CSPA gets back to business: the association moves ahead with a broad range of initiatives.

FOLLOWING THE SEPT. 11 terrorist attacks in the U.S., President George Bush urged Americans to "get about the business of America." The Consumer Specialty Products Association (CSPA) has done just that and the association outlined the latest series of moves it has made to keep the industry on course at its annual meeting, Dec. 2-6 in Fort Lauderdale, FL.

During the annual meeting several new ideas intended to spur growth were put forth to the general membership. Chief among these initiatives is the association's stewardship program, which was detailed by Procter & Gamble's Dana Winn during the general session. The program is intended to promote the production and distribution of safe and effectively formulated products that provide desirable benefits for household, commercial, institutional and industrial customers and consumers and their families, pets and their environment.

According to Mr. Winn, the stewardship initiative is similar to the chemical industry's responsible care program. Specifically, the mission of the CSPA stewardship program is to provide principles of management practice, leadership and training by which companies can provide safe and effective products for their household, commercial, institutional and industrial customers. He stressed, however, that membership in the stewardship initiative is entirely voluntary and not a condition of membership in CSPA.

Mr. Winn rattled off several benefits companies would reap by signing up for the stewardship program, including defining what the industry stands for, fostering a spirit of sharing and cross-training within the industry and improving performance through self-assessment. A guidance document from CSPA will be available this year to assist with this assessment.

But perhaps most important, the stewardship program will "improve the image of our industry among our target audience, government and legislators," said Mr. Winn. For all his effort in developing the stewardship program, Mr. Winn was presented with the Chairman's Award during the annual meeting. Also during the annual meeting, Al Pellini of CCL Container, received the Charles E. Allderdice Jr. Memorial Award. The award recognizes a distinguished individual who has demonstrated exemplary achievements, commitment and service to the industry and the association.

Other Developments

Although the stewardship program is at the center of CSPA's accomplishments, the association also made several other moves to strengthen its base. As previously reported (Happi, November, 2001), the detergent division was renamed the cleaning products division and the pesticide division was renamed the pest management products division. According to CSPA, the changes more accurately reflect the scope of the division's membership and the products they represent.

Also in 2001, CSPA moved to new headquarters in Washington, D.C. and the association launched a new magazine, Formulators' Forum.

During the annual business session, CSPA president Christopher Cathcart and CSPA chairman Ernest Bernarducci reviewed the latest regulatory activities at the state and federal level. Dr. Bernarducci warned attendees that state regulators continue to look for ways to increase fees for CSPA members as a way to shore up deficits within their state budgets.

The Word from EPA 

Steve Johnson of the Environmental Protection Agency (EPA) told the audience that although the anthrax crisis caught the industry and government by surprise, the two ultimately rose to the occasion. As a result, Americans are better prepared to defend themselves from such attacks. According to Mr. Johnson, the EPA, under the direction of Christine Todd Whitman, has three key themes: partnerships, innovation and results. He noted that EPA and industry can accomplish much more working together. At the same time, he noted that many good ideas, whether it is how to handle the anthrax crisis or product registration, originate outside Washington, D.C. But ultimately companies, associations and agencies must work together to obtain effective results, said Mr. Johnson.

Economic Recovery?

In November, several leading economists announced that the U.S. economy probably slipped into recession last March. James Glassman, an economic journalist and syndicated columnist, noted that the U.S. economy fell into a mild recession just once from 1982 to 2001. He assured the audience that the "new economy" will recover because of the liberation of supply in the traditional supply-demand model.

Several factors, still in place, led to this liberation of supply including more free trade around the globe, lower tax rates, better regulatory, monetary and fiscal policies and a technology revolution that spurred a surge in productivity. Following the NASDAQ meltdown, many observers were quick to blame too much investment in technology for the freefall in stock prices that began in 2000 and culminated in recession.

"Don't blame the slowdown on high tech," insisted Mr. Glassman. "The Federal Reserve raised interest rates too quickly from June 1999 to June 2000." Other culprits include a tripling of oil prices and the drag caused by high taxes and the budget surplus. "Too much money is flowing into Washington," he charged.

With all that newfound cash, all the federal government could do was look for ways to retire the debt. Instead it should have been using the money to foster growth, according to the speaker. "Retiring bonds is not the best way to spend a surplus," he insisted.

Despite those missteps, Mr. Glassman said there were signs that the economy was righting itself by the middle of 2001: the Fed started lowering rates, taxes were cut, oil prices fell and the regulatory activity in Washington was moving toward a pro-business slant."

