A Rising Tide

December 27, 2007

While its competitors struggle, Procter & Gamble continues to make gains in the U.S. laundry detergent market.

 With few competitors, P&G dominates the U.S. laundry segment.
A Rising Tide

While its competitors struggle, Procter & Gamble continues to make gains in the U.S. laundry detergent market.

Tom Branna
Editorial Director

Can any company in the laundry detergent category catch Procter & Gamble? It’s not likely. P&G, which already controls about 60% of the market, is rolling out new products on the back of its best-selling brands, even as one of its biggest competitors plans to exit the U.S. laundry care sector.

“P&G is on a roll,” agreed Connie Maneaty, director of personal care and household products at BMO Capital Markets Corp., New York, NY. “The company already has a 62% share of the market and its share has been growing 75-100 basis points a year.”
That kind of dominance was enough for Unilever to announce last year that it was exiting the U.S. laundry detergent category to focus efforts on its strong position in Europe and emerging markets. Ms. Maneaty noted that in 1995, Unilever held a 15% share of the U.S. market, but today, that share has dipped to 11%. While All Small & Mighty has provided a lift, that gain has come at the expense of Wisk and Surf.
Despite P&G’s big lead, Ms. Maneaty said that Church & Dwight is making noise via its Arm & Hammer and Oxiclean brands.
“Church & Dwight has a defendable niche with Arm & Hammer,” she said. “They’re scrappy and good at introducing new products.”
 All Small & Mighty's sales are good, but Unilever is still exiting the market.
For example, C&D was the first to market with Arm & Hammer Essentials, which is billed as 100% natural soap. That launch was ahead of P&G’s national rollout of Tide Essentials. Now C&D is making news with the introduction of Arm & Hammer Plus the Power of Oxiclean. The product combines the deep cleaning power of Oxiclean with the freshening power of Arm & Hammer baking soda. Combining the two products will enable C&D to move the Arm & Hammer brand into the premium price sector of the market, according to Ms. Maneaty.
It all comes at a time when the overall laundry detergent segment declined about 1% to about $3.5 billion, according to Information Resources, Inc., Chicago. Of course, that total does not include Wal-Mart sales. For the year ended Nov. 4, 2007, sales of liquid laundry products actually rose nearly 2% to more than $2.9 billion. In contrast, powder sales dropped 12.2% to $603 million, while sales of packets and bars dropped 9.6% to $24.3 million.

More Moves by P&G

They may have a big lead, but the folks in Cincinnati aren’t resting on their laurels. For the past several months, P&G has been busy expanding the distribution of its concentrated 2X Ultra formulations, which include the Era, Cheer, Gain and Dreft brands as well as Tide.
Also last year, P&G introduced Pure Essentials. The brand encompasses Tide, Downy and Bounce and includes a variety of natural ingredients. For example, Ultra Downy Pure Essentials is available in aloe and white lilac, and chamomile and lemon verbena scent variants.
“The launch is right on-trend with the consumer’s desire for nature-inspired products,” explained Kash Shaikh of P&G fabric care consumer relations.
Like so many other product categories, P&G researchers are focused on the fragrance experience. One of these scent-inspired launches is Simple Pleasures, which debuted last year under a variety of brands, including Tide and Downy. All of them promise to make laundry chores more enjoyable via fragrances such as magnolia and orange blossom, and water lily and jasmine. P&G’s focus on fragrance is working. It’s still early, but sales of Tide Simple Pleasures rose nearly 300% to $67.2 million for the year ended Nov. 4, 2007.
“We’ve spent a lot of time with the consumer,” said Mr. Shaikh. “We’ve learned that fragrance helps her reduce stress levels and these intricate scents help her feel good about all the things she does for her family.”
 Downy Pure Essentials provides an olfactory lift.
Laundry detergent that makes a woman feel good? Isn’t that what a fine fragrance is supposed to do? It’s no coincidence then that new Downy Simple Pleasures Radiance Collection was developed by the same perfumers who created fine fragrances like Valentino, Escada and Lacoste, according to P&G. Now, no one is confusing dinner and dancing with pretreating and rinse cycles, but the emphasis on improving the consumer experience is clearly evident in these recent rollouts. Next month, P&G is focusing on stain removal with the introduction of Tide with Dawn Stain Scrubbers. Mr. Shaikh said the brand is aimed at consumers who need to get out tough stains. The product is available in original and Whitewater Clean scents and will retail for $6.49 (50oz.) and $11.99 (100oz.).
Last year, Gain became P&G’s 23rd billion-dollar brand. After hitting that milestone, Gain kept right on going with the debut of Gain Joyful Expressions, which posted a sales increase of 40% for the year ended Nov. 4, according to IRI. Mr. Shaikh credited Gain’s growth to a group that’s come to be known as Gainiacs, a consumer base that represents just 15% of users but 90% of volume.
“They’re extremely passionate about Gain,” he noted. “They’re fun, care-free and light up any room that they enter.”
To reach this young, urban group, P&G has launched www.ilovegain.com. The site is chock-full of games, product facts and testimonials like this one from Becky in Kentucky:
“I can’t wait to smell Gain’s original scent on my clothes. It affects my whole attitude about laundry. I only wish it came in bath and body products!”
How’s that for loyalty? Mr. Shaikh said P&G will continue to look for innovative ways to reach these Gainiacs. In the meantime, the company continues to reach out to the general population with its “Tide Loads of Hope” social and charitable efforts. The program has helped clean clothes in Hurricane Katrina-ravaged New Orleans and, more recently, in portions of Southern California ravaged by wildfires.
“Its an evolution of what we’re doing as a brand. We’re looking to see how we can mean more to more people,” explained Mr. Shaikh. “We’re No. 1 in the category, but we want to build an even better relationship with consumers.”

