The II Market

October 31, 2005

With the economy on track, concern about health issues on the rise and innovative ideas to keep a variety of surfaces clean, marketers report a perfect storm to maintain growth.

The I&I Market

With the economy on track, concern about health issues on the rise and innovative ideas to keep a variety of surfaces clean, marketers report a perfect storm to maintain growth.

By Tom Branna - Editorial Director

Despite hurricanes wreaking havoc in the southeastern U.S., soaring fuel prices and uncertainty in the Middle East, marketers of industrial and institutional (I&I) cleaners insist demand remains strong for products that clean, disinfect and keep surfaces looking spotless. According to Kline & Co., the market research firm based in Little Falls, NJ, the U.S. market for I&I cleaning products fell just short of $9 billion last year. By product sector, Kline analyst Bruce Boynick, breaks the market out like this:

• Janitorial, $3 billion;
• Industrial, $2.5 billion;
• Food Service, $1.7 billion;
• Food Processing, $950 million; and
• Laundry, $650 million.

“Overall, the industry is growing 3% a year and is back on an even keel four years after the Sept. 11 terrorist attacks,” observed Mr. Boynick.

Ecolab’s Formula 1 reduces energy usage in laundry care.
Health care, especially within the assisted living and retirement community business, remains a growth area, he noted.

“Education has been strong, too and we expect that trend to continue,” Mr. Boynick predicted. “The U.S. is one of the few developed countries with sustained population growth.”

Mr. Boynick also pointed out that the hospitality industry—both food and lodging sectors—have been renewed. It appears as though consumers continue to plow an ever-larger portion of their paychecks into eating out and travel. And the numbers back up his assessment.

According to the Travel Industry Association of America (TIA), last year business and convention travel began to rebound after five years of decline, increasing 4.3% from 2003 to account for 12% of all domestic person-trips (144.6 million person-trips in 2004). Overall in 2004, U.S. households generated 663.5 million trips and 1.164 billion person-trips within the U.S., up more than 2% from 2003. According to TIA, leisure travel accounted for the majority (81%) of U.S. domestic travel, registering 944.3 million person-trips in 2004, up 1.6% over 2003. Three-quarters of all 2004 domestic travel was by car, truck or RV (876.7 million person-trips), while 16% occurred by air (188.7 million person-trips in 2004.

At press time, it was still unclear what impact hurricanes Katrina and Rita would have on business travel in 2005 and into 2006. Obviously, convention organizers were quick to move meetings out of weather-ravaged New Orleans. While they were able to find alternative sites, it remains to be seen if convention attendance will suffer from the moves.

Chase Products has introduced stronger, yet seamless aerosol cans.
The hurricanes are sure to impact hotel and motel results this year, but the U.S. lodging industry posted good gains in 2004. According to Smith Travel Research, Hendersonville, TN, last year total industry revenue increased nearly 8% to $113.7 billion, up from $105.3 billion in 2003.

But the recent hurricanes and weaker sentiment among business executives and consumers may have an impact on the food and lodging industry for the rest of the year. For the first time in the three-year history of the Tracking Survey, sponsored by the National Restaurant Association, restaurant operators registered a net negative result in terms of the short-term economic outlook. Last month, 31% of restaurant operators said they expect economic conditions to worsen in six months, compared to just 25% of operators who expect economic conditions to be stronger in six months. Quick casual operators are the least optimistic, with 17% expecting business conditions to improve in six months and 34% expecting conditions to worsen.

However office space renters are providing a boost to I&I product manufacturers. According to a recent study by Reis, Inc., a commercial real-estate research firm based in New York City, U.S. office vacancies fell to their lowest level in 3.5 years, while rents rose. The U.S. vacancy rate dropped to 15.1% in the third quarter from 15.4% a year ago in the top 70 U.S. office markets.


Older is Better for I&I

But the aging U.S. population is, perhaps, the biggest driver for I&I products. According to the Centers for Disease Control, Atlanta, life expectancy for Americans has reached an all-time high—77.6 years in 2003, up from 77.3 in 2002. Results for 2004 have not yet been published.

