World Business

Its sustainable detergents, Surf Excel and Small & Mighty, are launched in developing markets. Now they’re driving growth in Europe, too

By Kerry Capell

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When Unilever (UN) challenged its scientists to come up with a detergent that uses fewer resources, greener materials, and less packaging, few speculation it was possible. Yet Small & Mighty, the activity’s first super-concentrated liquid detergent, launched in October 2005 in a partnership with U.S. retailer Wal-Mart Stores (WMT), 18 months ahead of rivals such as Procter & Gamble (PG). What started to the degree that a means to boost Unilever’s green testimonials now is opening up avenues of innovation that are helping to urge growth in the company’s once-lackluster laundry unit. Since rolling abroad Small & Mighty in Europe in January 2007, more than 30 million bottles have been sold.

The virtue of the product is that consumers can wash the same amount of laundry with one-third the detergent. Smaller packaging means harvested land bottle uses 55% less plastic, enabling retailers to stock three times the number of bottles in the same space, preserving on labor and out-of-stock costs. There’s lofty savings with a view to Unilever, too, in manufacturing and transportation. The company says it saves 500 million gallons of water and 150 million pounds of formative each year. And the smaller bottle means Unilever can transport three periods as much product in every truck, saving 26 the masses gallons of diesel each year. "It’s a richness example of how good environmental practice is good for the company’s sailing craft line," says Keith Weed, Unilever’s group vice-president for home care.

Soapmakers such as Unilever are in a less degree than pressure from both retailers and consumers to be attached the point green in the corresponding; of like kind moment that the cost of commodities used in manufacturing is skyrocketing. Complicating the manufacturers’ dilemma is mart research that shows consumers craving more environmentally friendly products but don’t want to allowance more for them or adjust on performance. At the same time, a myriad of of the present day laws banning many traditional chemicals has reinforced the need for detersive makers to find biological alternatives.

To come up with a solution, Unilever went back to nature. At the company’sitting research and development labs in Northern England at Port Sunlight and in Mumbai and Bangalore, scientists experimented with commencing biotech ingredients such as enzymes that use less expensive oil-based materials than traditional chemicals. These enzymes, which are biodegradable, replace petroleum-based ingredients with plant-based ones. They not only about smaller carbon at the factory and in the washing machinery but also offer improved performance at lower water temperatures.

Detergent makers regard long used enzymes in products but be seized of only recently discovered that enzymes deliver additional environmental and other benefits. For starters, enzymes weigh less but work just as expedient as bulkier chemicals. That means Unilever be possible to use fewer ingredients in Small & Mighty’sitting formulation, helping to cut manufacturing costs. Because such biological ingredients work in a deviating way from chemicals, "they are opening up renovated possibilities in terms of making products more efficient and sustainable," says Keith Rutherford, Unilever’s R&D director instead of sustainable cleaning and vital power at Port Sunlight.

Much of Unilever’session knowhow in creating additional earth-friendly products comes from its experience in developing markets. Its Surf Excel Quick Wash, launched in 2004 in India, uses half as a great deal of water as orally transmitted brands, without disrespect to consumers two buckets of water a day, or some estimated total of 14 billion liters each year. That’s each important innovation notwithstanding consumers in the dry southern states of India, where clothes are washed by dint of. hand and water is scarce. Sales of the brand are up 27% in the first six months of 2008 in India, where Unilever boasts a 40% share of the detergent market. Moreover, Unilever’sitting detergents for use in these markets are formulated for use in cool water: Many people in developing countries do not wish access to pungent water.

Now such insights are helping to fuel introduction of novelty as being Unilever in developed markets, whose consumers are fit more environmentally aware. "Washing temperatures are coming from a high to a low position in the developed nature, and our experience in the developing world is helping to drive innovation globally," says Mike Pilkington, who heads Unilever’s R&D in Port Sunlight.

Unilever aims to use that knowledge to boost advancement in its $8.2 billion laundry business in Europe and emerging markets. In July 2008 the company sold its U.S. laundry business for $1.4 billion to U.S. peculiar equity firm Vestar Capital Partners. "Unilever was at a significant scale disadvantage in laundry in the U.S. vs. P&G, with very narrow prospect of reversing that position," says Dresdner Kleinwort consumer goods analyst Warren Ackerman. In the U.S., top player P&G had a 62% emporium share, he notes, again than five times larger than the No. 2-ranked Unilever. Globally, Unilever still trails P&G, with 20% vs. its 27% share, respectively. "Unilever is using its exit from the U.S. to focus on developing markets where it is the clear conductor," Ackerman says.

Unilever promptly moved its R&D out of the U.S. and opened new labs in India. Today nearly 40% of Unilever’s laundry sales come from emerging markets. And with five-year average growth rates of 8.3% in emerging markets compared through normal 0.6% for developed markets, that figure is expected to grow. According to analysts, Unilever’s strong focus on sustainability, coupled through innovative launches such as Small & Mighty and Surf Excel Quick Wash, have revitalized the craft. The turnaround in the laundry division brought largely by Small & Mighty "is one of Unilever’s biggest successes," Ackerman says.

Original text: http://rss.businessweek.com/~r/bw_rss/europeindex/~3/494323930/gb20081223_956227.htm