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THE BACKGROUND

The clothes-washing detergent and laundry-aids sector has reached something of a plateau in terms of penetration, which sits at about 94% in the UK, and value, which has reached £1.42bn.

Downward pressure on prices fuelled by the supermarkets has exacerbated the situation and minimal growth is predicted over the next few years.

Though fabric conditioners are faring well, this has led manufacturers to focus on ancillary products, which include items such as clothes fresheners and stain-removal pens, as the most likely area for profit.

Although the clothes-washing detergent and laundry aids sector is worth £1.42bn, growth is beginning to plane as households become smaller.

In 2005, detergents accounted for almost 75% of the market, with sales of £1.06bn, according to Mintel.

Within this category, there has been growth among unit-dose brands such as liquid capsules, which make up two-fifths of sales. This has been driven by the ease and convenience offered by the pre-measured formats.

Although sales of detergents have risen 5% since 2000, in real terms, they have dropped 1% since 2004. Price promotions have stifled value growth, with the concerted battle between leading retailers placing constant pressure on brands' prices. However, retailers' own-label products have not managed to achieve significant market share, despite their focus on low price.

Fabric conditioners have posted a stronger performance, with sales between 2003 and 2005 up 5% to £300m, a 21% share of the total market.

Clothes-refreshment products, a far smaller category, reported the best growth at almost 13% to £18m.

Share in the sector is fiercely contested by two key manufacturers: Unilever and Procter & Gamble. They have invested in new product development constantly to entice shoppers by adding benefits in the form of packaging, fragrances and formulation innovation and cleaning or stain-removing ingredients.

Brand stimulation

Unilever's Persil is the leading brand in the UK, with a 25% market share, but P&G is dominant in the market as a whole, with a 54% share and wider brand portfolio. Its detergent brands include Ariel, Bold, Fairy, Dreft and Daz, and Lenor fabric-conditioner.

Last year P&G invested heavily in overhauling its brands to kick-start a static market. Ariel, for example, a detergents range and its leading brand, underwent a major revamp. This included a change of logo, packaging and formulation and the addition of an Ariel Stain Pen, a portable item that can fit in a bag.

P&G also repackaged and updated the whitening system used in Daz, while the packaging for Fairy, a non-biological detergent aimed at mothers with young children, was also redesigned, and its strapline changed to 'Huggably softer for sensitive skin'.

The company has challenged Unilever's dominance in the fabric-softener category by investing £7m in its Lenor brand in 2005 and expanding its range of fragrances. At the beginning of this year, it introduced a Lenor In The Pink variant, with a mango and orange scent.

Unilever's key brands in the sector are Persil, Surf and Comfort. Persil has had a torrid time of late, its sales dipping 11% in the year to June 2005, according to Marketing's Biggest Brands (Marketing, 24 August).

It has sought to combat this with an £8m ad campaign using the strapline 'Dirt is good'. It also combined the might of two of its brands by launching Persil with Freshness of Comfort last year.

In 2004 Unilever introduced Comfort Pearls to its Comfort fabric-softener range. It has backed the premium product, the market's first single-dose conditioner capsules, with a £9m sadpend.

Although Unilever and P&G control most of the market, Reckitt Benckiser also has a stake. Its products include stain-removing brand Vanish, special-care detergent Woolite and water-softener tablets Calgon. The leading environmentally friendly brand in the sector is Ecover's ecological range.

Manufacturers have limited room for growth. With 90% of consumers using powders or tablets and 75% using fabric-conditioners, according to TGI, there is little room to attract more shoppers to the sector.

Many consumers in the market are brand-loyal, especially those who fall into older age groups or are less affluent, with 40% sticking to one brand.

However, younger and more affluent shoppers as well as those with families are most open to switching brands, with promotions a key mechanism.

Stunted growth

Although the development of more premium-priced, added-value detergents and fabric-conditioners brings value to the sector, factors are working against future growth. Fierce competition between manufacturers and a demographic shift to smaller households have led Mintel to predict minimal growth.

Overall sales are expected to reach about £1.47bn by 2010, of which £1bn will be accounted for by clothes-washing detergents, £387m by fabric-conditioners and £84m by ancillary products. This represents a rise of 4% for the total market compared with 2005.

New product development has fuelled the rise of ancillary products such as stain removers and fresheners and this is where much of the sector's growth will come from.

Creating products with additional and complementary functions to the core ranges of detergents will enable further sales to be gleaned in this mature market. Similarly, sales of fabric conditioners will grow by 27% in the next five years as additional formats and fragrances spur interest.

DETERGENT SALES BY MANUFACTURER AND BRAND, 2005 pounds m % 1 P&G total 570 54 Ariel 211 20 Bold 169 16 Daz 95 9 Fairy 84 8 Dreft 11 1 2 Unilever total 316 30 Persil 253 24 Surf 63 6 Others/own-label 169 16 Total 1055 100 Source: Mintel FABRIC CONDITIONER SALES BY MANUFACTUER, 2005 pounds m % 1 P&G (Lenor and Bounce) 120 40 2 Unilever (Comfort) 120 40 Others 3 1 Own-label 57 19 Total 200 100 Source: Mintel LAUNDRY BRANDS BY ADSPEND (£000) 2005* 2004 1 Bold 6435 8983 Ariel 4598 11,948 Lenor 4134 4468 Daz 3207 8474 Fairy 2689 2301 Bounce 14 9 Other 907 806 Total P&G 21,984 36,989 2 Persil 14,905 22,402 Comfort 9224 12,578 Surf 6753 4933 Total Unilever 30,882 39,913 3 Vanish 2370 6079 Calgon 2302 488 Total Reckitt & Benckiser 4672 6568 Others 462 1730 Total 58,000 85,200 Source: Mintel *January-September

ANALYST COMMENT - JOANNE LOADER, CLIENT MANAGER, TNS WORLDPANEL UK

Value brands and own-label detergents are putting pressure on sales. In the year to 29 January 2006, the laundry sector was worth £807m, according to TNS World-panel, having fallen slightly in value terms in the past three years.

Volume is static, as is the number of households buying products in the sector, with penetration sitting at about 94% of the UK's 23m households.

This suggests that the value decline has been driven by price deflation.

This has been driven in turn by the growing presence of own-label and increased volume sales of lower-priced brands such as P&G's Daz and Unilever's Surf, both of which ran strong promotions in 2005 and have increased penetration as a result.

Penetration is also up for P&G's Bold, with its Lavender and Camomile fragranced variant, introduced in September 2004, performing particularly strongly. Fairy's penetration has fallen slightly, although the brand has achieved growth by increasing loyalty and the average amount purchased.

In the own-label market, Tesco and Asda have increased their volume share in stores. Sainsbury's rebranded Megaperls, meanwhile, have brought new technology into the sector and helped to reverse a decline in penetration.

Liquid and liquidtab detergent formats are performing well, both growing at 2% year on year. They have increased their buyer base and frequency of purchase.

However, powder remains the biggest-selling format, with a value share of more than 40% and a volume share of more than 50% of the category. Tablets are the format most at threat and have suffered the steepest decline.