Unilever Roils the Industry

P&G is No. 1 and that makes the Unilever team very unhappy in the States. So, much so, that last summer, the company announced it would look for a buyer for its North American laundry unit. At the time, a Unilever spokesperson noted that P&G’s laundry business is four times the size of Unilever’s in North America.
“We’re at a significant scale disadvantage, and we see little prospect of reversing that,” said Anita Larsen.
At press time, Unilever had no comment regarding a potential suitor, and Ms. Maneaty of BMO Capital doesn’t expect a buyer to come from among the market leaders.
“In the U.S., there are only five players—P&G, Church & Dwight, Unilever, Henkel and Huish—that’s it. I don’t think any of the other companies would benefit from owning the Unilever brands; they’re all under pressure, although All is holding its own.”
Its future in the U.S. may be uncertain, but that hasn’t stopped Unilever from rolling out an array of new laundry products during the past year. According to Helayna Minsk, marketing director, All, Unilever will continue to introduce innovations that meet consumer needs, such as Secret Garden, a fragrance variant that has been added to All’s 2x concentrated line. It has a calming, light floral scent.
“We continue to build on the success of 3x concentrated products with the launch in 2007 of All Small & Mighty with the essence of Snuggle,” observed Ms. Minsk. “It’s packed with the fresh, clean and airy fragrance of Snuggle and gives laundry long lasting Snuggle freshness.”
Unilever also added a 64 oz. size to its 3x range, which delivers 64 loads of cleaning, the same as a 200 oz. bottle of regular non-concentrated detergent.
All Small & Mighty is off to a great start with more than $250 million of sales generated since launch, said Ms. Minsk.
“Consumers who try it have a 55% repeat rate, a remarkable figure for the category, and a clear reflection of how happy consumers are with the product,” she observed. 
In fabric softeners, Unilever extended the Snuggle Exhilarations premium sub-range with a new fragrance, Peach Blossom and Sunshine Swirl, a larger 50 oz. size, and Exhilarations sheets in complementary fragrances to the liquids franchise.
Due to the success of All Small & Mighty liquid concentrates in the U.S., it is now being rolled out in Europe through the Persil & Surf brands with tremendous success, according to Ms. Minsk.
Smaller companies too are rolling out new products. CR Brands, for example, launched Biz Double Action, which combines oxy-power plus enzymes in one product. It’s the first major upgrade to Biz in many years and it’s based on extensive consumer research around how (and why) consumers are using detergent additives and how Biz can improve their lives in this area, according to Rich Owen, president of CR Brands.
“It turns out that high-end consumers understand that detergents alone are not enough to get the really tough stains out,” explained Mr. Own. “So they turn to additives/boosters/pretreaters of all types.”
But because many of these products are formulated for a specific stain type, consumers end up with a huge, cluttered, shelf above their washing machine that is full of miscellaneous products.
“Biz Double Action solves that issue for them,” he told Happi. “It’s formulated to be as good as, or better than, any other product on every type of consumer relevant stain.”

Paying a Premium

The addition of novel scents and brand combinations coupled with an ethical positioning are helping laundry detergent marketers stave off competition while still commanding a premium, note industry observers. In fact, Mintel calls the introduction of more luxurious home care products one of the big trends for 2008. That’s good news for marketers, since these items can sometimes command a higher price point, said Lynn Dornblaser, senior new product analyst, Mintel.
She explained that there are more young adults in the workforce with more disposable income as well as empty nesters looking to spend more to enhance lives and homes with home care products that are more exclusive.
“Tide Simple Pleasures, with its unusual scent, is almost being positioned as having an aromatherapy benefit,” Ms. Dornblaser noted.
At the same time, brands such as Seventh Generation, which traditionally is sold in more upscale retailers, has been able to command a higher price point. But if these eco-friendly products move on to mass, it may be difficult to maintain their price.

New Year, Same Old REACH

Novel scents and unique product attributes may provide a lift to the laundry category, but companies are still being dragged down by the regulatory burden. This year, REACH regulations will continue to gather steam, even if the mandates are spread out over the next decade. Brian Sansoni, vice president, communications, at the Soap and Detergent Association, noted that many marketers and their suppliers are just realizing the enormity of REACH.
“Its like cramming for a final exam,” he observed. “Throughout the year, companies will be trying to get up to speed on REACH.”
SDA is working with other associations (including the Consumer Specialty Products Association) concerning North American regulatory risk-based assessment and management of existing chemical substances. Mr. Sansoni called it a North American alternative to REACH, but one that is science-based and sets priorities based on risk assessment.
“If done right, it could change the outlook for chemical management in North America and beyond,” he insisted. “We’re very engaged in the development of this program with the Environmental Protection Agency and our Canadian counterparts.”
In California, regulators have put forth a green chemistry initiative to curtail the use or manufacture of toxic chemicals in everyday life. The state even set up a blog on its website and invited the public to provide input on the regulations.
“We urged officials not to do anything that would undermine our ability to innovate and formulate products that have a public benefit,” said Mr. Sansoni.
To help spread the word about the safety of its products, the association will unveil a new website later this year, www.sdascience.org. Also, SDA is emphasizing the important role that member companies’ products play in protecting public health and reinforcing the industry’s strong track record on sustainability. Even the theme of the SDA annual meeting, “Going Beyond Green,” will focus on all aspects of sustainability. The annual meeting takes place Jan. 29-Feb. 2.
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