2021 Energy Label: An Appliance Brand Challenge and Cold Washing Accelerator

April 2020

The European Commission will introduce new energy label legislation in 2021 covering washing machines, washer dryers, refrigeration appliances and automatic dishwashing products. The new legislation is much tougher than previous iterations and promises to have a significant impact in the EU and beyond. Not only will brands need to invest in efficiency upgrades to rank well in the new system, but also the use of nudge theory means all stakeholders are being pushed towards lower wash temperatures.

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This report comes in PPT.

Key findings

Efficiency back to king buying factor

The forthcoming European Energy Label due in 2021 is the third iteration of the Commission’s legislation on MDA energy use, pushing another step change in lowering total European consumer energy usage associated with domestic appliances.

Global impact

Although much of the commentary for the appliance industry does tend to focus on high growth markets such as China, the EU block and its satellites do continue to make up a significant share of MDA sales value, and the impact of the regulation is felt beyond the EU.

Legislation with teeth

While earlier legislation was evidently circumvented by some appliance brand activities, the 2021 legislation is different and has clearly benefited from industry knowledge, guiding actions towards the social goals and blocking known methods for gaming the system.

Company impact

Significantly, brands that have traditionally offered the lowest price point products will be impacted hardest by the need to invest in and deploy new technology in order to even get onto the energy label. This may impact pricing (both average for affected categories, and even the entry price point for washing machines). This is not an easy regulation to meet.

Category impact

2021 legislation will affect washing machines, washer dryers, refrigeration appliances and automatic dishwashers which together account for >60% of MDA sales across the region where the rules will be enforced. Brand owners are naturally working hard to mitigate disruption in their own operations as well as for consumers at point of sale.

Broader impact

The A~G rating energy label is expected to be applied to tumble dryers, ovens and the troublesome floor care (SDA) categories later with an equally challenging push on efficiency; this legislation is envisaged to land around 2023 but is unconfirmed.

2024 and beyond

Depending on future penetration, auto-dosing has appeared on the EU’s radar needing special liquid detergent consideration in 2025.  Additional limits on energy use are slated for 2024. There is a ban coming on washing machines that allow micro plastics to exit into waste water (ban confirmed for France in 2025, but with EU wide rules also expected).

Key findings
Report is pre-coronavirus; timing for this regulation could change
EU energy label legislation has significant global impact
Affected major appliances: Company sales exposure to Europe
Price positions for appliance brands also likely to be a factor
Laundry care and dishwashing: Company sales exposure to Europe
What is happening in 2020/2021 on EU appliance energy labels?
Issues with “A+++” (especially super-declarations eg A+++ -50%)
Hopefully…super-declarations will soon be a thing of the past
Many industry voices analyse the new label in light of old struggles
The needs of society clash with the pressure of busy modern life
Population growth: Household energy use rises, despite savings
Motivations may be clear; but outcomes might not go quite to plan
Knock-on effects can take all stakeholders “off-message”
What is so different this time around for the 2021 energy label?
This has all the hallmarks of “poacher turned game-keeper”
EU even deploys nudge theory on brand and consumer psychology
Everyone ends up doing the right thing (whether they intend to, or not)
Few users associate longer cooler wash cycles with lower energy
Warmer water affects dissolving rates for builder and surfactant
Media coverage has tainted cold wash trends for some consumers
Back to the Future…energy labels are returning like its 1995 ?
Moving from the old label to the new label in 2021
Major wrinkle for complexity is the new emphasis on loading levels
EU’s logic is clear; demand trends create a new efficiency threat
The load sizes to care about (in R&D terms) just shifted violently
A time limit adds one additional new layer complicating the solution
The first push on circularity involves longer-term thinking on repairs
The regulation should have (but didn’t) fix three discrepancies
Washer dryers remain the dirty secret of laundry for water waste
Energy label compliance obligations across 2020/2021
Eco Design compliance obligations: during 2020 (going into 2021)
Eco Design compliance obligations: 2021
Eco Design compliance obligations: longer term
Confusion over 20°C cycle; this is a living topic (updates expected)
Strategic Implications
Energy saving is back to being a research and development priority
Colder washing temperature averages are (likely) coming to Europe
New technology investment into upgrades is booming
Samsung’s Q-Drive technology will face greater competition
This regulation is very likely to affect entry and average retail prices
Product-as-a-service can be boosted by this cost/price impact
Fmcg brands can extend their ownership of laundry “hygiene”
Dosing guides need granularity, accuracy and more comprehension
As wash temperature drops, hard water becomes more of an issue
Water use per KG of washing will drop; are fmcg brands ready?
Due to complexity, 2020 launches are in some cases being delayed
Comments by the EU made during this label process about 2025
Moving from the old label to the new label in 2021
The relative difficulty of the old label versus the new label
Investments are going into compressor upgrades and insulation
Separate cooling air cycles for fridge versus freezer space is potent
Moving from the old label to the new label in 2021
Investments needed here are heat pumps and drying innovations
This is likely to kick start the “cold wash” trend on dishwashing
Candy’s Rapido washing machine epitomises the industry dynamic
Many users remain unconvinced on the need for personal sacrifice
Some brands compete as champions of “quick and convenient”
The compromise leaves all parties dissatisfied at quality of outcome
Takeaway thoughts for improving things in future
Linking decisions to an experience of consequences is the only way
The EU could learn from Day Zero in South Africa
A normally abhorrent level of scrutiny and personal data sharing
What is acceptable in mortal situations becomes morally malleable

Home Care

This is the aggregation of laundry care, dishwashing products, surface care, chlorine bleach, toilet care, polishes, air fresheners and insecticides.

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