All of this is taking place as the category is showing signs of life and price pressure and price erosion may be ebbing. US sales of household cleaners in food, drug, mass market, rose a little more than 2% to nearly $3.2 billion for the 52 weeks ended Jan. 27, 2013, according to SymphonyIRI, Chicago.
Meanwhile, unit sales declined 1.6% to little more than 1 billion, as the average price per unit rose $.11 to $3.01 (see chart). At the same time, raw material prices have flattened and may even decline a bit in the second half of 2013, according to industry observers. That’s all good stuff for marketers who have been squeezed by rising raw material prices and retailers intent to hold the line on price increases.
While the overall picture has improved in the household cleaning space during the past year, clearly some categories have performed better than others. For example, sales within the long-suffering specialty cleaner/polish segment jumped 17.90%, as marketers promoted the ease-of-use of their formulas. That same easy-to-use benefit provided a lift for the oven/appliance degreaser segment as sales rose more than 12%.
Now SC Johnson, a segment leader, is hoping to provide the same lift to other categories with the recent introduction of Windex Touch Up Cleaner.
“People are very passionate about cleaning, but the way they clean today has evolved and we’ve introduced brand innovations along the way. Our research consistently shows that our Windex users want three main things: value, convenience and efficacy,” said Kelley Semrau, senior VP-global corporate affairs, communication and sustainability.
According to Semrau, SC Johnson recently did a deep dive into the “convenience” attribute and discovered a real opportunity to deliver a new user experience around quick cleaning solutions, especially in bathrooms and kitchens. The result: Windex Touch-Up Cleaners, which are available in a fresh scent bathroom variant and a kitchen variant in a citrus scent.
“Windex Touch-Up Cleaner is a new way to quickly clean those frequent little messes to help prevent them from becoming bigger chores,” she explained.
Social scientists are quick to point out that today’s on-the-go family has little time for mealtime let alone time to clean up after that quiche. But quick cleanups save time and help make weekly cleaning more manageable. That’s why Windex Touch-Up Cleaner is meant to stay out on the counter or wherever you need it, so cleanups can naturally become part of a consumer’s daily routine without slowing her down, according to SC Johnson, which maintains that Windex Touch-Up Cleaner is a revolutionary, new way to clean. It is the only product of its kind, specifically designed to stay out where you need it, so you can clean life’s everyday messes when you need it. Not only does it conveniently clean and shine, it also kills 99.9% of common household bacteria, and works on a variety of hard surfaces, according to SC Johnson.
Windex Touch-Up Cleaner, available in kitchen and bathroom variants, is intended for all those quick cleanups around the home.
Clorox knows a thing or two about bacterial killing—after all, that’s the hallmark of bleach, the company’s flagship product. CEO Don Knauss recently told analysts that stopping the spread of infection is one of the megatrends shaping his company. Other trends include value and green products as well as the growing strength of the Hispanic consumer.
Stopping the spread of infection drove Clorox bleach sales during the recently concluded flu season, which proved to be unusually bad, as the flu vaccine proved to be ineffective.
“We called it ‘give your home a flu shot,’” explained Knauss. “All wipes, cleaners and bleaches were co-merchandised and category sales rose 7% through January. Category sales are strong and accelerating.”
The company hopes to keep that momentum going as the rollout of compact versions of Clorox bleach was completed in March. Where the compact version was already available, Clorox reported a 10-point improvement in sales. But there are other benefits to compaction. Clorox can get 23% more units on shelf, which boosts margin by 300-500 basis points. Moreover, Clorox hasn’t lost any shelf space due to its compaction, according to Knauss.
Best of all, compact Clorox is attracting new users to the category as consumers under the age of 35 are giving bleach a try for the first time, according to the company’s data. Clorox is finding new avenues of growth, too. Thanks to the acquisition of HealthLink in January 2012, the company is placing more Clorox products in doctor and dentist offices around the country.
To improve the value proposition everywhere, Clorox recently unveiled its “smart tube” technology for its Formula 409 all-purpose cleaner, Clorox Clean-Up and Tilex Mold & Mildew cleaner. The built-in tube gets all the way to the bottom of the bottle to dispense all of the cleaning formula. The improvement enabled Clorox to get a 5% premium for products that utilize the smart tube technology.
