How the Detergent Market is Working Towards a Clean Sweep

Editor’s Note: The MIT Center for Transportation & Logistics' Sustainable Supply Chains initiative is exploring commercially viable ways to reduce plastic in supply chains. Companies that are interested in this work should contact Dr. Alexis Bateman, Director, MIT Sustainable Supply Chains, at [email protected].

The increasingly strident public outcry over the huge volumes of plastic waste clogging our environment demands a response from the companies held responsible for putting it there. Can these companies reduce the amount of plastic in supply chains and meet or even exceed their profitability targets?

The answer is a qualified yes. There are win-wins that achieve both the above goals. Identifying and capturing them is not easy given the number of environmental, commercial and operational stars that have to align to make this possible – but companies need to start looking for these opportunities

A prime example of the potential benefits can be found in the laundry detergent market. The industry's shift to concentrated liquid detergent yields both environmental and commercial gains. The product's journey from unknown innovation to household staple has been long and erratic, but it offers some important lessons for companies that want to meet consumer demand for less plastics in supply chains while remaining competitive.

Towards a packaging solution

Mountains of plastic waste have been building for many years, but a number of recent developments have moved them into the limelight. These include China's ban of non-industrial imports of plastic waste, the discovery of vast swirling garbage patches in our oceans, and images of plastics-gorged sea creatures that prompted bans of offending products such as plastic straws.

These high-profile images and accompanying stories have led to sweeping demands for immediate reductions in volumes of plastic waste. The reaction is understandable – but the reality is more complicated.

Supply chains are heavily dependent on plastics, and eliminating or reducing the material's usage can have far-reaching consequences for multiple actors. That said, there are huge opportunities to respond to stakeholder demands and cut costs, especially in the area of product packaging.

Packaging accounts for 146 million tons of waste annually and 42% of the global use of plastics. Given these numbers, product packaging is a prime place to start when looking for plastic-reduction win-wins in the supply chain.

However, the task is not straightforward and may involve a lot of work in both the supply chain and the broader market particularly with regard to winning consumer support for the required changes. Existing attitudes and practices are deeply ingrained, and changing them to make way for redesigned packaging is far from trivial. The laundry detergent market offers a salutary example of this change management challenge.

Paradigm shift

Laundry detergent in large, brightly colored plastic jugs is a mainstay product in American homes. But it has taken many years and numerous commercial twists and turns for it to attain this status.

Liquid detergent became the preferred product in the US and EU over the traditional powdered variety in the mid-1970s. At the time, powdered detergents were discovered to have large quantities of surfactants and phosphates that are damaging to human health and the environment. The EU and some US states outlawed phosphates, which led to a negative perception of the product in these regions. Despite changes in powder formats that removed the harmful additives, liquid detergent usurped the traditional product and became the norm in American laundry rooms.

Still, liquid detergent has some notable downsides. The product is a more effective cleaning agent than powder equivalents, but its formula uses more water and containers of the detergent are typically heavier and hence more expensive to transport. As a relatively heavy product, liquid detergent generally requires thick plastic packaging to avoid leakages and other damage while in transit that could make the product unsaleable and compound the environmental and cost impacts.

To address these issues, manufacturers began to concentrate formulas in the mid-seventies. Early concentrated versions of Colgate's Dynamo and Henkel's Purex detergents were introduced, but received very little traction and were quickly pulled off the shelves. Many arguments were put forward for the failure to win consumer support. Limited consumer understanding of concentrates was one possible reason; for consumers bigger packages of non-concentrated detergent translated into bigger value. This may have also been a result of the ritual-based nature of laundry and the difficulty of changing consumer practice (i.e. one cup = one load), as well as the new product's price premium. In addition, the large-size bottles of non-compacted detergent gave them a bigger presence on the shelf.

In short, without an industry-wide shift towards concentrated formulae, there was little reason to keep concentrated detergents on supermarket shelves.

