Condoms

A review of the condom market in Belize

December 2010

A custom report compiled by Euromonitor International for Options Consulting Services Ltd

2

Table of ContentsTOC

Introduction

Key findings

Facts and figures

Final thoughts

Appendix

Contact information

3

Introduction

4

Options

The core questions guiding research are:

What is the size of the overall market for condoms in Belize?

What are the leading forms of distribution (retail/non-retail)?

What are the key drivers, trends and future outlook in the market?

How is the supply chain structured for different types of condoms?

Point of sale audits, what condoms are on offer? How are they priced? How are they sold and marketed?

Euromonitor International

Euromonitor’s consulting team aligned with Options and PSI to develop a customized solution for the above questions

The project methodology focused on Euromonitor’s experience utilizing the following techniques:

Retail store audits

Internal data/analysis collation & secondary research

Data validation via industry contacts

Transparency in sources, inputs and assumptions

Project ObjectivesIntroduction

5

Euromonitor MethodologyIntroduction

Primary ResearchTrade interviews

Store audits

Secondary ResearchSyndicated data

Trade associations

Company sales

Trade press

6

Project flow

45 outlets

210 products

20 interviews

Primary

Align with Options

Align with PSI

In-country analyst

Baseline

Annual reports

Published figures

Articles

Secondary

Synthesis

Modeling

Realignment with

stakeholders

Sizing

1 2 3 4

Introduction

7

Primary research facts and figuresIntroduction

• Audited 45 stores in Belize City, Belmopan, and Punta Gorda

• Audited 210 products, tracking over 30 product attributes

Robust Audit

• 20 interviews with relevant sources

• Management-level interviews with government agencies, NGOs, retailers, clinics, importers, wholesalers and more

Comprehensive Interviews

• Involvement of key stakeholders (including government agencies) throughout the project

• Open dialog with stakeholders

Stakeholder Engagement

• Synthesized interviews, stakeholder views, primary and secondary research

• Forecasts built on stable foundationSolid output

Multi-pronged approach to project deliverables

Market sizes

Distribution

Market Drivers

Data

8

Key findings

9

Commentary from key stakeholdersKey findings

Stockouts are a problem; distribution

failures are the root cause. Free

condom distribution is costly and

unsustainable at the current large

scale.

Retailers cite condom quality,

availability and price as key success

factors in the retail market. Retailers

offering convenience (in the form of

high-traffic locations and longer

opening hours) are being rewarded.

Commercial sales are increasing,

thanks to growing demand and

increasing product awareness. The

decline in free condom distribution has

also helped sales growth.

Distributors

NGOs

Retailers

10

Commentary from key stakeholdersKey findings

Aware of the poor image of free

condoms and hopes the National

Condom Distribution Plan will help

address this issue through re-branding

and marketing efforts (i.e. packaging

changes, marketing campaigns, etc).

Marketing campaigns to promote

increased awareness and personal

health responsibility (such as Got It,

Get It) have been successful in driving

increased condom usage and should

continue to be a focus.

Monitoring of free condoms is not

strong, producing less effective

distribution strategies. Encourages

MOH to increase its distribution

capacity to facilitate tracking abilities.

Continues to offer assistance

(financial/technical) to achieve this.

Global

organizations

Government

Media

11

Condom supply chain is a complex affairKey findings

Commercial Condoms

Official Importers/

Wholesalers/Distributors

Unofficial Importers/

Wholesalers/Distributors

("grey market")

Convenience stores

Chinese/Indian Stores

Gas Stations

Pharmacies

Others

Socially-MarketedCondoms

PSI/PASMO

NGOs

Gas Stations

Pharmacies

Convenience Stores

Others

Consumers

BFLA

DistributorsMinistry of Health

Free Condoms

Gov't Health Clinics

NGOs

UNDP UNFPA

12

Free condoms involve international NGOsKey findings

• Free condoms largely depend on international aid. Most funding comes from the Global Fund. UNDP and UNFPA are the most important international organizations sourcing free condoms in Belize.

International

• The MOH also sources condoms and oversees distribution. Free condoms are registered in the records of the MOH Central Medical Stores, prior to distribution to partner organizations. A portion of free condoms are also distributed directly to local NGOs.

