01 October 1997 00:00 [Source: PCE]
Rising incomes worldwide have lead to an increase in demand for soaps and detergents, and an expanding business for the suppliers of chemical raw materials used in cleaning products. Lucia Carpio reports.
as standards of living around the world increase, the demand for soaps, detergents and other cleaning products also rises. Developing nations in Latin America and the Asia-Pacific are becoming more sophisticated in their demands, changing to detergents from soap bars, especially in the laundry detergent sector.
'Consumer products have benefited greatly from the economic growth taking place in developing regions as consumers move up to higher quality cleaning and personal care products as a result of increased purchasing power,' says a recent research report on cleaning product usage in South America undertaken by Colin Houston & Associates of New York.
It is positive news for producers in North America and Europe who supply the raw materials and the finished products to the cleaning markets of the developing regions.
'More product is likely to be exported in the future as these [developing] economies establish an infrastructure,' says analyst Dipen Kapasi in a research study by Frost & Sullivan on the US detergent and cleaning chemicals market.
'The trend indicates the likelihood of new geographic markets for detergent and cleaning chemicals, which will impact the world economy as a whole.'
The key ingredients used in most cleaning products are surfactants and builders. Surfactants reduce the surface tension of water allowing it to wet a surface quickly in order to loosen and remove soil, while builders increase cleaning efficiency by inactivating water hardness minerals which hinder the soil removal process. Ongoing developments indicate an increase in the use of soda ash as a co-builder while the use of phosphates as builders declines.
According to the Frost & Sullivan study, peroxygen bleaches and enzymes are making their mark as sodium hypochlorate loses market share to them. Bleaches are a key element in detergents because they convert soil into more soluble, dispersible particles that are easily lifted away by detergent.
The cleaning chemicals market consists of three groups: household, industrial, and institutional. While the household market is mature, both the industrial and institutional markets show signs of strength with high profit margins in addition to rapid growth.
Value-adding chemicals such as optical brighteners, speciality polymers and fragrances are commanding a high price because these are the functional properties most desired by end-users. Multifunctionality is seen as a key to gaining market share as the demand is for less product with more capabilities. Additive technology is becoming more important as a result.
Analysts say the increased use of speciality additives will raise the total value of detergent additives demand by more than 5%/year. Additive use will outpace growth in detergent shipments as filler loadings decrease in favour of functional additives which can enhance the performance and/or reduce the cost of detergents.
Another key influence on the soaps market is the demand for oleochemicals - the so-called 'natural' ingredient. Even though the market for oleochemicals in Europe is considered relatively mature, it has been forced to undergo changes in recent years to encompass new consumer demands, especially concerning the long-term environmental performance of the chemical ingredients.
The oleochemicals market in EU countries will reach more than $3bn by 1999. Oleochemicals, comprised of materials produced by the splitting of oils and gas and by other processes such as fractionation, hydrogenation and interesterification, traditionally include fatty alcohols and fatty amines in the range of basic oleochemicals, although they are primarily derivatives of fatty acid methyl esters and fatty acids.
The market for chemical ingredients is dominated by fatty acids. Mostly - though not exclusively - the range of fatty acids comprises straight chain acids, with an even number of carbon atoms.
In the detergent range of alcohols, demand is expected to increase for the traditional alcohol-based surfactants, such as alcohol sulphates, ethoxylates and ethoxysulphates as well as for the newer surfactants such as alkyl polyglycosides, which use fatty alcohol.
During the past few years alkyl polyglycosides, known as APGs, have become a large volume end use of fatty alcohol, a trend which is expected to accelerate by the end of the decade.
The surfactants industry continues to be the greatest end-use area of application either directly or indirectly for most of the different oleochemicals.
Within the oleochemical sector, the principal oils used are palm oil, palm kernel, coconut and tallow. Palm oil has been well established in Europe for several years, both as a frying product and as an ingredient in margarine, and consumption has increased significantly over the decade.
In terms of suppliers, the European market for basic oleochemicals is dominated by Netherlands-based Unichema - now part of ICI's speciality chemicals business following its purchase from Unilever earlier this year - and Henkel of Germany.