The increasing number of older Americans is putting pressure on elder care facilities, and that, in turn, is presenting new opportunities for I&I marketers. Colleen Dillon, Ecolab’s vice president, hospitality and health care, institutional division told Happi that the demographics should provide a boost to demand for long-term care facilities for years to come. At the same time, the hospitality market segment is posting growth in excess of 3% year-on-year.

“Both areas have issues,” she cautioned. “There is more emphasis on cost-control and energy efficiency. Long-term, we’re looking for solutions that reduce water and energy consumption.”

Ecolab researchers insist that, with the launch of Formula 1, they’ve found a way to reduce energy usage in laundry care. The low-alkaline formula combines enzymes and surfactants to create a near solid slurry/emulsion that runs through a simple dispensing system. According to Ms. Dillon, Formula 1 dramatically reduces the amount of water and energy needed to get clothes clean. In fact, using Formula 1 reduces water usage by 55 gallons a load.

“It changes the game in laundry chemistry,” insisted Ms. Dillon. “This low alkaline system also saves linen replacement.”

JohnsonDiversey, the No. 2 player in the I&I industry, has taken aim at the floor care segment with last month’s launch of floor strippers that remove heavy floor finish buildup in just one application. Available under the Johnson Wax Professional Fastrip and Butcher’s Wild Rapids brands, the new low-foaming formula is said to be capable of stripping off several layers of finish in one application. Company officials insist that Fastrip and Wild Rapids represent the biggest innovation in floor care in 15 years.

“It can strip a floor twice as fast as competitive products,” insisted Greg Bell, director of global communications, JohnsonDiversey.

Floor It!

Also in floor care, the company recently introduced several Green Seal-certified floor finishes and strippers. The products include Johnson Wax Professional Freedom SC floor stripper, Johnson Wax Professional Aquaria floor finish and Butcher’s G-Force floor finish and stripper. All of them meet the new GS-40 Industrial and Institutional Floor Care products standard introduced earlier this year by Green Seal.

To help its customers promote their own efforts to use environmentally-preferrable products, JohnsonDiversey recently rolled out a promotional kit devoted to its Healthy High Performance Cleaning system (HHPC).The program is a comprehensive set of procedures to help employees clean for health and environment. The six-step program was developed in consultation with Green Seal and includes cleaning procedures, occupant education and communication.

To help distributors and building service contractors better communicate the benefits of HHPC to their customers, JohnsonDiversey is introducing a complete communication program. It includes a CD that lets the user print out posters, newsletters and other pieces to educate employees and the general public about efforts being made to utilize environmentally-sound cleaning practices.

Finally, JohnsonDiversey has rolled out the QuattroSelect wall-mounted dispensing system. It enables users to dispense up to four cleaning formulas for either low-flow bottle filling or high-flow bucket or auto scrubber filling.

With more folks living out of a suitcase these days—whether it’s for business or pleasure—Ms. Dillon told Happi that there is plenty of room in the hospitality industry to make the hotel experience more enjoyable, and one of the easiest ways to creat this home away from home experience is through air care.

Like several other I&I companies, Acuity has rolled out a soy-based cleaner uder its Zep brand of products.
The perception of “home” and “clean,” has a lot to do with fragrances, according to Ms. Dillon. Hoteliers that can differentiate their businesses through scent stand a good chance of winning share in an increasingly competitive market. For example, each hotel chain could have its own signature scent or may tailor fragrances to suit individual customers.

“Hotel chains are looking for anything that gives them an advantage over a competitor,” she noted. “Look at how they promote their mattresses these days.”

At the same time, however, Ecolab is working with a variety of other suppliers to improve indoor air quality.

“It is challenging the entire industry to come up with raw materials and dispensers to marry a user-friendly, error-free system that improves indoor air quality,” she said.