Government

• In addition to its own gov’t health clinics, the MOH also relies heavily on local NGOs in the distribution of free condoms.

• Most serious obstacles to distribution are a lack of outlets outside of Belize City and poor transportation infrastructure

Clinics/NGOs

•There are two main ways that consumers procure free condoms: as walk-in patients or through outreach programs.

•NGOs target consumers through their Behavior Change Communication (BCC) programs, which helps them to identify vulnerable groups. PASMO is a leading NGO in this type of targeting.

Procurement

Consumers

Ministry of Health

Free Condoms

Gov't Health Clinics

NGOs

UNDP UNFPA

13

Limitations of the free condom modelKey findings

• Free condoms suffer from an image of poor quality compared to socially-marketed and commercial condoms

• This image has been created by a lack of branding, use of less attractive packaging (silver foil), and the simple fact that they are available free of charge, which causes Belizeans to value them less.

Quality

• Coverage of Belize’s most vulnerable populations is limited by ineffective targeting methods in free condom distribution.

• While the use of local NGOs in free condom distribution indicates a step in the right direction towards more effective targeting, there is much room for improvement in this area.

Targeting

• Current monitoring systems also present an obstacle to more effective free condom distribution. They lack detailed information and reach throughout the entire chain and currently only measure large shipments, not specific use by geographic region and consumer segment.

• These monitoring systems must be improved to increase coverage of the poorest/highest risk groups.

Monitoring

14

PASMO the main player in SM condomsKey findings

• PASMO is the main distributor of SM condoms in Belize. It is the local partner of PSI, which supplies PASMO with the Vive brand. PASMO specializes in social marketing to reduce the spread of HIV transmission.

• In 2010, BFLA joined PASMO as a supplier of SM condoms in Belize, launching the COOL brand of SM condoms.

Primary NGOs

• Most SM condoms are purchased in commercial retail outlets, such as gas stations, pharmacies, and independent stores. Suppliers sell products directly to retailers or use distributors to reach these consumers.

•Vive was deliberately removed from market in early 2009 as part of re-branding effort, but is expected to return in 2011 with a new image.

Distribution

• In order to increase consumer access to affordable condoms, PASMO also distributes products through local NGOs, especially when targeting consumers outside of Belize City. The organization has also focused on non-traditional outlets like bars, hotels, etc.

•The removal of Vive from the market in 2009 has caused significant stockoutsof SM condoms, since no other SM brand was on the market. This should improve by 2010-2011 with re-launch.

Availability

Socially-MarketedCondoms

PSI/PASMO

NGOs

Gas Stations

Pharmacies

Convenience Stores

Others

Consumers

BFLA

Distributors

15

Undefined roles in commercial chainKey findings

Commercial Condoms

Official Importers/

Wholesalers/Distributors

Unofficial Importers/

Wholesalers/Distributors

("grey market")

Convenience stores

Chinese/Indian Stores

Gas Stations

Pharmacies

Others

Consumers

•There are two ways that commercial condoms enter Belize: official imports and unofficial imports. Official imports pay a 12.5% tariff and are concentrated in the hands of a few companies. Unofficial imports enter without paying a tariff and take place through a myriad of Chinese/Indian traders.

Importers/

Distributors

• The three main importers/distributors in the formal market are James Brodie &Co, Madisco, and Santiago Castillo. They sell to a wide range of retailers, including independent stores, gas stations, and pharmacies, among others. They also sell directly to consumers and to smaller wholesalers.

Distribution

• Consumer surveys indicate that most consumers are satisfied with the current availability of commercial condoms. However, without effective inventory strategies, many retailers suffer from limited variety and stockouts, which suggests significant room for improvement.

Availability

•No evidence of strong leakage of free condoms in the commercial market. Free condoms have a much poorer image due to a perception of low quality. However, commercial actors would like free condoms to be more specifically targeted at vulnerable populations to allow commercial sales to grow.

Impact of Free Condoms

16

Procurement practices for small retailersKey findings

• Small store owners generally go to wholesalers located in Belize City to pick up goods.

