As the dominant force in the U.S. laundry care market, P&G continues to push ahead with innovative technology that protects its coveted market share. Can economic concerns and environmental awareness help other players, including the newest—Sun Products Corp.—chip away at P&G’s lead?
Everyone knows the moon affects the tide, but what about a sun?
Sun Products Corp.—the newly merged operations of private label giant Huish and Unilever’s former North American laundry care brands via Vestar Capital—is set to take on laundry behemoth Procter & Gamble, the maker of Tide, and the rest of the U.S. fabric care market. Ready to move into new corporate headquarters in Wilton, CT in March, Sun Products has become an instant and sizable force in U.S. laundry market with sales of approximately $1.8 billion in 2007.
But can any company really compete with P&G in the laundry aisle?
|Tide Total Care is P&G’s newest fabric care technology.
According to Information Resources, Inc. (IRI), for the 52 weeks ended Nov. 2, 2008, sales of Tide liquid in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) rose 7.41% to $1.29 billion, dwarfing the rest of the brands in the $3 billion liquid category. Sun Products’ All liquid—which it acquired from Unilever along with Wisk, Sunlight, Surf and Snuggle—was a distant second with sales of $230.6 million.
According to Ms. Collin, the old Unilever business could be used to build scale and market presence for a smaller company. “But,” she continued, “given the combined strength of P&G’s Gain and Tide brands, “I’m not sure how successful other players will be at trying to take share from them.”
Yet second tier players contend consumers are becoming more aware that they can get what they want for less—it just depends on what they want: great cleaning, greener products or better fragrance profiles.
What may also be helping is the floundering economy. Consumers are taking a closer look at their finances and even mundane purchases such as laundry detergent are under the microscope.
“When consumers start to question their purchase decisions, that is an opportunity for a brand or retailer that is value oriented,” said Eric Schwartz, marketing director, laundry care, Henkel of America.
According to IRI data, many of the value and mid-range brands of liquid detergent posted gains during the 52 weeks tracked by IRI, with Henkel’s Purex liquid, the third ranked brand overall, rising 3.1% to $227.7 million. Sales of Church & Dwight’s Arm & Hammer and Xtra liquids jumped 3.5% and nearly 6% to $167.6 million and $114.5 million, respectively. Private label liquid sales rose 21.2% to $108.5 million.
As secondary brands make impressive gains and economic woes are forcing consumers to scale back, there’s a lot of talk about value in the laundry market.
“Value is on the top of consumer’s mind,” said Lauren Thaman, P&G’s associate director, external relations, fabric care, North America. But according to Ms. Thaman, the consumer’s quest for value isn’t focused solely on price. They want products that work well and can help their clothes last longer and look newer longer, especially as they cut back on apparel purchases and wear their current wardrobes a little longer.
|Method’s new Squeaky Green triple concentrated laundry detergent.
To combat this, last August, P&G rolled out the Total Care concept to Tide and its market-leading liquid fabric softener Downy.“We have taken the performance of Tide and Downy to a whole new level,” Ms. Thaman said.
The Total Care line features P&G’s proprietary Protective Fiber Complex, which includes silicones adapted to perform within the wash cycle through a lubricating technology that reduces abrasion between fibers and helps protect a garment’s color and shape. The complex also includes a polymer deposition aid that forms coacervates to help keep the silicones from washing away, acting as a net and capturing other care ingredients and bringing them down to the fabric surface for maximum effect and chlorine scavenger technology, which helps maintain bright colors and prevents dyes from fading by neutralizing chlorine in the wash water.
P&G is billing it as a breakthrough technology that helps preserve and protect the “beauty,” of clothes over time, a message that resonates well with women. If it sounds like the detergent team has taken a page from P&G’s personal care playbook, you’re right. For the past five years, P&G fabric care scientists worked with their beauty colleagues, borrowing and adapting skin care and hair care technology for laundry applications.
|New Zealand’s Ecostore brand is now selling products online in the U.S.
Trading Down, or Not?
While P&G looks to elevate fabric care to fashion care, companies such as Henkel are holding their own in the marketplace, buoyed in part by a new frugalism in which many consumers are trading down and shopping different channels to stretch their paychecks.
“As the economy softens, we see consumer’s heightened attention on getting value for everyday purchases. It’s not just about price. They are interested in value-oriented brands. Value has become chic. This is good for the Purex brand,” said Mr. Schwartz.
