As global concern over water scarcity increases, there is a growing opportunity for companies to replace traditional laundry chemicals with less water-dependent laundry ingredients.
In fact, emerging economies are making the transition toward water-efficient laundry products that need less water for rinsing while concentrated detergents containing less water are predominant in developed countries, in an effort to cut packaging and transportation costs. There is still room for innovation, especially in emerging markets, where the development of effective and affordable less water-dependent ingredients is still challenging.
Water is becoming an increasingly scarce commodity, especially in the two largest emerging markets, China and India, where 46% of absolute global volume growth in laundry detergents is forecast during the 2015-2020 period. In fact, 50% of the global laundry detergent market by volume in 2020 will be accounted for by water-stressed countries across four continents: China, India, Indonesia, Mexico, South Africa and US (eg California). It is not surprising that in this landscape, leading companies with environmental responsibility initiatives such as Unilever, Procter and Gamble and Henkel – which together account for around 40% of the global laundry detergent market by volume – have already started to explore ways to reduce the water footprint of their products.
Water accounts for around one fifth of the total ingredients in laundry detergents, with liquid detergents unsurprisingly containing the highest amount of water in their formulations. The laundry detergent industry globally consumed 5 million tonnes of water in 2015 and demand is forecast to grow at a CAGR of 3% to 2019, driven above all by the growing demand for liquid laundry detergents in Asia Pacific and Middle East.
The development of waterless products is not going to solve the problem of water scarcity by itself since the water added to the products represents less than 1% of the total water footprint. Nevertheless, Walmart has challenged laundry manufacturers to reduce the water content in detergents by 25% in North America by 2018. This has produced a strong impetus for leading companies to innovate in concentrated and extra-concentrated laundry detergents that also save on packaging and transport costs. In fact, demand for liquid tablet detergents, designed for use in conventional and high-efficiency washing machines, is expected to grow at a CAGR of 7% in North America and in Western Europe over 2015-2020. By contrast, fast emerging economies such as India are less open to waterless products due to their higher price compared to water-based alternatives and, instead, there is a shift here towards standard liquid detergents, which are expected to grow at a CAGR of 13% in Asia Pacific during 2015-2020.
Market opportunities for manufacturers of surfactants, synthetic polymers and preservatives are expected to increase in the short to medium term. In fact, in China, the demand for concentrated liquid detergents is expected to grow at a CAGR of 16% over 2015-2020. This trend will fuel demand for amylase enzymes, preservatives and non-ionic surfactants (eg alkoxylated fatty alcohols) in laundry detergents which are expected to grow at CAGRs of 15%, 15% and 11%, respectively, by 2019. However, the impact of the shift towards liquid detergent tablets on the laundry ingredients market in North America and Western Europe is harder to predict since higher concentration involves lower volume but higher value. In contrast, the growing popularity of liquid detergents in India will affect demand for surfactants and synthetic polymer in laundry detergents which will grow at a CAGR of 4% and 3%, respectively during 2015-2019.
Average Content (%) of Selected Ingredients in Laundry Detergent Formulations
Towards water-efficient products
One possible contribution towards solving the problem of water scarcity could be the development of less water-dependent laundry formulations for countries suffering growing water stress and scarcity. According to the latest sustainability reports from leading companies such as Unilever and Henkel, the rinsing of laundry with water contributes up to 85% of the total water footprint of the product. Key players are exploring potential solutions to combat water scarcity. After the sustainability challenge Reinventing Laundry to Be Less Water Dependent, which Unilever launched in October 2015, the company has launched the Sustainable Washing Challenge, aimed at improving the cleaning power of laundry products and therefore reducing the amount of water used to wash clothes.
In Asia Pacific, successful companies such as Unilever, Procter & Gamble and Kao Corporation provide detergent formulations with a lower water footprint such as Surf Excel Quick Wash or Attack Neo and fabric softeners such as Comfort and Downy One Rinse. The world leading enzyme supplier Novozymes markets Easyzyme, an enzyme solution for laundry bar detergents that reduces the amount of water needed to wash clothes by hand. Although globally bar detergents only represent 7% of laundry detergent sales by value, in India bars account for 25% of annual detergent sales and this is expected to remain the case throughout 2015-2020.
In order to gain market share in developing countries where most of the growth in laundry detergent sales is expected, ingredients and detergent manufacturers should invest in research to develop cost - and water -effective laundry products that are environmentally-friendly, so the water left after washing can be reused in other contexts. In fact, Unilever, which has a significant share of the laundry detergent market in countries with problematic water supply, such as India (40%), Thailand (55%), Vietnam (75%) and Indonesia (31%), is assessing novel biodegradable laundry ingredients and their potential use as nutrients in the sustainable growth of household food crops.
Action needs to be taken since water shortages are inevitably going to become more frequent across the world. There are market opportunities for liquid tablet detergents which prevent overdosing and promote water saving in developed regions and places with growing middle class such as some cities in China. By contrast, in developing countries with limited water supply the market will be focussed on low-cost, water-efficient hand washing detergents that are able to offer rapid and clean rinsing with limited water consumption. The implications for laundry ingredients manufacturers are significant and the market for enzymes, preservatives and non-ionic surfactants is expected to grow in the medium to long term.