• Another option is for stores to place orders with wholesalers over the phone and arrange their own transportation and delivery to their store.

Belize City

• Stores outside of Belize City, especially Chinese stores, usually are usually organized as a purchasing consortium in which case the larger importers/ distributors (such as Brodies, Madisco, etc.) will handle transport and delivery to a specified consortium member store for onward distribution to their members.

Regions outside of Belize City

Belize’s complex retailing environment complicates supply chain management and increases the uncertainty of product supply in retail outlets. This is especially true for small retailers, which hold strong importance within the overall retailing environment. Below is a description of the procurement practices used by small retailers in Belize City and those in the outlying regions.

17

Pricing Analysis of Leading BrandsKey findings

Trojan by far the most expensive brand Vive, the only socially marketed condom in 2009-2010, registered an average price of US$0.34, below market average (US$0.70) and below most popular brand, Contempo (US$0.47). Trojan in sole possession of high end market sales (US$1.31), while IDA (or “silver bullet”) is the most common free condom in the market. COOL was launched in August 2010 and is the only other SM condom in the Belizean market. It was launched after pricing data was collected, but is priced at US$0.27 per condom.

Average Price Per Condom by Brand (US$)

1.31

0.75

0.70

0.47 0.46 0.44

0.340.28

0.000.00

0.20

0.40

0.60

0.80

1.00

1.20

1.400.75

0.47

0.46 0.450.44

0.34

0.28

0.000.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80Leading Brands Leading Brands without Trojan

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Condom Shelf LifeKey findings

Most brands have 3 year shelf life; low incidence of expired condoms Contempo is above average with 33.8 months shelf life; best in market is Erotim with 41.9 months, worst is Casanova with 9.1 months. Only two brands were found with expired expiration dates: Contempo and Vive. Poor inventory practices contribute to retailers stocking expired products. Some reports indicate that free condoms are sometimes discarded at public events, contributing to wastage within free condom distribution.

Average Shelf Life by Brand (months)

41.9 39.8

38.0

33.832.3

30.0 29.4

24.9

9.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

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Analysis of Product AttributesKey findings

Limited demand for value-added condoms Value-added condoms an option, but limited to a niche group of consumers, usually younger consumers between 18-24 years of age.While lubrication was a feature found in most condoms, flavors and colors were significantly less prevalent. Flavors and colors are almost always available in an assortment, including such flavors as chocolate, vanilla, and strawberry and such colors as red and black.Magnum condoms were also present in many stores, but represented less than 8% of the sample products.

% of audited condoms

2.2%

5.7%

7.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Flavored Colors Extra-large (Magnum)

20

Standard packaging most prevalent Boxes of 3 plastic-wrapped condoms are most prevalent; this is the most common format for the Contempo brand of condoms. Boxes of foil-wrapped condoms and large-format packages are also found, but less popular among Belizean consumers.

Packaging AnalysisKey findings

% of audited condoms, selected product attributes

Exterior Packaging Wrapper Type Pack Size

88.7%

8.8%

1.5%

66.5%

33.0%

84.8%

3.4% 2.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Box Pouch Other Plastic Foil 3 units 1 unit 12 units

21

Contempo51%

Trojan28%

Chrome9%

Lifestyles5%Vive

3%

Erotim2%

Casanova1%

Durex1%

Brand Presence in Retail OutletsKey findings

Frequency of brands found in audits% of audited products, by brand

Contempo most prevalent brand in store audits Share of market presence concentrated in the hands of two main brands: Contempo and Trojan Vast majority of condoms required assistance for purchase; 70% of audited products were found behind the counter, compared to 4% located on store shelves.

% of audited condoms requiring assistance for purchase

77%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

22

Retail commentary highlights Key findings

Price is the most important

factor in purchase decisions.

Availability/convenience is

also very important.

Supply chain is both

concentrated and fragmented:

a few large distributors, but

also many Asian traders.

Most retailers do not have

well-developed inventory

strategies; they are more

reactive than pro-active.

