A New Normal?

By Tom Branna, Editorial Director | November 6, 2012

The industrial and institutional cleaning market is struggling to regain pre-recession growth rates, but some observers say the days of picking low-hanging fruit are over.

When the US and global economies are bustling, I&I marketers view the future with great optimism. But some observers are suggesting that with more municipalities going bankrupt, California itself teetering on a fiscal cliff, and federal, state and local governments cutting back on product usage, the industry will be hard-pressed to recapture the gains that were typical in the mid-2000s.

“The I&I market is a funny business,” explained Steve Swigart, chairman of Spartan Chemical. “There are fewer players than there used to be; it is capital intensive and new companies don’t come along very often. The character has changed a lot.”

As a result of The Great Recession and the ensuing anemic recovery, some industrial and institutional marketers are dramatically retooling their businesses, searching for new opportunities and, in the process, remaking themselves in ways no one could have ever expected.

Major Moves at Ecolab
Leading the way, of course, is I&I market leader Ecolab, which, in 2011, purchased Nalco, a leader in water treatment. Just last month, Ecolab acquired Champion, a leading global provider of energy specialty products and services to oil and gas producers. Champion has annual sales of $1.4 billion, compared to Ecolab’s sales of $2.3 billion in the energy service sector. The acquisition increases Ecolab’s energy service sales by 60% and the company’s overall sales by 11%. Together, the Nalco and Champion deals will make Ecolab the largest producer of North American oilfield chemicals with a 40% market share, according to analysts.

Doug Baker, Ecolab’s CEO, said the acquisition is consistent with the company’s strategy of focusing on several macrotrends: safe food, clean water, healthy environment and abundant energy.

Thanks to its acquisition of Nalco, Ecolab is spreading its reach into fast-growing segments such as water treatment.
“It makes Ecolab stronger, increasing our exposure in our fastest growing segment,” explained Baker.

Most recently, Ecolab Inc. sold its vehicle care division to Zep Inc. for approximately $120 million in cash. The vehicle care division had 2011 sales of $66 million. As a result, the acquisition will boost Zep’s vehicle care sales by 40%, and gives the company a 9 or 10% share of the $1 billion US vehicle care marketplace.

“This sale enables us to sharpen our strategic focus on our core business areas while assuring vehicle care customers will receive excellent ongoing product and service support from a long-established provider in the industry,” explained Baker. “In addition, our vehicle vare colleagues will be part of a business in which they will be more closely aligned and have access to the tools and resources that will support growth.”

For Zep, the acquisition is an ideal strategic fit, as nearly a third of company’s business serves transportation across all three sales channels, according to John K. Morgan, chairman, president and CEO. In addition, the newly formed Zep Vehicle Care division will have increased market access with corporate accounts and distributors.

“Our served markets and brands fit together nicely to form a much more complete value proposition for customers and broader access to markets for the combined business,” explained Morgan.

With this acquisition, Zep adds the Blue Coral, Rain-X and Black Magic brands to its lineup, which already includes Zep Enviroedge, Niagara National, Washtronic and Armor All Professional. The new entity will be led by Steve Nichols, the current general manager of Ecolab Vehicle Care, who will assume the position of president, Zep Vehicle Care, upon closing of the transaction, which is expected later this year.

The purchase is accretive in year one and will provide increasing benefits over time. Another plus is that the financing was extremely attractive, according to Zep. Finally, the acquisition will help meet Zep’s long-term financial objective of reaching $1 billion in revenue within five years.

Industry observers suggest that the moves made by Ecolab suggest that company executives are acknowledging that the strong growth days for the I&I sector are over, and that Ecolab must look elsewhere to tap markets that fit its financial plans for growing its business faster than the overall economy—a growth rate that the I&I marketers and their suppliers will have to settle for at the present time.

“The I&I market follows the economy, so 2012 hasn’t been particularly good or bad,” noted Jim Beard, senior vice president-marketing, State Chemical Solutions. “(The economy) has recovered from the recession, not dramatically, but it is headed in the right direction. It’s moving forward but not by leaps and bounds.”

Conflicting Numbers

Apparently The Freedonia Group knows something that I&I executives don’t. The Cleveland, OH-based, market research company expects US I&I cleaning chemical sales will grow 4.2% annually to reach nearly $13 billion in 2015.

“The growth projection that we came up with is surprisingly bullish, but that’s because we expect the economic recovery that has lagged will start to pick up,” explained Mike Richardson, an industry analyst with Freedonia.

