The Household Cleaner Market

November 7, 2005

Consumers remain germ-phobic but marketers are making it

The Household Cleaner Market

Consumers remain germ-phobic but marketers are making it easier for
them to kill bacteria that lurks in their homes.

Marketers aren’t throwing in the towel in the battle against household dirt. In fact, multinationals such as S.C. Johnson and Procter & Gamble are attacking all that grime with an assortment of disposable cloths, wipes and towelettes.

Yet the humble dust cloth isn’t the only thing changing in the household cleaner category these days. Brands, and companies too, are switching hands as marketers try to remain competitive in a category that has become dominated by a handful of large players. For example, Automation, Inc., Jacksonville, FL, the tiny company that revolutionized the bath and shower cleaner segment a few years ago with the introduction of Clean Shower, has sold that best-selling brand to Church & Dwight. On a larger scale, Reckitt & Colman and Benckiser announced a merger earlier this year that will bring together such well known brands as Lysol and Calgon and create the world’s largest household cleaning products company.

These moves come at a time when sales in the U.S. household cleaning market are climbing, thanks in part to higher priced, more efficacious formulas. According to Information Resources, Inc., Chicago, dollar sales of nonabrasive tub and tile cleaners rose 8.7% to nearly $423 million for the year ended July 18, 1999 (see chart, p. 76). Industry observers agree that the household cleaning products category will continue to grow as consumers become even more concerned about fighting germs.

“Guarding your family is a primal force. We want them to feel safe and be safe,” noted Marvin Matises, president of Galileo Idea Group, a Naperville, IL-based company that specializes in new product development. “Consumer awareness about germs continues to grow and people are becoming obsessed by this invisible kingdom of germs and bacteria that they can’t see.”

This obsession, according to Mr. Matises, will spawn a whole new generation of germ-fighting cleaners for floors as well as portable cleaners that on-the-go consumers can use to disinfect school desks and office furniture.

“S.C. Johnson’s Allercare is a good example of how far the trend of detoxing our environment will go,” noted Mr. Matises. “The concept will eventually spread to work and school as marketers roll out pocket size disinfectants for offices, phones and school desks.”

Marketers of household cleaning products agree with Mr. Matises’ assessment. “Current trends in U.S. home care include the continued ‘germ-phobia’ in consumers,” noted Lisa Zigmont of Amway. “There remains a growing need for disinfecting/anti-bacterial/sanitizing products that can help protect the family and their home. As younger families seem to be spending additional quality time at home, the increased need for a safe, inviting and healthy environment is key.”

Church & Dwight’s Big Move
This growing concern about germs should boost the demand for disinfectants and sanitizers. The nonabrasive tub and tile cleaner segment got a boost a few years ago with the introduction of Clean Shower. Since then, there has been a range of new entries from such heavyweights as Clorox and S.C Johnson, but that didn’t deter Church & Dwight from purchasing Clean Shower from Automation just last month. Also around this time, Church & Dwight purchased Scrub Free from Benckiser. At the time of the purchase, Church & Dwight estimated that combined wholesale sales of the two brands exceeded $50 million a year and represent a 16% share of the bathroom cleaner category. The combined purchase price in both transactions was about $55 million.

“They are a nice fit to our existing product line,” explained Zvi Eiref, chief financial officer at Church & Dwight. “They have similar marketing and R&D issues and their sales and operations are a nice fit too.”

According to Mr. Eiref, the bath and shower cleaning category has annual retail sales of $450 million. Moreover, since the launch of Clean Shower in 1995, the category has grown $100 million. “There has been very large incremental growth following the introduction of Clean Shower. Obviously, consumers want innovative products in this category,” noted Mr. Eiref. “We admire what the Clean Shower people have done.”

The acquisition of Clean Shower and Scrub Free puts Church & Dwight, which had sales of $560 million in 1998, in head-to-head competition with much larger players on a relatively level playing field. Unlike the powder laundry detergent category, where P&G’s Tide dominates with a 50% market share, the bathroom cleaner category is splintered. According to Mr. Eiref, the acquisitions of Clean Shower and Scrub Free give Church & Dwight a 16% dollar share of the market. Other players’ shares range from 16 to 21%.

According to Church & Dwight, Scrub Free is the leader in the value end of the business. The product is sold in three versions: soap scum remover, mildew remover and daily shower cleaner. Reckitt & Colman sold the brand following its acquisition of Benckiser in order to appease U.S. regulators.

