By Paul Ziobro
Church & Dwight Co. (CHD) will try to sell more laundry
detergent by making less.
The company is trying to usher in the next round of compaction
in the laundry category with plans to launch a more-concentrated
version of its Arm & Hammer liquid laundry detergent in the
coming months. The company says the formula for Arm & Hammer
Ultra Power is twice as concentrated of its current offering,
cramming the ability to clean 60 loads into a 45-ounce bottle. By
comparison, a 50-ounce bottle of Arm & Hammer liquid detergent
cleans 32 loads. The new bottle will be priced the same as larger
bottles.
In addition to the margin boost that comes from lower packaging
and shipping costs, Church & Dwight is making the move to help
try reverse a decline in overall sales for the laundry category
ever since single-dose laundry products, led by Procter &
Gamble Co.'s (PG) Tide Pods, started flooding the market last year.
In the fourth quarter, for instance, Church & Dwight said that
while total single-dose unit sales rose $140 million from a year
ago, the total sales from liquid, powder and single-dose laundry
fell $58 million.
Church & Dwight Chief Executive Jim Craigie has lamented the
overall sales decline as the single-dose siphons money from the
overall category. "It's not helping to grow the laundry category.
In fact, it's hurting the category," Mr. Craigie said Tuesday on
Church & Dwight's fourth-quarter earnings call. "The answer
going forward...is to do another round of liquid compaction."
To be sure, Church & Dwight, which offers a single-dose Arm
& Hammer product, does see a place for such products. Mr.
Craigie said that consumers who have to wash their clothes at
laundromats, for instance, benefit from not having to lug a whole
bottle with them. But Church & Dwight argues that such a new
product should grow the overall pie, not shrink it.
In that sense, Church & Dwight is looking to also appeal to
retailers with its new formula, as they too can benefit from lower
transportation costs and having to stock shelves less frequently,
since more bottles can fit on them.
It may also be seen as a move to hold onto shelf space should
single-dose laundry detergent catch on permanently, leaving less
room in the laundry aisle.
P&G, for one, is showing no signs of slowing down its push
into the new form. It expects Tide Pods, which commands 75% of all
unit-dose sales, to hit $500 million in sales in its current fiscal
year. The company, which didn't immediately respond for comment,
also plans to launch a similar product under its Ariel brand in
April, with plans for more launches to follow in additional
countries.
With compaction, Church & Dwight is essentially rehashing a
strategy from about 2008, when all the leading laundry brands,
including P&G's Tide, Sun Products Corp.'s Sun and Henkel AG's
Purex, all rolled out smaller bottles and concentrated formulas.
The change lifted sales 5% in the mature product category, Mr.
Craigie said.
Clorox Co. (CLX) has already started the trend on the bleach
side. The company's in the midst of a geographically phased
national rollout of a more-concentrated version of its namesake
liquid bleach. Monday, Clorox said that consumers are taking to the
new product well, giving a jolt to sales of a product that has
sagged for some time.
Church & Dwight, which also makes the Xtra laundry
detergent, on Tuesday reported a 27% increase in fourth-quarter
earnings, with organic sales, which exclude a recent acquisition
and foreign exchange effects, up 5.2%. Shares of the company, which
also makes cat littler and Trojan condoms, rose 1.3% to $59.13.
Write to Paul Ziobro at paul.ziobro@dowjones.com
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