Cleaning clothes is no vacation and laundry detergent will never be considered a luxury item. And yet, while pre-treating coffee stains can’t be confused with a holiday in Turks and Caicos, detergent suppliers are still subject to all of the same economic factors that impact consumers. Housing crises, layoffs and bank failures, in their own way, erode consumer confidence and force consumers to cut back on even the most basic of household expenses.
“Many consumers transitioned to store brands which had been the effect of past recession; it has been more profound this time due to the magnitude of this recession,” observed Phil Matena, vice president, Innospec. “Participating across the value spectrum was a key to success for suppliers like [us].”
But after an extremely difficult 2008 and a rocky start to 2009, suppliers report that the laundry detergent and household products market began to stabilize last year and is even beginning to grow again.
(l-r): Thomas Schroeder, Josef Koester and Rita Koester of Cognis
David Del Guercio, senior vice president and general manager household care global, Evonik Goldschmidt Corp., agreed, noting that inventory control is done.
“Orders are based on true demand,” he told Happi. “We saw gradual improvement in 2009, a gradual growth.”
Shafeek Razac, marketing manager, BASF, observed that inventory rebuilding began in the fourth quarter and he expects that trend to continue in 2010.
“It’s too early to read into it, but we’re anticipating this is another indication of the market turnaround,” said Razac.
Even enzyme producers called 2009 a challenging year, although, for Novozymes, that meant growth of 7% compared to the double-digit gains the company is accustomed to, said Anders Lund, director of marketing for detergent.
Still, the economic crisis didn’t hit every region of the world equally. Cognis executives reported strong results in Asia and Latin America, along with weakness in the NAFTA region and Europe.
“Our global reach enabled us to do well,” explained Rita Koester, global marketing director, home care/I&I. “Those who could balance the impact came out best.”
Procter & Gamble is eager to expand its reach in fast-growing Asia-Pacific and Latin American countries. According to Jack Ryan, vice president, P&G Chemicals, P&G’s new chief executive officer Bob MacDonald wants to build on his predecessor A.G. Lafley’s strategy of touching and improving more consumers’ lives in more parts of the world, but more completely.
“We expect big growth in Latin America and Asia-Pacific,” noted Ryan.
While companies strive to balance their global portfolios, they’ve had to weather growing consumer demand for value-priced detergents and household cleaners. Sales of premium-priced laundry products slipped during the past two years, while value brands and private label offerings found favor with cost-conscious consumers. But some suppliers insist they are well-equipped to weather the storm.
“We have a broad portfolio,” observed Josef Koester, marketing director, Care Chemicals, North America, Cognis. “So while the premium side doesn’t do so well now, we can balance it with the value side.”
“Rhodia was able to maintain overall demand because we supply ingredients for premium, mid-tier and value brands,” said Sébastien Méric, vice president-home and personal care, Rhodia Novecare. “We also benefited from expansion, including the acquisition of McIntyre, our new surfactant plant in India and a strong presence in Asia where demand remained robust.”
According to Méric, back in 2008, when consumers’ buying power was already under pressure, the company redirected its R&D efforts to provide the general market and select partners with smart ingredients that do more for less.
“In 2010, we will see some of these efforts coming to fruition together with our expanded ability to capture growth in Asia with a dense network of surfactants plants reaching out from India, Thailand, Indonesia and China,” said Méric.
The Search for Innovation
While price continues to be important, several suppliers insist that laundry detergent marketers are poised to roll out an array of novel cleaning solutions.
“As I look at 2010, the topic is innovation, specifically, breakout innovation that can lead to growth,” said Nilesh Shah, global R&D director, home and personal care, Dow Chemical. “Customers want to solve tough problems. The want to go after oily stain removal and cold water cleaning and they want to make cleaning easier with multifunctional products.”
(l-r) David Del Guercio and Sahar Fakhry-Smith of Evonik and Nilesh Shah of Dow Chemical.
For its part, P&G’s products are available in 80% of the world’s countries, but not across all product categories. Currently, P&G serves four billion consumers, but the goal during the next few years is to expand that reach to five billion via all price points from value all the way to super premium.
“Consumers are more value-conscious than they were in the 1980s and 1990s, but that doesn’t mean that they won’t buy top of the line products,” said Ryan.
Kathy Fish, vice president-global fabric care R&D, P&G, agreed that consumers are rethinking their purchases. Shoppers who never thought twice about buying a bottle of Tide are at least looking at lower cost products.
“But clothes are a big expense,” she noted. “If your good clothes turn into play clothes, that’s not good value. So we are reframing value.”
At the same time, however, innovations are making news and garnering sales. P&G is set to roll out new compact laundry detergent powders this summer. Meanwhile, results are still coming in, but convenience products such as Henkel’s Purex 3-in-1 and P&G’s Bounce Dryer Bar, seem to have found a ready audience.