Henkel is a key player, producing some 10 000 products and has six distinct product sectors worldwide. In terms of chemical products, the company produces fatty acids, glycerine and fatty acid derivatives, as well as fatty alcohols and their derivatives, among others.
It is also engaged in the manufacture of detergents and household cleansers and aroma chemicals/perfume compositions, as well as toilet soaps, bath and shower products, deodorants, skin creams, skin care products, dental care and oral hygiene products, hair shampoos and conditioners, hair colorants, hair styling and permanent wave products, perfumes and fragrances.
Unichema, with its headquarters at Gouda, produces more than 500 000 tonne/year of oleochemicals, from natural oils and fats with vegetable or animal sources, at sites in nine countries throughout the world, including the Netherlands, the UK, Spain, Italy and Germany, North America, Australia and Malaysia.
The company is active in several market sectors including fatty acids and glycerine, soap bases, lubricants and base stocks, personal care ingredients (such as cosmetic esters) and polymer chemicals and catalysts.
A relatively new sector is pharmaceuticals, where Unichema has developed tailor-made excipients for more efficient medicines delivery and, in polymer chemicals, the development of a new polyester polyol that is compatible with foam blowing agents such as water and pentane, eliminating the need for CFCs.
Europe is seen by many analysts as the world's most advanced market for cosmetics and toiletries products. Premium brands perform particularly well in the fragrance market, while the increasingly sophisticated formulations used in skin care products, particularly those with anti-ageing properties, are expected to drive this market.
However, relatively low growth is anticipated in the European markets for deodorants and bathroom products due to the mature nature of these sectors, relatively high consumption levels, low marketing activity levels, and lack of potential for technological innovation.
The large French and German markets offer the best total value growth. The German market is experiencing a substantial increase in its overall size due to the reunification of west and east. Italy and the UK offer the next best growth prospects.
In terms of suppliers to the cosmetics and toiletries market, Frost & Sullivan says: 'New entrants exist and the threat of additional entrants is increasing in markets where above average industry returns are being achieved due to high growth rates and low competition. This involves suppliers extending their existing market segments into these higher return categories or, in certain circumstances, will involve non-industry related manufacturers entering the market for the first time.'
The other key world market is the US, where over the past few years new product introductions have been targeting emerging niches and increasing demand from a greying population. The market for US personal care product sales will grow at about 6%/year according to Frost & Sullivan.
In the US the proportion an individual spends on personal care is - skin care, about 25%; hair care 21%; cosmetics 15%; fragrances 12%; oral products 10%; soaps 8%.
Natural ingredients like aloe vera, almond oil, rose-hip oil, tomato extract and other ingredients derived from fruits, vegetables, flowers or herbs are becoming increasingly popular for their beneficial and 'natural' characteristics as manufacturers respond to buyer resistance to synthetic materials.
Multifunctional products are gaining greater market presence in the US. Two- and even three-in-one products are proliferating, including shampoos that condition as well as provide intensive treatment, lipsticks with sunscreens, and toothpastes that also prevent tartar and plaque build-up.
An increasingly middle-aged population wants to keep a healthy, younger look with personal care products that minimise the outward effects of ageing.
As changing demographics influence research and development, alpha-hydroxy-based products known for their anti-ageing properties have become an increasingly important market presence.
African-Americans, Asians and Latin Americans are, meanwhile, growing in population much faster than the majority white population in the US, offering a new niche of target marketing focusing on these specialised ethnic groups' demands.
A more mature domestic market and lowering trade barriers are pushing US-based manufacturers to target foreign emerging markets such as the Asia-Pacific, Latin America and eastern Europe. Global marketing will cushion firms against cyclical and seasonal fluctuations within home countries and help ensure stable cash flows.
Many personal care products, however, require modification before being successfully marketed offshore. While soft pastel shades are popular in the US, for example, brighter colours are preferred in Latin America.
With an already high penetration rate, successful manufacturers of soap and cleaning products must offer frequent new product introductions and relaunches. Vendors need to stay ahead of the competition by shortening product cycles. Product improvements and extensions lengthen and revive product life.
With retail consolidation, manufacturers are moving more heavily into mass marketing to gain more prominent shelf space with the few remaining powerful retailers.
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