State Industrial Products is emphasizing air care with the introduction of the SE-500 additive into its Fragrance Factory air care system. According to Jim Beard, vice president, marketing, the addition of SE-500 has significantly improved the effectiveness of the Fragrance Factory.

“Customers tell us that the improvement is almost magical,” insisted Mr. Beard. “The SE-500 additive removes a wide range of malodors—even cigar malodors.”

According to Mr. Beard, improving air quality is a major concern of State’s customers and consumers, too.

“Our customers tell us that improving the indoor environment for their clients and employees is paramount,” added Mr. Beard. “Everybody is looking at the creative use of fragrance and odor control. But you can’t just perfume the environment. People expect much more than that.”


Souped Up Soap

While it tries to saves the environment, Spartan isn’t against saving some money for itself…and its customers. In April, the Maumee, OH-based company introduced bulk foaming handsoaps under the Lite’n Foamy brand. The idea behind the introduction is the elimination of expensive cartridges and bags.

“Purchasing agents realized that they were spending a lot of money on hand soap and most of it was due to packaging,” said Marygrace Miller, Spartan’s advertising/marketing manager. “Cartridges are nice, but they are expensive and getting more expensive.”

Users also prefer the convenience of foam and the Spartan executive said the company is working on ways to expand the foam concept into other product categories.

Customer concerns about indoor air quality often involves more than eliminating malodors or leaving a pleasant scent. They’re demanding solvent-free cleaning products that are more environmentally-friendly than traditional cleaners. Nearly every marketer who spoke with Happi insisted that the development of environmentally-friendly products has become a major issue with their customers.

A Cleaner Kind of Clean?

Spartan Chemical has met the challenge with the introduction of its SoyStrong line of degreasers and waterless hand cleaners. Ms. Miller said the introduction fits well with the U.S. government’s mandate to promote farm activity and conserve petroleum.

“We’re getting very involved with bio-based ingredients such as soy, corn and sugar,” she explained. “Soy often works as well as petroleum-based products and it’s better for the environment.”

In fact, Spartan executives are so sure that these bio-based products will continue to gain share that they are expanding the SoyStrong brand into a general-purpose cleaner and a graffiti remover later this year. It’s all part of the company’s strategy to build share in the green segment of the I&I market.

“Spartan is a leader in the cleaner/degreaser business. We were the first to promote bioaugmentation products and one of the first to come out with Green Environmental products,” she noted. “We’re really stepping up to the forefront in this segment. It just makes sense from an environmental and oil conservation standpoint.”

Other marketers too, are rolling out “greener” cleaners. In September, Acuity Specialty Products introduced 20 soy-based products to replace d-limonene products. According to Ross Harding, executive vice president of sales and marketing, some of soy’s benefits is that they are VOC-compliant, renewable and produced in the U.S.

Costs Continue to Rise

“Rising raw material prices and environmental issues have been the two big drivers during the past year,” explained Mr. Harding. “Both are challenging, but they’ve given us the opportunity to introduce product lines based entirely on new chemistry.”

At the same time, increased media attention on personal hygiene and human health is opening up new opportunities for Acuity. Mr. Harding noted that demand for hand sanitizers has been particulary strong. Acuity is also closely monitoring avian flu developments as the company is a major supplier to chicken processing facilities.

“We’re building a response plan for avian flu—it’s on everybody’s radar screen. Our food and poultry plants and general customers are asking what products we have that will combat both avian and flu in general,” he explained. “That’s been a growing area for us.”

The Acuity executive said health concerns are affecting business in other I&I segments too. To meet its customers’ needs, the company recently launched Zep Tackle, a product designed to eliminate Staphylococcus infections in health clubs and other sports-related facilities

“Sanitation issues are creating new opportunities for us,” said Mr. Harding. “With our strong technical support team and thousands of representatives, we have the ability to quickly launch new products.”

In fact, Acuity is planning to increase its sales team by 5% during the next 12 months.