“Companies are breaking away from the traditional approach,” noted Del Guercio. “They are looking for convenience—a bridge between laundry and the dryer.”
Still, nearly every supplier that Happi interviewed noted that demand for value will only continue to grow in the household products industry. Josef Koester noted that private label already holds a 30% share in Europe in many categories and demand continues to grow.
“Private labels are beginning to brand themselves with a performance-for-value message,” he said. “They won’t go away as the economy improves. Retailers are giving them shelf space.”
Full Speed Ahead
While consumers were cutting back on their spending during the “Great Recession,” suppliers insist they did no such thing.
“There were no cuts in R&D at Cognis,” insisted Josef Koester.
In fact, Cognis actually made investments in several parts of the world, including an alkylpolyglucoside investment in China, expansion of specialty polymers in Germany and construction of an anionic surfactant plant in Mexico.
Acquisitions led to some of the biggest changes during the past year, with BASF acquiring Ciba and Dow Chemical purchasing Rohm and Haas.
“With the Ciba acquisition in 2009, we increased our flexibility to respond to and support our customers current and future needs, enhancing our position of being the partner of choice,” said Gary Dee, business director home and personal care, BASF. “The combined businesses of legacy Ciba and BASF offer tremendous potential with very little overlap.”
He pointed out that Ciba’s portfolio consists of products such as fluorescent whitening agents, antimicrobials and rheology modifiers as well as specialties including dye fixatives, fabric enhancers, oxidation catalysts, UV absorbers and ingredient protectants. Most of these products offer secondary benefits to the cleaning formulations.
Phil Matena, Innospec
“In addition to gaining new products and technologies, we are also benefiting from the complementary technical expertise in detergents, brought in through the acquisition,” said Dee. “Our growth strategy continues to focus on unmet market needs, and tailored solutions for the customer. The Ciba acquisition has further increased our capability to bring innovation to the market. These capabilities give us a clear competitive advantage.”
No product or ingredient category could escape the impact of the recession. Even high-flying demand for green ingredients fell back to earth a bit. According to industry estimates, the market for green products still rose 6% last year, down from historical 17% levels.
Still, growth in a recession, however small, can never be ignored, which is why Cognis rolled out Polyquart Ecoclean, a polymer based on starch, a renewable raw material that is aerobically and anaerobically biodegradable. It closes the gap for formulating environmentally sound hard surface cleaners with up-to date convenience claims like excellent wetting, spotless drying and easy to keep clean. Polyquart Ecoclean modifies hard surfaces like ceramic tiles, glass and stainless steel to become more hydrophilic. This rinse-off effect lasts for up to 10 rinse cycles, according to Cognis. Polyquart Ecoclean is easy to formulate with too, since it is stable across a wide pH range (from 3 to 10) and is compatible with anionic, cationic and nonionic surfactants.
Although Dow Chemical hasn’t launched any new products in the first quarter, Shah and his team are currently developing a set of surfactants based on glycerol, which he hopes to commercialize this year.
At the same time, Dow Chemical continues to work on issues of ongoing importance such as oily stain removal, enzyme optimization and fragrance release. To create products with a more substantive fragrance, Dow Chemical researchers are working on novel encapsulation and controlled release technology.
“Oily stain removal is a work in progress and we are also working on enhanced cleaning at lower temperature, fragrance release and enzyme stability,” said Shah. “We’re trying to get them out to the market as quickly as possible. But we know they must be robust in order to survive consumer scrutiny.”
If Dow Chemical researchers are successful, he predicted that a stream of innovations will hit the market between now and 2012.
BASF’s most recent launches focus on specific consumer laundry needs, too. For example, Lutensol M has outstanding emulsifying properties that allow laundry detergents to be produced for high efficiency at low wash temperatures. Meanwhile, Luvipur 10 is a new additive that enhances the cleaning power of liquid laundry detergents.
“Manufacturers can either increase the detergent power of liquid detergents and concentrates by adding Luvipur 10, or save on the use of active ingredients, such as anionic surfactants, which can lead to cost savings,” explained Dee.
For autodish detergent formulators, BASF’s Trilon M is a sustainable chelating agent that allows the formulators to make non-phosphorous automatic dishwashing (ADW) gels with high performance similar to ADW powders containing phosphates.
Another BASF technology, Plurafac SLF 180, is a new nonionic surfactant for ADW, which offers high detergency, wetting power and soil-dispersing capacity, but with very little foam.
Finally, Sokalan AT120 is a clear thickener for liquid laundry and hand dish wash applications. It exhibits better efficiency than existing thickeners and at the same time is very easy to formulate, according to BASF.