The smart tube is the latest in Clorox’s bid to win via its “Desire. Decide. Delight.” Strategy; i.e., getting consumers to choose Clorox products over a competitors 60% of the time, which is a demonstrable win, according to Knauss.
“Five and a half years ago, 15-20% of our products had that demonstrable win. Now 50% of our products win,” said Knauss. “We are growing share because we are delighting the consumer. That’s how we’re getting market share in a tough environment with premium products.”
Another megatrend that’s impacting Clorox’s business is green products. The company was one of the first mainstream household care companies to jump into the green segment when it launched Green Works. The timing could have been better, as the introduction coincided with The Great Recession. But now Green Works is gathering steam.
“As the economy improves, we are seeing more robustness in the green category,” explained Knauss.
The folks at Method would certainly agree with that assessment. According to the company’s estimates while green represents just 3% of the $7.5 billion (retail) household cleaning market, sales of green products are growing 5-6% a year. More impressive, Method’s sales are growing more than 20% a year, according to Michelle Arnau, general manager, Method.
Method expanded its hard surface cleaner range to tackle a variety of surfaces such as granite.
Method has expanded its agreement with designer Orla Kiely
to include all-purpose cleaner.
“It has to work. If it doesn’t, you won’t get repeat business,” observed Arnau. “Then, we go a step further and promise an experience through our fragrance, our packaging and our nontoxic ingredients. Moms and pet owners really connect with our brands because we promise happy, healthy homes.”
Ideas such as pumps for laundry and dish detergents that enable moms to use just one hand to dispense products endear customers to the Method brand. Similarly, Method’s spray fabric softener format lets users throw away the dryer sheet and reach for the trigger sprayer instead. Four shots on a laundry load and its good to go in the dryer and good for the environment too, since there’s no sheet to throw out, according Arnau.
More recently, in October, Method introduced Smarty Dish Plus a 3in1 monodose dish detergent that works exceptionally well in hard water. Smarty Dish Plus debuted in Target before rolling out elsewhere in January. Now, Method is supporting the brand with a sampling program with Target.
“People are always skeptical that a natural product will work. We’ve shown them that Smarty Dish Plus works as well as Cascade Complete,” insisted Arnau. “My mantra is cleaning without compromise.”
Last month, Method teamed up again with Orla Kiely to roll out products packaged in containers with the fashion designer’s touch. Four new patterns will be available for a limited time in hand wash, dish soap and all-purpose cleaner. Scents include tomato vine, white nectarine, honeysuckle and cloudburst in Kiely’s oval spot, wallflower, multiflower spot and square flower patterns, respectively.
“Dish detergent is one of the first green products that people try. It’s an obvious connection,” noted Arnau. “Then they move on to the bathroom where efficacy is a bigger challenge and skepticism (about great products) remains.”
Method was one of the first to roll out a natural antibacterial cleaner, based on thymol, in 2010. In 2011, the company reworked the formula, switching out the thymol-based technology in favor of a citric acid-based disinfecting formula for kitchen and bath.
“Thyme is an effective ingredient, but the fragrance is challenging; it is very strong for some consumers,” said Arnau.
Method has rolled out an array of successful products, but Arnau said better environmentally-friendly technology is necessary to introduce effective drain cleaners and aerosol-alternatives.
Effective Cleaners for Generations to Come
The folks at Seventh Generation, however, beg to disagree. The company has created a solid franchise that’s built on biobased ingredients and company executives say the technology keeps getting better and better. So much so, that they are confident all formulation hurdles will be cleared.
“There are no challenges that we can’t overcome,” noted Nicholas Guastaferro, director of marketing, Seventh Generation. “There are challenges that we are still trying to crack, but we know there are solutions.”
Seventh Generation, in fact, recently developed a model that looks at the company’s portfolio 3-5 years out and Guastaferro insisted that technology already exists makes these products feasible.
“The time to market might be longer,” he told Happi. “But Tim Fowler (VP-R&D) and his team are leading us with bio-based ingredients.”
The Seventh Generation team is working to drive water out of its formulations. No specific moves have been made, but obviously refills and concentrates will both play key roles in a program that Guastaferro maintains takes a consumer-centric approach.
