News Analysis: Old guard lose out in soap wars

Laundry brands have been squeezed hard by price promotions and own-label growth, writes Melanie Godsell.

Laundry detergent manufacturers have been having a tough time of it over the past 18 months. The category leaders, Ariel and Persil, lost 12% and 9% respectively in sales in the year to 23 April, according to TNS Worldpanel 2006 Biggest Brands (Marketing, 16 August); the combined value of Unilever brands Persil, Comfort and Surf slumped by £35m.

This is not the result of consumers opting out of cleanliness regimes - in fact, detergent volume sales are steady. Chief among the factors behind the decline of the big brands is the growing popularity of supermarket own-label laundry and dishwashing products, which are undercutting their branded counterparts. As such, they are a tempting proposition, according to Adrian Goldthorpe, head of consumer strategy and innovation at Futurebrand.

While branded household and cleaning products still account for the lion's share of the market, it is static at 68%. Own-label, however, has been making small but steady gains and increased its share by 2% to 32% in the 12-month period, according to TNS Worldpanel.

Consumer cynicism

Tesco and Sainsbury's own-label washing powders are priced £1.62/kg, while 1kg of Persil costs £2.50 and Ariel £2.42. 'We tend to have a low emotional involvement in this category, so we are swayed by functional aspects such as price,' says Goldthorpe. The consumer is now more savvy and cynical about brands, believing that own-label products can do the job as effectively, he adds.

Tesco's own-label washing powder increased its share from 8% in 2004 to 11% in the year to March 2006, according to BMRB TGI data. Sainsbury's own-label washing powder's share was static.

In addition to price, supermarkets are not afraid to use creative pack designs to achieve standout. 'Laundry brands still tend to be a bit formulaic, but own-label ignores category cues and allows itself to be different,' adds Goldthorpe.

The sector's value has also been dented by heavy price promotions. At the time of writing, Sainsbury's was offering 25% (£1.37) off a 3kg box of Persil, while Tesco was offering two 950g boxes of Daz for £3, a saving of 94p.

Daz-owner Procter & Gamble has now earmarked price promotions as a problem. From next month it will begin price-marking packs of Ariel sold in independent cash-and-carry outlets. They will carry a competitive price, to ensure consumers perceive they are getting a bargain, but it will not be as low as previous promotions.

Another change in consumer behaviour has been sparked by the fact that the claims made for products baffle them with science. 'The soap-powder market is becoming like the shampoo market. Consumers don't understand it, so they buy the same product as last time,' says Paul King, retail director of Vivid Brand, which specialises in achieving better listings for grocery brands.

Goldthorpe agrees, pointing out that 'consumers don't normally browse the laundry aisle - they buy what they normally would'. He also believes that more people are buying detergents in bulky packs via the internet for easy delivery - selections that are then saved in online shopping lists.

While online shopping accounts for only about 3% of the laundry market, this is growing 25% year on year, according to TNS. However, the repeat-purchase theory does not explain the success of entrants to the market such as Fairy's fabric conditioner, which was launched in January.

Fragrance is also an important factor in deciding which brand to purchase, as consumers want something in addition to cleaning power. Meredith Whitely, consumer insight director at TNS Worldpanel, says: 'Brands must keep on top of fragrance trends and differentiate themselves this way'. She points to Bold - which increased its sales by 12% and offers Ocean Clear and Apple Blossom and Lime Zest variants - as a brand that has achieved this. Meanwhile, Persil and Ariel focus on their biological, non-biological and colour-care variants.

Bold is not the only brand to have made gains over the past year. Fairy achieved a 10% increase and moved into dishwasher products and fabric cleaning, with the January launches of Fairy Active Bursts and a fabric conditioner for sensitive skin. P&G withdrew its sensitive Lenor fabric conditioner to accommodate the latter.

Fairy's success is due in part to its advertising, says Whitely. The brand carries associations with NPD that are not necessarily specific to laundry or dishwashing products, but are the result of a halo effect of its advertising, she claims.

Finish also grew sales by 7% and continues to dominate the dishwashing sector. Goldthorpe believes this is because it taps into a fundamental human need to latch on to visual cues to believe a product's functionality. The brand's bold white, blue and red Powerball tablets, for example, use those colours purely to provide a 'power' message.

Despite the success of some brands in these sectors, another year of declines are challenging two companies that are considered leaders in FMCG marketing. Both P&G and Unilever have made attempts to revitalise the sector, with the major revamp in November of Ariel and the recent launch of the Persil 'Be my coach' campaign fronted by Steven Gerrard and Dame Kelly Homes, but still face a struggle to shore up their sales.

DATA FILE - HOUSEHOLD/CLEANING BRANDS

Rnk Brand 2006 2005 Change
(pounds m) (pounds m) (%)
1 Persil 200-205 215-220 -9
2 Fairy 185-190 165-170 10
3 Ariel 140-145 160-165 -12
4 Bold 110-115 95-100 12
5 Comfort 100-105 110-115 -9
6 Finish 100-105 90-95 7
7 Lenor 75-80 75-80 -1
8 Daz 65-70 60-65 6
9 Flash 55-60 55-60 1
10 Surf 50-55 60-65 -12

Source: TNS Worldpanel 2006 Biggest Brands

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