CSPA certainly isn’t showing its age. The group added 26 new members during 2014, bringing the total number of member companies to 250.
“We have done great things, showing the industry that we have real value,” observed CSPA chairman Paul Siracusa of Church & Dwight. “The next year is going to be challenging, let alone the next 100.”
And yet, Association executives assured attendees that it is more than ready to handle the challenges at the state, federal and international levels—despite a rate of change that is extraordinary. In fact, CSPA president Chris Cathcart told attendees that the industry and its Association is at a pivotal point and that in order to keep up, it is imperative to stay ahead on a host of issues including product transparency with consumers and retailers, regulatory issues with legislators and non-government organizations and, of course, consumers.
“CSPA’s future is to be a trusted business partner,” he asserted.
Cathcart noted that the Association has done that with major retailers such as Walmart, Costco and Staples to develop workable sustainability goals, developed labeling initiatives with the Grocery Manufacturers Association (GMA) and created strong relations with several NGOs in an effort to pass key legislation. In fact, CSPA and its program are highly regarded by Environmental Defense Fund President Fred Krupp, who met with Siracusa and Cathcart in July to discuss CSPA’s efforts to work with the Environmental Protection Agency.
Although TSCA reform failed in 2013 and 2014, Cathcart said he was confident that real reform can take place this year—and TSCA reform is necessary, as states rush to push through legislation on their own.
“At least a dozen states will be pushing a chemical bill (in 2015),” he explained.
But by working closely with legislators, NGOs and regulators, the Association has been able to get close with once-perceived adversaries, according to Cathcart.
“We know the California Air Resources Board on a one-to-one basis, and CARB listens to our comments,” he explained. “And our relationship with EPA has never been stronger.”
Strong Programs, Too
Another CSPA strength, according to Cathcart, is its internal programs. In 2014, the Association relaunched its 30 year-old Product Ingredient Review as the Research & Regulatory Management Council (RRMC) to accurately reflects the group’s wide-ranging activities, Cathcart explained.
RRMC combines technical expertise and industry knowledge with relationships with regulatory agencies. RRMC directs the 50 cooperative research projects that are designed to develop data and address industry issues efficiently and cost-effectively.
Another program, Alliance for Consumer Education (ACE), launched the People Against Inhalants Network (PAIN). The online community (www.peopleagainstinhalants.com) was developed to bring together parents and families who have lost loved ones to inhalant abuse. Cathcart also singled out the good work being done by the Consumer Aerosol Products Council (CAPCO), which fosters education of aerosol products; the Compliance Assistance Group, which helps companies get the outside guidance they need on a range of issues by getting them access to a cadre of consultants, and the Consumer Specialty Insurance (CSI) group, which aids smaller companies get the insurance coverage that they need.
“We’re making sure that we evolve along with our member companies in order to meet all of their needs,” explained Cathcart.
Westerman Honored
All that the Association accomplished during the past year, and the past 100 years for that matter, could not have been achieved without the efforts of its members, stressed Cathcart. During the annual meeting, CSPA honored those who have made contributions during the past year or throughout their careers. Tammy Westerman, senior VP-business development, State Industrial Products, received the Charles Allderdice Award, the Association’s highest honor, for her work on behalf of the association. Westerman retired at the end of 2014 after a distinguished career with State Industrial.
Gerard Bailey, Procter & Gamble, received the Chairman’s Outstanding Achievement Award for his work with the air care division. Also, the CSPA recognized volunteers within each division:
- Aerosol Products Division—James Bloome, PE, RA Jones & Co.;
- Antimicrobial Products Division—Jan Dhonau, Procter & Gamble;
- Air Care Products Division—Steve Tanner, Arylessence, Inc.;
- Cleaning Products Division—Tony A. Rook, The Sherwin-Williams Company;
- Industrial & Automotive Products Division—Michelle Rudnick, CRC Industries;
- Pest Management Products Division—William Metzger, United Industries Corp.;
- Polishes & Floor Maintenance Division—Stanley R. Weller, Ph.D., Amrep Inc.
CSPA has overcome many challenges during the past 100 years, but the retail landscape may be changed forever by technology, and not every company is positioned to survive or thrive in the new business reality, noted Doug Stephens, founder, Retail Prophet and author of “The Retail Revival.” He noted that global ecommerce sales reached $1.2 trillion in 2013 and are growing 19% year-on-year (12% in the US). By 2025, 35% of retail transactions will occur online. Amazon handled 426 transactions per second on Cyber Monday. Meanwhile the German Post Office is already making deliveries by drone, and Alibaba, with its 40% gross margin, is expected to recreate the online landscape.
