the laundry care market is besieged by higher raw material costs and retailer
inflexibility on pricing. Laundry detergent suppliers offer a variety of strategies to
succeed in this increasingly complex new world.
Tom Branna • Editorial Director
LADIES AND GENTLEMEN, sharpen your pen- cils. Recent cost-cutting announcements by some of the biggest players in the
global household cleaning market means that
suppliers will continue to be pressured on price
even as their raw material costs continue to rise.
In recent weeks, P&G and Henkel announced
restructuring plans in an effort to boost profitability, and industry observers expect more
household product makers to take similar cost-cutting measures in the coming weeks.
At the same time, economic troubles in
Greece and the threat of a slowdown in China
are being felt in nearly every corner of the world
as marketers and ultimately, consumers, opt to
“Last year got off to a fast start, but volume
started to drop toward the end of the year due
to concerns about the debt crisis,” explained
Gabriel Tanbourgi, president, Care Chemicals,
BASF. “Our customers started short-term ordering, the whole pipeline became cautious
and that’s continued into 2012.”
senior vice president, Care Chemicals, BASF.
“We manage it very well because we offer
high-volume, innovative solutions in a one-
stop shop,” he explained.“We provide solutions
for low-, mid- and high-tier products. Our cus-
tomers offer all three price points and so do we.
We understand value.”
If higher costs weren’t enough, Croda and
other suppliers experienced a shortage of raw
materials last year.
“The biggest challenges in 2011 involved
securing sufficient raw materials to meet our
customer’s need for our ingredients,” explained
Kevin Gallagher, president, Croda Inc. “This
required a lot of team work and cooperation
with both our customers and our suppliers.
We were able to work as an effective team to
assure continuity of supply.”
Yet, Croda’s greatest opportunities came
from using its insights into ingredient perfor-
mance and combining them with its customers’
knowledge of consumer behavior.
“Where these intersect, we were able to
help our customers exploit new niche areas,
like Design for Environment (DfE)-approved
formulations for a variety of home care and I&I
products,” recalled Gallagher.
Few suppliers have had a more complex year
than BASF, which spent much of 2011 integrating Cognis, which it acquired in 2010 for $3.8
billion. That purchase followed previous acquisitions such as Ciba (2009) and Engelhard (2006).
“The integration went very quickly. We
learned a lot from past acquisitions and did a great job creating the management team,” noted Tanbourgi.“The IP integration
was most important; our customers see the strength behind the
acquisition. It enables us to be even more innovative within Care
Gabriel Tanbourgi, BASF
Dirk Buengel, BASF
Finding Ways to Win
But nearly every supplier contacted by HAPPI insisted that through cagey investments, keeping
a watchful eye on the bottom line and rolling
out a range of new products, they are well prepared to succeed in a turbulent environment.
“We call it a VUCA market: Volatile,
Uncertain, Complex and Ambiguous,” explained
Tom Nelson, director, customer business devel-
opment, P&G Chemicals. “There is rationalization and consolida-
tion. We have to know how to work in this market. We’re adapting
and changing with the times and successfully partnering with our
The cost pressures are tremendous, agreed Dirk Buengel,