It has been beneficial to Henkel’s fabric softener business. According to IRI data, sales of Purex Soft liquid fabric softener concentrate rose more than 20% in the last 52-week period.
“It is a value position brand, and what is making it sing is that we made it look more premium,” said Mr. Schwartz, pointing to a mid-year packaging revamp and improved fragrance. “The combination of price point and the look is making it do well in this economy,” said Mr. Schwartz.
“The consumer wants to get the best value out of their product, which may or may not be the cheapest product,” noted Bill Littlefield, executive vice president, general manager, Sun Products Corp. “They will demand that products deliver on their brand’s promise. It will be the totality of value of the product they buy, not just the price point.”
Initially part of the Huish stable, Sun Products’ Sun Burst liquid rose a whopping 861% to $37.9 million, according to IRI data. According to Mr. Littlefield, the company used the 2x conversion to make some changes. “As we went through 2x conversion, we upgraded graphics and the overall proposition that Sun was offering, and consumers are responding,” he said.
Purex Natural Elements is also connecting with customers, according to Mr. Schwartz.
“Consumers are very interested in eco topics. And this was true before the situation worsened. They don’t want to feel like they are trading down.”
At half the price of Tide and less than half the price of Seventh Generation, Purex Natural Elements might easily catch the eye of a cash-strapped consumer. But according to Mr. Schwartz, it is when shoppers read the fine print and smell the scent that the purchase decision is made. “We excel at R&D on value in our category and premium experience at great prices, Natural Elements is an example. They see that this is not a trade off,” said Mr. Schwartz.
Purex Natural Elements, which is recognized by the U.S. Environmental Protection Agency’s Design for the Environment (DfE) program, is available in Linen & Lilies, Apple & Melon, Cherry Blossoms & Vanilla scents. It hassuggested retail pricing of $3.49 for a 50oz. bottle and $6.99 for a 100oz.
As Henkel does green for less, Method and Seventh Generation are taking their eco laundry care products to a higher level, answering the calls of consumers who, despite tough economic times, want to use products that are kinder to the environment.
|Seventh Generation has new fabric softener sheets that are recyclable, biodegradable and compostable.
“After analyzing how much water, packaging and energy were wasted in the production of typical liquid laundry detergent, we launched our own triple-concentrated formula in 2004, making Method the first in the U.S. mass market to offer 3x laundry detergent. Our formula at the time was at the peak of sustainability and consisted of biodegradable surfactants with minimal water. However, as a company that constantly strives to improve its product, we wanted to take this laundry detergent to the next level both in terms of natural ingredients and stain-fighting performance,” said Katie Molinari, public relations manager. “In addition to being readily biodegradable, our new formula is dye-free and hypo-allergenic, and has an improved enzyme system for increased stain-fighting.”
Method tweaked its dryer cloths too. The firm has improved the original plant-based formula to increase its effectiveness at reducing static. Offered in the same three fragrance profiles as the detergent, new Squeaky Green dryer sheets feature water-based technology that infuses softeners into fabric, rather than coating the surface, which can leave a waxy residue that dulls colors over time, according to the company. Method has also swapped the plastic container for a pouch.
Seventh Generation also unveiled new fabric softener sheets. Each chlorine-free sheet uses naturally formulated plant-derived ingredients and is recyclable, biodegradable and compostable, which is a major issue for the firm. According to Seventh Generation, if every household in theU.S. replaced just one box of polyester fabric softener sheets with Seventh Generation paper sheets and recycled or composted them after use, 6000 tons of solid waste would be prevented from entering landfills. The firm offers the sheets in top selling free and clear and blue eucalyptus and lavender, which is derived from 100% essential oils and botanical extracts.
Another marketer with a keen eye on the environment is Ecostore, a 15-year old brand from New Zealand, which is now selling its green household, personal and baby care products in the U.S. via its website www.ecostoreusa.com. Founded by Malcolm Rands, the company’s line includes powder and liquid laundry soap, as well as other products that are natural, plant-based and eco-friendly.
Ecostore’s laundry liquid contains certified organic eucalyptus oil, which delivers fresh clean fragrance and extra cleaning power.
