Arch-rivals Unilever and Procter & Gamble (P&G) have been waging a war in the laundry market since the dawn of time, it seems. One, P&G, is the largest manufacturer in the detergents sector with Ariel, Bold, Fairy, Daz and Dreft in its portfolio. The other, Unilever, owns the leading and longest-established detergent, Persil.
Battles rage between the two, with new formats, fragrance variants, green credentials and other innovations utilised, as the packaged-goods giants vie to achieve growth in a market that has reached saturation.
The latest skirmish has been sparked by P&G’s launch of Ariel in a “next-generation” gel format later this year (MW last week). The brand’s value has slid in recent years, with its brand share dropping from 21% to 18%, between 2005 and 2007, in a category worth £857m in 2007, according to Mintel. P&G is hoping the Ariel launch will herald a fightback against Unilever’s successful launch of Persil Small & Mighty concentrated sub-brand last year.
But if Persil has, to some degree, consolidated its position in the market with Small & Mighty, Unilever cannot be entirely happy with it. Overall, Persil has seen some erosion in its brand share (around 2%) across the range of formats in which it is available.
Environmental considerations have been a major factor in innovation in the sector, reformulating to concentrates and repackaging products, as the manufacturers strive to satisfy consumer concerns without compromising performance. Unilever’s Small & Mighty sub-brand, sold across Persil and Surf, ticks many of the boxes.
Following a different path for Ariel, P&G invested in a massive £12m campaign to drive home the environmental implications of using hot water with its “Turn to 30 degrees”campaign. The move was hailed by green campaigners, with Julia Haines, author of The Green Consumer Guide, describing the push as a “fantastic thing”, tackling the most significant issue, and with the potential to have a “greater positive impact on the environment than any other initiatives in the sector”.
Yet it did nothing to improve Ariel’s sales. Some feel consumers took the information on board, but simply applied the advice to the brand they were already using.
Others in the industry feel consumers are suffering from “green fatigue” and are less susceptible to marketing based around eco credentials. Brand Union chairman Terry Tyrrell says: “The trouble is that some manufacturers speak with one voice and act with another. On the one hand they say they are increasingly aware of green considerations, yet they are introducing more brands and products to the market. If a new format is truly innovative and better for the environment, then why don’t they discontinue the old ones?”
And, while the two brands at the top of the market have been occupied with the green factor, P&G’s lower-value “secondary” brand, Bold 2-in-1, has been executing a marketing strategy that has resulted in such strong growth in brand share, up 3%, that it now accounts for a similar share of the market as Ariel’s 18%.
An industry observer says P&G has identified what they call the “sensorial consumer”, a younger shopper interested in indulgence. “With exotic-sounding fragrance variants, such as Black Diamond and Lotus Flower, P&G has capitalised on an under-used consumer market for Bold,” he adds.
The fabric conditioner element of Bold 2-in-1 has all but disappeared from its positioning. Indeed P&G has launched its fabric conditioner brand Lenor in the same fragrance variants as Bold, and the two are “clearly meant to be used together”, according to industry experts.
Leo Burnett account director Chris Jackson heads the agency’s laundry business across western Europe, working on P&G brands including Fairy and Dreft. He highlights competition from own-label brands as one of the key challenges manufacturers currently face, but points out that Bold is in a particularly good position in this context.
Jackson says: “They [own-labels] are becoming increasingly trusted and are replicating the big brands’ product innovations incredibly quickly. We saw this with the launch of Small & Mighty. Previously it would have taken own-labels a while to react, but now they are able to replicate virtually from launch.”
He says it is becoming more difficult for big brands to give customers a sense of value. “But Bold’s indulgent positioning is tricky for own-label brands to challenge, because, while it’s not difficult to replicate a new scent, they don’t really have the credentials to address the luxurious aspect of Bold’s stance,” adds Jackson.
Unilever’s Surf and P&G’s Daz continue to slug it out at the lower end of the market, with Surf seeing an increase in value of 20% since 2005, according to Mintel. The introduction of Surf Small & Mighty has had a positive effect, but Surf’s relaunch in mid-2007, with variants incorporating essential oils, including Lavender and Oriental Blossom, was more significant, say experts. Daz still leads Surf in terms of brand share, with 9% compared to Surf’s 7%, but its own value growth since 2005 is only 1.3% and brand share for the same period was static. It is expected, however, that P&G will stage a fightback later this year and overhaul Daz, introducing its own range of fragranced variants (MW May 1).
Also performing well is P&G’s Fairy, with an increase in value of more than 25% since 2005, accounting for a brand share of 11% in 2007. Fairy’s long-established brand credentials of softness and gentleness compete well against own-labels.
Meanwhile, Ariel and Persil will continue to feel the pinch, experts predict. And, unless they introduce some really meaningful product innovations, they could see further erosion of their respective brand share, not only from supermarket brands, but also from other mid-market brands.
Euromonitor household care analyst Adrian Atterby explains that both competition between brands and competition between retailers using promotions and special offers leaves little room for price rises.
Atterby believes premium brands Ariel and Persil cannot afford to leave themselves exposed price-wise. “Consumers are quite willing to try new brands in the laundry care category,” he says. “If you group brands as luxury, standard and lower-end products, it is in the standard section where we are seeing growth in what is an otherwise stagnant market.
“Products from this standard section will continue to grow, because consumers now feel able to trust their performance. They will wash effectively.”
Atterby adds: “These premium brands are launching niche products, such as Ariel’s Febreze variant, to give the consumer the idea that there is a difference, but it does not seem to resonate with shoppers. In the current economic climate, as food prices rise, consumers will be looking for other items in the weekly shop that can be bought more cheaply. Laundry care products are one area where shoppers will feel they can cut costs.”
This consumer trust in “standard products” could leave Ariel and Persil with little to offer shoppers to convince them that they provide a real difference meriting paying extra.