in tables. Demographic groups showing preference for a particular brand/product based on index values may not indicate that it is the largest user group, but would rather indicate the group’s preference toward the product or brand as compared to the overall user group. This chapter also draws inferences from HIV/AIDS Surveillance Reports made by Centers for Disease Control and Prevention (CDC). The surveillance report – “Cases of HIV Infection and AIDS in the United States, 2004” (updated in February, 2006) by CDC was used to examine the inflection trends of AIDS in the U.S. according to consumer demographic characteristics. The “Preliminary Births for 2004” report compiled by the CDC, and the report on “Adolescent Pregnancy and Childbearing in the U.S.” compiled by the Centre for Health Statistics were also used to map pre-marital and teenage births in the U.S. according to consumer demographic characteristics. July 2006 ©MarketResearch.com, Inc. Page 91 Chapter 6: Consumer Condoms in the U.S. The American Sex Survey, conducted by ABC News in 2004, was used to explain condom usage and AIDS inflection rates in Southern states of the U.S. Page 92 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Adult Condom Usage in the U.S. Although use of condoms is a key determinant of unintended pregnancies, effective family planning and sexually transmitted diseases, according to the Simmons Survey, only 15.1% of U.S. adults use condoms. This low percentage seems illogical in the face of government data that cites that approximately half of all pregnancies in the U.S. are unintended114 and that the rate of HIV/AIDS infection was 15.0 per 100,000 in 2004.115 Figure 6-1 Percentage of U.S. Adults Using Condoms, 2005 (%) 15.05% Use Condoms Do Not Use Condoms 84.95% Source: SMRB, NCS (National Consumer Survey) Fall 2005, Packaged Facts. This material is reprinted with permission 114 115 Family Planning Progress Review (www.healthypeople.gov), December 8, 2004 statehealthfacts.org July 2006 ©MarketResearch.com, Inc. Page 93 Chapter 6: Consumer Condoms in the U.S. Condom User Selected Key Demographics Young Singles and Young Marrieds It is no surprise that younger consumers aged 18-44 years were the heaviest users of condoms. This age segment falls within the 25-50 years age bracket of people at greatest risks of contracting HIV/AIDS [See Table 6-2]. According to the National Opinion Research Center (NORC) at the University of Chicago, which conducts the General Social Survey (GSS) sponsored by the National Science Foundation, the number of sexual encounters declines with age., the number of sexual encounters declines with age. The frequency of sex is the highest and fairly consistent in the age bracket of 20-30 years. The frequency drops by about 20% with every 10 years increase in age up to age 64. People aged between 65–74 show a 60% drop. The study also claims that the average frequency for Americans aged 18–39 is 84 times per year, declining steadily to about 63 times per year for those aged 40 and above.116 Simmons data suggest that both young singles and young marrieds are heavily inclined toward condom use. Both consumer groups may be interesting in curtailing parenthood for the immediate future. Condom usage skews particularly high for those aged 18-34 (index of 200+ each) and for unmarried individuals (156). This suggests condom use by sexually active, young singles. There is also the suggestion of heavy use among newly married young people when you take into consideration two data sources: Simmons and Census data. According to Simmons those aged 2435 skewed very high (203) for condom usage and according to the U.S. Census Bureau, in 2004, the estimated median age at first marriage for women in the U.S. was 25.8 years and 27.4 for men. So while people are marrying slightly later, Simmons data suggests that family planning is still important for these older newlyweds. African Americans Skew High Ethnicity also plays a defining role in consumer preferences for using condoms. African Americans have the highest index, 210, for condom usage. Asian Americans with an index of 137, and Hispanics with an index of 129 also showed a high preference for condom usage. 116 Health Library, Sexuality & Health. Page 94 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Geography Matters Consumers from the Northeast showed a higher tendency (index of 118) for using condoms as compared to people from other regions, which may correspond in part to the greater concentration of major metropolitan areas in the Northeast. Interesting and worrisome is condom usage in the South skewed very low, particularly since the South accounted for the largest percentage of all AIDS cases diagnosed in the U.S. in 2004 (46.6%).117 Condom usage is lowest in the Southwest (index of 86), which may reflect poor health infrastructure in some of the states, as well as the socio-economic factors that limit condom usage and curtail treatment of STDs.118 Education and Economics Clearly education and economic status affect condom usage. Graduate degree holders (index of 107) or college graduates (index of 137) showed a greater tendency for using condoms. Similarly, consumers from affluent households (household incomes of $60,000 and over) were highly skewed toward condom usage. Consumers from households with incomes between $60,000 and $99,000 showed the highest inclination for condom usage (index of 108), while consumers from households with incomes over $99,000 also showed high preference for using condoms (index of 104). Family Planning Consumers from families with five or more members showed the highest tendency for condom usage with an index of 133. An interest in family planning may explain why households with children under the age of six years also have a high index, 163, for usage of condoms. 117 Centers for Disease Control and Prevention, HIV/AIDS Surveillance Reports, Cases of HIV Infection and AIDS in the United States, 2004. (Updated in February 2006). 118 Southern States Manifesto, HIV/AIDS and STD’s in the South: A Call to Action, March 2, 2003 July 2006 ©MarketResearch.com, Inc. Page 95 Chapter 6: Consumer Condoms in the U.S. Table 6-1 Demographic Characteristics Favoring Use of Condoms, 2005 Basis Category Index 18-24 years 211 25-34 years 203 35-44 years 118 Male 131 Hispanic Origin 129 African American 210 Asian American 137 Northeast 118 College Graduate 137 Graduate Degree 107 $60,000 to $99,000 108 $100,000 or More 104 Marital Status Not Married 156 Number of People in Household Three-Four 124 Five or More 133 Under 6 years 163 6-11 years 113 Own Condo or Co-Op. 108 Rent 163 Age Group Gender Race Region Education Household Income Age of Children Type of Residence Source: Simmons Market Research Bureau, Fall 2005 Study of Media and Markets; Packaged Facts. This material is reprinted with permission. A Closer Look at Condom Usage by Age According to the SMRB Fall 2005 survey, younger adult consumers aged 18-44 years were the core group of condom users in the U.S. Of this section of the population, consumers aged 25-34 years represented 35% of total condom users, forming the largest group of condom users in the U.S. in 2005. The use of condoms among consumers over age35 falls rapidly as people get older. This does not necessarily mean that consumers show an increase in risky sexual behaviors with an increase in age. More likely, they are in monogamous relationships where the risk of contracting HIV or other STDs is considerably reduced, and the primary purpose of using contraception is birth control rather than prevention of STDs. Other methods of family planning, such as birth control pills, may also account for a fall in use of condoms with the increase in age of the consumer. Page 96 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Many consumers feel that using condoms during sexual intercourse causes a lack of sensation and, thereby, makes the act less pleasurable. Consumers also express concern over the risks of the condom tearing or slipping during intercourse. Many older males have difficulty sustaining erections when putting on a condom, while others have allergies to latex. All these concerns, excuses and drawbacks may have led consumers away from condom use or to considering other types of contraception. Figure 6-2 Percentage of U.S. Adults Using Condoms by Age of User, 2005 (%) 34.96 35 % of U.S. Adults Using Condoms 30 23.77 23.42 25 20 15 11.98 10 4.00 5 1.75 0.12 0 18-24 25-34 35-44 45-54 55-64 65-74 75 and Over Age (Years) Source: Simmons Market Research Bureau, Fall 2005 Study of Media and Markets; Packaged Facts. This material is reprinted with permission. Losing Boomers to Viagra According to a 2005 survey of over 1,700 U.S. adults (aged 45 years and above), conducted by the AARP, 60% believe sexual activity is a critical part of a good relationship, while 95% were in favor of fidelity.119 For these consumers abstinence or condom usage to prevent sexually transmitted diseases is not a priority. They are more concerned about sexual dysfunctions. 