Clean Well...Do Some Good

January 3, 2007

Clean clothes? That’s a given. Now marketers say they are doing their part to clean the environment, revitalize local economies and, believe it or not, build a better world in the process.

Clean Well...Do Some Good

Clean clothes? That’s a given. Now marketers say they are doing their part to clean the environment, revitalize local economies and, believe it or not, build a better world in the process.

Tom Branna
Editorial Director

It’s not enough for laundry detergent to remove dirt, eliminate stains and make clothes bright. In today’s environmentally-conscious world, the products and the companies behind them must do some good too. That means reducing energy, using less water, even making the consumer feel better as she does a load of wash. Outside the laundry room, more companies are getting closer to the consumer by getting involved in the issues that are near and dear to her heart.

“If the 20th Century defined industry responsibility in terms of product safety and workers’ rights, is the 21st Century going to hold us accountable for the social, economic and environmental impact over the full lifecycle of the goods we offer? The answer is probably yes,” said Patrick Cescau, chairman of Unilever at the World Conference on Detergents, which was held in Montreux last fall. “The external environment is evolving so fast that it is going to shape us more than we can possibly shape it. We are not masters of our own destiny. And it is misguided to pretend we are.”

Here's a look at the largest markets for laundry detergents, according to Euromonitor International.

Top Detergent Markets


Country                2005 Retail Sales

                                (in millions)

U.S.                        $9,471
Japan                    $3,442
China                    $2,791
UK                          $2,697
Brazil                      $2,477
France                   $ 2,295
Italy                        $2,220
Mexico                   $2,077
Germany                $2,069
Spain                       $1,628
India                        $1,517
Russia                    $1,347
Source: Euromonitor International

Driven by these external forces, laundry detergent manufacturers—big and small—are undertaking a wide array of initiatives to meet the changing demands of consumers. In recent years, small innovators such as Method Home Products have exploded on the scene, while industry giant Unilever reaps the benefits from the rollout of All Small & Mighty compact laundry detergent. Not to be outdone, segment leader Procter & Gamble is testing its own versions of compact liquids with plans to launch it across the U.S. in mid-2007.

Here are the leading liquid laundry detergents ranked by dollar sales in food, drug and mass merchandisers for the year ended Nov. 5, 2006. Totals do not include Wal-Mart sales. Source: Information Resources, Inc., Chicago, IL.

Brand                     Sales

Tide                       $1,183,743,000
All                             $307,256,500
Purex                       $228,477,800
Gain                         $196,204,000
Arm & Hammer      $137,810,700
Xtra                           $120,131,700
Cheer                       $102,755,200
Wisk                            $98,404,220
Private Label             $75,283,560
Era                               $62,786,180

Here are the leading powder laundry detergents ranked by dollar sales in food, drug and mass merchandisers for the year ended Nov. 5, 2006. Totals do not include Wal-Mart sales. Source: Information Resources, Inc., Chicago, IL.

Brand                                      Sales

Tide                                          $328,202,900
Gain                                         $105,027,700
Cheer                                        $32,730,080
Surf                                            $31,301,070
Arm & Hammer Fabricare     $29,411,880
Ariel                                           $20,388,410
Private Label                           $14,925,670
Sun                                            $13,503,850
Arm & Hammer                        $12,138,070
Foca                                           $10,251,740

These initiatives come at a time when sales growth for laundry detergent sales in the U.S. and other parts of the world is beginning to slow down. Sure, it’s a hallmark of mature market such as Western Europe, Japan and the U.S., but what’s even more troubling for global players is that the trend occurs in emerging markets too. According to Euromonitor International, global retail laundry care sales rose 5.1% last year to nearly $50 billion. The chart below shows the top 12 markets in 2005, according to Euromonitor International.

In the U.S., sales of laundry detergents rose 3.3% to nearly $3.5 billion in manufacturers dollars for the 52 weeks ended Nov. 5, 2006, according to Information Resources, Inc., Chicago. Sales of liquids were up 7.5% to nearly $2.8 billion, while sales of laundry powders declined 11% to about $670 million. Sales of laundry detergent packets and bars fell 8.1% to about $26.1 million. Sales of tablets plunged 93% to $13.2 million. Keep in mind, however, that in all instances, these totals do not include Wal-Mart sales.

But regardless of where products are manufactured or sold, successful companies are those that offer innovative solutions to the consumer.

