Koch Tries Its Hand at Carpet Cleaners
September 18 2016 - 9:30PM
Dow Jones News
Koch Industries Inc., a conglomerate owned and run by
conservative billionaire brothers Charles and David Koch, is making
a push into the household-cleaner business, taking aim at industry
stalwarts such as Procter & Gamble Co. and Clorox Co.
One of the largest private companies in the world, Koch is
launching a carpet-cleaner line that will be sold under the
Stainmaster brand. The product is the result of a pairing between
two Koch companies: Invista, which makes Stainmaster carpet and
upholstery, and Georgia-Pacific, maker of Dixie paper products,
Angel Soft toilet paper and Brawny paper towels.
It is Koch's first foray into the $25 billion U.S.
household-cleaning market, and executives say they have several
more products in development.
For two years, Koch has been trying to get its disparate
portfolio of companies, whose products also include Lycra fabric,
fiber-optic wire and refined natural-gas products, to work more
closely together.
"Innovation is not just one 'aha' idea from a great inventor,"
said John Pittenger, Koch Industries senior vice president of
strategy and innovation. "As a rule, a great invention was probably
hatched in six or seven different places at a time. So this is
about combining existing knowledge from different places."
Georgia-Pacific, based in Atlanta, developed the product and
will handle advertising and distribution through its established
relationships with major retailers. Invista, based in Wichita,
Kan., contributed the Stainmaster name and expertise in carpet
fibers.
The cleaner will go up against British consumer-products company
Reckitt Benckiser Group PLC, the maker of two carpet cleaners,
Resolve and Woolite, that combined have a roughly 36% share of the
$360 million U.S. carpet-cleaning market, according to
Euromonitor.
The Stainmaster cleaner went on sale in recent weeks at Wal-Mart
Stores Inc., a number of grocers and about 30 Lowe's Cos.
locations. A national rollout is planned for later this month.
Reckitt Benckiser took issue with Koch's main selling point for
the Stainmaster cleaner: that the product avoids leaving a sticky
residue, common to other carpet cleaners. Resolve's ingredients
leave no sticky residue, Reckitt Benckiser said.
Koch's decision to get into household-cleaning products "is a
huge threat" to the established players, said Gary Stibel, founder
of New England Consulting Group in Westport, Conn. "In too many of
these categories the leading brands haven't been innovating."
The idea to develop a carpet cleaner emerged when Koch
executives decided to act upon a wealth of consumer data that came
along with the company's 2004 acquisition of Invista from DuPont
Co. According to the research on Stainmaster, one of the brands
included in the deal, many consumers considered it a top
carpet-cleaning brand even though, in reality, there was no
Stainmaster carpet-cleaning product.
Mr. Pittenger said the company is looking at other Koch pairings
in lawn-and-garden products and in apparel. Georgia-Pacific
recently created a home-cleaning division and plans to launch more
offerings.
Pushing further into the core consumer-products business could
set up Koch companies to compete with some of their biggest
customers. For instance, Invista provides material for diapers made
by P&G and its rival Kimberly-Clark Corp., both large and
lucrative businesses. "That's a place we've chosen not to go," Mr.
Pittenger said.
Getting companies in unrelated industries and far-flung locales
to work together doesn't come naturally, Koch executives said.
In recent years, the conglomerate has pushed its different
businesses to work together. At board meetings, executives from
each company share the projects they are working on. Each year,
hundreds of employees meet at a so-called innovation summit to
exchange ideas.
Koch Industries also is setting up a companywide network that
allows employees in the various businesses to easily share
information about intellectual property and research projects.
"The issue is getting people to really sit back from all the
things they are focused on and saying, 'Who here might be able to
help?' " said Georgia-Pacific Chief Executive Jim Hannan. "We're
hopefully getting better at leveraging all that tacit knowledge
that exists across all the companies."
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
September 18, 2016 21:15 ET (01:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Clorox (NYSE:CLX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Clorox (NYSE:CLX)
Historical Stock Chart
From Sep 2023 to Sep 2024