Clean Soap

The Market

The world market for soaps and detergents is valued at $38 billion, the equivalent of 35 million tons of products. It is a highly concentrated business with 50 companies holding 90 percent of the market. Whereas the sector is not characterized by double digit growth rates, it continues to expand in both industrialized and developing nations at steady 1-3 percent annually. Laundry detergents account for 40 percent of the market, while soaps represent 20 percent and dishwashing detergents 15 percent. The soap and detergents business has been described as the SUV of consumer products - it is old, wasteful and costly for the consumer while profitable for the producers.

Soap used to be expensive and was only used by the wealthy until the French chemist Nicolas Leblanc found a cheap way to make soap from salt. For centuries, olive oil, widely available in France, Spain and Italy was used as the main ingredient. In the 19th century palm oil gradually replaced olive oil in formulations. The Germans first produced synthetic detergents from coal tar in 1916 and by the 1950s the industry was dominated by petroleum derivatives. The industry is capital-intensive with an average worker revenue of $700,000 per year. Due to a drive towards automation, the industry has been employing fewer workers. The US soaps and detergents companies increased turnover by 18 percent over the last decade while reducing employment over the same period with 28 percent.

The market is highly diversified with a standard supermarket offering 40 different laundry detergents including liquids and powders. The industry is in a constant flux. First introduced around the turn of the millennium, liquid detergents outpace any other cleaning product by a ratio of 4 to 1. It is a remarkable development since liquid cleansers are typically priced higher than powders, thus securing better profitability and low growth markets.

Next: Part 2

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