On July 26, Reckitt & Colman announced it would purchase Benckiser for nearly $3.2 billion. The new company, called Reckitt Benckiser, is expected have annual sales of $4.7 billion, making it the largest, purely household cleaning products company in the world. The deal is not expected to be finalized until Dec. 10, as the companies await U.S. regulatory approval.


Wipe Away Germs
Bigger is definitely better when it comes to the competitive household cleaner market. That’s because well-established players such as S.C. Johnson and Procter & Gamble keep rolling out new products at a fast clip. For example, just last month P&G introduced Mr. Clean Wipe-Ups, a nonwoven, baby wipe type product that promises to eliminate 99.9% of bacteria on hard surfaces.

The pre-moistened, nonwoven wipes clean and disinfect in one step. The product is available in both kitchen and bath versions and can be thrown away after use, eliminating the need for a bacteria-soaked sponge. Mr. Clean Anti-Bacterial Wipe-Ups contain citric acid which, the company maintains, kills 99.9% of household bacteria including E-coli, salmonella and listeria.

“Consumers currently lightly clean their kitchen or bathroom five or six times a week,” noted Damon Jones of Procter & Gamble. “They are washing down countertops with dish water or wiping up hair in the sink.”

By using Mr. Clean Anti-Bacterial Wipe-Ups consumers can still clean the same way, but they’ll be using a product with anti-bacterial properties. A starter tub of 28 wipes will retail for $4. A 28-count refill pack will cost $3 and an 84-count refill pack will retail for $8. Mr. Clean Wipe-Ups will reach U.S. stores next month.

P&G began testing the wipe concept in the UK in April where the product is called Flash Disinfecting Wipes. Response was so strong, according to Mr. Jones, that the company has had trouble meeting consumer demand.


P&G, S.C.J. Go Head to Head
For now, Procter & Gamble has the wipe segment of the household cleaning product market all to itself. In other categories, however, P&G faces some pretty tough competition. For example, P&G in July introduced Swiffer dry, disposable cloths which use electrostatic action to pull dirt, dust and hair from surfaces. Yet, a month later, S.C. Johnson responded to that launch with Pledge Grab-It a similar electrostatically-charged, disposable cloth.

S.C. Johnson was able to quickly introduce the product because it licensed the technology from Kao Corp. which introduced the “Quickle Wiper” electrostatic dry mop kit two years ago in Japan.

“The technology was developed in Japan by Kao five years ago,” noted Kerry Clair of S.C. Johnson. “We signed an agreement in May and are beginning to market the product to 100 countries around the world.”

A Swiffer starter kit includes a sweeper and 8 disposable cloths for an approximate retail price of $14.99. Refill cloths are available in 8 count ($2.49), 16-count ($4.99)and 32-count ($8.99) packages. Pledge Grab-It is sold in a starter kit with a sweeper and 10 disposable electrostatic cloths for approximately $14.99. Refill packs are available in several sizes. A 10-count size retails for $3.

Who will win the battle of the electrostatic cloth? It’s too early to tell, but the launch of such products as Swiffer and Mr. Clean Wipe-Ups are proof that P&G is determined to get growing again via new product introductions. The company’s first quarter fiscal 2000 core profits rose 10%, with the help of a strong showing in its fabric and home care business. Reflecting a reorganization to contain costs and launch new products, Procter & Gamble's core earnings rose to $1.27 billion for the quarter, excluding reorganization costs.


A Unique Alliance
P&G is also trying new strategies to reach consumers. For example, it has formed a marketing alliance with Tupperware to cross sell products. This summer, for instance, the consumer-products maker introduced its Swiffer sweeper at “Tupperware parties” before making the product available to the general public.

“One of the challenges of a new product launch is explaining to the consumer what the product does,” noted Mr. Jones. “Tupperware let us get the product into the hands of a lot of people on a local level so that they can see how it works. That was a much more effective way of launching a new product.”

P&G, S.C. Johnson and others will continue to launch easy-to-use products that will change how consumers clean. After all, S.C. Johnson noted a University of Maryland study found that the average woman spends 15.6 hours a week cleaning her home—just about half as much time as she spent cleaning in the 1960s. With time strapped consumers eager to try products that clean faster and easier, observers say a raft of new household cleaning products is just around the corner.

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