119 Drug Store News, June 6, 2005 July 2006 ©MarketResearch.com, Inc. Page 97 Chapter 6: Consumer Condoms in the U.S. According to Linda Fisher, Research Director at AARP, “Professionals have long known that sexual dysfunction is not only a major problem for relationships and mental health, but can be a marker of life-threatening physical health issues, especially heart disease.”120 Condom marketers will need to renew their approach in order to tap this consumer segment, who may be distracted by Viagra and other drugs designed to combat erectile dysfunction. Entice these older consumers with products that enhance sexual performance or make it more pleasurable. In this regard, marketers have come up with innovative products such as condoms coated with climax delayers that are useful for consumers suffering from premature ejaculations, or those who cannot sustain erections for long durations. Trojan, Durex, and Lifestyles each have an offering in this category, and offer a renewed opportunity for marketing condoms to seniors. The Trojan Extended Pleasure Lubricated Condoms, Durex Performax Condoms, and Lifestyles Lasting Pleasure Condoms all feature climax delaying lubricants. 120 Drug Store News, June 6, 2005 Page 98 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Table 6-2 Estimated Numbers of AIDS Cases in the U.S. by Year of Diagnosis and Age of the Persons, 2000-2004 Age at Diagnosis (Years) 2000 2001 2002 2003 2004 Total Number of AIDS Cases through 2004* <13 124 115 109 69 48 9,443 13–14 60 79 71 58 60 959 15–19 291 274 312 301 326 4,936 20–24 1,329 1,343 1,467 1,664 1,788 34,164 25–29 3,432 3,239 3,279 3,276 3,576 114,642 30–34 6,497 6,258 6,010 6,003 5,786 195,404 35–39 8,930 8,649 8,716 8,763 8,031 208,199 40–44 7,530 7,502 7,825 8,291 8,747 161,964 45–49 5,200 5,401 5,656 6,102 6,245 99,644 50–54 3,007 3,199 3,436 3,672 3,932 54,869 55–59 1,528 1,567 1,718 1,854 2,079 29,553 60–64 833 820 930 929 996 16,119 ≥ 65 752 759 738 848 901 14,410 Note. These numbers do not represent reported case counts. Rather, these numbers are point estimates, which result from adjustments of reported case counts. The reported case counts are adjusted for reporting delays and for redistribution of cases in persons initially reported without an identified risk factor. The estimates do not include adjustment for incomplete reporting. * Includes persons with a diagnosis of AIDS from the beginning of the epidemic through 2004. Centers for Disease Control and Prevention, HIV/AIDS Surveillance Reports, Cases of HIV Infection and AIDS in the United States, 2004. (Updated in February 2006). The Touchy Subject of Teens Teen access to condoms is a hot button topic in the U.S., but the facts are clear. Teens are having sex. They are getting pregnant. They are susceptible to sexual transmitted diseases. And all evidence points to the fact that while abstinence is the best defense, it is not a reasonable expectation. In 2004, unmarried women under 15 years of age accounted for an overwhelming majority (97.4%) of teenage births, while 15-19 year old unmarried women accounted for 82.4% of teenage births. The birth rate among unmarried women less than 15 years of age, increased by 2.2% over the previous year. The focus of abstinence-based sex education programs in many schools and colleges has not helped reduce teen birth rates in the U.S. The number of adolescents and teenagers diagnosed with AIDS also increased by 1.4% in the same period. July 2006 ©MarketResearch.com, Inc. Page 99 Chapter 6: Consumer Condoms in the U.S. It may be time for marketers to take aggressive steps as a voice for youth in the media in what is seemingly a time of crisis in America. Table 6-3 Number and Percentage of Births to Unmarried Women in the U.S. by Age, 2003-2004 2003 2004 % Change 2003-2004 Percentage of Births to Unmarried Women in 2004 1,415,995 1,470,152 3.82 35.7 Under 20 years 343,670 348,934 1.53 82.6 Under 15 years 6,469 6,614 2.24 97.4 337,201 342,320 1.52 82.4 15-17 years 120,571 120,972 0.33 90.3 18-19 years 216,630 221,348 2.18 78.7 Age of Mother All ages 15-19 years Read as: In 2004, 348,934 or 82.6% cases of births to women less than 20 years of age were to unmarried women. Note: Data for 2004 are based on a continuous file of records received from the States. Figures for 2004 are based on weighted data rounded to the nearest individual. Source: Centers for Disease Control and Prevention, Preliminary births for 2004. Figure 6-3 Percentage of All Births to Unmarried Women by Age, 2004 97.4 100 90.3 % of All Births in the U.S. 90 82.6 78.7 80 70 60 50 35.7 40 30 20 10 0 All ages Under 20 years Under 15 years 15-17 years 18-19 years Age of Unmarried Mother Source: Centers for Disease Control and Prevention, Preliminary births for 2004. Page 100 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. The Effect of HIV/AIDS on the Population In the State of the Union Address in 2006, President Bush said that “More than one million Americans live with HIV, and half of all AIDS cases in the U.S. occur among African Americans. An estimated 250,000 people do not realize that they carry the virus. Roughly 40,000 new transmissions occur every year in the U.S, about half of them resulting from individuals unaware that they are infecting others. The number of AIDS cases is especially high in African-American, Hispanic, and gay communities, as well as among intravenous drug users and prisoners.”121 According to CDC estimates, in 2004, around 20,965 African Americans were diagnosed with AIDS, comprising 49.5% of the total diagnosed cases of AIDS in the U.S. for 2004. The White/Not Hispanic population accounted for 28.4% and Hispanics accounted for 20.5% of the total AIDS cases diagnosed in the U.S. in 2004. Table 6-4 Estimated Numbers of AIDS Cases in the U.S. by Year of Diagnosis and Race/Ethnicity, 2000-2004 Race/Ethnicity 2000 2001 2002 2003 2004 Total Number of AIDS Cases through 2004* White and Not Hispanic 11,378 11,052 11,604 11,657 12,013 375,155 African American 19,510 19,473 19,934 20,685 20,965 379,278 Hispanic 7,957 7,974 7,907 8,632 8,672 177,164 350 381 440 478 488 7,317 175 169 186 189 193 3,084 Asian/Pacific Islander American Indian/ Alaska Native Note. These numbers do not represent reported case counts. Rather, these numbers are point estimates, which result from adjustments of reported case counts. The reported case counts are adjusted for reporting delays and for redistribution of cases in persons initially reported without an identified risk factor. The estimates do not include adjustments for incomplete reporting. * Includes persons with a diagnosis of AIDS from the beginning of the epidemic through 2004. Centers for Disease Control and Prevention, HIV/AIDS Surveillance Reports, Cases of HIV Infection and AIDS in the United States, 2004. (Updated in February 2006). The high incidence of AIDS cases indicate that there are still large segments of people from different ethnic origins that still need to adopt safe sex practices such as condom usage. Although African Americans accounted for approximately 13% of the U.S. population in 2004, they accounted for nearly half of HIV/AIDS diagnoses. African Americans accounted for the most 121 The White house, Office of the Press Secretary, February 1, 2006 July 2006 ©MarketResearch.com, Inc. Page 101 Chapter 6: Consumer Condoms in the U.S. cases diagnosed among males (44%) and the majority of cases among females (68%).122 Looking beyond 2006, a better prevention stratagem, consisting of extended HIV testing, targeted campaigns, and sex education may be needed to tackle the high incidences of HIV/AIDS among African Americans and Hispanics. Another factor indicating lack of condom usage is the teenage birth rates that vary widely with ethnicity. According to the Planned Parenthood Federation of America,123 in the U.S., in 2003, the birth rate among teens aged 15-17 years was 22.4 births per 1,000, and 70.8 births per 1,000 women aged 18–19 years. The teenage birth rate for Hispanics was 82.2 per 1,000, 64.8 per 1,000 for African Americans, and 27.5 per 1,000 for White/Not Hispanic. In 2003, 82% of the teens that gave birth were unmarried, while about 40% of teen pregnancies end in abortion.124 122 U.S. Census Bureau, Population estimates and CDC, Racial/Ethnic Disparities in Diagnoses of HIV/AIDS, February 10, 2006. 