Cleaning up

laundry and surface care market size

The laundry and surface care sector is a sizeable market with interesting opportunities.

It reached a value of £2.4bn in 2018 but its growth has lagged at a meager 0.2% per annum since 2015. This has in part been caused by the dominance of large FMCG companies with tired brands racing to the bottom with prices, driven by heavy discounting.

However, a more granular look into the market reveals there are interesting segments bucking this trend and experiencing rapid growth. In a similar scenario to other large categories, such as snacking and beauty, growth in the market is being driven by brands and categories which are responding to changing consumer preferences.

In the case of cleaning products, we have identified two key criteria - innovation and eco-consciousness - which feed into consumer desires for invention and a growing consciousness of the provenance and impact of the products we consume.

While growth in the overall market has been sluggish, our analysis shows that this is untrue across the board. In fact, niche categories (defined as having less than £50m of sales) have grown by 5% per annum over the last five years, compared to <1% for core categories. New products such as fabric freshener, oven cleaner and drain unblocker have driven growth and demand has been created by encouraging consumers to broaden the repertoire of categories they buy from.

Another key focus of innovation has been the adoption of high street trends. Surf, a washing liquid brand, recently launched a new `Coconut Bliss' fragrance, porting a popular consumer ingredient into the category. Likewise, Day2, a "Dry Wash Clothes Spray", has capitalised on the popularity of dry shampoo by creating a spray on clothes wash. The line between consumer brands and cleaning products has been further blurred by Oasis, a women's fashion retailer. In 2018 Oasis entered into the household category with a Fabric Conditioner, achieving distribution in major retailers such as Sainsbury's.

Another segment of the market experiencing growth is eco-friendly. This is reflective of the wider consumer trend that originated in food, disrupted personal care and is now having a key impact on the cleaning industry. Mintel estimates that eco-friendly products now account for 30% of the household cleaning market, having grown by 15% p.a. since 2013.

This growth has attracted notable M&A activity. SC Johnson acquired the Ecover and Method brands from People Against Dirty, a "planet friendly" US cleaning business using only naturally derived and biodegradable ingredients. Meanwhile, in the UK brands such as Eco Egg and Bio D (seen above) have experienced rapid growth, offering products free from synthetic fragrances, preservatives and enzymes.

In our view, brands seeking growth need to exhibit at least one of these characteristics to attract customers and succeed in today's market. Those that can offer both will be well placed to "clean up".

Edmund FitzGerald