The economic recovery began in 2009, continued unabated in 2010 and shows no signs of slowing down in 2011, according to analysts. That’s good news for raw material suppliers to the global household and laundry care industry, many of which continued to post impressive gains quarter after quarter since plumbing the depths of the recession. Of course, a rising tide lifts all boats, including commodity prices, which is a cause of concern for nearly every supplier to the industry.
During the recent annual meeting of the American Cleaning Institute (see coverage p. 60 in this issue), several suppliers sat down with Happi to explain where their companies and the industry are headed in 2011 and beyond.
Perhaps no company in the industry is more optimistic about the future than BASF, which completed its €3.1 billion acquisition of Cognis in December. The move strengthened BASF’s leading position in value-added products for home care and gave it a leading position in personal care ingredients as well. BASF will announce integration plans by the end of the first quarter and complete the structural integration by the end of the year.
BASF’s Plans for Cognis
“In the past five years, we acquired Engelhard, a portion of Degussa, Ciba and now Cognis. We are profiting from all of that knowledge we acquired,” explained Gabriel Tanbourgi, president, Care Chemicals Division, BASF. “Now with the Cognis integration, we expect it to be a fast one.”
According to Tanbourgi, prior to the acquisition, BASF lacked in some areas such as surfactants and emollients for personal care, but has closed that gap with the Cognis acquisition.
Moreover, there are a lot of synergies between BASF and Cognis, which will result in a broader product portfolio, better understanding of consumer needs, and more opportunities for innovation, according to company executives. BASF executives previously announced, “With this acquisition, we achieve a leading position in personal care ingredients, strengthen our leading position in value-added products for home care and establish a strong position in health and nutrition products.”
“By purchasing Cognis, we in particular expand our portfolio with products based on renewable raw materials. A broader and more attractive offering of products and services combined with our research and development expertise will allow us to become an even more important partner for joint development projects with our customers. This will contribute to making them even more successful.”
“This entire industry revolves around innovation,” explained Tanbourgi. “BASF has more than 9,600 R&D employees. The strength of Cognis will help broaden our access to innovation.” He noted that BASF’s Care Chemicals division research budget is very powerful, with a strong focus on breakthrough innovation as well as on customer-based innovation and a smaller portion being devoted to process innovation.
“(During the recession) we continued to invest in R&D,” observed Gary Dee, director, home, I&I and personal care. We believed this placed us at an advantage as the global markets slowly begin to climb out of the recession. Our customers were very active too, and they tried to innovate forward in areas where it made sense.”
The results for BASF’s Care Chemicals Division were increased due to the demand for several innovative products in fabric care including Tinopal optical brighteners for detergents, Rheovis rheology modifiers and Sokalan color care polymers.
“Overall, 2010 was a better year for our raw materials going into the laundry category,” said Dee. “The demand for innovative ingredients has not changed. In fact formulators are demanding more and more ingredients that are multi-functional, with improved soil removal benefits and excellent environmental profile.”
One area where Cognis excels in is chemistry based on renewable raw materials.
“Alkylpolyglucosides (APGs) are as natural as you can get,” noted Dee. “The addition of the APG product line adds depth and fills in some of the performance gaps of the legacy BASF product portfolio. We are able to offer effective solutions in application areas where it was not previously possible. Look at Cognis’ Dehypon chemistry and BASF’s Plurafac chemistries, now we can offer products ranging from low foam to high foam for the home and I&I markets.”
According to Dee, the combined businesses of Cognis and BASF offer tremendous potential with very little overlap. “With the acquisition of Cognis, we strengthen our portfolio with less cyclical and more specialty businesses and further expand our position on a global basis.
“In North America, we have begun to look for opportunities to leverage our technologies, reduce complexity and explore new routes to market,” added Dee. “One of the most important considerations, of course, is to make sure our customers and markets are well cared for during the integration process.”
Dow Fabric & Surface Care, Firmenich and Symrise Are Honored by Henkel
Dow Fabric & Surface Care received the “Best Innovation Contributor 2010” award from Henkel Laundry & Home Care at the 2011 American Cleaning Institute (ACI) Annual Meeting and Industry Convention in January.
Every year Henkel recognizes an external partner for delivery of outstanding, consumer-relevant innovation. This year Dow Chemical received Henkel's award for SoftCAT, a conditioning polymer that enhances textile elasticity.
“We are truly honored to receive the award for the Best Innovation Contributor 2010 from our long-term business partner, Henkel, Laundry & Home Care business sector,” said Eunice Heath, global general manager, Dow Home & Personal Care. “At Dow, we are committed to collaborating with our customers to meet their needs. In fact, we study consumer trends so that we can focus our vast research and development resources on creating solutions for our customers that anticipate consumer demand.”
“Dow is always looking for ways to solve customer problems and thereby provide brand owners with opportunities for differentiated label claims,” said Carlos Silva Lopes, global marketing director, Dow Fabric & Surface Care. “The development of SoftCAT, a special polymer exhibiting a repair effect on the elasticity of textiles, is an example of how Dow is committed to helping our customers succeed. This award is the result of years of collaboration with Henkel and represents a multifunctional effort by research and development, technical services, marketing and sales.”
In presenting this award, Thomas Müller-Kirschbaum, corporate senior vice president for research and development, technology and supply chain for Henkel's Laundry and Home Care business sector, remarked, “Dow's innovative chemistry contributes to assuring Henkel's leading position in special laundry care, now and in the future.”
