1. COVER STORY
Soaps and at BASF. "This is another indication of the
market turning around." Razak says.
Detergents
During the recession "there was a trend
toward cutting down costs in their formula-
tions in two ways. First, by reducing active
matter in the formulation, and second, by
replacing ingredients with cheaper alterna-
tives," says Volker Radonjic, global product
group manager for primary surfactants at
Cognis.
Rhodia has also seen a shift in demand
to value brands as consnmers look to save
money wherever possible. "Tbe premium
brands have suffered," says Sébastien Méric,
v.p./home and personal care at Rhodia. "We
also saw an extension of the private labels
in 3009,"
Tbe shift has not resulted in lower
demand at Rhodia. "We are a supplier to the
premium, mid-tier, and value brands." says
Pascal Juery, president of Rhodia Novecai'e,
a Rhodia division that includes home and
personal care products. "So the shift is not
really affecting our busiuess, and tbe home
and personal care market remains as resil-
ient as ever.
Sasol's Olefins & Surfactants division
{Sasol O&S) posted a decline of 4%-5% in
sales to detergents and cleaners last year.
"Looking back at past recessions, we always
said that the detergent and cleaner market
was recession-proof in developed regions,"
Suppliers Take Stock of Recovery says Tom O'Brien, general manager/organ-
ics at Sasol O&S. "We may have seen it
flatten, but we never saw declines. Tliis
economic crisis was different." Tbe biggest
Consumer trends forced formulators to cut back on contributor to the decline was the destock-
ing, O'Brien says. However, formulators
surfactants and switch to cheaper ingredients. As sup- looking to save by reducing surfactant loads
piiers iook forward to economic recovery this year, some and consumers down-tiering to private label
brands that typically use less surfactants
worry these cost-cutting measures are here to stay. in the ñrst place, also contributed to the
decline, he says.
F
ornmlators and suppliers to the soap consumer preference for milder products Consumers are beginning to trade up
and detergent sector expect an uptlck will drive robust demand for amphoteric again, however, and sooner than antici-
in demand as recovery progresses, surfactants, it says. pated. "We started to notice this in the third
although some express concern that a deep Meanwhile, the recession has made con- calendar quarter of last year and it contin-
recession could have a lasting impact on con- sumers "focus on value for money, with ued through the fourth quarter," O'Brien
sumer spending; habits. However, analysts some contributions to tbe environment," says. Given the severity of the financial
are confident that demand in developing says Gary Dee, business manager/home and crisis, the company had thought consum-
regions will pace growth, and consumer personal care at BASF. "There was some ers would stay with value brands for a much
pressure for more sustainable products will drop off in sales in the North American longer time. "I have to say it was a little bit
overtake recession survival tactics as the market last year, but we are starting to see to our surprise," he adds.
strategic priority. signs of recovery," Dee says. "There's been a Other firms say consumer trends favoring
The global market for surfactants is significant interest in value products, where cheaper soaps and detergents had a negli-
estimated to be $14 billion in 2009, and is performance is very high for the price." gible effect on surfactant sales.
forecast to reach $18 billion by 2015, says Inventories began to rebuild in the Evonik Goldschmidt says it did not see
market research firm BizAcamen (San fourth-quarter of 2009, and this restock- significant shifts in its sales from premium
Francisco). Anionic snrfactants constitute ing is expected to carry over into 3010, to value products. "Sales were down pretty
nearly half of the global market demand, but says Sbafeek Razak, marketing manager much across the board, although we did
www.cbemweek.com Chemical Week, Januatv 18/25.2010 1 7

2. COVER STORY
hear from our customers that the shift was not without delays, Houston says. The start
going on," says David Del Gnercio, senior up of new merchant plants in Malaysia,
v.p. and general manager/consumer special- Thailand and India will provide a new
ties, household care at Evonik Goldschmidt. resource for formulators looking to differen-
Volumes at Evoiiik's household care husi- tiate their products. "However, the customer
ness declined approximately 4% in 2009 base has yet to be estahlished. Interested
over 2008 levels. Cost-cutting efforts did, parties are watching the marketplace for
however, change the dynamic of the indus- MES activity to judge the potential success
try. "Ten or fifteen years ago, innovation of future projects."
was generally introduced hy manufacturing
Suppliers say the technology spread for
companies like Evonik, and the customers
CATE: Products in de- KELLY: 'Green' products surfactant production between the devel-
would decide if and where such chemistries veloping world ftecome have survived the oped and developing world is closing. "Up
fit. Now, after evaluating cost and success more sophisticated. recession.
until now, developing regions have stayed
ratios of new products, there's much more
5%-l5% expected in developing regions, with the older, more traditional and estab-
emphasis on joint development projects
and l%-3% for developed countries. lished product techuologies that developed
hetween customers and huyers. Everyone
Trends so far this year have been encour- regions have long since abandoned for
has limited resources and wants to increase
aging, says Jack Perini, global husiness newer, more environmentally friendly
development success," Del Guercio says.
manager/alcohol & ethoxylates at Shell acceptable varieties," Del Guercio says. "But
Expectations for this year are conserva- Chemical. "Customers are rehuilding inven- now we are beginning to see movement in
tive. "Overall we're expecting a 3%-5% the developing regions toward more envi-
recovery for volumes in the household care
husiness, similar to the levels we saw for I CLEANING UP
(2015 Global Surfactant Sales: $18 billion)
ronmentally acceptable and sustainable
types."
