Business

THE PROFITS IN REPELLENTS

West Nile fears are driving sales in protective products, JOHN INTINI reports

June 30 2003
Business

THE PROFITS IN REPELLENTS

West Nile fears are driving sales in protective products, JOHN INTINI reports

June 30 2003

THE PROFITS IN REPELLENTS

West Nile fears are driving sales in protective products, JOHN INTINI reports

Business

DURING THE MID-1980S, when he was studying business at Ohio State University, Brian Tuffin played strong safety for the famed Buckeyes football team. And while it’s been nearly 20 years since he’s strapped on the pads, the president of Brantford, Ont.-based S.C. Johnson & Son Canada Ltd. remains a defensive specialist—albeit on a much different playing field. These days the 39-year-old is busy trying to help ward off a swarm of West Nile-infected mosquitoes. Sitting in his triangular-shaped corner office, Tuffin talks at length about his firm’s commitment not just to selling its bug repellents, but to educating consumers on how to protect themselves from the insects—and from a potentially deadly disease. People are listening. “Many of our major retailers have already seen more than 300-per-cent increases in sales,” says Tuffin, fiddling with the gold ring he earned when the Buckeyes were Big 10 and Cotton Bowl champs in 1986. “People aren’t waiting around to be bitten by mosquitoes. They’re making preventive purchases—not reactive ones.”

That focus on preventive education is Tuffin’s best defence against any suggestions that S.C. Johnson is unduly profiting from widespread fears of West Nile. The company is Canada’s largest bug-repellent manufacturer, and West Nile has turned bug spray into big business. Industry analysts predict this season’s sales of insect repellents will at least double from last year, when Canadians spent $40 million on them. Most of that went to S.C. Johnson—three out of every four Canadian buyers opt for its products, including Off! Skintastic and Deep Woods Off! “West Nile has changed the purchasing habits of Canadian consumers,” says Andrew Pelletier, director of corporate affairs with Wal-Mart Canada.

Consumers didn’t wait for warm weather. “We’ve seen a doubling of insect repellent sales since February,” says Pelletier. But the big sales explosion is yet to come. Thousands of Canadians are packing up for summer holidays, and when the first confirmed human case of West Nile is reported, it will

almost certainly increase demand for protective products. “Many of our retailers have been asking for their full inventory up front,” says Neil Chin, vice-president of marketing with S.C. Johnson. “They want to make sure they’re ready when demand really increases, and are afraid of running out.”

Last year 20 Canadians, mostly in southwestern Ontario, died of West Nile, and more than 300 fell ill from the disease. Although there have been no confirmed human cases so far in 2003, more than a dozen dead birds have been found to have the virus in Ontario, two were detected in Quebec, one in Manitoba and another in Saskatchewan. A report in late May, meanwhile, that a Seattle man was thought to have the disease, heightened awareness of West Nile and drove up repellent sales right across the continent-even though that report was ultimately proven false.

Major retailers are reaping the rewards. Roña and Canadian Tire stores have experienced substantial increases in sales of anything that might keep the bugs at bay. “Repellents, foggers, citronella torches and mosquito magnets have all done excep-

‘PEOPLE ARENT waiting around to be bitten by mosquitoes. They’re making preventive purchases—not reactive ones.’

tionally well for us so far this year,” says Scott Bonikowsky, a spokesperson for Canadian Tire. “As public concern increases, so do product sales. We have seen a triple-digit increase.” While its market share is smaller, Pointe-Claire, Que.-based Schering Canada Inc., maker of the popular Muskol repellents, is also selling at a record pace. Muskol has been protecting Canadians for 50 years, thanks to a formula developed by a colonel in the Canadian military. “We’ve been shipping our products to the stores as fast as we

can manufacture them,” says Schering spokesman Randy Steffan.

But the sales windfall poses challenges for the manufacturers. Both S.C. Johnson and Muskol have boosted production at their plants. Can they keep up if demand gets any greater? “I certainly hope so,” says Tuffin, who expects production to double this year. “In the history of our North American operation, there’s never been a scenario of this magnitude. Our team has been meeting since January in anticipation of West Nile, but we won’t know the extent of the surge until later in the season.”

Most of the top repellents use a chemical called DEET as the active ingredient. It’s an effective deterrent to bugs, but Health Canada does not recommend the use of DEET on children under six months, and only in small doses for other young children. In large doses or after prolonged use, DEET can be a neurotoxin. There are alternatives: just in time for the peak season, S.C. Johnson is offering Off! Botanicals, a DEET-free repellent recently approved by the Canadian government (it was sold in the U.S. last year). “Sure it’s great timing,” says Tuffin. “but the creation of this product was driven by a consumer concern with using DEET.” The company has more than doubled its advertising budget to mount a print, TV and radio campaign explaining how its products can help consumers enjoy the outdoors this summer while protecting themselves from potential infection. Chin says the company is also posting a bug tracker on its Web site to keep tabs on the most heavily infested areas. “We’ve hired entomologists to tell us where the bugs are and where they’re going to be,” Chin says. “Hiring experts doesn’t give us any brand recognition, but it does provide credibility.”

West Nile is also driving up sales for firms that produce everything from scent-free soaps to protective camp gear. “We’ve been selling a lot of screening-related products, including bug hats, bug jackets and bug tents,” says Bonikowsky at Canadian Tire. “Mosquitoes are not new to Canada, but

the threat of West Nile has just made more people think about protecting themselves.” Conversely, West Nile—like SARS and mad cow—will likely add to the woes of the already depressed tourism industry. Weekend warriors, who head north to cottage country for a break from the city, are a little more apprehensive this season. That could be bad news for resorts, campground operators and outfitters. Checking the canoe reservations for July and August, Rob Rickward, who owns and operates Canoe Algon-

quin in Kearney, Ont., says bookings are down by about a third compared to this time last year. “It’s hard to tell if it’s SARS or West Nile, but the schedule is definitely not filling out like it does in other years,” says Rickward, who has run the canoe outfitting company for 25 years. “Last year, if three men came in, one would buy a bug jacket and the others would laugh at him. This year, they’re all buying jackets. There is no doubt West Nile is on people’s minds.”

Since S.C. Johnson is privately owned and

doesn’t publish financial figures, there’s no way of knowing the exact impact of West Nile on the company’s bottom line. While he acknowledges that sales are booming, Tuffin is adamant the company is not taking advantage of people’s fear just to promote repellent sales. “We’re a family-run company,” says Tuffin, “and I’d rather my neighbours know how to protect themselves from West Nile than sell another case of OFF!” Either way, Canadians will still buy record amounts of repellent this summer. flfl