Croda recently opened a laundry laboratory at its Edison, NJ facility which enables the company to generate claims substantiation data that is reflective of consumer washing habits, according to Damian Kelly, business development manager, home care and functional specialties, Croda.
“Our new laundry facility has been used to generate claims support data for Croda’s upcoming new product launch, Cirrasol ST Ultra,” he said.
According to Kelly, Cirrasol ST Ultra represents new, patented technology that delivers softening through the wash. The softening performance of Cirrasol ST Ultra is comparable to that of the leading 2-in-1 commercial product.
“But Cirrasol ST has the added benefit of not graying fabric over multiple washes which is a consequence of current technology,” explained Kelly.
Lund noted that enzymes provide solutions to four key market drivers: compaction, sustainability and low wash temperature, reducing use of raw materials with volatile costs and new consumer relevant claims. No wonder why he is optimistic about 2010 and beyond.
“Novozymes is positioned to deliver what the market wants,” he said. “We have the technology and the resources to give our customers what they need.”
Rhodia introduced two products during the recent Soap and Detergent Association annual meeting held in Orlando, FL. Repel-O-Tex Smart is billed as a cost-effective solution designed for value brand laundry powders. It is highly effective at low surfactant levels, boosting the efficiency of primary detergency, as well as anti-graying and soil release benefits.
“Repel-O-Tex Smart typically allows formulators to reduce their formulation cost by up to 10% and formulation loading by up to 20%, allowing them to maintain performance while boosting their economical and environmental sustainability profile,” said Méric. “This new cost effective and sustainable solution brings innovation back to value laundry powders, a category that has not experienced much improvement in recent years compared to laundry liquids.”
New Repel-O-Tex Crystal is the latest soil release polymer for liquid detergents. It is very efficient on fatty stains such as motor oil, shoe polish or lipstick. It is designed to perform in the latest concentrated formulas and washing conditions, such as lower temperature and shorter cycles, according to Méric.
Innospec’s key new product is Iselux, an isethionate surfactant that is said to be ideal for skin cleansers and sulfate-free shampoo. According to Matena, the product has all the right credentials for today’s consumer. It is sulfate-free, readily biode-gradable, based on renewable materials, incredibly mild and delivers outstanding performance. Innospec is finalizing the global approval of the material so that customers are free to globally market their products.
In addition, Innospec is relaunching Enviomet biodegradable chelant to the home care market for laundry and auto dish applications. According to Matena, it offers performance benefits far beyond chelation.
“Customers are finding our data instructive and see it as a solution to some challenging performance goals,” said Matena, who noted that Innospec’s sales have doubled in the past five years and could double again this year via the technology it is bringing to the market.
Innovation and Sustainability
Sustainability has been a part of P&G’s corporate DNA for 40 years, according to company executives. It plays a role in five areas: products, operations, social responsibility, employees and stakeholders.
“P&G Chemicals can be an enabler for sustainability,” said Ross Holthouse, external relations manager, P&G. “Every manufacturing site has a sustainability goal to show real progress.”
For P&G, that means ensuring a better quality of life for the world’s consumers on environmental, social and economic levels. In fact, P&G helped pioneer life cycle analysis back in the 1970s. Most recently, the company has been a driving force in converting consumers to use cold water.
At P&G Chemicals, the company recently converted the feedstocks for its Kansas City, MO amines plant from petroleum to natural fatty alcohol. In fact, the tertiary amines in Dawn (U.S.) and Fairy (Europe) are now natural alcohols.
“There are some sustainability benefits there,” said Tom Nelson, national sales manager, P&G Chemicals.
As it continues to work on sustainable solutions, P&G Chemicals’ goals this year include optimizing its fatty alcohol network and creating new uses for the co-products that result from its glycerin operations.
Evonik executives maintain that the laundry category is driven by two catalysts: convenience, which includes efforts to build more attributes into laundry detergents and sustainability.
“The greening of the market is taking place, but it has to be at the right price,” observed Sahar Fakhry-Smith, marketing and sales manager, consumer specialties, household care, Evonik. “Every company has purchased a green company or developed a green brand.”
Sustainability has led to big changes in the market, according to BASF executives.
“Traditional top loaders are increasingly being replaced with higher efficiency machines, which mean a change in the ingredients required for fabric care formulations,” said Dee. “With less water and energy, ingredients have to work much faster and in colder temperatures. Color care is an important trend we see continuing in 2010 as consumers look to higher performance and care of their garments.”
Clearly, suppliers and their customers have entered 2010 with an upbeat attitude. At the same time, they are confident that they will develop a range of solutions to tackle a host of performance and environmental issues.
“This is a pretty responsible industry, because it is so close to the consumer and innovations move along at a good pace,” concluded Del Guercio. “
With the worst of the recession behind them and a new wave of innovations in front, suppliers to the laundry category are cautiously optimistic about their prospects for 2010.