Leading the way, of course, is health care, which, thanks to demographic and macroeconomic trends, has the most upside going forward. By region, Freedonia expects the biggest gains will continue to come from Eastern Europe, Asia and Latin America. Richardson noted that while gains in China will slow, the growth will still outpace much of the rest of the world. At the same time, India is expected to grow rapidly, but it is still a small and underdeveloped market. Overall, Freedonia puts the worldwide I&I market at $35 billion.

What’s driving innovation in the major markets? Surprisingly, said Richardson, it isn’t the products as much as it packaging, raw materials and the effort being made to create more value for end-users.

“There aren’t any major cleaning challenges that haven’t had a product solution created already,” explained Richardson. “So the most interesting innovations come in areas such as labor-saving devices, single-step floor care products and precision dosing.”

Finding Growth

Although Beard expects the I&I market to follow the trajectory of the overall economy, State has, in recent months, found better-than-average success in two categories—hand sanitizers and odor control. Within hand sanitizers, State has benefitted from growing acceptance by its education customers about the importance of maintaining a strong hygiene program.

“There hasn’t been an outbreak of illness, but our customers have been sensitized to the importance of hand sanitizers and they want to be prepared,” explained Beard.

To keep satisfying the growing demand for hand sanitizers, State rolled out a new dispenser under its Ecolution brand, which is certified by Green Seal. Beard noted that despite the ups and downs generated by the US economy, demand for green solutions continues to expand.

“The conversion from conventional to green cleaners did not slow during the recession,” Beard observed. “And every year, the raw material suppliers get better and better at incorporating renewable feedstocks.”

As for odor control, State recently rolled out PanAroma Fragranced Odor Control Discs. The product is said to provide consistent fragrance and odor elimination for 30 days without the use of sprays, gels, batteries or bulky dispensers. Each disc is infused with a strong fragrance and is set in an attractive case that can be placed in bathrooms, elevators, hallways or any other space that requires odor control.

“As part of the green movement, we are getting away from sprays that atomize into the air and any device that requires a battery,” explained Beard. “We are designing and focusing on passive air freshening.”

On a larger odor-control scale, State is expanding its presence in sewer system odor control, where the company offers biological actives to minimize odors.

“We are well-known for our air fresheners and odor control capabilities,” explained Beard. “This is just an extension of that.”

The technology, of course, is different, as sewer system odor control relies on minimizing the buildup of hydrogen sulfide. State accomplishes that using biological cultures. The company has been active in the category for five years and is posting double-digit gains these days.

“Every municipality operates a sewage system,” noted Beard. “We’re in the odor-control business and can offer them a variety of solutions.”

State’s restroom Panorama and Soap Factory make for an eye-catching couple.
Customer demand for green is impacting all marketers and their product formulas. Last month, Ecolab introduced a line of bio-based hard surface cleaners that are said to deliver effective cleaning performance and are USDA BioPreferred and Green Seal certified. Designed for lodging, commercial and facility operations, Ecolab’s bio-based facility care solutions are made from plant-derived natural resources and designed to remove soils from hard surfaces safely and effectively. The full product line includes a peroxide multi-surface cleaner, glass cleaner, acid bathroom cleaner and neutral bathroom cleaner.

“Ecolab’s new line of bio-based hard surface cleaners were designed to deliver effective cleaning performance with staff interactions in mind and do not require personal protective equipment during use,” said Mark Copeland, the company’s VP-marketing, institutional. “These products can help businesses improve sustainability and safety while maintaining outstanding cleaning results.”

Ecolab insists that these bio-based hard surface cleaners have proven to be more effective than competing products. In one field test, for example, the Acid Bathroom Cleaner proved to be 17% more effective at removing soils than the leading competitor products, according to Ecolab.

Good Gains at Spartan

Elsewhere, Spartan Chemical has found new opportunities in warewashing and laundry, according to Swigart, who told Happi that these businesses have been growing rapidly since his company entered these categories.

“We have 550 distributors across the US and we are having a lot of fun with those lines,” explained Swigart, who has maintained for years that the one thing which separates successful I&I companies from unsuccessful ones is service.

“The industry is about size and product and pricing. There is a differentiating point, of course, but some people can’t see it,” said Swigart. “So you have to find ways to separate yourself from the other guys and that’s where relationships and service comes in.”

Executives at Sealed Air are confident that the 2011 acquisition of Diversey will begin paying benefits in the near future. Diversey represents 40% of Sealed Air’s annual sales, and the company is determined to continue the integration of Diversey and align the platform for more profitable growth, according to Carol Lowe, chief financial officer, Sealed Air. At the time of the acquisition and ever since, analysts say the Diversey acquisition was a good fit for Sealed Air since the two shared many customers but with no product overlap.