123 Planned Parenthood Federation of America, Inc., affiliated health centers in the U.S. provide reproductive health care and sexual health information. 124 Planned Parenthood Federation of America, Inc., Pregnancy & Childbearing Among U.S. Teens, Fact Sheet , January 2006 Page 102 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Table 6-5 Estimated Numbers of AIDS Cases in the U.S. by Year of Diagnosis and Region, 2000-2004 2000 2001 2002 2003 2004 Total Number of AIDS Cases through 2004* Northeast 12,105 11,212 10,395 11,149 11,158 289,792 Midwest 3,968 3,949 4,303 4,495 4,498 93,701 South 15,841 16,598 17,751 18,612 19,792 343,449 West 6,443 6,258 6,745 6,474 6,083 187,730 U.S. dependencies, possessions, and associated nations 1,156 1,190 1,073 1,100 982 29,634 Region Note. These numbers do not represent reported case counts. Rather, these numbers are point estimates, which result from adjustments of reported case counts. The reported case counts are adjusted for reporting delays and for redistribution of cases in persons initially reported without an identified risk factor. The estimates do not include adjustments for incomplete reporting. * Includes persons with a diagnosis of AIDS from the beginning of the epidemic through 2004. Centers for Disease Control and Prevention, HIV/AIDS Surveillance Reports, Cases of HIV Infection and AIDS in the United States, 2004. (Updated in February, 2006). Incidences of AIDS cases are higher in the South than in the Northeast, Midwest, and West. The number of new HIV/AIDS cases declined or leveled in the West, Northeast and Midwest, but increased in the South.125 At the December 2002 Southern AIDS Conference, the Southern States Manifesto, written by the Southern State AIDS and STD Directors Work Group, reported that seven out of ten states with the highest AIDS cases are in the South. The HIV epidemic in the South is in some ways reflective of the situation in some developing nations. The HIV/AIDS epidemic here is affecting the rural, heterosexual African American female. The poor health infrastructure, socio-economic factors, lack of affordable housing, racial disparity, and high rates of other sexually transmitted diseases are factors driving the HIV/AIDS epidemic in the South. Of the 17 Southern states, 16 have received $29 million in federal funding for abstinence-onlyuntil-marriage programs through the Special Projects of Regional and National SignificanceCommunity Based Abstinence Education (SPRANS) grant program, and the Adolescent Family Life Act (AFLA) in 2002 and 2003. These programs are targeted at faith-based organizations, state health departments, crisis pregnancy centers, school boards, and schools in the South. However, they seem to have offered little help in preventing AIDS among the predominately 125 Centers for Disease Control and Prevention, HIV/AIDS Surveillance Reports, Cases of HIV Infection and AIDS in the United States, 2004. July 2006 ©MarketResearch.com, Inc. Page 103 Chapter 6: Consumer Condoms in the U.S. African American and/or low-income residents of the South, accounting for 40% of HIV positive people and 46% of all new AIDS cases in the U.S. 126 According to Bill Smith, director of public policy at SIECUS (Sexuality Information and Education Council), “The Southern States Manifesto demonstrates that in the places where abstinence-only-until-marriage programs have really taken hold, we are seeing a disturbing trend of rising HIV rates because young people don’t learn how to protect themselves.”127 Moreover, teen birth rates are also very high in the Southern and Southwestern states. Overall teen birth rates in the U.S. declined significantly after large increases in the 1980s. In 2002, the teen birth rate declined to 43 live births per 1,000 teenage women nationally, including declines in every state. Teen birth rates varied by geographic region, with the highest rates occurring in the South and Southwest.128 The high teenage pregnancies rates in the South are not indicative of the Southerners’ attitudes towards premarital sex. According to the American Sex Survey conducted by ABC News in 2004, Southerners are largely informed by religiosity, more apt to be weekly churchgoers, and conservative on the subject of sex and related issues. According to the survey, 71% in the Northeast and roughly two-thirds in the West say premarital sex is acceptable, whereas only 54% Southerners agree.129 The focus on abstinence in sex education programs in schools is simply not working. While the focus on abstinence has not been a significant deterrent to teenage sex, the program keeps away valuable information on condom usage and safe sex from teenagers who indulge in sexual intercourse. According to one MSNBC study in Texas, 23% of ninth-grade girls (13 to 14 years old) had sex before receiving abstinence education. After taking the course, 29% of the girls in the same group said they had sex. The percentage of boys in the tenth grade (14 to 15 years old) having sex increased from 24% before receiving abstinence education to 39% after receiving abstinence education.130 According to the CDC, in 2002, the states with the highest birth rates for teens aged 15-17 years were District of Columbia, Puerto Rico, Guam, Texas, New Mexico, Mississippi, Arizona, Louisiana, Arkansas, Alabama, and Georgia.131 126 Southern States Manifesto, HIV/AIDS and STD’s in the South: A Call to Action, March 2, 2003 Sexuality Information and Education Council (SIECUS), August 2003 Centre for Health Statistics, Adolescent Pregnancy and Childbearing in the U.S. 129 ABC News, American Sex Survey, October 21, 2004 130 The Politics of Sex in America, March 27, 2006 and MSNBC, February 1, 2005 131 CDC, National Vital Statistics Reports, December 17, 2003 127 128 Page 104 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Although teen birth rates are decreasing, the highest teen birth rate occurred in Texas, with 62.9 births per 1000 teens, in New Mexico with 62.7 per 1000 and in Mississippi at 62.5 per 1000, in 2003.132 132 Child Trends, Press Release, April 18, 2006 July 2006 ©MarketResearch.com, Inc. Page 105 Chapter 6: Consumer Condoms in the U.S. Condom Preference by Type The vast majority of condom users (89.2%) most often use latex condoms, known to be an effective method of birth control and the safest kind of protection against HIV/AIDS and other sexually transmitted diseases. However, consumers often complain that latex condoms reduce sensation during the act. For this reason, some consumers use the thinner, natural skin condoms made of sheep intestines, which can be used to avoid unwanted pregnancies, but not as protection against STDs. This major drawback limits the use of natural skin condoms. According to the SMRB Fall 2005 Survey, only 10.8% of the consumers used natural skin condoms most often. Page 106 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Figure 6-4 U.S. Adults Favoring Use of Condoms by Type of Material, 2005 (%) 10.84% Use Latex Condoms Use Natural Skin Condoms 89.16% Source: Simmons Market Research Bureau, Fall 2005 Study of Media and Markets; Packaged Facts. This material is reprinted with permission. The survey does not cover polyurethane condoms. Age, gender, marital status, number of people in the household, age of children in the household, and type of residence are all significant factors indicating condom use, but cannot be used to signify consumer preferences for using latex or natural skin condoms. The demographic characteristics of both latex and natural skin users share a certain likeness across these factors. On the other hand, consumer ethnicity, region of residence, education, and household income are differentiating demographic factors. July 2006 ©MarketResearch.com, Inc. Page 107 Chapter 6: Consumer Condoms in the U.S. Latex Condom Users versus Natural Skin Condom Users Table 6-6 Demographic Characteristics Favoring Use of Condoms by Type, 2005 Basis Age Group Gender Race Region Education Household Income Marital Status Number of People in Household Age of Children in Household Type of