“It contains no optical whiteners or brighteners, which can upset the human immune system, harm aquatic life and it is safe for septic tanks and gray water systems,” added Mr. Rands, who noted that his firm has received hundreds of letters from individuals who have used Ecostore products and say they have seen positive health benefits, such as reduced eczema and allergies.
According to Mr. Rands, Ecostore’s laundry liquid and oxygen whitener have been top performers among U.S. consumers based on initial trials and sales. The company is actively seeking a U.S. based manufacturer, and in the interim, products are being shipped from New Zealand.
It’s a Process
Regardless of the chemistry behind the products, laundry is a mundane task that requires attention to detail, according to fabric care experts.
“Laundry is a process. There are a lot of decisions you have to make and those decisions affect the outcome,” said Harold Baker, associate research fellow at The Clorox Company.
According to Mr. Baker—who is better known by consumers as Dr. Laundry, manning a laundry blog and hotline for Clorox—there are many other factors beside detergent brand selection that impact the outcome of laundry night, including proper sorting, water temperature and use of treatment additives such as stain fighters and whiteners.
New to the Clorox stable is Clorox 2 Stain Fighter & Color Booster, which launched in mid September. Besides being double the concentrate, it has also been reformulated to work better on tough stains and keep clothes bright and whiten whites.
|Clorox 2 Stain Fighter & Color Booster launched in September.
Growing Niche Opportunities
Some companies are carving out a niche for themselves in laundry care when it comes to cleaning specific fabrics, such as high-performance athletic wear and dry-clean only garments.
Win detergent, founded in 2005 by Mark R. Konjevod, a former collegiate linebacker and marathon runner, is one such company.So far, Win has kept its distribution squarely focused on retailers that sell high-tech fabrics, such as Dick’s Sporting Goods as well as smaller sporting goods shops. But the New York-based company also thinks big. This past summer, the firm was named the first official licensed detergent of the U.S. Olympic Team and its detergent was used in Olympic training centers across the country prior to the Games in Beijing.
For Win, the sponsorship is a perfect way to reach targeted customers—the athletes who wear the garments—not to mention the opportunity to win over even a fraction of the 200 million viewers who tuned in to NBC during the 11 days of the Games.
“Our relationship with the USOC is a core part of the brand’s DNA,” Mr. Konjevod maintained.
With distribution recently expanded to Canada and estimated annual sales between $4-5 million, the firm seems to be hitting its stride. According to Mr. Konjevod, Win will post growth of around 150% in 2008. Clearly, Win is keeping a watchful eye on trends in the overall market evidenced by its first line extension, Win Green, an environmentally friendly and fragrance-free formula that is completely biodegradable. The formula contains no brighteners, phosphates or dyes and is housed in a bottle made from recycled plastic.
While these high-tech garments are primarily used for exercise and competition, the market is growing. This type of clothing has become mainstream—just check out the moms on the school pickup line where yoga and workout attire are a staple. With that in mind, should Win be eyeing more traditional laundry outlets?
“Win continues to seek retail distribution that is strategically appropriate,” Mr. Konjevod said. “As the user base for high-tech fabrics expands to an increasingly mainstream audience, so too will Win’s distribution.”
But there’s a new player to contend with and it is making moves into traditional detergent outlets. Dry, Inc. has entered the market with new ProWash activewear detergent, its own formulation that addresses the specific needs of high-tech athletic apparel. According to Dry, Inc., it quickly and easily cleans and eliminates odors, bacteria and stains from activewear clothing, and can be used as substitute for or as an additive to regular laundry detergent.
ProWash began shipping in August to select Wal-Mart stores, and Dry, Inc. is currently securing distribution to make the detergent available in a wider variety of grocery, drug and mass merchandisers.
“We fielded so many calls from consumers looking for a product that completely removes the odor from performance fabrics,” said LeAnne Williams, director of marketing for Dry, Inc., which plans to begin advertising ProWash in 2009 in print and online. “When we discovered that the average American household needs to clean up to 9 activewear garments a week, we knew there was a business opportunity.”
Portland, OR-based Dry, Inc. sees another opportunity to increase sales in 2009. With the economy in the doldrums, consumers are less likely to drop off garments at the local dry cleaner, and may turn to “at-home” dry cleaner products. On average it costs $5 to clean a garment at the dry cleaner and less than $0.50 to clean the same garment with Dry Cleaner’s Secret, according to the company.