This situation persisted in the United States through the eighties and nineties. Then in 2005, Unilever's brand of detergent, All, released a concentrated version called All Small & Mighty. According to Unilever, the concentrated variant used half the packaging, one-quarter of the water use, and one-third less diesel fuel to transport as compared to the traditional All product.

This version was a hit with consumers. One reason is that it was paired with better consumer education and retail store features. For example, Unilever communicated that the concentrated version had equal washing power to a bigger bottle of the regular liquid detergent. The packaging showed a little bottle with an “equals” sign denoting it to be equivalent to a bigger bottle of non-concentrated detergent. Improved consumer education was another important change. The All Small & Mighty product was demonstrated at stores around the US to show that it was just as effective as its unconcentrated version.

Increasing consumer awareness of concentrated product allowed other manufacturers to follow suit. In 2006, P&G rolled out 2x concentrated formats of most of their major detergent brands: Tide, Cheer, Gain, Era & Dreft. As the market began to shift towards the concentrated product, Walmart gave it a final push by requiring that suppliers deliver at least 2x concentration for all detergent products on Walmart's shelves. The move essentially changed the face of the detergent market.

It also reduced the amount of plastic used as companies switched to smaller detergent bottles. And there were other environmental benefits too. For example, one leading manufacturer reported that its concentrated product used 35% less water compared to the non-concentrated product; an annual saving of 230 million gallons of water. Product delivery required fewer pallets and truck trips.

Continued innovation

Since the major shift in 2007, the detergent market has continued to innovate. In 2012, P&G released Tide pods which contain only 10% water as opposed to 50% in the 2x concentrate detergent product. Tide pods are packaged in a plastic bag instead of a large-format bottle which utilizes much less plastic.

Some of this innovation has been driven by smaller market disruptors. Manufacturers Seventh Generation and Method marketed concentrated formats in the early 2000s with 4x and 3x formulations respectively, but these companies were not big enough to trigger an industry-wide change. In 2018, Seventh Generation released an ultra-concentrated (8x concentrate), bio-based detergent that uses recycled PET for its packaging. Their EasyDose Ultra Concentrated detergent uses 60% less plastic, 50% less water, and weighs 75% less than its traditional format detergent, and is designed to avoid overuse of detergent. Additionally, the lightweight bottle is designed with e-commerce in mind and requires much less space and weight to ship. P&G has followed suit with its new “eco-box” designed together with Amazon. The packaging essentially looks like a wine box with a plastic bag housed in a cardboard package. This design is lighter and uses less corrugated cardboard without affecting the performance of the packaging.

And the market continues to foster innovation. Startup companies are offering entirely new ways of thinking about laundry. For example, a product offered by Grover Collaborative enables customers to buy a reusable detergent dispenser and purchase refill pouches when needed. This novel approach uses less packaging and the lighter units are easier to transport. Another company, Dizolve, sells lightweight strips of laundry detergent that dissolve in each load. With paper packaging and no liquid, the product eliminates the use of plastics and is small and lightweight.

Time to start innovating

As this short history shows, innovative packaging in a mass market – some 900 million bottles of detergent are used annually– can yield major environmental and commercial benefits.

But these win-wins do not come easy. They require innovative thinking throughout the supply chain from product design and manufacture to customer delivery. And it's not enough to change best practices within companies; innovative products must also win consumer acceptance at an affordable price.

Increasing consumer demand for less plastic presents some formidable challenges for companies – but it also represents a huge opportunity to develop products that are successful from both commercial and environmental perspectives. Moreover, as the liquid detergent story illustrates, the emergence of innovative products (in this case concentrated formulations) can spur the industry-wide shifts that are necessary to achieving change on a large scale.

Such opportunities exist, but companies must be willing to start the journey.

The MIT Center for Transportation & Logistics' Sustainable Supply Chains initiative is exploring commercially viable ways to reduce plastic in supply chains. Companies that are interested in this work should contact Dr. Alexis Bateman, Director, MIT Sustainable Supply Chains, at [email protected].

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