But when the Sept. 11 attacks came, consumer confidence swooned, leading to more rate cuts, tax cuts and smarter public spending. Those moves have helped the Dow Jones Industrial Average to climb 20% from Sept. 21 to Nov. 30 and the NASDAQ to jump 36%. The rise in stock prices historically signals that the worst of a recession is over and Mr. Glassman remained optimistic about the future of the market, noting that stocks have returned an average of 11% a year since 1926. "I think the economy over the next 50 years will be even better than the last 50 years," he concluded. "We must remain future-oriented."

A New Approach for Aerosols?

Although aerosol fillings in 2000 topped 3.2 billion units, representing the third highest total ever recorded in the industry's annual survey, Mr. Cathcart presented some sobering statistics to members of the aerosol division during the division meeting held on Dec. 4. He noted that pressurized product sales on a per capita basis peaked in 1973 at 13.7 units. In contrast, per capita units were 11.6 in 2000. He noted that If the industry had been able to maintain the per capita consumption levels of two decades ago, total units filled last year would have been closer to 3.8 billion. Mr. Cathcart blamed the decline on several factors including the chlorofluorocarbon (CFC) ban and ensuing controversy, inhalation abuse, graffiti, consumer questions regarding recycling and volatile organic compound issues.

"Negative consumer attitudes toward aerosols and a general chemophobia on the part 'of the public are possible factors for the decline," said Mr. Cathcart. "Real or imagined, these issues are used to target aerosols."

To stem the erosion of sales, he suggested looking outside the aerosol industry for solutions. Mr. Cathcart noted that the plastics industry faced similar problems nearly a decade ago when consumers turned away from plastics toward materials they perceived to be more environmentallyfriendly. But in 1992 the American Plastics Council began a widespread campaign highlighting the benefits of plastics and, over time, managed to convince consumers of the positive role plastics play in everyday life.

He suggested the aerosol industry should study ways to enhance its image. Unfortunately, the plastics industry spends $25-30 million each year on its image campaign. Before members balk at such a hefty price tag, he suggested a study be conducted to research the matter more closely.

"Do you want to get to the bottom of this?" he asked division members. "And when you get there, do you want to do something about it?"

With industry and the association working together, things can be accomplished he insisted. "We have nothing to apologize for! It's not only OK to spray, it's smart to spray," he told the audience. "Let's proactively address the issue in 2002."

Harry McCain of Aeropres pointed out just how difficult it would be for the industry to raise $30 million to tackle the aerosol issue and noted through the end of November, member companies pledged $100,000 of the $250,000 deemed necessary to study the issue and find out the real attitudes of consumers. He pointed out that the term "aerosol" has been linked to anthrax and may confuse consumers.

Apathy among marketers hasn't helped matters either. He noted that not all member companies use the "No CFC" logo on their aerosol products. Mr. McCain suggested several ways companies can communicate the efficacy and integrity of aerosols through such unique measures as product placement in movies, holding a can lottery or placing free standing inserts in major newspapers. "Let's stop apologizing for aerosols and start promoting them," he urged.

Finding Growth at Retail

During the division meeting, Timothy Knight of Sherwin Williams made several market observations regarding the retail environment in general and the aerosol spray paint segment in particular. He noted that the spray paint segment has been a low to no-growth mode for several years due to a variety of factors including changes in substrates, improved original equipment manufacturer (OEM) finishes and regulatory and legal issues. At the same time, there has been significant consolidation among retailers in the U.S. and many have moved to an everyday low price strategy that reduces already slim margins even more.

To succeed in this tougher retail environment, Diversified Brands has introduced innovative products such as Mirage spray paint which changes colors as the light source moves and expanded into niche markets that may provide new growth opportunities. Other ways to achieve growth include building brand equity through more advertising, improving operation and becoming proactive in regulatory issues that could impact sales.

Doug Raymond, also of Sherwin Williams, reviewed regulatory activities taking place on the national, state and local levels. He told the audience that everything that has a negative impact on the industry gets its start in California and ultimately spreads to the rest of the U.S. He urged members of the aerosol industry to attend meetings of the California Air Resources Board (CARB) on a regular basis.

"We all need to work together," he said. "When we send 50 or 60 people to a meeting, that impresses CARB. It's not good when there are only three or four people in attendance."

A Global View of Air Care

The air care division reviewed the latest trends and regulations that are having an impact on industry. Neil Snyder, Reckitt Benckiser, provided an overview of international regulations. Although several problem areas do exist, most notably in Europe, Dr. Snyder noted that, generally speaking, there are no specific regulations that apply to air care products per se, compared to other consumer products.