Residence Category Latex Index Lambskin Index 18-24 years 222 170 25-34 years 210 166 35-44 years 117 124 Male 128 140 Hispanic Origin 122 201 African American 203 244* Asian American 127 279* Northeast 118 119 Southeast 99 137 Did Not Graduate High School 88 120 High School Grad 75 112 College Grad 148 70* Grad Degree 101 128* $40K-$59K 101 113 $60K-$99K 107 112 $100K or More 110 57 Not Married 155 168 Three-Four 125 118 Five or More 131 175 Under 6 years 169 139 6-11 years 117 128 12-17 years 104 131 Rent 159 177 * Note: Sample size unstable and is shown for consistency and directional purposes only. Source: Simmons Market Research Bureau, Fall 2005 Study of Media and Markets; Packaged Facts. This material is reprinted with permission. The latex condom profile suggests that the typical users are more likely to be African American, Hispanic, or Asian American. However, Hispanic males showed a marked preference for this type of condom at an index of 201. Latex users are most likely from the Northeast, versus lambskin users, who are predominant in the Southeast. Latex users are most like college graduates and/or make and above average incomes while the lambskin profiles skews to less educated and lower income users. Page 108 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Condom Usage by Brand According to the SMRB Fall 2005 survey, Church & Dwight’s Trojan is most-used condom brand, followed by Ansell Healthcare, Inc.’s Lifestyles and SSL Americas, Inc.’s Durex. Three of the top five brands used most often belong to Trojan: 4.7% of adults used the Lifestyles brand of condoms most often; 4.6% used the Other Trojan brands; 3.2% used Trojan Magnum; and 2.5% used Trojan Her Pleasure. 1.7% of those surveyed used the Durex brands most often. [See Figure 6-5] Figure 6-5 Usage Rates for Condoms by Brand, 2005 (%) 5.00% 4.70% 4.61% 4.50% 4.00% % of U.S. Adults 3.50% 3.17% 3.00% 2.46% 2.50% 2.00% 1.71% 1.44% 1.50% 1.00% 0.40% 0.50% 0.22% Other Brands Class Act Naturalamb Durex (Gold Coin, Ramses, Sheik) Trojan Her Pleasure Trojan Magnum Other Trojan Lifestyles 0.00% Condom Brands Note: The Durex brands included in this survey comprise Gold Coin, Ramses, and Sheik. Source: Simmons Market Research Bureau, Fall 2005 Study of Media and Markets; Packaged Facts. This material is reprinted with permission. July 2006 ©MarketResearch.com, Inc. Page 109 Chapter 6: Consumer Condoms in the U.S. Table 6-7 Demographic Characteristics Favoring Use of Condoms by Brand, 2005 Index Basis Category Durex # Lifestyles Trojan 18-24 years 323 225 224 25-34 years 163 204 205 35-44 years 131 139 112 Male 137 119 134 Hispanic Origin 162 106 123 African American 181* 254 196 Asian American 168** 104** 126 Northeast 123 128 115 Southeast 82* 134 97 Pacific 126 69 100 College Grad 110 135 140 Grad Degree 120* 62 111 $40,000 to $59,000 126 111 95 $60,000 to $99,000 108 112 111 $100,000 or More 95 81 110 Marital Status Not Married 163 156 159 Number of People in Household 3-4 129 126 131 5 or More 140 151 122 Under 6 years 142 164 164 6-11 years 120 136 105 12-17 years 89 128 104 Rent 153 175 154 Age Group Gender Ethnicity Region Education Household Income Age of Children in Household Type of Residence * Note: Sample size unstable and is shown for consistency and directional purposes only. # Note: The Durex brands included in this survey comprise of the Gold Coin, Ramses, and Sheik. Source: Simmons Market Research Bureau, Fall 2005 Study of Media and Markets; Packaged Facts. This material is reprinted with permission. Durex Users Preferred by younger consumers, the Durex brand of condoms accounts for 26% of the world’s $4 billion condom market, making it the world’s top condom brand.133 Younger consumers display strong brand preferences and like buying brands that reflect their lifestyles. Moreover, the 133 Page 110 ©MarketResearch.com, Inc. July 2006 Chapter 6: Consumer Condoms in the U.S. Durex.com web site plays a key role in facilitating communication with young adults and provides them with information about safe sex. Consumers aged 18 to 24 years (index 323) used the Durex brand of condoms most often, apart from those in the 25-34 years age bracket (index 163), and those aged between 35 to 44 years (index 131). Consumers of Hispanic origin also had a penchant for using Durex condoms, at an index of 162. Consumers residing in the Pacific (index 126) and Northeast (123) regions also used Durex condoms often. Consumers from households with incomes on the lower side ($40,000 to $59,000) showed preference for the Durex brand of condoms (index 126). Lifestyles Users Lifestyles brand was very strong across several age groups, from those aged 18 thru 44. African Americans showed a high inclination for using Lifestyles condoms (index of 254), while consumers from the Southeast (index 134) and Northeast (index 128) also used Lifestyles condoms quite often. Also showing an affinity for the Lifestyles brand of condoms were college graduates with an index of 135. Consumers from households with incomes ranging from $40,000 to $99,000 preferred using the Lifestyles brand of condoms. Trojan Users Consumers aged 18 to 34 years skewed toward usage of Trojan, with those aged between 18 to 24 years (index 224) using the brand most often. African Americans (index of 196), Asian Americans (index 126), and Hispanics (index 123) also skewed high for using Trojan condoms. Consumers from the Northeast region (index 115), college graduates (index140), and consumers from higher income households showed a preference for Trojan. July 2006 ©MarketResearch.com, Inc. Page 111 Chapter 6: Consumer Condoms in the U.S. Page 112 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Chapter 7 Condoms in the U.S Trends Condom Manufacturers Target Women While men still purchase approximately 70% of male condoms, the number of women purchasing them is rising.134 Manufacturers are responding to this by focusing on new product development, packaging, and promotions geared specifically to the female condom purchaser, or are at least taking a unisex approach which are, at least, not offensive to either sex. New products in a variety of shapes, textures, flavors, lubrications, and toys have been designed to enhance the experience of sexual intercourse for women. Although a condom designed to offer a more pleasurable female experience is not a new concept, the earlier products’ packaging, marketing and retailing left something to be desired. Marketers have become more sensitive to the special emotional and functional needs of women, sexual and otherwise. This is seen in modifying packaging and brand positioning to make these products more accessible to women. For instance, in September 2005, Church & Dwight Co. introduced Elexa, a line of sexual wellbeing products under the Trojan brand that include freshening cloths, vibrating ring, condoms, and intimacy gels. The packaging is comparatively more discreet with dark, subtle colors, delicate print, and a simple line drawing of a woman (versus any sexually suggestive pictures and words). The principal display package bears the words “a woman’s perspective by Trojan,” but the Trojan brand name receives less space while ‘Elexa’ is very prominently displayed. The name Elexa is derived from the Greek goddess Alexa - the “protector of mankind.” The retail display is key to the marketing pitch. Elexa products are located in the feminine care aisle, to make purchase simple and comfortable. Similar initiatives are underway at Durex Consumer Products. According to Mark McGreevy, Vice President of Sales at Durex Consumer Products, “Products are being enhanced with women in mind. Many of the new products that we’ve introduced over the past couple of years have been 134 Grocery Headquarters, Vol. 68, Issue. 