A Can Makes a Difference

Chase Products introduced the SureGrip can, an ergonomically preferable spray can, years ago. Now the company has reengineered the can again with the introduction of the 2Q can manufactured by DS Container. The new, two-piece can was created at DS Container’s state-of-the-art facility in Batavia, IL, using polymer-coated steel and a coil-to-can manufacturing process that ensures rapid response. The end result is a seamless, corrosion resistant package that has a contemporary look and premium feel. Despite the improvements, Chase was able to introduce the new can much more quickly than other projects.

“Working with DS Container we’re able to cut lead times dramatically so we can get new ideas to market much faster,” explained Ron DeSimone, director of corporate marketing, Chase Products.

Also new from Chase is QTB disinfectant spray. The easy-to-use product kills 99.9% of germs in just 20 seconds. It kills HIV-1 on precleaned environmental surfaces, as well as typical germs such as Staphylococcus aureus, Salmonella choleraesuis and Pseudo- monas aeruginosa.

A Look Ahead

Going forward, Ecolab, has its eye on a bigger market share. During a meeting with industry analysts last month, Ecolab chairman Doug Baker noted that his company has a 10-12% market share in the global I&I market, which he estimates at $40 billion (retail).

“Our competitive environment is fragmented. Our next biggest competitor (JohnsonDiversey) has sales of $3 billion, but after that it drops off dramatically,” he noted. “We have sizeable advantage and the ability to execute that others don’t have.”

Ecolab has been supplying products and services to full-service restaurants since 1923, making it the oldest segment in the company’s portfolio. Yet, Mr. Baker insisted that Ecolab still has plenty of room for growth with even more products and services. It is all part of Ecolab’s “Circle the Customer” strategy of delivering the products and services they truly want and need.

“We could triple our business without selling to a new customer, simply by circling the customer and fulfilling the promise,” he insisted.

At the same time, end-users are looking to simplify their business with fewer vendors selling fewer products. According to Mr. Baker, Ecolab views simplification as a means to growth.

“We won’t rip out $250 million from a business. Our focus is growth, but we have to look at some of our complexity,” he told analysts. “We have 44 pot and pan formulas in North America. We’re cutting it down to 10. We don’t need 44 formulas. It doesn’t add value.”

Going forward, industry experts say cost-containment will be a key issue in 2006. Most agree that raw material prices will remain high, forcing them to look at other ways to keep prices down.

“Better custom-training, unique new products and better dilution all help to reduce costs,” noted Mr. Harding. “Customers have become even more cost-conscious and now there looking at the entire cost-of-use.”

Companies that are successful in the I&I market are those that can deliver innovative, environmentally-friendly solutions at an attractive price point.

I&I Ingredients

Here are new ingredients for industrial and institutional cleaners introduced by suppliers in the past 12 months. For more information about the products listed here, contact the supplier directly.

Arch Chemicals, Inc.
Smyrna, GA
Tel: (800) 523-7391
Website: www.archbiocides.com
E-mail: sales@archbiocides.com

Description: poly(hexamethylenebiguanide) hydrochloride (PHMB)
Applications: The Vantocil (PHMB) antimicrobial range offers a wide potential for end-use applications such as hard surface disinfectants and disinfectant wet wipes. Vantocil P is available for formulation of liquid products and Vantocil S is available for formulation of tablet products—both products hold EPA registrations.

Use levels: Typical in-use level to provide surface disinfection is 100-200ppm PHMB active ingredient (0.05-0.1% Vantocil P)

Comments: At typical use levels, the PHMB antimicrobial provides low skin irritancy and low eye toxicity. PHMB is a highly effective antimicrobial, offering fast speed of kill, broad spectrum activity and the ability to retain this activity in the presence of organic matter and hard water, with no evidence of organism resistance. PHMB is stable and effective over a wide pH range, is low foam and does not leave surface streaks or tacky residues on treated surfaces.