“We’ve always had a base of customers that used our product to save money and conveniently dry clean at home, but now with the current economy we’re expecting a record year,” she said. According to IRI, sales of Dry Cleaner’s Secret for the 52 weeks ended Nov. 2 fell 22.6% to $5.1 million.
What may also help the product garner more attention is its new alliance with one of the most recognized names in fabric care. Since June, the product has been marketed as Woolite Dry Cleaner’s Secret.
“The Woolite brand has always been synonymous with refreshing and protecting your clothing. We found the American consumer had a very high awareness of the Woolite brand and the co-branded package would bring more users into the market,” said Ms. Williams.
According to Dry, Inc., Woolite Dry Cleaner’s secret is easier to use than some of its competitors, including Dryel, a P&G brand that saw sales dip 1% to $13.7 million.
While a P&G official told Happi Dryel isn’t a main focus for the company, dry cleaning does interest the Cincinnati consumer products giant. Since the summer, P&G has been testing Tide Dry Cleaners, a trio of freestanding professional dry cleaning stores in Kansas City. P&G is using technology created by Kansas City-based GreenEarth Cleaning, which touts an environmentally safe dry cleaning process that replaces petroleum-based solvents with liquid silicone that breaks down into SiO2 and trace amounts of water and carbon dioxide. In addition to being green, there’s also a heavy focus on service at Tide Dry Cleaners, with drive-through service and 24-hour lockers in which select customers can pick up their garments after normal business hours.
Living in a Regulatory World
As marketers grapple with a slowing economy and a growing interest in sustainability, they must also come to grips with the growing threat of regulatory activity in the U.S. and around the world.
Just last month, Dec. 1 to be precise, the pre-registration period closed on REACH, the far-reaching Registration, Evaluation and Authorization of Chemicals, but Ernie Rosenberg, president of the Soap and Detergent Association, warned that while the deadline has come and gone, many issues still remain unresolved.
“A lot of downstream users aren’t getting answers from Europe,” he warned. “The end of pre-registration didn’t solve much.”
For example, questions still remain on a wide variety of issues including information sharing, data compensation and even animal testing.
Meanwhile, in North America, the U.S. and Canada continue to generate a lot of assessments within the guidelines of the Security and Prosperity Partnership under the Montebello Agreement, according to Mr. Rosenberg, who warned that if the new Administration moves in and unravels the work already completed, “it will set back assessment for a decade,” he insisted.
But Mr. Rosenberg also noted that Congress already has a full plate of legislation to consider, including the Kid-Safe Chemicals Act (KSCA), which if passed, would bring dramatic change to the Toxic Substances Control Act (TSCA).
At the state level, while California may have designs on legislation regarding ingredient disclosure, Mr. Rosenberg noted that tough economic times often put a damper on legislators’ enthusiasm to raise taxes. Moreover, the industry has already announced a voluntary ingredient disclosure program that will go into effect in 2010.
What’s To Come?
While P&G continues to stretch Tide’s reach across the entire fabric care marketplace, the competition isn’t sitting idle.
Construction continues in Jackson Township, PA, as Church & Dwight builds its new $150 million Arm & Hammer detergent manufacturing facility and distribution center. The site is scheduled to be finished by the end of the year.
And while Sun Products has yet to reveal any specific plans, the company is preparing to challenge the marketplace in 2009. “Laundry care is an $8 billion category which is a consumer staple. We have a 20% share, and we have a portfolio of brands relative in their own space. From All to Wisk to private label to Sun, it is a very nice portfolio that plays in each and every segment of the category,” said Mr. Littlefield. “We will be making every effort to leverage scale in the category for the benefit of consumers.”
Meanwhile, Henkel has something in the pipeline. While Mr. Schwartz kept details close to his vest, it appears Henkel plans to up the ante with this new offering, scheduled for the spring. “We will continue to provide innovation that wows consumers in a way that still has strong value to it. We are planning to step that up.”
83rd SDA Annual Meeting To Highlight Sustainability
The Soap and Detergent Association (SDA) will hold its 83rd annual meeting on Jan. 27-31, 2009 at the Boca Raton Resort & Club. The theme of the meeting is “Protecting Future Generations.” According to SDA, hundreds of attendees from more than 65 companies and 16 countries are already signed up for the convention. Industry executives can now go online to SDA’s website to register at www.cleaning101.com. In addition, for the first time, SDA is offering daily registration rates.