8, August 1, 2002 July 2006 ©MarketResearch.com, Inc. Page 113 Chapter 7: Trends Condoms in the U.S created to cater to women’s needs. From new textures and shapes to increased lubricants, today’s condoms offer a more natural and pleasurable experience for both partners.”135 According to Kimberly Liss, Brand Manager for Durex, “A younger, more sexually confident generation of women is buying condoms these days: 43% of women aged 18-24 in 2003, up from 27% in 2002.”136 To cater to this market, Durex markets products such as the ‘Durex Her Sensation Condoms’ – a condom with a berry scent, extra lubrication and ribs near the base of the condom. Marketing Focus Shifts from Contraception to Pleasure The condom market is inundated with pleasure enhancing products such as ultra thin condoms, special lubricants and flavors, unconventionally shaped condoms and vibrators. Amid the hype generated around each new such product launch, the original message of condoms is further lost. Condoms, like so much in American culture, are becoming entertainment. According to Information Resources Inc., dollar sales of condoms through chain supermarkets, drugstores, and mass merchandisers other than Wal-Mart rose 2.7% from $232.9 million in 2004 to $239.3 million in 2005. Some of this boost can be attributed to the growing market for condoms with features that enhance sensation or pleasure during sexual intercourse. For instance, the sales of Trojan Twisted Pleasure condom with a special twisted shape at the closed end to stimulate both partners grew 62.2% in 2004 over the previous year and again by 7.9% from $5.3 million in 2004 to $5.7 million in 2005. IRI-tracked sales of Trojan Her Pleasure condoms, which feature a bulbous head and a ribbed pattern with raised rings near the open end of the condom, increased 17.9% from 2003 to 2004 and a further 5.3% from $9.8 million in 2004 to $10.3 million in 2005.137 Taking these design innovations to the extreme is the Inspiral condom made by India-based Medtech Products Limited. This condom features a nautilus shaped head at the closed end, which results in a spring-action, stimulating the glans. According to IRI, sales of these condoms increased 48.3% in 2004 over the previous year and a further 6.5% in 2005 to reach $1.3 million. Global Protection, too, has a similar offering in its Pleasure Plus condoms. Pleasure Plus features a sizeable pouch with internal ribs at the closed end of the condom. During sexual intercourse the pouch moves and stimulates both partners. 135 Grocery Headquarters, Vol. 68, Issue. 8, August 1, 2002 Hour, July 22, 2004 137 Information Resources, Inc. InfoScan Review; Packaged Facts. 136 Page 114 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Condoms in the U.S One reason for the thriving market for these products could be that purchasing these is easier and more discreet compared to the purchase of sex toys and related accessories at specialty stores. At the same time, consumers in general are less uptight about discussions and products of a sexual nature. Most importantly, however, consumers are willing to spend on products the offer fun and fulfillment. According to Ted Conley, vice president of consumer marketing for Durex, “Many consumers have moved from less expensive traditional condoms to the more expensive pleasure-oriented ones. Retailers who have expanded distribution of pleasure condoms have seen a corresponding spurt in sales.”138 The success of sexual pleasure or enhanced sensation segment of the condom category has created a market where enhanced sensation items represent the major portion of male condoms market. In 2005, almost two-thirds of the condoms on the market were pleasure-oriented products.139 With newer innovative products such as vibrating condoms, condoms with warming gels, climax delaying lubricants and others, the trend is only going to grow stronger. Lack of Data, High Price Limits Market for Polyurethane Condoms In 1995, Durex Consumer Products introduced the world’s first polyurethane condom for men – the Durex Avanti. Designed for people allergic to latex, the Durex Avanti had certain advantages over latex condoms, such as compatibility with oil based lubricants, odorless, very thin material and thereby more heat conductive and transparent. The product soon became one of the largest selling Durex brands.140 Subsequently in 1999, Church and Dwight Co. launched the Trojan Supra polyurethane condom made of a patented ‘microsheer’ polyurethane material that is very thin and transparent but strong and coated with Nonoxynol-9 Spermicide (N-9). According to IRI, in 2005, sales of Trojan Supra brand of polyurethane condoms reached $4.7 million while sales of the Durex Avanti brand of polyurethane condoms reached $2.2 million. 138 139 140 Drug Store News, May 23, 2005 Chain Drug Review, Volume: 28, Number: 4, February 27, 2006 Consumers Union of U.S., Inc., May 1995 July 2006 ©MarketResearch.com, Inc. Page 115 Chapter 7: Trends Condoms in the U.S The market for polyurethane condoms is very small compared to latex condoms and IRI indicates modest growth in sales of the Durex Avanti and Trojan Supra brands of polyurethane condoms in 2005. Polyurethane condoms simply do not measure up to latex condoms, especially in terms of effectiveness in preventing the transmission of STDs. While laboratory tests on polyurethane show that sperm and viruses like HIV cannot pass through it and the FDA has approved several polyurethane condoms, polyurethane condoms safety is not as well documented as latex condom safety, effecting consumer purchase. They are more expensive and have higher breakage rates than latex condoms. Test results are published in The Cochrane Database of Systematic Reviews 2006 (Issue 1), wherein 11 trials were made on 3,957 sexually active, adult monogamous couples in heterosexual relationships and not at risk for STDs. Nine trials were conducted in the U.S., one in the U.K. and one in France. The tests concluded that breakage rate for polyurethane condoms was up to five times higher than for latex condoms.141 Furthermore, the FDA requires each package of polyurethane condoms to be labeled “For Latex Sensitive Condom Users.” This label may be off-putting to the average consumer without latex allergies. The higher price not withstanding, if the marketers are able to dispel the consumer’s doubts regarding reliability of polyurethane condoms and are able to educate the consumer on issues such as the intended use of N-9 lubricant, the marketers may be able to turn around the downward trend in polyurethane condoms. Female Condom Still a Failure The first female condom was introduced in the U.S. in 1994 under the name “Reality.” Now known as the FC Female Condom in the U.S. and distributed by Mayer Laboratories, Inc., the female condom is a large, loose-fitting polyurethane condom that is inserted into the vagina and is intended to prevent pregnancy and STDs. With IRI tracked sales of just $266,800 in 2005, the market for female condoms is rapidly shrinking, falling 19% in 2004 and a further 22% in 2005. 141 Health Behavior News Service, Center for the Advancement of Health, February 14, 2006 Page 116 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Condoms in the U.S The reason for the failure of this product in the U.S. condoms market is that it provides reduced protection against pregnancy as compared to male latex condoms [See Table 7-1]. Protection against sexually transmitted diseases could also be inferior as polyurethane condoms have a higher failure or breakage rate as compared to latex condoms. A failure rate of over 25% has been reported and the FDA requires the labeling of female condoms to mention that “highly effective protection against STDs is provided if the male partner uses a latex condom for men.”142 Apart from these two factors, there are other drawbacks to using female condoms, such as insufficient lubrication and squeaky sounds during intercourse. Some women find it difficult to insert or remove the female condom. The outer ring is visible outside the vagina and seemed ungainly to some users. Moreover, the female condom is relatively expensive at approximately $14 for a pack of five.143 According to former FDA Commissioner David A Kessler, M.D., “The female condom is not all we would wish for, but it is better than no protection at all. The male latex condom remains the best shield against AIDS and other STDs.”144 142 U.S. Food and Drug Administration, New Ways to Prevent and Treat AIDS (FDA Consumer Reprint), July 12, 2004 Mayer Laboratories, Inc. website (www.mayerlabs.com) 144 U.S. Food and Drug Administration, New Ways to Prevent and Treat AIDS (FDA Consumer Reprint), July 12, 2004 143 July 2006 ©MarketResearch.com, Inc. Page 117 Chapter 7: Trends Condoms in the U.S Table 7-1 Overall Pregnancy Rates by Type of Contraceptives Used Contraception Method Sterilization Hormonal Methods Intrauterine Devices (IUDs) Barrier Methods Typical Use Rate of Pregnancy Lowest Expected Rate of Pregnancy Male Sterilization 0.15% 0.1% Female Sterilization 0.5% 0.5% Implant (Norplant) 0.09% 0.09% Hormone Shot (Depo-Provera) 0.3% 0.3% Combined Pill (Estrogen/Progestin) 5% 0.1% Minipill (Progestin only) 5% 0.5% 