“It’s the end of the beginning of ecommerce,” he asserted.
So what does the future hold? Immersive technology will create a virtual world where consumers will be able to “travel” around the world to purchase products and tactile technology will enable online shoppers to “touch” products before they decide to buy them.
“Ecommerce will become a lot more physical,” Stephens promised. “3D printing technology will be like having a dollar store right in your home.”
He predicted that technology will enable doctors and insurers to access wellness data from sensors imbedded in patients and appliances will place orders when supplies run low. It may seem far-fetched, but the bottom line is that all this technology enables consumers to go direct to manufacturers and bypass traditional retail, not to mention traditional media.
“The physical store was primarily a product distribution mechanism,” he explained. “It was a purchase funnel where, if a company spent enough on marketing and bought more ads on TV, it would be successful. Now the funnel is broken; marketers are pouring money into an array of media and it’s not working.”
Stephens noted that every day, a consumer is subject to 34 gigabytes of data from YouTube, Twitter, Facebook and other online sources. Yet, a recent Google study found that 56% of online ads never get seen. The linear path to purchase is now a matrix, where consumers start on Facebook to see what their friends like, visit a company’s website to view the selection, check consumer product reviews, visit the store to view the product and then order online.
“For the first time in history, the consumer is in control,” Stephens asserted. “(Consumers) don’t need to believe a marketer. They can shop whenever and wherever they want. So who needs a store?”
So what will happen to all that real estate of big boxes, strip malls and the like?
Here’s Stephens’ theory: the store is becoming the media. He explained that the store format is the place where a customer can have a visceral connection with a brand—but retailers must realize that they are selling experience, not products.
“It’s not just taking, it’s about making,” he explained. “It is less about product and more about creating excitement.”
Unfortunately, that will result in fewer, but better paying, retail jobs.
“We’ll need great people, who are brand ambassadors, to create a wonderful experience,” said Stephens.
In this new reality, it’s not enough for a company or its employees to be just average. With one click, consumers can choose from thousands of options.
“Nobody needs what you sell,” he asserted.
To compete, companies and their brands must have a strategy that’s either exclusive, niche and service-oriented (high fidelity) or one that’s ubiquitous, with broad appeal (high utility).
“You can’t be in the middle and you can’t be both; they oppose one another,” Stephens explained. “Look at Best Buy and Sears, they are middle of the road. You don’t want to be there.”
He warned the audience that their biggest competitors in the future may not even exist yet, pointing out that new companies like Airbnb and Tesla reshaped the travel and auto industries.
To succeed in this new reality, he urged attendees to move in new directions.
“Steer your business toward the Barbary Coast,” he suggested, in reference to the once-dangerous, pirate-inhabited coast of northern Africa. “Jump in a new direction.”
Sustainability at Work
CSPA chairman Paul Siracusa chaired a special session on sustainability featuring representatives from a supplier and marketer. A representative from Costco was unable to attend. Still, Denise Petersen of BASF and Jeff Pinkham of Scotts Miracle-Gro provided insights on how sustainability works at their companies and how it impacts industry’s success in the future.
“The future of sustainability is the supply chain,” asserted Petersen. “Collaboration up and down the supply chain is critical.”
She noted that BASF competes in just about every consumer product category, earns 1,200 patents a year and operates six Verbund sites—a massive operation that requires collaboration and introspection. The firm looked at its sustainability efforts from the feedstocks it uses to transportation of finished products. Regarding sourcing, BASF is a member of the Roundtable on Sustainable Palm Oil (RSPO) and WWF’s Palm Oil Innovation Group, and collaborates with an array of companies and organizations.
Internally, BASF recently analyzed 50,000 of its products, measured their sustainability line-by-line and segmented them into four categories: accelerator (novel product), performer (standard product), transitional (products that require work) and challenge (products that will be phased out).
“We identified what works and what doesn’t,” recalled Petersen. “The program addressed consumer needs and retailer expectations.”
BASF also created a Supply Chain Index to make sustainability part of every employee’s job and to measure sustainability efforts. For example, the Index helped the company focus on making sure that trucks are fully loaded before shipping and reduced returns and disposals.
“We have to harness the sustainability contributions at every point of the value chain and collaborate for maximum contributions,” she concluded.
Pinkham began his presentation by reading Scotts’ Mission Statement: “To help people of all ages express themselves on their own piece of the Earth.”
To help protect that Earth, a few years ago, the company eliminated phosphorous from its lawn fertilizer formula—even though it sold as much as 10,000 tons of phosphorous a year. More recently, Scotts took neonicotinoid, which has been linked to the collapse of honeybee colonies, out of its GrubEx line and its new Bonus S formula contains 98.5% lower level of active ingredients than its old line. To improve dispensing and reduce overdosing, Scotts introduced the Snap automatic dispenser.