2008 as a whole," Del Guercio says. 20.000 Consumers in developing regions are also
Ciariant also says it did not notice a sig- beginning to shift from powder detergents
nificant shift towards consumers huying to more expensive liquid detergents. Merle
cheaper brands, hut did see cost-cutting hy says. However, this trend did slow with the
their customers as an opportuuity to offer economic conditions of 2009, he adds.
them with new ways to reduce formulation Rhodia has been focused on emerging
costs, "The good thing about a crisis is that markets, where surfactant demand in soaps
you need to be creative, that you need to and detergents and other home and personal
enhance and tailor the properties of your care products has grown dramatically. The
offerings to the prevailing market realities, company recently used its acquisition of
at lower overall formulation costs for the 2007 2009 2015 surfactants maker Mclntyre Group in early
customer," says Michael Willonie. head of SourM; BliAcumen (San Francisco). 2009 to extend its product range amd its
the industrial & consumer specialties (ICS) tories and intrinsic demand appears to he presence in fast-growing regions.
husiness at Ciariant. improving. Ethoxylates appear to he stron- Meanwhile, formulation support for devel-
Sales in 2009 sales were "rather resilient ger for both non-ionic and anionic forms as oping regions is an "essential success factor,
versus 2008 within industrial and consumer well," Perini says. as opposed to developed regions such as the
hard surface cleaning as well as in fah- Consultants say a slight recovery in the U.S. and Europe where innovation is key,"
ric care," says John Cate, global husiness linear alkylhenzene (LAB) market was says Clariant's Willome.
director of fabric and cleaning applications witnessed during the second half of 3009 Sasol O&S, which serves customers in
at AkzoNohel Surface Chemistry. "Within after the economic downturn cut demand developing markets from its plants in China
those, the Industrial & Institutional segment during the three previous quarters, says and South Africa, says cost sensitivity is
was hit the hardest due to the struggling Joel Honston, president of consulting firm still a big driver in the developing world.
automotive sector and also the travel indus- Colin A. Houston & Associates (Brewster, "In general, product performance is a sec-
try," Cate says. NY). "Usage levels for 2009 are estimated ond priority, and the paramount challenge
Ciariant is expecting a "reasonable" rate to he fiat with no overall growth above 2008 is getting the lowest cost surfactant into the
of recovery this year that will bring the levels," Houston says. "The rationaliza- formulation," O'Brien says.
company's sales to the soap and detergent tion of feedstocks seen in Western Europe "We're seeing the sophistication of clean-
industry slightly above 3009 levels, Willome and North America over the past two years ing products increase in the developing
says. "For several months we have noted has lowered production in the Western regions," Cate says. "We see the door open to
good and increasing demand in Asia. Latin hemisphere, while growth continues for us to sell some of our value-added products.
America is expected to grow as well, while LAB demand and production in the Middle As an example, in Asia, we're having success
the situation in Europe and particularly in Eastern, African and Asian regions. Latin in some of our water-based degreasing tech-
North America remains more difficult." But America is resilient, and with only slight nology replacing solvents. In Asia, it's more
even in these mature markets, the company effects seen from the crisis while growth is open to us switching from solvent-based to
has seen some signs of improved demand, he expected over the current year." water-based technology." Asia's humid con-
says. Several planned and announced methyl ditions also means that products that sold in
Sasol O&S is expecting the market to have ester sulfonates (MES) projects in Asia are North America or Europe are not stable in
higher demand growth rates this year, with entering the commercialization phase, hut those conditions. Cate says. "Those products
18 ChemicalWeehJanuary 18/25,2010 vnvw.chennveek.com

3. COVER STORY
must be redesigned or we have to provide or not we can afford to register certain customers' willingness to purchase greener
alternatives that are stable." products. There will definitely be some product," says Damián Kelly, business devel-
BASF says one area it is focnsing on in outsourcing of certain chemistries from opment manager/home care and functional
emerging markets is fragrance solubiliza- Europe," Del Guercio says. And with costs of specialties at Croda. "This was one positive
tion. "Developing regions use a lot more registration so high, companies may cboose aspect of last year and increasing envi-
fragrances in their products, it's a major fac- not to pursue new innovative chemistries ronmental regulations," Kelly says. "The
tor for purchasing ñnished goods," Razak altogether based on registration cost versus recession hasn't affected sustainability. Not
says. BASF has developed Lntensol XL, a the potential business gain, he adds. just (customers'] desire to buy green prod-
series of surfactants for the solubilization Suppliers also report that their customers ucts or green ingredients, but their ability
for a variety of fragrance oils. remain committed to making their products to reduce their carbon footprint as well."