BASF Performance Chemicals
Florham Park, NJ
Tel: (800) 443-6460
Website: www.powerfulcleaning.com

Lutensol XL/XP
Comments: A new line of nonionic surfactants with superior performance in cleaning applications.These surfactants exhibit extraordinarily fast wetting properties when compared to high-performance nonionic surfactants. In addition, the Lutensol XL series is virtually odor-less with high emulsifying power. This makes the Lutensol XP/XL series a good alternative to both the C9-C11 alcohol ethoxylates and alkylphenol ethoxylatesin a number of applications such as “all-purpose” cleaners, degreasers, and car wash.

Trilon M
Comments: Recognizing the need for powerful, environmentally friendly chelates, BASF is offering Trilon M. In addition to its high chelating power and one of a kind eco-tox profile, this chelate offers excellent solubility across the entire pH range delivering a high degree of flexibility to formulators.

Maphos Phosphate Esters
Comments: Offering outstanding hydrotroping, detergency and alkali stability properties for hard surface and built liquid cleaning formulations, Maphos phosphate esters are extremely flexible complex phosphorylated nonionic surfactants, with low foam tendencies.

Cognis Corporation
Ambler, PA
Tel: (215) 628-1437
Website: www.cognis.com
E-mail: virginia.lazarowitz@cognis.com

Arlypon VPC
Description: blend
Applications: Thickener for acidic products
Use levels: 2-5%
Comments: Effectively thickens acid and acid combinations including hydrochloric, sulfamic, phosphoric, citric, glycolic and maleic acids. Provides processing advantages due to the “all in one” concept—no need for other surfactants. Enhances soap scum/lime scale removal. Shortens production time. No swelling step. Product is added directly after the acid is in solution. Easy to handle /liquid at room temperature. Contributes to fragrance solubilization. Compatible with cationic ingredients.

Polyquat Ampho 149
Description: amphoteric acrylic co-polymer
Applications: All types of hard surface cleaners
Use levels: 0.1% active
Attributes: When used in a hard surface cleaner the product makes a surface hydrophilic, so water sheets off with no spotting. Can increase gloss retention. Makes a surface easier to reclean, dirt doesn’t stick. Compatible with all surfactant types

Dehypon LT 104
Description: butyl end-capped nonionic
Applications: warewash CIP
Use levels: various
Comments: Product is a low foam nonionic with a high antifoam capacity. The butyl end cap makes it stable in acid and alkaline systems. The product has a cloud point of 25.5- 27.7°C. It is an excellent wetting agent.

Croda Inc
Edison, NJ
Tel: (732) 417-0800
Website: www.crodausa.com
E-mail: marketing@crodausa.com

Primasurf SC50
Description: Proprietary surfactant blend
Applications: Hard surface cleaners, multipurpose cleaning wipes, car interior and upholstery cleaners, hand laundry detergents and fabric spotters
Use Levels: 5-15%
Comments: Primasurf SC50 is a high actives biodegradable surfactant system designed to maximize cleaning performance and ease of use. It is recommended as an alternative to using multiple surfactants in a broad range of cleaning formulations.Primasurf SC50 is a good foamer, a very fast wetter, stable over a wide pH range and mild to skin.

The Dow Chemical Company
Midland, MI
Tel: (800) 447-4369
Website: www.dow.com

Dowfax Triton, Tergitol surfactants
EO-PO Block Copolymers
Versene chelants
Propylene glycol USP/EP
Applications: Surfactants, microemulsions, controlled release/capture, dispersions, film formers, oil imbibers, water absorbing, high internal phase emulsion and thickeners, nonwovens
Comments: For a complete list of ingredients for the I&I market, visit the website: www.dow.com/surfactants/applications/cleaning/indust.htm

Wayne, NJ
Tel: (973) 628-4000
Website: www.ispcorp.com

Description: Proprietary Pyrrolidone-Surfactant mixture
Applications: Wetter/spreader/surfactant used in HI&I cleaners, textiles, pigments, agrochemicals and other industrial applications.
Use levels: 0.01%-0.1%
Comments: Superior wetting and spreading properties at very low use levels (<0.1%).Better cleaning performance on glass, soap scum removal and grease cleaning.