Similarly, Seventh Generation is expanding its business by supporting its base home and laundry care business then looking to adjacent categories to see where opportunities lie. For example, Seventh Generation expanded its home cleaning offerings last year by introducing cleaners for granite, stainless steel and wood surfaces, noted Brendan Taylor, senior brand manager. Most recently, Seventh Generation added a lemon-scented variant to its dish detergent line and larger SKUs will debut later this year.
Guastaferro maintained that the company’s best opportunities for growth come from optimizing the existing products offered and then exploring adjacent categories that make the most sense from a consumer standpoint. He insisted that the green market has yet to reach its full potential because barriers to green still remain. For example, some consumers still believe that conventional products work better than green cleaners. But over the past five years, Seventh Generation has reformulated its line so that they are as good or better than conventional products, according to Taylor.
“Fowler had us look at all the products in our line to make sure that we were meeting consumer expectations.”
Seventh Generation has been in business for 25 years; during that time the company has learned more about the efficacy of plant-derived materials as well as what the consumer wants.
“We maintained a growth trajectory during the recession,” said Guastaferro. “Now we are experiencing more growth by focusing on our base products and expanding into adjacent categories.”
Those efforts are paying off. For example, Seventh Generation’s dish liquid is the best-selling SKU at Target. More recently, the company introduced an entire line of organic products in Whole Foods, including a liquid dish soap.
Seventh Generation executives maintain that the green category still has room to run, insisting that more consumers are starting to understand that their homes’ indoor air quality can be impacted by the products they use to clean.
“The only thing that is stopping momentum in the category is poor performance,” said Guastaferro. “We see conventional players launching subpar products or they’re not being transparent. That incriminates the entire category.”
Regardless of what its competitors say, Clorox’s CEO said his company is leveraging the robustness within the green category. Overall, Clorox’s green business is growing 10% a year, according to Knauss.
That’s good, but only half of the 20% gain that Clorox is seeing from its international business. “We focus on midsize countries, just like we focus on midsize product categories,” explained Knauss.
In recent years, Clorox has expanded international distribution from 5 to 30 countries, with an emphasis on Latin America, a region with a “well-developed bleach habit,” according to Knauss.
In Latin America, 70% of bleach is used for cleaning applications and just 30% is used in laundry. That’s nearly an exact opposite of the market breakdown in the US. To improve its business in Latin America, Clorox is implementing SAP in 12 countries.
In 2014, Clorox will celebrate its 100th anniversary. To make sure the company is around for years to come, executives will unveil its 2020 strategy in October.
Following its acquisition by Ecover in 2012, Method has more resources and the ability to expand globally too.
“Ecover is a leader in sustainable manufacturing, especially within the supply chain,” said Arnau.
Global coverage is complementary as well, as Ecover is a player in Europe and Method’s business is US-based.
Arnau said the takeover feels more like a marriage than an acquisition.
“We have independence and remain a maverick in the categories we compete,” she said. “Ecover is a lot like us, but can take us to the next level. We want to be the world’s largest cleaning company.”
New from RB
Lysol’s been around for more than 100 years. The brand equity is so strong, in fact, that it’s expanding into foaming hand cleaner after entering the hand soap category in 2010. New Lysol Touch of Foam hand soap provides 10 times more protection against germs than the leading national competitor, while “moisturizer-enriched micro-bubbles” leave hands feeling soft and comfortable, according to Reckitt Benckiser executives.
New Lysol Touch of Foam
In this case, Lysol Touch of Foam promises to get hands germ free without drying them out. Lysol Touch of Foam is available in three fragrance variants: Creamy Vanilla Orchid, Rose & Cherry in Bloom and Wild Berry Bliss. The 8.5oz pump retails for $2.99-3.49, and the 25oz refill retails for $4.77-5.19.
To get the word out about Lysol Touch of Foam, RB has embarked on a 360° campaign that includes TV and print ads as well as tie-ins with designer Cynthia Rowley to develop new Lysol packaging, a mobile campaign traveling throughout the South, Midwest and East Coast portions of the US, and an indepth campaign in Walmart nail salons, where the Lysol Touch of Foam logo appears on mani and pedi mats. Finally, RB is reaching out to 5000 bloggers to promote Touch of Foam.