0.8% 0.6% Progesterone T 2% 1.5% Male Latex Condom 1 14% 3% Diaphragm 2 20% 6% Vaginal Sponge (no previous births) 3 20% 9% Vaginal Sponge (previous births) 3 40% 20% 2 20% 9% 40% 26% Female Condom 21% 5% Spermicidal gel, foam, suppository, Film 26% 6% Withdrawal 19% 4% Natural Family Planning (calendar, temperature, cervical mucus) 25% 1-9% No Method 85% 85% Type Copper T Cervical Cap (no previous births) Cervical Cap (previous births) Spermicide Natural Methods None 2 Note: Typical use is when you don’t use it at all or don’t use it correctly. Lowest expected rates reflect perfect use: when you use it correctly every time you have sex. Source: U.S. Food and Drug Administration, Consumer-Friendly Birth Control Information U.S. Policies May Contribute to Reduced Condom Sales The U.S. government has used foreign aid to pressure other governments to adopt abstinence education programs. In 2003, when the U.S. global AIDS bill was passed, Congress added into the law a requirement that one-third of all AIDS prevention funds be spent on abstinence programs.145 The clause is controversial: some organizations, such as the Government Accountability Office (which is an arm of Congress) and the Global AIDS Alliance, questioned the practicality of 145 OpEd News, April 12, 2006 Page 118 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Condoms in the U.S promoting abstinence before marriage, and the possible ramifications of neglecting contraception techniques such as usage of condoms. The Global AIDS Alliance also charged that the U.S. State Department was also compelling countries receiving the aid to cut back on programs that educate people on the use of condoms. A report from the GAO states that the legislation in question is causing severe difficulties in the execution of various AIDS programs in the 15 countries receiving aid through the President’s Emergency Plan for AIDS Relief (PEPFAR). The report alleges that the Office of the Global AIDS Coordinator (OGAC), the government department responsible for executing PEPFAR, has even crossed the limits of the legislation. OGAC has reportedly recommended that various country programs set aside at least half of the funding for sexual transmission prevention activities in 2006, and two-thirds of that amount to promoting abstinence before marriage as well as fidelity in marriage. This is a marked shift from the previous policy promoting condoms as the primary device to fight the global AIDS pandemic. To meet the new spending targets on abstinence-based prevention a number of country PEPFAR programs had to cut services for prevention of HIV transmission from mother to child. AIDS prevention programs; including condom promotion for the population at risk of contracting AIDS were forfeited in some cases to prioritize sexual abstinence before marriage. Non-governmental organizations (NGOS) were also inhibited from educating young people about safe sex and condoms despite an obvious need to do so. In addition, some NGOs felt that the OGAC guidelines were vague, as there was uncertainty on the difference between condom information and condom promotion, the latter being banned by PEPFAR.146 In the U.S., a 2002 Human Rights Watch (HRW) study found, that abstinence education programs received millions of dollars but mostly comprised of religious indoctrination and antigay messages from Republican Party oriented churches and church groups. It has been claimed that federal funds were used to disseminate misleading information about condoms and birth control despite objections of medical doctors and social work professionals.147 In light of these factors, the Global AIDS Alliance director, Dr. Paul Zeitz, asked Congress to intervene and reverse the State Department requirements. In October 2003, the Senate considered rationalizing the proscription on condom-use education and also funding programs that simply 146 147 AIDSMap, Thursday, April 13, 2006 Political Affairs, April 10, 2006 July 2006 ©MarketResearch.com, Inc. Page 119 Chapter 7: Trends Condoms in the U.S prioritize the promotion of abstinence. However, the amendment was defeated following pressure from the Bush administration and the Republican Senate leadership.148 The effect of the new policy promotion affected condom sales in the U.S. In 2004, Ansell Healthcare declared that condom sales in the U.S. dropped due to President Bush’s sex education programs, which favor teenage abstinence above condom distribution.149 According to IRI, sales of Ansell’s Lifestyles brand of condoms fell 8.4% in 2004 to $28.1 million. In 2005, IRI-tracked sales of Ansell fell by another 1% and unit sales fell by 3.8% since 2004. Major marketers like SSL Americas and Church & Dwight Company, have suffered less compared to the smaller players. For instance, IRI-tracked sales for smaller player Okamoto (Beyond Seven) was $961.6 thousand in 2004 – 22.9% lower than the previous year. In 2005, IRI-tracked sales at Okamoto fell 14.5% to reach $821.7 thousand. Sales of other major condom marketers, such as Global Protection, Inc. and SSL Americas Inc. (Durex), Inc. also suffered in 2004. Although Durex managed a healthy 9.8% growth in sales in 2005, sales at Global Protection, Inc. continued to decline. Prime Time for the Condom Despite the fact that no official government or industry limitations prevent condom commercials from being aired on prime time television, condom advertisements have by custom been restricted to late-night hours or cable networks. But television networks have in recent times become more tolerant with sexual health product messaging, as seen by the glut of erectile dysfunction drug ads and feminine personal care ads. On June 2005, two television networks, the WB and NBC ended the custom by broadcasting the first network commercial for condoms during prime time viewing hours, airing Trojan “Make a Difference” advertisements after 9 p.m. and 10 p.m., respectively.150 Trojan’s Vice President of Marketing Jim Daniels remarked, “Network television is an efficient means of reaching consumers, and the prime time hours are probably the best time to do that.”151 The “Make a Difference” advertising campaign calls attention to individual accountability and sexual health using statistics about STDs.152 148 149 OpEd News, April 12, 2006 The Sydney Morning Herald, August 11, 2004 150 abcNews, June 1, 2005 abcNews, June 1, 2005 152 Drug Store News, Vol. 27, Issue. 10, September 26, 2005 151 Page 120 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Condoms in the U.S The foray into prime time television could also be a response to the growing comfort levels among consumers regarding topics related to sex which has led to franker and open discussions on contraception and AIDS. The American Sex Survey, released by ABC News in October 2004, charts out the attitudes of consumers toward sex and other topics related to sex in the U.S. The survey indicates that 51% respondents discussed fantasies, 42% considered themselves sexually adventurous and 29% had sex on the first date. Another factor that may have prompted marketers to advertise on prime time television could be that the youth can no longer be alienated from condom advertising or discussions on safe sex. The American Sex Survey indicates that Americans first had sex at an average age of 18 (17 for men, 18 for women). The old method of airing condom advertisements late in the night so as to minimize the exposure of children to adult content can no longer be justified. However, apart from these factors one cannot deny that targeting the youth with condom promotions and advertisements makes good business sense for condom marketers. Changing Trends in Sex Education Depending on the state or local school district mandate, schools teach either the Comprehensive Sexuality Education or the Abstinence-Only-Until-Marriage Program. These are two different types of sex education classes that embody two absolutely diverse perspectives. However, many schools do not follow any one program exclusively and the topics taught to the students may fall under any of the two programs. Nonetheless, the debate on which type of sex education program should be taught in schools has become an issue of national dispute and the source of much political muddling. The abstinence-only sex education program is a key element of the education plan drafted under the Bush administration. It has its supporters as well as critics. According to the Kennedy School National Survey on Sex Education,153 