“Commoditization and falling prices will deny our industry space to innovate, unless we start to think differently about the products we sell,” insisted Mr. Cescau. “We are a mature sector, with mature growth rates.  For companies interested in top-line growth, detergents—in the developed world at least—is not where the glittering prizes lie.  Here, the challenge is to provide innovative and relevant brand offerings.”

All Goes Small

Unilever leaped to the forefront of innovative solutions last year with the February rollout of All Small & Mighty, a 3x concentrated laundry detergent that cleans as many loads (32) as a regular 100oz. bottle. The product uses 74% less water than regular detergent. At the same time, All Small & Mighty uses less than half the plastic of a regular 100oz. bottle, which means less waste to recycle and less impact on the environment.

The good news for Unilever is that Wal-Mart likes the concept too. In fact, the world’s biggest retailer partnered with Unilever to get the word out about the benefits of All Small & Mighty. In less than 10 months since its launch, the concentrated detergent saved more than two million gallons of water during manufacture; 3.5 million square feet of corrugated cardboard and almost 5,000 gallons of diesel. Total financial savings in the supply chain and in-store run at over $600,000.

“It’s a win-win for us, Wal-Mart, consumers and the environment,” noted Mr. Cescau.

A Big Test in Cedar Rapids

Unilever may have Wal-Mart in its corner, but don’t count out Procter & Gamble by any means. After all, the Cincinnati-based company dominates the global laundry care market with a 28% share (see chart, p. 74). P&G may be a bit late to the concentrated detergent party, but the company is poised to make its presence felt in the fast-growing segment. The company is in the midst of a six-month test market in Cedar Rapids, IA, where it is testing 2X versions of its Tide, Gain, Era, Dreft and Cheer compact laundry detergents. At the same time, the company is conducting a limited scale-up trial throughout the U.S. to measure how the concentrated formulas impact operations such as packaging and shipping. It’s an extra step from P&G normal test procedures, but an important one, explained Ross Holt-house, external relations manager for fabric and home care.

“We wanted to make sure we came up with the right mix of value and performance,” he told Happi. “This is the biggest change we’ve made to our liquids in the past decade.”

Mr. Holthouse said he expects a full rollout of the concentrates in mid-2007, but in the meantime, the company is determined to educate consumers about the benefits of the new compact formulas.

“Consumers get confused when you start talking about different sizes—the bigger bottle is often perceived as a better value,” he noted. “So consumer education is critical. They must understand that compacts provide the same number of uses as the old formula.”

Educating consumers is one thing, connecting with them is another. P&G has a number of programs in place to show consumers that it cares about the issues that they care about.

“Historically, when we talked about laundry detergent we talked about performance,” explained Kash Shaikh, external relations manager. “Now we’re trying to push beyond the laundry room and touch the women who use our products in an emotional way that goes beyond performance.”

To test Tide Simple Pleasures, for example, P&G researchers actually spent days with women across the country—going shopping, heading soccer games—in an effort to find out what they want in life and why.

“We learned that fragrance plays a huge role in a woman’s life, which led to the launch of Tide Simple Pleasures,” recalled Mr. Shaikh. “Fragrance helps lift her out of the boring laundry process and gives her an escape.”

Using this type of 360° consumer research approach helped P&G understand how important family is to a woman and how new products must not only perform well, but must also help the family too.

"Women want products that make them feel good as the caretakers of the family,” he explained. “It goes beyond laundry detergent.”

Top 10 Laundry Detergent Companies

Here are the leading players, ranked by market share, in the global laundry detergent market.

Company                                                           2005 %Share

Procter & Gamble                                            28.1
Unilever                                                            17.4
Henkel                                                                 8.9
Reckitt Benckiser                                               5.3
Colgate-Palmolive                                             2.9
Kao                                                                        2.9
Lion                                                                       2.2
Church & Dwight                                                 1.4
Fábrica de Jabón La Corona SA de CV         1.1
Zhejiang Nice Daily Use Chemical Co Ltd     1.0

Source: Euromonitor International

P&G Lights Up Jackson Square

Moving out of the laundry room and into consumers’ lives was the driving force behind a new Tide Cold Water campaign starring Ellen DeGeneres. All last month, Ms. DeGeneres reminded Americans that the little things they do can make a big difference in their communities, particularly when it comes to energy savings.  During the four-week campaign, Tide urged people across the country to commit to doing just one load of laundry in cold water to help New Orleans during the holiday season. According to P&G, washing one load of laundry in cold water saves enough energy to light 20 100-watt light bulbs for one hour. When 100,000 people made the pledge, it saved enough energy to provide an energy-efficient holiday lights display for the people of New Orleans in historic Jackson Square.   