The result? A green, healthy lawn that isn’t just aesthetically-pleasing, it actually has real environmental benefits like reducing water runoff and soil erosion, acting as a water filter, providing a cooling effect, acting as a greenhouse gas sequestrant and oxygen generator.
As part of its sustainability outreach, Scott’s teaches consumers how to use less water to achieve a healthy lawn and sponsors research on ways to reduce water use. Down the road, the company will launch slow-growth seed that requires less mowing and drought-tolerant seed. Researchers are also working on organic pesticides, RNAI products and biodegradable packaging.
Hunger Games
The way to growth for the aerosol industry is through consumers’ stomachs. IRIworldwide’s Larry Levin urged aerosol division members to take a closer look at the food category, noting that it is growing nearly 3% a year, compared to zero growth for more traditional aerosol categories.
“Whipped cream is leading the way,” he told the audience, noting that manufacturers are rolling out novel flavors to help the segment grow 7.4%. Other categories that are growing include insect repellent, up 7.2%; household care, up 2.4%; and sun care, up 1.8%. In contrast, furniture polish sales fell 10.5%, spray deodorants dropped 3.7% and air fresheners declined 2.5%.
But whether a product category rises or falls doesn’t solely depend on price.
“The consumer is always searching for value, but that doesn’t mean cheap,” he warned. “Go and test your products to see how much consumers will spend for your innovations.”
Yet, Levin acknowledged that the consumer is feeling pinched. In fact, 30% of households making $100,000 or more say they are under stress. Which may explain why deep discount retailers are growing two times faster than the industry.
“People who drive Mercedes like to go to dollar stores,” he explained.
A Matter of Trust
Everything we touch, eat and breathe on a regular basis is a chemical; but just because everything is chemical-related, doesn’t mean people relate to chemicals. Chemophobia is growing in the US and the industry must take steps to address this issue, noted SC Johnson chairman and CEO Fisk Johnson.
“Trust is hard to gain and easy to lose,” he explained. “It’s what we face in our industry today—trust in the chemistry of our products.”
In a recent survey conducted by SC Johnson, just 41% of respondents said that companies do the right thing when it comes to ensuring the safety of their products. What’s worse, just a quarter of respondents said that chemical companies do the right thing.
Why? Johnson cited five reasons for growing distrust among consumers for chemicals and the companies that rely on them:
- The subject is complex;
- Fear sells and the media fan it;
- Government wants to appeal to its constituents;
- A real void in data; and
- Greenwashing and a lack of transparency abound.
First, make sure your own house is in order. SC Johnson, for example, regularly reviews its products and eliminates “bad actors” regardless of cost. For example, the company eliminated chlorine from its Saran Wrap product. The result was a less effective “cling” that has hurt the brand’s market share, but as Johnson pointed out, it was the right thing to do.
Second, be transparent. Even in the age of the internet, consumers read product labels, Johnson insisted. And while suppliers and marketers complain about the loss of intellectual property, Johnson explained how his company works with partners to iron out an array IP issues. Most recently, SC Johnson whittled its list of 3,500 fragrance components down to 1,300 ingredients. But even if companies do the right thing, that doesn’t make them immune from NGOs and other interest groups, he warned.
Third, eliminate greenwashing. Marketers make too many vague or misleading claims about their products that only mislead consumers and damage the trust they have in a company and its products. Terms such as “non-toxic” is vague and meaningless, he noted, as everything is toxic at the wrong level—even air and water.
“Natural ingredients aren’t all safe; the claim is not supported by the science,” he charged.
Johnson admitted that his own company got caught up in greenwashing when it placed an in-house “GreenList” label on several products. After outside groups complained that the label was misleading because it wasn’t awarded by an impartial third-party, SC Johnson removed the label from its products.
Four, advocate for better regulations. Like CSPA executives, he called for Congress to pass the TSCA Modernization bill. Johnson urged industry to come together and support TSCA reform, noting that it is in the best interest of the public and ultimately, the companies and products that come under its charge.
“My great-grandfather had a saying,” recalled Johnson. “‘The goodwill of people is the only enduring thing in any business. It is the sole substance. The rest is shadow.’”
By coming out of the shadows, by being transparent, chemical specialty product marketers and their suppliers can win over consumers.
Opportunities in Air Care?
A healthy body and a healthy environment go hand-in-hand. That’s the belief of 74% of Americans, according to results of a consumer study conducted by the Natural Marketing Institute. But what’s healthy for one consumer may not jibe with another, according to Steve French of NMI. That’s because consumers can be divided into five distinct groups ranging from LOHAS (11% of the population) all the way to Unconcerned (17%). Unfortunately, they all do share one thing in common—fear.
