Innovation picks up pace in US laundry care

Author: Magdalena Kondej

Date published: 22 Jul 2009

The exit of Unilever from laundry care in the US has left room for a shake-up of the sector.

Unilever, formerly the second leading player in laundry care in the US, bowed out of the sector in September 2008 after seeing its share fall from 15% in 2001 to 11% in 2007. The company sold its laundry care brands to a private equity company, which formed the now second-placed Sun Products Corp, and announced an intention to focus on Europe, Africa and Latin America. The effects of this withdrawal are now beginning to be seen.

While Procter & Gamble remains the dominant force in US laundry care with a 54% share of the sector, with its Tide, Gain and Downy brands holding the top three spots respectively, the exit of the second largest player seems to have brought a new lease of life to laundry care in the US, kickstarting innovation as players look to grab share.

Concentrating on the future

According to Euromonitor International figures, laundry care in the US is currently worth US$10 billion, and grew by 3% in 2008, a significant improvement on the previous year's figure of less than 1%. Given the maturity of laundry care in the country and its high household penetration, it is difficult to increase volume sales, but in value terms the sector has benefited from the continuing consumer shift towards value-added, higher-priced products, particularly concentrated detergents.

While value growth is predicted to slow a little in 2009 in light of the difficult economic climate and the fact that most manufacturers have now switched to concentrated products, concentrated detergents are likely to remain the driving force behind the sector's predicted growth over the forecast period because of their widespread appeal. Manufacturers enjoy the increased margins the products offer, they appeal to retailers because they require less shelf space, and consumers have bought in to the concept because they like the idea of reducing waste – a particular draw as the green movement becomes more mainstream in the US.

Environmental credentials will continue to grow in importance

Demand for natural and sustainable products is growing in the US and, as a result, manufacturers' use of a green positioning is likely to extend beyond concentrated products, driving consumers to trade up on environmental grounds, particularly once the current economic crisis subsides. Some of the major manufacturers have already taken steps to enter the green market. Procter & Gamble, for example, has launched its Tide Pure Essentials line, made with baking soda and citrus extracts, while Church & Dwight, the third biggest player, saw the strongest gains in 2008 on the back of its Arm & Hammer Essentials laundry care line, which plays on the green credentials of its baking soda and plant-based ingredients. However, these products now face a fresh challenge from the sector's latest arrival.

Clorox takes on Procter & Gamble

The arrival of the Clorox Green Works brand in the laundry care sector is the biggest indicator to date that green is gaining importance in laundry care. In June 2009 Clorox announced that its green brand would expand in the sector with Green Works Natural Laundry Detergent and Green Works Natural Laundry Stain Remover. The products are priced at a similar point to Tide and below those of niche green manufacturers, allowing mainstream consumers to buy into a green brand. In addition, Clorox claims to have patent-pending technology that boosts natural detergent ingredients, making them as effective as synthetic products, addressing the concerns many consumers have about the effectiveness of green products. Given the success of the Green Works brand in other sectors of household care since its launch in January 2008, the impact of its arrival in laundry care will no doubt be of keen interest to rival manufacturers, not least Procter & Gamble.

Henkel first with a new format

Fourth-placed player Henkel, which holds a 5% share on the back of its value Purex brand, has potentially done most to shake up the sector with the development and launch of a new product format. In May 2009 the company announced the launch of Purex Complete 3-in-1, a sheet that is transported from washer to dryer with the wash, embedded with a concentrated detergent that is released by the water of the wash, and fabric softener and anti-static agents that are activated by the heat of the dryer.

The launch is being backed by a US$50 million marketing campaign, focusing on the product's convenience, value and sustainability – three strong purchase drivers for American consumers. The company claims that the product will simplify the laundry process and offer better value for money as consumers need only one product instead of three. Sustainability claims focus on the product requiring less water to manufacture and less packaging than a traditional detergent, bringing the added bonus of lower transportation costs. However, the disposable nature of the sheet may prove a bone of contention with the growing number of consumers who place environmental concerns high on their list of priorities.

Although the dominance of Procter & Gamble is unlikely to be challenged for the foreseeable future, and the full impact of the green trend and Henkel's format development remains to be seen, this recent innovation has brought new life to a sector that just a couple of years ago appeared to be stuck in a rut.