15% of Americans believe that schools should teach Abstinence-Only-Until-Marriage Programs and not provide information on how to use or even purchase condoms and other contraceptives; 46% believe that sex education programs should encompass “abstinence-plus” (i.e., while stressing on abstinence, schools should teach about condoms and other contraception methods); and 36% believe that sex education should not be 153 The survey, conducted by Princeton Survey Research Associates from September to October 2003, was based on two nationwide telephone surveys conducted among a random sample of 1,759 respondents 18 years of age or older who accurately represent the national population. July 2006 ©MarketResearch.com, Inc. Page 121 Chapter 7: Trends Condoms in the U.S only about abstinence from sexual activity but that the focus should be on how to make responsible and informed decisions about sex.154 The survey also showed that despite the fact that only 15% of Americans want abstinence-only sex education in the schools, 30% of public middle schools and high schools where sex education is taught actually teach abstinence-only, 47% taught abstinence-plus and 20% taught a more comprehensive program. Supporters of the abstinence-only program have had some success with more federal funding being made available for abstinence programs. While the debate over abstinence continues, from the condom marketer’s perspective, the focus on abstinence-only programs in schools means only one thing – lower sales. Teenagers represent an at-risk population in terms of the likelihood of contracting AIDS, STDs or unwanted pregnancies and targeted marketing efforts by condom manufacturers at this segment is not uncommon. The U.S. teenage population represents an important market segment also because marketers want to catch their consumers at a young age as it is believed that it becomes difficult to make condom users switch brands. 154 NPR, February 24, 2004 Page 122 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Condoms in the U.S Battling Ancient Blue Laws The term “blue law” has its origins in 17th century Connecticut. Coined by Puritans who wished to keep the Sabbath holy, blue laws were a device to preserve rigid familial structures, to regulate decadence and prevent people from wearing revealing clothes. Over time the purpose of these laws was diluted as it addressed varied issues such as sodomy, polygamy and adultery. Blue laws are somewhat antiquate and are gradually disappearing. However, in August 2005, the Supreme Court refused to hear a case on the legality of a ban on the sale of sex toys in Alabama. The law prohibited the distribution of ‘any device designed or marketed as useful primarily for the stimulation of human genital organs.’ Offenders could get a one-year jail term or be fined $10,000 on first offense. Alabama’s law does allow the sale of vibrators and body massagers that are not specifically designed or marketed to the public as sexual aids. Sales of sexual devices were exempt if they were to be used ‘for a bona fide medical, scientific, educational, legislative, judicial or law enforcement purpose.’ The other states with bans on vibrators are Georgia, Mississippi and Texas. The vibrating condom – a condom with a battery-operated ring that can be attached at the base (open end) of the condom – is banned in Alabama, Colorado, Georgia, Kansas, Louisiana, Mississippi, Texas and Virginia. Use of Nonoxynol-9 based Spermicides Decline In the 1990s, Nonoxynol-9 (N-9), the active ingredient in most spermicidal creams sold in the U.S. was shown to kill the AIDS virus in the laboratory tests. Further epidemiologic studies suggested that N-9 offered some degree of defense from bacterial STIs (Sexually Transmitted Infections) when used directly or along with a diaphragm. Researchers anticipated that N-9 would show similar success against HIV in human trials as well. HIV prevention activists expected N-9 would be the leading weapon in the effort against AIDS. Condom marketers who had already offered condoms coated with N-9 spermicide to avert unwanted pregnancies started publicizing the added benefit it offered in protection from AIDS. However, the belief of having found a wonder drug to prevent transmission of HIV and other STDs simply by using N-9 was soon found to be baseless. A 2000 study of N-9’s effectiveness among sex workers in South Africa and Thailand showed that HIV incidence was actually higher July 2006 ©MarketResearch.com, Inc. Page 123 Chapter 7: Trends Condoms in the U.S among women using N-9 than among those using other products. The finding questioned the safety of using N-9 for protection against unwanted pregnancy.155 Experts at the World Health Organization (WHO) and the U.S. Centers for Disease Control and Prevention (CDC) conducted a review of the evidence. The summary report was released by WHO in October 2001 and the CDC published its public health guidelines for the use of N-9 in May 2002 asking manufacturers to stop adding N-9 to condoms and sexual lubricants. The WHO and CDC reports reached the following conclusions: 1. N-9 is not effective against HIV or other STIs and, when used vaginally multiple times a day, can cause genital lesions—a condition that may increase a woman’s risk of acquiring HIV. 2. In case of anal intercourse even small doses of N-9 can cause massive, short-term damage to the rectal epithelium (lining), thereby increasing an individual’s risk of contracting HIV and other STIs. 3. Although non-condom contraceptive products containing N-9 are moderately effective in preventing pregnancy and safe when used infrequently, condoms lubricated with a small amount of N-9 are no more effective in preventing pregnancy than are lubricated condoms without N-9.156 Sadly, the public revelation of the increased risk of acquiring HIV and possibly AIDS and the ineffectiveness of condoms coated with N-9 at preventing pregnancy tarnished the image of all condom manufacturers. Furthermore, anti-family planning activists who promoted abstinence started using the N-9 issue to discredit condoms, and contraceptives as a means of avoiding STIs and unwanted pregnancy. According to Lori Heise, Director of the Global Campaign for Microbicides, “The belief that N-9 helps prevent HIV is deeply entrenched and it would take years and a massive public education campaign to correct. The most prudent thing to do is to remove N-9 from lubricants and condoms.”157 In September 2002, a coalition of over 85 leading scientists and health groups issued a statement calling upon manufacturers of condoms and lubricants to voluntarily eliminate N-9 from their products. Since the launch of the call, nine condom and lubricant manufacturers including 155 The Guttmacher Report, Volume 8, Number 2, May 2005 Global Campaign for Microbicides, Press Release, September 26, 2002 157 The Guttmacher Report, Volume 8, Number 2, May 2005 156 Page 124 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Condoms in the U.S Johnson & Johnson (Condom business bought by Ansell Healthcare Products in 2002), Mayer Laboratories and Durex Consumer Products, Inc. have discontinued production of N-9 condoms and lubricants. Planned Parenthood Federation of America (PPFA) promptly stopped providing N-9 condoms. Ansell Ltd., maker of Lifestyles condoms, and Church & Dwight Company, maker of Trojan have resisted, and claim that N-9 lubrication on condoms provides women with back-up protection against pregnancy in case of condom failure. In January 2003, the FDA proposed a labeling guideline that proposed adding a caution to alert the consumers that vaginal contraceptives containing N-9 do not check the transmission of HIV and other STIs, and that frequent vaginal use (more than once a day) of N-9 products can increase vaginal irritation, and increase the risk of infection. In March 2005, GAO released a report on the federal government’s efforts to research about N-9 and HIV and notify the public. The report reproached the FDA for taking too long to inform the public about evidence related to N-9 and HIV transmission. Despite all such efforts to limit the use of N-9, some companies continue to sell N-9 condoms – further confusing the public. Approximately one in five condoms sold in the U.S. is still lubricated with N-9. Church & Dwight argues that N-9 condoms remain an important family planning option for couples whose primary concern is pregnancy prevention and who prefer the extra measure of pregnancy prevention