“The average American is fearful about everything they do, from getting on airplanes to genetically-modified organisms,” insisted French. “They have a fear of ‘what’s in my stuff?’”
For example, 28% are concerned about chemicals in laundry products, 31% about indoor air quality and 39% about chemicals in their personal care products. Indoor air quality is of greatest concern to consumers in the LOHAS group, as well as middle-of-the-road conventional types. So what can air care marketers and their suppliers do to win over these worried consumers? They can start by making sure their products are minimally packaged as 74% of consumers say FMCG are overpackaged. Similarly, companies should look to use biodegradable and recycled packaging whenever possible, advised French.
Another way to boost fragrance sales is to reduce product complexity. He suggested emphasizing reed diffusers and introducing potpourri that consumers can put in a pot of water and boil on the stove to release scent.
“Consumers tell us that they live stressful lives and are looking for ways to simplify them,” he explained, pointing out the craft brew trend has taken the US by storm and that there may be similar opportunities for craft environmental fragrances.
And to appease these stressed out folks even more, French suggested formulators develop fragrance systems that act as delivery systems for vitamins, minerals and other nutrients or systems that help consumers get a good night’s sleep.
Finally, he reminded attendees that what a company stands for is as important as what it sells in today’s world of Corporate Social Responsibility, and he urged companies to make CSR a part of their business model.
“Consumers want to support companies that have the same level of responsibility and commitment that they do,” French explained.
The good news for the air care industry is that media coverage has been generally positive during the past year, according to a study conducted by CSPA, Communications Vice President Erin Donovan and Manager Rachel Boehm tracked thousands of mentions in traditional and social media during the past year and found that 20% of them were positive, 70% neutral and 10% negative, and of these, only three were extremely negative toward the industry.
“There are opportunities to address coverage in the middle,” concluded Donovan. “The conversation is not as negative as we feared. We have a real opportunity here.
Therefore, the Air Care Division will decide what’s next whether that means retaining the status quo, filling the void in the middle or aggressively targeting the negative reports.
But in order to reach the middle and change the story, you have to write the story and address it to the right audience, observed Boehm.
“Whom should we address?” she asked. “The Hill staff? News media? NGOs?”
The staff will continue to work with Air Care Division members to answer that question and perhaps fund a study to demonstrate the benefits of its products.
• Representatives of CSPA’s 250 member companies re-elected Paul Siracusa, PhD, executive VP-global R&D, Church & Dwight Co., Inc., as chairman. “Paul Siracusa has done a remarkable job leading CSPA in its 100th year. It has been a pleasure working with him to expand the association’s effectiveness as a representative of the household and institutional products industry and I look forward to continuing this partnership in 2015,” said Chris Cathcart, CSPA president and CEO. “Just as remarkable are the men and women elected as 2015 Board of Directors. The association continues to attract industry’s best leaders to help establish direction on a variety of public policy issues,” added Cathcart. Also elected during the General Session were the 2015 board officers and members to the board for terms expiring in 2017. CSPA officers and directors are elected by active members and serve a term of three years. Officers of the 2015 board of directors are: chairman Paul Siracusa, Church & Dwight Co., Inc.; first vice-chairman William Auriemma, Diversified CPC International, Inc.; second vice-chairman Pamela Lam, Henkel Consumer Goods, Inc.; treasurer Adam Selisker, CRC Industries, Inc.; and president and CEO Chris Cathcart, CSPA. Members elected to serve terms expiring in December 2017 are: John Abplanalp, Precision; Gerard Baillely, Procter & Gamble; David Campbell, RB; Mike Freeman, WD-40 Company; Steve Goldberg, BASF; Rebecca Korwin, State Industrial Products; Cynthia Reichard, Arylessence and Bill Schalitz, Spartan Chemical. Members previously elected, serving terms expiring in December 2015 are: Greg Adamson, Givaudan; Lisa Alexander, Firmenich; Steve Christenson, Ecolab; Catharine de Lacy, Clorox; Frank Jusich, Central Life Sciences; Bill Metzger, United Industries; Kelly Semrau, S.C. Johnson and Rob Slone, Stepan. Members previously elected, serving terms to serve terms expiring in December 2016 are: Patrizia Barone, Unilever; Joel Burdick, Beauty Avenues; Kimberly Cassar, Hartz Mountain; Mike Feldser, Ball; Jeff Pinkham, Scotts; Elaine Schley, Armored AutoGroup; Ron Shuck, Sherwin-Williams and Bill Smith, KIK. |