Disposable batteries are a costly way to buy power. Their days are numbered
TIME was when a household torch used an incandescent bulb and gobbled disposable batteries. Now it is more likely to have a low-power LED (light-emitting diode) and a long-lasting rechargeable battery—or none at all: a flick of the wrist or a twist of a handle can provide enough juice for a bright steady light.
These trends—lower power consumption, better and cheaper rechargeables, new power sources—are squeezing what used to be a lucrative market. Remote controls for televisions, for example, used to be powered by batteries. Now they can be an app on a mobile phone. The latest gadgets, such as wearable devices, come with batteries built in—typically based on a thin sliver of lithium, not a tube packed with manganese dioxide, alkali and zinc. “There are fewer cavities,” says Ali Dibadj of Sanford C. Bernstein, a research firm.
Competition is intensifying, too. Many consumers now buy batteries at discount shops and favour own-label or no-label versions over the pricey branded products. In America the two leading makers, Energizer and Duracell (the latter owned by Procter & Gamble), have lost market share, according to Nick Cunningham of Freedonia, another research firm—though between them they still had 37% of the market in 2012. In Europe all the big manufacturers are thought to be using spare capacity to make batteries for retailers and other own-label competitors.
The big battery labels have limited options. “You have to innovate your way out of it or accept lower margins for higher share,” says Mr Dibadj. One response is to market harder, with better packaging or gimmicks such as bonus packs.
Rayovac, another big American brand, has launched a new range of battery packs to keep phones and other gadgets topped up between recharges. Duracell has launched a “super-premium” battery with price to match, called Quantum in America and Ultra in most other markets. It is trying to wean consumers off the cheapest zinc-carbon batteries and on to alkalines, which are more powerful, durable and leak-free. Older consumers who remember their devices being ruined by leaky batteries are open to pitches about safety. Younger ones tend to be sceptical. The fastest-growing part of the market is disposable lithium batteries. These are powerful, light and do not fail in the cold. Their price is dropping. But they remain a niche.
Another option is to cut costs. Western battery manufacturers have shifted production offshore. The main companies no longer make zinc-carbon batteries, the cheapest type, in the United States.
With returns squeezed at home, Western firms are finding little comfort elsewhere. China is already the largest battery market, and demand is projected to climb faster there than anywhere else in the coming years. Competing against unreliable, leaky zinc-carbon products from local makers in emerging markets used to be easy. Not any more. Locally made alkaline batteries are now cheap and ubiquitous. So persuading consumers to pay over the odds for foreign brands is a struggle.
In the poorest countries the market for disposable batteries is being undermined before it gets going, as cheap wind-up, solar-powered and rechargeable devices proliferate. Producing power has never been easier. Making money from selling it in small tubes is getting a lot harder. –http://www.economist.com/news/business/21594330-disposable-batteries-are-costly-way-buy-power-their-days-are-numbered-out-juice
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