“Energy savings is a huge topic of concern across industry, consumers and the government,” noted Mr. Shaikh. “That’s why we partnered with Ellen DeGeneres to get the energy-saving message out and help people understand the little things that they can do to really help their community.”

While Unilever and P&G show renewed interest in concentrates and altruism, the founder of a small San Francisco-based home care product manufacturer insists his company was built on both concepts.

A Method to Its Business Srategy

Method Home Products launched triple concentrated laundry detergents in 2004. Since then demand for Method has soared and industry sources estimate that the privately-held company’s sales reached $60 million in 2006. In addition to laundry care products, Method markets all-purpose and specialty hard surface cleaners, dish cleaners, hand and body care products and air care items.

“Ultimately, our business is about creating positive change,” explained company founder Adam Lowry. “It’s been great to see how our triple concentrated detergent has been a lever of change for the entire laundry detergent category.”

Does Mr. Lowry lose sleep at night now that Unilever and soon, P&G, have re-entered the concentrated laundry detergent category? Not at all, he insisted.

“One of the advantages we have is that our brand is known for creating innovative change,” he said.

Before founding Method, Mr. Lowry was a climatologist. As the threats from global warming soared, he saw a need to become a change agent and identified the household and personal products industry as the perfect vehicle to make those changes.

“Household and personal care products are one of the largest contributors of health problems in the home,” he charged. “We wanted to create positive environmental and human health benefits by designing products that incorporated sustainability principles at their core.”

In contrast, larger and older competitors were founded on a different set of principles, he told Happi.

“I don’t view sustainability as a consumer trend. It has to do with the way you run your business and make decisions,” he maintained.

While his competitors define and refine their concentrate strategy, Mr. Lowry and his team are determined to roll out more innovations in 2007.

“We’ve shifted the market once, and we’re ready to do it again,” he insisted.

Being an agent of change can certainly pay off. During the past three years, Method’s sales have jumped nearly 4000%, and the company was recently ranked No. 7 on Inc.’s 2006 list of the 500 fastest-growing private companies.

“We have new products, new distribution and are entering international markets, which will all make 2007 our best year yet,” predicted Mr. Lowry. “We have one master brand and there has been tremendous growth in the number of consumers who want to make their home a Method home.”

The Implications of REACH

Now, more than ever, marketers must answer to the consumer on environmental issues. In a few months, it will have to answer to the EU as well. In April, European regulators will begin enacting REACH (Registration, Evaluation and Authorization of Chemicals). Everyone impacted by the regulations—marketers and suppliers alike—agree that REACH will add a tremendous cost burden to industry. The good news for the detergent industry is that much of the data collection has already occurred.

“We’re in good shape in terms of meeting the data requirements of Europe,” explained Ernie Rosenberg, president of the Soap and Detergent Association. “This is an industry that did its job early, so we’re in better shape than most when it comes to REACH.”

However, Mr. Rosenberg also warned that the newly-elected U.S. Congress will be much more aggressive in its oversight of the Toxic Substances Control Act (TSCA), which will lead to efforts to amend TSCA with REACH-like elements.

Even as associations such as SDA and the International Association for Soaps, Detergents and Maintenance (A.I.S.E.) brace themselves for a drawn out battle over REACH, some industry leaders insist that REACH has a positive side.
“Despite some critics, we believe the industry is using chemicals safely, and REACH should help us to get this message across,” Mr. Cescau told the audience at the World Conference on Detergents. “The challenge now is to get the communication to consumers right.  That means focusing on the needs of consumers—not just regulators and NGOs—and doing so on the basis of likely risk not potential hazard.”

While industry experts judge the merits of REACH, in the end, said Mr. Cescau, it is all about building and safeguarding consumer confidence and trust in brands. He also warned the audience that REACH represents only the tip of the biggest iceberg facing the detergent industry—its impact on the environment, especially water. In 2005, Unilever, Procter & Gamble and companies from other sectors worked together to highlight the importance of water issues to the industry.

“It brought home to all of us how finite a resource water is,” he said.  “We all need to examine our own water needs and act together to reduce them.”