Inventory

strategy

Market

drivers

Suppliers

23

Facts and figures

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Key assumptions underlie forecast growthFacts and figures

• Relies heavily on international organizations for funding, especially the Global Fund. Most recent round of funding ended in 2009, causing a shortage in 2010, but is expected to be renewed for 2011-2012.

• Developing “National Condom Distribution Plan” to help improve total market performance and create more defined distribution roles across sectors.

Government

• Continues to experience robust growth as it fills in for shortages in other sectors and improves overall marketing and distribution strategies.

• Compound annual growth expected to reach 16% over the 2008-2012 period. James Brodie & Co continues to be the largest player.

Commercial

• PSI plays an active role in the market, helping to improve overall performance and coordination between sectors.

• In addition to helping commercial distributors, PSI is planning on an aggressive expansion of Vive, with most growth anticipated from Spanish-speaking Belizeans

PSI

• In August 2010, decided to reduce their focus on free condom distribution due to unsustainable costs and a change in operations focusing on SM condoms.

• Launched Cool, another socially-marketed brand of condoms, which should significantly improve consumer access to condoms and boost usage.

BFLA

• Benchmarked against global/regional figures where social programs exist

• Per capita pool is sexually active individuals (ages 15+).

• Per capita condom use will increase into the future. Per-capita use

• Free condoms have a poor image in Belize (low quality), which some argue could harm the adoption of condom usage in the country and prevent total market growth.

• Stakeholders believe best use is for targeted, vulnerable populations.

Crowding out

25

Per Capita Condom ConsumptionFacts and figures

Usage driven by commercial sales Commercial sector is the only sector to exhibit an increasing trend over 2008-2012, bolstered by PSI’s market development activities with distributors. Drop in free condom and socially-marketed distribution contributes to significant decline in overall per capita usage in 2010. Increasing responsibility for personal health expected to be main driver of usage by 2012.

Per capita condom usage in the Belize by channel, 2008-2012

0.99 1.03 1.39 1.51 1.61

0.96 1.00 0.05

1.46 1.65

3.20 2.95

1.39

1.16 1.25

-

1.00

2.00

3.00

4.00

5.00

6.00

2008 2009 2010 (f) 2011 (f) 2012 (f)

Commercial Social Marketed Free

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Total Condom Market SizeFacts and figures

Condom market rebounding by 2012 Two major trends caused a significant decline in condom consumption in 2010: expiration of Round 3 funding from the Global Fund and Vive, the only socially-marketed brand, being withdrawn from the market due to re-branding efforts from PSI and PASMO. Consumption expected to rebound by 2010, led by the expanding commercial sector and re-launch of SM brands (Vive, Cool).

Belizean condom market in volume (units ‘000s), by channel

157.3 168.3 233.1 259.0 282.5

152.9 164.2 9.2

250.0 290.0

510.1 482.0

233.9

200.0

220.0

-

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

2008 2009 2010 (f) 2011 (f) 2012 (f)

Commercial Social Marketed Free

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Sector Share of Total ConsumptionFacts and figures

Balanced distribution expected by 2012In 2008, free condoms held the highest share, reaching over 62% of condoms distributed in Belize. However, by 2012, this share is expected to fall to 28%, as policy shifts towards a more sustainable market approach to condom distribution. By 2012, distribution is expected to be balanced, with no sector achieving more than a 37% share of total distribution.

Belizean condom market distribution by channel, 2008-2012

19.2% 20.7%

49.0%

36.5% 35.6%

18.6% 20.2%

1.9%35.3% 36.6%

62.2% 59.2%49.1%

28.2% 27.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2008 2009 2010 (f) 2011 (f) 2012 (f)

Commercial Social Marketed Free

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Contempo accounts for 1/3 of the marketFacts and figures

•Well-known brand throughout Belize.

•Exclusive distributor is James Brodie & Co Ltd, but a myriad of independent traders also import the brand into the country.

•Rough Rider is the most popular sub-brand, followed by Wet n Wild and Bareback.

•Benefits from its affordable price and its superior placement within retail outlets.

Contempo

• In terms of brand awareness, Trojan is just slightly lower than Contempo.

•However, its high price limits consumption to higher-income consumers. It is the sole premium condom brand in Belize.