Peroxydone K-30, Peroxydone K-90
Description: 2-Pyrrolidinone, 1-ethenyl-, homopolymer; hydrogen peroxide
Applications: Bleaching, cleaning and stain removing agent for detergents, cleaners, mold/mildew removers, drain openers personal care, oral care and pharmaceutical applications.
Use levels: 5-30%
Comments: Safe and effective solid polymer complex for delivering hydrogen peroxide on contact with water from liquid, gel and solid product formulation.Excellent stability, solubility and film forming properties for a broad range of applications.

Rohm and Haas Company
Spring House, PA
Tel: (215) 641-7000
Website: www.rohmhaas.com

Duraplus Advantage
Description: high-solids floor finish polymer
Applications: floor polish
Use levels: ~45% by weight in a 30% ultra high solids floor polish formulation.
Comments: Duraplus Advantageemulsion is based on innovative patent-pending technology that enables more effective use of carboxylic acid groups within the polymer. Theemulsion delivers a higher zinc to acid molar ratio than is possible with conventional zinc cross-linked technologies. The unique feature of high cross-link density coupled with low acid level and its high Tg (62°C) allows Duraplus Advantage emulsion to provide finishes with superior durability, excellent soil resistance and faster dry time.

Duraplus Advantage is today’s solution for long-lasting, cleaner looking floors with fewer coats resulting in lower maintenance cost. With 30% high solids, Duraplus Advantage-based polishes stand up to daily detergent scrubbing while maintaining excellent appearance in high traffic areas.In today’s environmental and health conscious world, Duraplus Advantage offers low odor in an APE-free and formaldehyde free acrylic emulsion.

Duragreen MF 1
Metal-Free Floor Finish Polymer
Description: a high solids (40-41%) floor finish emulsion polymer based on new, self-crosslinking technology that produces a high quality, modified acrylic polish without the use of metal-crosslinkers. This self-crosslinking chemistry is responsible for its rapid cure and excellent detergent resistance.
Applications: Floor Polish
Use levels: ~38% by weight in a 20% solids floor polish formulation.
Comments: Duragreen MF 1 based polishes offer superior detergent resistance, gloss retention and mark resistance relative to conventional metal-free polishes. Duragreen MF 1 is an environmentally preferred, alkylphenol ethoxylate (APE) free and formaldehyde free acrylic emulsion. Polishes made with Duragreen MF 1 exhibit superior detergent, black heel mark and scuff mark resistance properties relative to traditional metal-free products. The outstanding properties of Duragreen MF 1provide cleaner looking floors with superior gloss retention resulting in less frequent need for burnishing, recoating and stripping.

Suggested formulations made with Duragreen MF 1 polymer have virtually no odor, making them ideally suited for flooring in patient care facilities such as hospitals and nursing homes. Duragreen MF 1 polymer meets proposed environmental standards for floor finishes.

Sterokem Ltd.
Haifa, Israel
Tel: (972) 4 846 8477
Website: www.sterokem.com
E-mail: : info@sterokem.com

Kemphos 2001
Description: chlorinated trisodium phosphate
Applications: scouring powders, sanitizers, automatic dishwashing machine powders.
Comments: Kemphos 2001 can be used asa component in cleaning compounds requiring destaining and bleaching properties, asource for materials which require both high buffered alkalinity and a stable active chlorine.

Description: trisodium phosphate (TSP)
Applications: dairy cleaners, household cleaners, garage and factory cleaners, water treatment, boiler cleaningcompound, paint remover.
Comments: Triphos is acrystalline TSP with six molecules water. It is less powdered than competitive products and therefore creates less dust. It also offers the following advantages: good solubility (product is granular with no tendency to cake). High alkalinity and high pH (good bufferingand water softening properties). High phosphate content (24-26%).

Related End-User Markets:

Related Raw Materials: