Convenience, sustainability top consumer demands
2019 ACI’s annual meeting

This was first published on February 1st, 2019 as a supplement to Chemical Week and has been republished here with permission from Chemical Week.

Delegates were upbeat at the American Cleaning Institute’s annual meeting, with talk of slower growth overshadowed by opportunities to use chemistry to deliver consumer demands for new, more convenient formats, enhanced product benefits, and improved sustainability profiles.

“The general economic health in the US continues to be positive,” both on the B2B and B2C sides, says Melissa Hockstad, ACI’s president & CEO. While the recent government shutdown has caused some delays on new chemicals evaluations, several longer-term trends are positively impacting industry. These include consumer demands for convenience and product information, Hockstad says. Products need to be easy to use, effective, and cost-effective, and information needs to be conveyed in a way that is meaningful for the consumer. Resource scarcity and changing demographics—including older populations, smaller households, and migration to cities—are also impacting how industry innovates, she adds.

“The mood of the show has been pretty good,” says Eric Peeters, global business director, home and personal care for Dow Chemical. "The discussions we've had have all been very, very positive [and] focused on the future—innovation, sustainability, and other big things happening in the industry. I think there's a little bit of apprehension about 2019 because of the general economic environment, and clearly the geopolitical environment has not dramatically improved in the last two months. There's uncertainty around Brexit, for example. But, in reality, the market itself is pretty solid. Not spectacular growth but we're expecting a good year."

Tammo Boinowitz, senior vice president and general manager/care solutions at Evonik, says customers have reported growth recently despite macroeconomic stressors like the slowdown in China, tariffs, and Brexit. "Large customers are optimistic for 2019, so we are cautiously optimistic as we look ahead."

Jeff Jirak, vice president Americas at Nouryon—formerly AkzoNobel Specialty Chemicals—says his customers are also upbeat with a little caution. "They are generally feeling like 2019 is going to be okay. There are concerns around things like tariffs and global trade obviously, but overall things seem really stable."

Oleochemical markets have generally been solid despite the volatility in energy and crude markers, says Bryan Huston, vice president with Acme-Hardesty. Market growth remains generally in line with GDP growth in household and personal care markets, Huston says. “Our customers are growing in Latin America and Asia,” Huston says. “There’s a growing middle class consuming more personal care products.” Logistics is one area that require attention. “Supply chains are getting more complex,” Huston says. The extended supply chains and distances for oleochemicals make planning critical to ensure security of supply, he says. Costs, shipping and trucking, are also adding pressure across the supply chain, he adds.

Demand for natural ingredients and ingredient sourcing that does not compete with food has been high, says Vincent Gass, head of global marketing industrial and consumer specialties at Clariant. "Most of the customers we met with saw this as a priority for the coming years," he says. He notes that traceability and certifications for palm oil derivatives like RSPO are getting momentum. "There is also a push to move away from non-renewable resources altogether and focus on biobased processes or natural ingredients that could provide the same level of performance and sensorial benefits without relying on controversial raw materials." Clariant has made several bolt-on acquisitions in the field of natural ingredients over the past years to meet this demand.

Increasingly, shelf-space labeling at certain retailers includes signage for products that are certified biobased, non-GMO, or other designations. "Point of purchase data shows that millennials truly do focus on these sections," Jirak says. "So there's definitely a trend toward that. Will they pay a premium for it? I think that's being sorted out now."

Sensorial benefits—already in high demand for personal care—are increasingly being sought in home care as well, Gass says. "Customers are looking at ways to improve the sensorial benefits of their products also in cleaning. This is already the case for dishwashing—with demands for foam quality—but I am also seeing it in laundry and in surface care."

There has been an emphasis on "collaborative exchanges of technology and innovation," Jirak says. "People realize that, for this industry to grow, we need to innovate products that are more sustainable. And the only way to do that is to talk to one another, get ideas on the table, and get the technical, marketing and sales teams together to brainstorm." An innovation project may include three to four companies or even universities, where each brings a particular innovation or strength to the table.

Gass is also seeing broader collaboration throughout the value chain, for instance, between machine manufacturers, formulators, and suppliers. "This helps create a broader understanding of the way megatrends such as water scarcity and energy savings will impact the entire cleaning value chain."

Meanwhile, care benefits become even more important as fast fashion comes under pressure for its large environmental footprint. "We are moving to a world where, especially the younger generation, are going to buy higher-quality garments and want to keep them longer, which means you need to make sure the fabric doesn't lose its appeal after several cycles of washing," Peeters says. Color needs to stay, and the garment needs to retain fibers, he adds.

Boinowitz notes consumer preferences to avoid microplastics is beginning to move beyond personal care and into cleaning care applications. Evonik recently won the top prize among Henkel suppliers for a newly-developed, microplastic-free, readily biodegradable opacifier based on glycol distearate. Henkel Beauty Care uses this new ingredient in its Fa relaunch as a replacement for polymer materials. Boinowitz is also seeing demand for naturality as well as ingredients that improve softening and scent profiles.

Formulators and their customers are also grappling with increasing regionalization. "Things like formats and use case are quite different from region to region," Gass says. "It's not just temperature of washing that changes. We have to be able to anticipate in each region what the next big trend is and innovate to support our customers to be ready." Clariant has a trends platform called CleanForward that helps formulate solutions to exemplify trends in a given region.