It was not too long ago that it seemed the alkaline battery business was unstoppable. With a range of consumer devices that drained batteries in no time, manufacturers like Duracell thrived through innovation. During last 3-5 years, though, it seems that these companies are in the same dilemma that Eastman Kodak was before its demise. At least Kodak had the option to switch from traditional cameras to digital cameras but once the demand for digital cameras dried up, there was no way the company could enter the smart-phone market. It was a transition that they could not make or failed to make in time.
Duracell, Energizer, Rayovac, and many other manufacturers are at that point right now. We do not believe that alkaline batteries will not be needed at all any time soon, but their demand has been in decline for years now. After seeing the trends, analyzing the market demand, and looking at the financial performance of the participants, it is now obvious that during the period 2014-2018, the global demand for alkaline batteries will settle somewhere around 9 billion units valued at approximately $7 billion. Demand is declining in most of the developed world and while rising demand in emerging economies has provided a near-term cushion, it is not likely to continue. In other words, tough times are ahead for a company whose core business is disposable batteries.
Below is our report on the worldwide alkaline battery market that shows that the consumer trends are not in favor of the suppliers. The only solution will be some form of consolidation to eliminate excess capacity.
One question that we have not addressed in this presentation is if companies like these should transform their business model and enter battery segments that are growing in demand. These are mostly rechargeable batteries used all the way from consumer electronic devices to automobiles, but that is not easy to pull off considering that competitors have already been active in those segment for decades. In other words, we expect well-established participants like Duracell and Energizer to simply acquire some of the smaller rechargeable battery manufacturers.