“It was a real complimentary fit,” recalled Richardson. “Sealed Air’s packaging and packaging equipment businesses don’t encroach onto Diversey’s business of food processing and beverage processing equipment.”

Looking ahead to the new year, Beard expects 2013 to shake out along the same lines as 2012.

“I expect it to be the same as 2012,” he told Happi. “The I&I business will always follow the economy. From everything we see, 2013 is even going to be a little better than 2012.”

If Beard’s forecast is right, slow but steady growth will continue to be a hallmark of the I&I industry.
Looking for a new ingredient for your industrial or institutional cleaning product? A list of them begins below.
CSPA Set for Dec. 2-6 in Fort Lauderdale, FL
• Registration is open for the Consumer Specialty Products Association’s 2012 Annual Meeting, which will be held on Dec. 2-6 at the Harbor Beach Marriott Resort and Spa in Fort Lauderdale, FL.

This year’s annual meeting theme, “Connecting People, Building Business,” focuses on the B2B and networking opportunities available during the meeting.According to the Association, in addition to the valuable information you can gain at the meetings and sessions, the annual meeting is an opportune time to get in front of new business prospects, key decision makers and other influencers.

The keynote speaker is travel industry expert Jerry Jones, who is founder of Travelocity.com as well as founder and CEO of Kayak.com. Jones is also managing principal of Essential Ideas, a consultancy he co-founded to help companies in their transition to the digital economy. He serves as chairman of Kayak.com, and is on the boards of LuxuryLink, Smart Destinations and Rearden Commerce. He is a venture capitalist with General Catalyst Partners and the Sierra Angels.

Jones is also chairman of the Lake Tahoe Shakespeare Festival and serves on the National Information Technology committee of the Boy Scouts of America.

More info:www.cspa.org

New Ingredients for I&I

Here is a list of new ingredients for the industrial & institutional cleaning markets that have been introduced by industry suppliers during the past 12 months. For more information on any of the products listed here, contact the supplier directly using the information provided.

AkzoNobel Surface Chemistry LLC
Chicago, IL
Tel: 800-906-9977 or 312-544-7000
Email: Linda.Terwilliger@akzonobel.com
Website: www.akzonobel.com/sc

Alcoguard H 5025
Chemical Description:Hybrid polymer
Use levels:1-3%
Comments: Alcoguard H 5025 is a novel hybrid polymer solution composed of both polysaccharide and synthetic monomers. It offers significant improvements in safety, carbon footprint, biodegradability and efficiency, compared to fully synthetic polymers.

Berol 609
Description:Nonionic surfactant
Applications:Degreaser, all purpose cleaning and laundry
Use levels:2-10%
Attributes: Berol 609 is a new eco-premium (readily biodegradable), next generation alcohol ethoxylate blend designed to match the key properties and performance of nonylphenol ethoxylates, specifically NP9 or NP10.It is completely water soluble; no hydrotrope is needed.

Ashland Specialty Ingredients
Wayne, NJ
Tel: 800-505-8984
Email: pantonopoulos@ashland.com
Website: www.Ashland.com/homecare

Jaypol HS77
Description: Copolymer containing sulfonate and maleate functionality
Applications: Mineral deposit control in automatic dishwashing and encrustation control in laundry applications.
Use levels: 0.1-1.0%
Comments: Highly stable in severe applications where the driving force for mineral scale formation is high.

Jaypol HN70
Description: Maleic rich copolymer
Applications: Mineral scale control in carbonate build powdered laundry applications.
Use levels: 0.1-1.0%
Comments: Exceptional functionality as an inhibitor and crystal modifier for calcium carbonate.

Croda Inc
Edison, NJ
Tel: 732-417-0800
Email: marketing-usa@croda.com
Website: www.croda.com/homecare

Diversaclean LF
Description: Proprietary concentrate
Applications: Dilutable concentrate, multi-purpose cleaner, glass cleaner
Use levels: 1-33% depending on application
Comments: Specialty formulated concentrate that can be easily diluted to produce an effective, low foaming ready-to-use detergent for the HI&I market.Diversaclean LF also has broad pH compatibility making it suitable in acidic or alkaline systems.

DuPont Tate & Lyle Bio Products
Wilmington, DE
Tel: 302-999-2390
Email: Rose.F.Durham@dupont.com
Website: www.duponttateandlyle.com

Zemea Propanediol
Description: 1,3-Propanediol
Applications: Solvent for home and industrial cleaning products; enzyme stabilizer for liquid laundry detergents
Use levels: 3-12%
Comments: Approved by EPA’s Design for Environment/ NSF CleanGredients.USDA certified as 100% biobased.Approved by Natural Products Association. Readily biodegradable. Skin-friendly performance attributes such as no skin irritation/sensitization and increased humectancy—ideal for wipes applications and other cleaning products that touch the skin.