Still, in Europe, some air care products, depending on the formulation, must comply with several regulations, including the Biocidal Products Directive and the Dangerous Preparations Directive. Dr. Snyder also reviewed regulatory activity in North America, Australia, Asia, Africa and the Middle East. He concluded that global harmonization remains a key topic of interest for many industry observers and he suggested that the European regulatory model will probably become the system of choice.

"Whether we like it or not, we live a global world. Any product can be used and disseminated around the world," he noted. "The world wide web can turn an issue in Nepal into a global issue."

In this new global economy, culture plays an increasingly important role in international business, noted Roy Crum of the University of Florida. He noted that cultural value systems are learned very early in one's life and once they are set, they are difficult to change. Therefore, people usually consider people and events that are similar to their own culture to be normal and what is unlike their culture to be strange, irrational and even evil.

These attitudes are called cultural bias, which can by accentuated by things learned subconsciously and stereotypes. Although country-by-country analysis is useful, it has its limitations, said Dr. Crum. "Not everyone in a country is alike," he noted. "In fact, variations within some countries are actually greater than variations among countries. The nation-state is not always the best way to decide how to sell products."

Dr. Crum also reviewed five ways that cultures are characterized. For example, cultural complexity refers to the degree to which understanding of conditions within a culture is dependent on the possession of background data specific to the context. For example, Germany, Switzerland and the U.S. can all be considered low context nations. In contrast, China and Japan are high context nations, which raises the difficulty of understanding the actual meaning of what is said.

Buying Decisions in Brazil

Victoria Jones reviewed buying decisions in Brazil. Dr. Jones noted that 20% of the population lives in Rio de Janeiro and Sao Paulo. Overall, just 10% of the population owns a car, 28% have phones and only 5% use the internet, although internet usage is growing 10% a month, according to the speaker. She said that Brazil is a collective society where consumers shop in groups and consider shopping a form of entertainment. Brazilians are also drawn to promotions such as discounts, free gifts and prize drawings. "Consumers are motivated by the chance to win something," said Dr. Jones.

Rather than promote their U.S. heritage, U.S. companies in Brazil would do well to follow European design trends because Latin Americans look to Europe for trend setting ideas in fashion and food.

Global fragrance trends was the topic of a presentation by Suzanne Sutin of Belmay. She noted that, in recent years, marketers have realized just how important fragrance is to making a product purchase--if consumers have more choices, they'll make more purchases. As a result, there has been a proliferation of fragrances in air care, with names such as Hawaiian Breeze and Cucumber Melon. At the same time, consumers can choose from plug-ins, candles and a host of other options. "We can have it all in air care," insisted Ms. Sutin.

She pegged air freshener sales (aerosols, plug-ins and candles) at nearly $2.2 billion in 2000, with North America accounting for 41% of sales and Western Europe 30%. By product type, sprays accounted for $1.1 billion in sales, followed by plug-ins, $705 million and candles, $382 million--although Ms. Sutin said candle sales are very underestimated. In most markets, the leading players are S.C. Johnson, ReckittBenckiser, Sara Lee and Dial. Moreover, she predicted home fragrance sales will continue to grow due to the cocooning trend.

RELATED ARTICLE: Carnauba: a son's memoir.

ONE NORMALLY DOESN'T EXPECT to get life lessons when attending a trade association annual meeting. But then, it's not every day that a prominent industry leader creates a film that delves deeply into the dynamics of what it means to be a son, a father and the head of a business family.

That's what happened at the CSPA annual meeting when industry members were invited to view "Carnauba: A Son's Memoir," a film by Samuel C. Johnson, chairman emeritus, S.C. Johnson & Son. When he began filming, Mr. Johnson set out to retrace his father's 1935 expedition to South America in search of carnauba wax. But in the end, the film is a moving examination of the important role that family plays in the development of the individual.

For much of the film, Mr. Johnson tries to come to grips with his relationship with his often-distant father. In the end, however, he realizes it's not so much how one remembers his father, but, "how our children remember us." Following the movie, Mr. Johnson told the audience that the drive to achieve success in business should not distance one from his or her family. "Do not be a successful, but distant industrialist."

After "Carnauba: A Son's Memoir," was completed, Mr. Johnson had to decide what to do with the film. Some wags suggested S.C. Johnson & Son purchase airtime on a major network and surround Carnauba with advertisements for Raid and Glade, but Mr. Johnson would hear none of that. "Carnauba is something that is meant to help people, not the company." As a result, Mr. Johnson is currently in talks with public television and said the movie will probably appear on PBS in the future.