During the Henkel ceremony, Firmenich and Symrise were recognized for "Best Supply Performance 2010.
Every supplier who spoke with Happi acknowledged that rising feedstock prices are a growing concern for them and their customers.
For Innospec, 2010 was a much more challenging year then 2009 for pricing as raw materials started to increase in the first quarter and the rate and magnitude of the increases grew thru the remainder of the year, according to Phil Matena, VP-sales and business development, Active Chemicals, Americas.
“We did see improvements in the demand for materials; this was especially true for the industrial segments of our business,” explained Matena. “Our personal care business saw notable growth in our sulfate free surfactants as this category continues to gain momentum.
While P&G Chemicals’ executives expect the recovery to continue, they’ve taken to calling it a VUCA market; i.e., one marked by volatility, uncertainty, complexity and ambiguity.
Similarly, Kevin Gallagher, president, Croda Inc., noted that there is growing concern with rising commodity prices.
“We need to keep up with these prices to make sure that we have commodities available for use as raw materials,” said Gallagher. “We are always working with customers to look at opportunities for savings in the supply chain.”
That sentiment was echoed by BASF executives. As Tanbourgi noted, innovation must be affordable for customers.
Additionally, Dee indicated that there continues to be some raw material shortages in 2011 in North America, due to a number of factors, including the tightness for natural alcohols and other naturally derived feedstock.The tightness of natural alcohols has spilled over into synthetic alcohols as synthetics are being used to some degree to replace naturals. Purified ethylene oxide is expected to run at lean levels as demand rises and because of recent supply outages.
Tom Nelson, director, P&G Chemicals, noted that with the recovery came some supply challenges. For example, today, lauric oil is 50% above its historic high price.
“In 2007, we learned to pass on price increases in order to remain viable,” recalled Nelson. “We must offer our customer choices to avoid surprises and work closely with them to deliver solutions.”
Innovation Is the Answer
As costs continue to rise, the best answer is to find innovative ways to get improved performance with better chemistry, Nelson added.
“We want to optimize our capabilities to make sure that our customers succeed,” he explained.
To achieve that goal, P&G Chemicals plans to:
• Further optimize its fatty alcohol network;
• Continue to create new uses and applications for alcohol co-products;
• Optimize its tertiary amine supply network;
• Expand development of sustainable formulations with Olean and Sefose; and
• Stay ahead of regulatory compliance.
The company is also upgrading SAP across all of its systems, Nelson said.
“We are evaluating demands of customers and defining what our network should look like now and 10 years from now,” explained Nelson. “The relationship between customer and supplier is much more collaborative than it was 10 years ago. People realize that you can’t do it alone.”
At Croda Inc., the biggest success story during the past year has been the launch of its naturally-derived, DfE-approved NatSurf range of nonionic surfactants. According to Gallagher, there has been a significant surge in sales as many customers express interest in replacements for nonylphenols (NPEs) and other customers move toward DfE approved formulations.
Besides the NatSurfs, Croda is introducing a line of ModiSurfs that will keep surfaces cleaner, longer. Furthermore, the company is expanding its global applications team in home care in order to take advantage of opportunities for the NatSurfs and ModiSurfs.
“In addition, we continue to work on bringing more and more personal care attributes to home care products, particularly through the use of nonwoven fibers,” explained Gallagher.
Evonik is promoting the use of Tego Betaine C60 in household care and I&I applications. Based on coconut, it can be formulated into a broader pH (2-13) range than other betaines, and has applications wherever the formulator wants foam.
Evonik is also promoting its Carspray 800 formulation. The vegetable-based product hit the marketplace in August.
“It combines performance, efficiency and sustainability,” explained Sahar Fakhry-Smith, marketing and sales manager, Evonik Goldschmidt.
Innospec is launching blends that incorporate its Iselux technology, explained Matena. “These blends enable our customers to create high-performing structured liquids for use in both shampoos and body wash,” he said.
Later this month, Innospec will roll out a dry shampoo and later, will expand its portfolio of sulfate-free surfactants with sarcosinates and amphoterics.
Into the Future
Croda is looking forward to a robust 2011, according to Gallagher. “We believe that our work in improving the performance of our customer's products will result in significant growth this year.”
With the structural integration of Cognis expected to be completed by year-end, BASF executives are confident that the company is well positioned for future global growth. In emerging markets, BASF has a strong structure in Asia and has added more plants with the acquisition of Cognis. These markets, especially those in China and India, are critical for future growth, as are Brazil and the rest of Latin America.
In 2011, BASF has several key product launches underway. In North America, the company will roll out a new form of methylglycinediacetic acid (MGDA), known as Trilon M Granules SG (second generation).
Trilon M is a sustainable chelating agent that allows formulators to make phosphorous-free automatic dishwashing (ADW) with similar high performance to ADW products containing phosphates. Trilon M granule SG is a new solid version with better handling and processing properties, especially for ADW tabs and powders, according to BASF. The company was excited to announce that Trilon M is one of the first chelating agents to meet the Design for the Environment (DfE) approval guidelines.
In the wipes category, BASF’s Care Chemicals division will introduce a portfolio of ingredients for better performing wipes for the home, I&I and personal care markets. These ingredients will include surfactants, polymers and personal care additives.
Evonik has budgeted six billion eurosthrough 2015 to propel organic growth as well as acquisitions.
“As our customers expand, we will support them with our technology around the globe,” explained David del Guercio, senior vice president & general manager, household care, Evonik Goldschmidt.