“Social media is important and bloggers are a very important component,” explained Rizzo. “They get people talking about the product and they are a very credible source of information. We’re trying to get consumers to try the product via some non-standard methods.”
Issues with Impact
Formulators and suppliers have stepped up their game when it comes to innovation. However, regulators and non-government organizations have stepped up their activities as well.
Chris Cathcart, president, CSPA.
According to CSPA president Chris Cathcart, the association’s top issues include air quality, ingredient disclosure, chemical management issues, green chemistry and reform of the Toxic Substance Control Act (TSCA).
“Air quality issues continue to be one of our highest priorities with a great deal of emphasis on ozone nonattainment in California and in various other states,” said Cathcart.
CSPA will continue to negotiate new VOC regulations for consumer products in various states, including California’s 2013 Amendments and a new Utah regulation, and will also be engaged this year in scientific research on low vapor pressure (LVP) compounds with California Air Resources Board and the update to the California State Implementation Plan. Other key initiatives will include working with retailers on VOC compliance assurance, and joining with Ozone Transport Commission states to recommend updates to the California Department of Toxic Substances Control’s National Consumer Products Regulation, according to Cathcart.
In the area of ingredient disclosure, CSPA initiated a voluntary ingredient disclosure program, Consumer Product Ingredient Communica- tions Initiative, to further promote transparency of the industry and align with the EPA’s Design for the Environment (DfE) program. In addition, CSPA has published the second edition of the Consumer Product Ingredients Dictionary, which continues to serve as a leading tool to standardize and define ingredient nomenclature for companies engaged in the industry’s voluntary program, according to Cathcart.
The patchwork of state laws as it relates to chemical policy is creating significant concerns with CSPA members, particularly in the areas of chemical management, green chemistry and TSCA.
“It is extremely difficult to formulate and market consumer products that are different for individual states,” said Cathcart. “We believe the trend will continue at the state level and even likely move to the local units of government until TSCA is modernized. CSPA supports a federal model that all of the states can follow.”
On chemical management issues, CSPA continues to monitor EPA’s significant new use rules on chemicals that have emphasized the lack of information on how and if a chemical is used in consumer products, according to Cathcart.
“While this activity has not directly impacted our members, we recognize the potential implications,” he told Happi.
Regarding green chemistry, Cathcart said CSPA supports the innovative goals of green chemistry; however, imposing a patchwork of state laws under the guise of green chemistry (or “safer chemicals”) will have the opposite effect. He said the California Safer Consumer Products Regulation is a critical focus of CSPA, along with Washington State efforts on Alternatives Assessments.
Finally, on behalf of its members, Cathcart said the Association has played an active and constructive role in the TSCA modernization process to ensure that the revised statute—or current regulation at the EPA—strikes a balance between the need for chemical management oversight and the need to protect the ability of the consumer products industry to innovate and commercialize consumer products and protect proprietary information.
“We will continue to engage on TSCA as opportunities present themselves to work with the EPA, Democrats, Republicans, our industry colleagues and partners in the NGO community,” Cathcart asserted.
The Evolving Marketplace
Despite all the challenges, the $80 billion dollar consumer specialty products industry remains strong and CSPA remains strong with it, said Cathcart.
“CSPA added 25 new companies last year, and we continue to see new members joining our organization. We also have a 97% retention rate. The industry is healthy and growing.”
The Association will update its membership next month at the 2013 CSPA Midyear Meeting, May 7-10 in Chicago. To register, visit www.cspa.org. This year’s theme is “The Evolving Marketplace,” and features a keynote presentation by economist Steven D. Levitt, co-author of “Freakonomics” and “Superfreakonomics.” The meeting will include division sessions as well as InnoVention 2013, the two-day B2B event for the household and institutional products industry.
Prior to the Midyear meeting, on May 6, CSPA’s Cleaning Products division will conduct a cleaning products intermediates seminar. The full day course, led by industry experts, provides participants with a deeper understanding of ingredient selection and the issues related to the optimal development of sustainable cleaning products, according to CSPA.