that spermicidal condoms provide.158 158 Food and Drug Administration, Division of Dockets Management, February 10, 2006 July 2006 ©MarketResearch.com, Inc. Page 125 Chapter 7: Trends Condoms in the U.S Product Trends Vibrating Condom Rings The vibrating condom – a condom with a battery operated ring that can be attached at the base (open end) of the condom was one of the central attractions at an inventors’ trade fair in Geneva in 2004.159 The vibrating condom ring, a Taiwanese creation, has gone on to become one of the most innovative and popular products launched in the condom market in recent times. Consisting of small vibrator attached to a soft silicone ring, the vibrator and its non-rechargeable cell are completely enclosed in silicone. The ring may be switched on or off, and used multiple times. Most vibrating condom rings last around 20 minutes. Designed to arouse the clitoris as well as the male genitals, it can be worn with or without a condom. The vibrating condom ring was first sold in the U.S. under the name ViCon. Leading condom marketers in the U.S. were quick to launch their own versions of the ViCon. Select brands include Trojan Vibrating Ring, Durex Vibe, Lifestyles 4Play Vibe, The Pleasuring, and Merit Joy Vibrating Ring. With the exception of Merit Joy Vibrating Ring which lasts up to 40 minutes, the other mentioned brands of vibrating rings last for about 18 to 20 minutes. Glow in the Dark Condoms Although glow in the dark condoms are not a new product concept, the Night Light brand of glow in the dark condoms is the first one to be approved by the FDA as a safe condom for prevention of STIs and unwanted pregnancies. The Night Light glow in the dark condom is marketed by Global Protection, Inc. and makes use of safe and non-toxic phosphorous pigments. The phosphorus pigments are sealed between two layers of regular latex via a patented 3-layer process. 160 These condoms need around 30 seconds of exposure to light before use, for the effect of the phosphorus pigments to show. 159 160 Daypop, April 3, 2004 Website of online condom retailer - Undercover Condoms (www.undercovercondoms.com) Page 126 ©MarketResearch.com, Inc. July 2006 Chapter 7: Trends Condoms in the U.S Condoms with Climax Delay Lubricant For men who suffer from premature ejaculations or who are unable to sustain an erection for long durations now have readily available assistance in the form of climax control lubricants that delay ejaculation. The climax control lubricant generally contains small percentages of benzocaine as the active ingredient. Benzocaine is a local anesthetic commonly used as a topical pain reliever and the active ingredient in many over the counter analgesics. Sensation to touch is caused by the stimulation of nerve endings. When the nerve endings are stimulated, sodium enters the nerve ending, which causes an electrical signal to build up in the nerve and travels to the brain.161 The Benzocaine in the lubricant acts as a chemical barrier, stopping the sodium from entering the sensitive nerve endings in the male genitals. This desensitizes the penis, resulting in delayed ejaculation and longer lasting erections. To avoid the same effect on the female, only the inner side of the condom is coated with the lubricant while the outside may have regular lubricant. The Trojan Extended Pleasure Lubricated Condoms, Durex Performax Condoms, and Lifestyles Lasting Pleasure Condoms are all similar condoms featuring climax-delaying lubricants. Custom Sized Condoms Famed New York City condom store Condomania offers a line of condoms in 55 sizes. Branded as “TheyFit,” this line is touted to be sized-to-fit or custom fit according to the buyer’s size. Although technically the available sizes are limited to 55 and cannot really be called custom fit, they are enough to fit most penis lengths and widths. These condoms are available in 55 combinations of 14 different lengths and 11 different widths. The more custom fit could make these condoms safer to use as the possibility of the condom tearing or slipping off during sexual intercourse or during withdrawal due to improper fit will be reduced. The manufacturer also claims that a better fit will result in a more natural feel and increased comfort and pleasure. To order a custom-fit condom from Condomania, customers are provided with a special fit-kit online to measure the penis length and width accurately before ordering. According to company spokesperson Adam Glickman, “The “TheyFit” brand condoms are more comfortable and less likely to tear than other styles. And if 161 www.healthatoz.com July 2006 ©MarketResearch.com, Inc. Page 127 Chapter 7: Trends Condoms in the U.S you’re not sure what size you will need, just see Condomania’s online special measuring tool. The measurements are defined by random number and letter combinations.”162 Condom Kits – More than Just Condoms Marketers are launching condoms and accessories designed to focus on pleasure and foreplay in addition to protection from STD’s. A new trend is to sell condoms with pleasure enhancing accessories along with condoms in a single kit. Designed to enhance foreplay among users, these products will help to create lasting impressions of these products in the users mind. One such offering is the 4Play series of condom kits introduced by Ansell Healthcare Inc. in April 2005. The 4Play series comprises of five products that are basically condom kits bundled with pleasure-enhancing paraphernalia. The five kits are the 4Play Touch, 4Play Taste, 4Play Tease, 4Play Vibe, and the 4 Play Ignite. According to the company’s business development manager, Dahai Guo, “The company has decided to highlight pleasure as a way to drive sales in the (condom) category.”163 The 4Play Touch features three lubricated latex condoms, two fruit-scented warming massage oils and some massage tips. The 4Play Taste includes three lubricated ultra-sensitive condoms and two fruity edible body paints. The 4Play Tease includes three lubricated latex condoms, edible vanilla dust with a feather tickler. 4Play Vibe includes one lubricated latex condom and a vibrating ring with battery. The 4Play Ignite features three lubricated latex condoms, body glitter lotion and three sachets of silky warming lubricant. The method of enticing consumers to practice safe sex by offering products that promise pleasurable experiences is also practiced by Church & Dwight Co., Inc. with its Trojan Elexa brand. The Elexa offers condom kits with accessories such as vibrating rings and freshening cloths. 162 163 Website of Condomania (www.condomania.com) Drug Store News, May 23, 2005 Page 128 ©MarketResearch.com, Inc. July 2006 Appendix Condoms in the U.S. Appendix Church & Dwight Co., Inc. Mayer Laboratories, Inc. 469 N. Harrison St. Princeton, NJ 08543-5297 Phone: 609-683-5900 Fax: 609-497-7269 Website: www.churchdwight.com 646 Kennedy St Ste C Oakland, CA 94606-5315 Phone: 510-437-8989 Website: www.mayerlabs.com SSL International plc 35 New Bridge St. London, EC4V 6BW, England United Kingdom Phone: +44-20-7367-5760 Fax: +44-20-7367-5790 MedTech Products Limited Alexander Square, 4th Floor Guindy, Chennai - 600 032 India Phone: +91 - 44 - 22355254 / 55 Website: www.medtechproducts.org Primary US Address: SSl Americas 3585 Engineering Dr., Ste. 200 Norcross, GA 30092-2820 United States Phone: 770-582-2222 Fax: 770-582-2233 Website: www.ssl-international.com Global Protection Corp. 12 Channel St Boston, MA 02210-2323 Phone: 617-946-2800 Website: www.globalprotection.com Ansell Healthcare, Inc. Okamoto USA, Inc. 200 Schulz Dr. Red Bank, NJ 07701 Phone: 732-345-5400 Fax: 732-219-5114 Website: www.ansellhealthcare.com 18 King St Stratford, CT 06615-5827 Phone: 203-378-0003 Website: www.okamotousa.com July 2006 ©MarketResearch.com, Inc. Page i Your Single Source For Buying Market Research Just Got Better! MarketResearch.com "Alert Me" Service Be the first to know when new research is available! Let new research find you! Create your own Alert Me service, a free e-mail that lets you know when (and how many) new reports are available in your chosen areas of interest (over 650 to choose from!) Every day our collection grows with hundreds of fresh titles from existing publisher partners as well as entire collections from new partners, making our Alert Me service a great tool for keeping tabs on the topics and trends generating interest in your industry. Visit MarketResearch.com and sign-up now! 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