Market players must also contend with greener, despite tighter cost restraints. "The -LINDSEY BEWLEY
the requirements of the European Union's recession does not appear to have affected AND REBECCA COONS
Registration, Evalnation, and Authorisation
of Chemicals (Reach) law, with the full reg-
istration for the first tier of products due
late this year. The implications of possible
Stocking Up on Innovation
W
changes in the U.S. to the Toxic Substances eak economic conditions have cut tbe Indian and Latin American markets
Control Act (TSCA) law is also increasingly into consumer spending on house- remain "relatively strong," Moeller says.
on industry's radar. hold products, including laundry U.S. liquid laundry detergent consump-
Sasol O&S says it has been working with detergents. Producers are responding with tion reached $3 billion in 2008, according
the Soaps and Detergents Association more efficient production and by tapping to market research firm The Nielsen Co.
(SDA: Washington) on the TSCA debate. into new end-use sectors, to maintain and (New York), up 1.6% from the prior-year
However, industry appears to be divided on expand market share. period. P&G continues to dominate that
what changes to TSCA are needed. "There Producers expect demand in the global sector, with a market share of about 58%,
are some people who feel we ought to just soaps and detergents industry to begin Nielsen says. P&G's laundry detergent
adopt Reach," O'Brien says. "They are in the picking up this year as customer inven- brands include Tide. Gain, Cheer, and Era
minority. These are the companies that also tory destocking comes to an end. Soapers' in the U.S., and Ariel, Bold, and Fairy in
do business in Europe, they've figured out efforts to maintain or expand market share Europe. P&G's U.S. market share eroded
Reach, so they think it should just be done in during the economic downturn have also slightly last year, slipping 1.6 percentage
the U.S.-even though they would never have focused on investing in the development points, Nielsen says. P&G does not break
agreed to Reach had they had a choice," he of new products and product lines, as well out sales for its laundry products, hut
says. The other camp is saying they have as in more efficient manufacturing plants. Nielsen data says the company's U.S. liquid
to do everything they can to prevent Reach That contrasts with the trend several years detergent revenues fell 1%.
from being legislated in the U.S. "In my ago when soapers favored acquisitions or P&G says the fall in market share reflects
opinion, the worst case scenario is that joint ventures, selling price hikes it imposed on several of
products end up banned or restricted with- The worldwide laundry detergent mar- its product lines, including liquid laundry
out science-based debate," O'Brien says. ket will grow about 2.4%/year, to $56.7 detergents in North America. The move cre-
Evonik supports TSCA reform and is billion in 2013, according to estimates by ated a "price gap" between its products and
working with the ACC and SDA to guide leg- consulting firm Euromonitor International those of its competitors, Moeller says. P&G
islators toward changes that are practical. (Chicago). The market grew 8.1%/year in raised selling prices to offset significantly
"It's important that the risk assessments are 2003-08, Euromonitor says. The slowdown higher commodity raw material costs and
science-based, and we are not just regulat- is a direct resuit of the weak economy, espe- the effects of a strengthening U.S. dollar
ing the end products," says Reinhold Brand, cially in developed regions, producers say. compared with most world currencies.
president of Evonik Goldschmidt and Consumer spending on
Evonik's Stockhausen superabsorbent and detergents and other house-
occupational skin care company. "And we hold products is down in the Global demand for soaps and detergents should
would like the federal government to enact U.S. and Europe, in line with pick up as destocking comes to an end.
the regulations: it would be extremely diffi- continued high unemploy-
cult for every state to have their own set of ment rates, Procter & Gamble
rules." However, Evonik "would like to see (P&G) CFO Jon Moeller told attendees at P&G's price hikes were not followed by its
a more pragmatic control put in place, and a recently held Morgan Stanley confer- U.S. competitors, which forced P&G's prices
EPA and government have so far been open ence. Customer inventory drawdowns have back down. Selling prices are not moving
to it. The key here is to find a way to protect abated, however, and demand for house- down across the industry, and price adjust-
the environment and the population without hold products is growing modestly in those ments "are behind us," Moeller says.
requiring tons of bureaucracy and R&D regions, but it is still well below historic lev- Soapers, meanwhile, are mostly investing
resources." els, Moeller says. Developing markets that internally to expand market share, rather
In some instances. Reach has been pro- were hit hard by the economic downturn, than through acquisitions as was tbe case a
hibitively expensive and curbed innovation. including Central and Eastern Europe, few years ago. Major deals during the past
"In the next phases of Reach, there will be have rebounded significantly, he says. The decade include Henkel's purchase of Dial in
discussions within Evonik about whether Chinese market has also improved, and 2004. and Churcb & Dwight's (C&D) acqui-
www.chemweek.com Chemical Week,January 18/25,2010 1 9

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