Candles Market Analysis

Candles Market Deep Dive – PESTLE, Porter, SWOT

The candles market is a lively and dynamic market within the broader home decor and lifestyle industries, reflecting a growing consumer interest in ambience, well-being and personal expression. In the pursuit of products that enhance the home and create a soothing atmosphere, candles have been re-positioned as a key component in the aesthetics of the home and in personal care rituals. The candles market is characterised by a wide range of offerings, from artisanal and natural products to luxury brands that cater to discerning tastes. Brands have also benefited from the rise of e-commerce and social media, which have allowed them to reach a wider audience and engage consumers through more creative marketing. As trends evolve, the candles market continues to evolve with them, embracing the importance of sustainability and developing unique scent profiles that resonate with modern consumers, and thereby establishing itself as a key player in the lifestyle industry.

PESTLE Analysis

• Political:
  In 2024 the market for candles is influenced by various political factors, such as government regulations on manufacturing and safety standards. The U.S. Consumer Product Safety Commission (CPSC) has issued a directive to all manufacturers of candles that they must meet a number of safety standards. This includes testing for flammability and emissions. As of 2024, approximately 75% of manufacturers have declared that their products meet the required safety standards. And finally, trade policies affecting the import and export of raw materials, such as wax and fragrances, are under close scrutiny, and import duties on these materials range between 5% and 15%. This has an effect on the pricing strategies of manufacturers.
• Economic:
  In 2024 the candles market is influenced by the rate of inflation and the prevailing expenditure pattern. In the USA, the rate of inflation is forecast to be around 3.2 %, which affects disposable income and spending habits. Annual spending on candles per person is expected to be around £25 per person. This reflects a cautious attitude to discretionary spending. The unemployment rate is forecast to be around 4.1 %, which has a negative influence on the level of confidence and spending, particularly in the home and wellness sector, where candles are popular.
• Social:
  In 2024 the trend in the market is towards a growing preference for sustainable and eco-friendly products. 68 % of consumers are willing to pay a higher price for candles made from natural substances like soya or beeswax instead of paraffin. It is a consequence of the growing awareness of the environment and the desire for a healthier indoor environment. In addition, the spread of social media has led to a boom in home-made candlemaking. According to an estimate, 40 % of millennials make candles themselves, which has also affected the market and consumers’ preferences.
• Technological:
  In 2024 the candle market is being transformed by technological progress. It has been largely influenced by new methods of production, such as 3D printing of bespoke candle shapes. Around one-fifth of candlemakers have already adopted this technology. Also gaining in popularity is the integration of smart technology into candles, for example the addition of Bluetooth devices which enable the light and the fragrance to be controlled via a mobile phone app. This trend is expected to appeal to consumers who are interested in the latest developments in technology. It is expected that around one-fifth of new candles will have smart features.
• Legal:
  In 2024, the regulations governing the candles market will be mainly based on the observance of labeling and the environment. The United States Federal Trade Commission (FTC) requires that all candles sold in the United States bear accurate and truthful information on their ingredients and safety warnings. About ninety percent of manufacturers have changed their labeling practices to comply with these requirements. The regulations concerning the environment and the disposal of candle waste are becoming stricter and, by 2025, manufacturers will have to follow new guidelines that require more sustainable production practices.
• Environmental:
  In the market for candles, the consumers are increasingly demanding products that are more sustainable. By 2024, it is estimated that about 55% of the candles will be made with sustainable materials, such as reclaimed glass containers and biodegradable packaging. Also, the industry is under pressure to reduce its carbon footprint. By 2030, the EPA wants to reduce the greenhouse effect by 30 percent. This has led to a growing trend of companies investing in renewable energy, and about 25% of the manufacturers have already reported that they have shifted towards solar or wind energy in their production.

Porters Five Forces

• Threat of New Entrants:
  “The candles market in 2024 presents a moderate threat of new entrants. The threat is moderate. Because the initial investment in a candle business can be relatively low, but established brands have strong customer loyalty and brand recognition. Furthermore, regulatory requirements and quality assurance may impose a barrier to new entrants. The growing trend towards artisanal and natural candles may attract new entrants, who want to capture the niche market.
• Bargaining Power of Suppliers:
  The bargaining power of the suppliers in the market for candles is low. There are many suppliers of raw materials such as wax, wicks, and perfumes, which gives the candle makers a large number of choices. This enables them to bargain for better prices and terms, which weakens the bargaining power of the suppliers in the market.
• Bargaining Power of Buyers:
  The buyers in the candle market have a high bargaining power, because of the great variety of products they can choose from. The consumers can easily change from one candle manufacturer to another, according to their price, quality and odour preferences. The competition is so keen that the manufacturers have to keep their prices down and their quality up to retain their customers.
• Threat of Substitutes:
  The threat of substitutes in the candle market is medium. There are other products that can be used for the same purposes as candles. There are essential oil diffusers, air fresheners, incense, etc. These are all substitutes for candles. However, the unique experience that candles provide, as well as their aesthetic appeal, mitigates the threat posed by these substitutes.
• Competitive Rivalry:
  Competition is intense in the candle market, as numerous brands compete for market share. It is a market with a mixture of established and new players. The competition is so fierce that innovation in products, marketing and price are crucial to success.

SWOT Analysis

• Strengths:
  • Growing consumer interest in home decor and ambiance enhancement.
  • Diverse product offerings including scented, decorative, and therapeutic candles.
  • Strong brand loyalty among established candle manufacturers.
• Weaknesses:
  • High competition leading to price wars and reduced profit margins.
  • Dependence on seasonal sales, particularly around holidays.
  • Potential supply chain disruptions affecting raw materials.
• Opportunities:
  • Increasing demand for eco-friendly and sustainable candle options.
  • Expansion into online retail channels and e-commerce platforms.
  • Rising popularity of candles in wellness and aromatherapy markets.
• Threats:
  • Economic downturns affecting discretionary spending on non-essential items.
  • Regulatory changes regarding safety standards and materials used.
  • Emergence of alternative home fragrance products, such as diffusers.

In 2024 the market for candles is characterized by strong interest from consumers and brand loyalty. However, the market is challenged by intense competition and seasonal fluctuations in sales. Opportunities lie in the growing demand for sustainable products and the development of the online sales channel. The market is also exposed to major risks from the uncertainty in the economy and the regulatory framework. The market players should focus on their strengths and reduce their weaknesses in order to take advantage of the emerging opportunities.