•Main distributor of Trojan condoms is Santiago Castillo, but again there is notable imports from independent traders.

Trojan

•Prior to 2010, Vive was the only socially-marketed condom in Belize.

• In 2009, the brand was withdrawn from the market so that it could be re-branded. PSI expects to re-launch the brand in 2011.

•Prior to being withdrawn from the market, Vive was among the most recognizable condom brands in Belize for its good price-quality ratio.

Vive

•Government distributes “generic” condoms along with other contraceptives, referred as “silver bullets” due to their being wrapped in foil. There is no evidence of these condoms leaking into private sector.

•Other global brands exist in the market (Lifestyles, Chrome, etc.), but are not very popular.

Otherbrands

Market share by brand, 2010

Contempo34%

Trojan6%Lifestyles

4%Chrome3%

Vive2%

Others51%

(includes generics)

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Small retailers best in commercial salesFacts and figures

•Consists of independent grocery stores, convenience stores, and neighborhood shops.

•Chinese/Indian shops are estimated to hold 18% of sales from this outlet type.

•Are the main distribution point for commercial and socially-marketed condoms in Belize.

Small Retailers

•Accounted for 9% of total condom distribution in 2010.

•Natural outlet for condoms due to their specialization in health-related products.

•Higher presence of more premium brands i.e. Trojan, compared to other retailers. As a result, tends to have the highest prices.

Pharmacies

•3rd most important retailer of commercial condoms in Belize, achieving a 6% share in 2010.

•Shell One Stop is the most popular gas station for condom purchases.

•Late hours and convenient locations make these outlets attractive to consumers. Moreover, consumers already use these outlets for other convenience purchases (snacks, etc.).

Gas Stations

•Free condoms are mainly distributed through local NGOs because they have better access to target populations and it reduces the burden on government agencies. Prior to 2010, BFLA was the most active distributor. Others include PASMO, YFF, and UNIBAM.

•However, BFLA recently announced it no longer is distributing free condoms, which has therefore shifted more distribution through gov’t health clinics.

Non-Commercial

Outlets

Distribution share by outlet type, 2010

(includes generics)Non-

Commercial Outlets

49%

Non-Traditional

Outlets1%

Small retailers28%

Pharmacies9%

Gas stations6%

Wholesalers4%

Others

2%

Supermarkets1%

Commercial Outlets

50%

30

Final Thoughts

31

Key Learnings from Belize’s Condoms MarketFinal thoughts

• Free/subsidized condoms are NOT cannibalizing commercial condoms.

• However, they are preventing a more sustainable and vibrant market for commercial and socially-marketed condoms from taking off, which ultimately leads to lower condom penetration in Belize.

Commercial

• Tax evasion is prevalent among smaller traders bringing condoms in from Mexico, so there is little information regarding this segment of the market.

• This study estimates that about 15% of commercial sales come from these traders.

Informality

• One of the major problems facing Belize is steady availability to the consumer. This problem is prevalent in all three sectors. In free condoms, the lack of reliable outlets hampers distribution, while in the commercial sector, retailers practice poor inventory management and therefore do not increase stock at appropriate times.

Availability

• Recent campaigns targeted at improving personal health care and increasing awareness for condoms have succeeded in driving growth of condom usage in Belize.

• As PSI and commercial actors ramp up to meet this growing demand with desirable products, the industry expects continued growth in the future.

Supply and Demand

• Distribution is still largely concentrated in small retailers and this is expected to continue over the forecast. Pharmacies will also remain an important outlet.

• However, both commercial and NGO actors are trying to expand distribution to non-traditional outlets in order to increase consumption. This includes gas stations, bars, hotels, clinics, and NGO offices.

Distribution

32

Information in this report researched by Euromonitor has been extracted from a report produced by Euromonitor International Ltd (“Euromonitor”) solely for its client Options.

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Disclaimer

Contact details:

Philip BuchananConsultant

Tel: +1 312-922-1115 x 8279 philip.buchanan@euromonitorintl.com

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Tel: +1 312-922-1115 x 8238 mike.jozwik@Euromonitor.com