Evonik Goldschmidt Corporation
Hopewell, VA
Tel: 804-452-8658
Website: www.evonik.com/household-care

Tego Betain C60
Description: Cocamidopropyl betaine
Applications: Tego Betain C60 is a 47% active betaine that offers multiple benefits including low color and odor, low viscosity, preservative free and exceptional mildness. It is used as a secondary surfactant in dishwashing liquids, household cleaners, bathroom cleaners, car shampoos, and laundry detergents. Tego Betain C60 has been reviewed and meets the relevant DfE criteria and is listed on CleanGredients.
Use levels: 2-8%
Comments: Cocamide DEA has been under scrutiny for the propensity of residual ethanolamine to form carcinogenic nitrosamines when formulated with nitrosylation agents. Tego Betain C60 is an excellent substitute for cocamide DEA in foaming applications.

Lonza, Inc.
Allendale, NJ
Website: www.lonzabiocides.com

Lonzagard Disinfectant Wipes Plus and Wipes Plus 2-4 Minute Contact Wipes
Description: Broad spectrum, one-step, hard surface, disinfectant/cleaner in a convenient, disposable wipe. When used as directed, this formulation delivers effective biocidal action and exceptional cleaning performance. Actives—octyl decyl dimethyl ammonium chloride .09%, dioctyl dimethyl ammonium chloride.04%, didecyl dimethyl ammonium chloride.05%, alkyl (C14 50%, C12 40%, C16 10%) dimethyl benzyl ammonium chloride .12%. Inerts—water, chealants, surfactants, substrate99.70%.
Applications: Health care—hospitals, sick rooms; food processing, service, retail; Food processing, service, retail—USDA-inspected food processing facilities, food processing plants, food storage areas, restaurants; Professional, ethical—barber shops, salons, dental offices; homes, small business settings; Consumer—homes, small business settings; Institutional & Industrial/Janitorial—Schools, day care centers, hotels, motels, fitness centers, athletic facilities, colleges, correctional facilities, business/office buildings, factories; Transportation—Airplanes, airports, ambulances, boats, buses, campers, cars, emergency vehicles, ships, taxis, trailers, trains.
Comments: Lonzagard Disinfectant Wipes Plus and Wipes Plus 2-4 Minute Contact Wipes offer four major advantages to customers: Solvent free (does not contain added solvents; Greater (efficacious on a greater number of organisms claims compared to similar disinfectant wipes); Faster (4 minute contact kill time, down from the 10 minute industry-standard); Available (with a broad variety of approved substrates).

Spectra Colors Corporation
Kearny, NJ
Email: dyes@spectracolors.com
Website: www.SpectraColors.com

SpectraRinse Dyes
Chemical Description: Polymeric
Applications: children’s products, inks, writing instruments
Use levels:Usage level is around 15-20% for the colored ones and around 50% for the black.
A Buyer for Sister Jenny?
• She’s built a company from the ground up, creating a three-item product line of effective creams for aches, pains and wounds, but now the company founder, who goes by the name Sister Jenny, is ready to sell her Jen-Til Touch line to the highest bidder.

“It would be wonderful if a company such as Unilever would purchase my line,” she told Happi at the recent International Federation of Societies of Cosmetic Chemists Congress in Johannesburg, South Africa.

Sister Jenny’s Jen-Til Creams includes multi-purpose, baby and joints and muscles formulas. All include a blend of essential oils and other natural ingredients to help to heal burns, to repair sun damage and itchy skin. The Sister Jenny’s Joints and Muscle Cream is said to have assisted a number of people to walk after car accidents. In fact, Sister Jenny says her creams helped a crippled runner so much that since he began applying the creams, he’s been able to complete 20 marathons—of course, Sister Jenny didn’t say what his times were!

Still, according to Sister Jenny, her formulas are used by healthcare professionals to treat skin conditions caused by burns, diabetes and other maladies. In fact, Isabella “Pippie” Kruger, a three-year old South African girl who was burned on more by than 80% of her body on New Year’s Eve, uses the creams. And after five cardiac arrests and 45 operations, the toddler recently returned home from the hospital.

The publicity is just the latest in a string of awards for Sister Jenny and Jen-Til Touch. After 18 years, the founder says she is ready to share her products with the world—but she wants to be paid handsomely for it!

More info: www.jentiltouch.com

Related End-User Markets:

Related Raw Materials: