The global laundry detergent market was valued at USD 146.3 billion in 2019 and is expected to grow at a CAGR of 4.8% during 2020-2027. The laundry detergent market is driven by few factors such as the increasing need of consumers towards cleanliness and self-hygiene, chemical ingredient research used in laundry detergent formulations, and increased pressure on laundry detergent manufacturers to go green.
Both soaps and detergents are one of the major revenue-generating segments of the whole chemical industry. Laundry detergents are formulated using simple chemistry with a higher degree of differentiation along with the product brands. The players in the market are continually tweaking laundry formulations to make them sustainable and suitable for changing technology.
These formulations are expected to change with respect to the washing machines consumer’s use, for instance, the consumer preference towards high-efficiency machines, which use less quantity of water, resulted in increased use of high-quality laundry detergents, as consumers continue with such trend, manufacturers of laundry detergents will innovate their products for low and cold-water intense cleaning.
However, the fluctuations in raw material prices and high regulations are restraining market growth. Most of the laundry detergents are derived from petroleum, which makes it hugely dependent on the volatile oil industry. This has led to a shift of manufacturers to potential alternatives to natural raw materials, with relatively low costs.
Among manufacturers, there is an increasing trend to reduce suppliers count, to reduce procurement costs, and to improve associated financial benefits, often known as "supplier consolidation", which provides controlling power to the suppliers' group.
Moreover, regulatory agencies are conscious of the ingredients/chemicals being used in laundry detergents. In line with many countries have limited the use of phosphates in laundry detergents, which are harmful to humans, if exposed frequently. The increased concern of the environmental impact of the chemicals also impacting the market growth.
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The intense competition in the market is driving product innovation and differentiation, resulting in price reduction. The industry is glutted with local and international laundry detergent manufacturers, both in organized and organized sectors. There is a difference between consumer buying behavior in urban and rural settings. Urban consumer’s purchase decision is mostly influenced by the advertisements and consciousness towards cleanliness, while, in rural areas, price plays a vital role. Proctor & Gamble is the undisputed leader in the industry, comprising nearly half of the laundry detergent industry share.
This intense competition creates a conducive business environment for product innovation, allowing large and small companies where players need to evolve in both mass and niche markets, to satisfy diverse needs and lifestyles. It will enable companies to accomplish innovation and breakthrough products, it could be at the packaging level, formulation level, or product level.
The market is primarily segmented on the basis of type, application, and region.
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In 2019, the powdered segment accounted for the largest share in the assessment period. Segment’s high share is attributed to the strong demand from the emerging countries, where a huge rural population prefers economical powdered laundry detergents over others, in the highly unorganized sector. Countries like India, China, South Korea, Thailand, and Malaysia have surged in the middle-class population who can afford washing machines, which resulted in the consumption of branded powdered laundry detergents.
Liquid laundry detergents are projected to register the fastest growth rate over the forecast period. This is due to increased adoption of the product in the developed economies, provides consumer comfort and convenience, and is cheaper to manufacture, and has a greater margin for the retailers and wholesalers.
Fabric softeners are anticipated to grow at a steady rate; however, the product had seen a dip in sales in the past few years. Product is marketed to the premium customers having high disposable income, which prefer attributes like fragrance, and natural care. Moreover, to increase its sales the companies need to capitalize on marketing spend and innovative strategies in the developing economies.
In 2019, the household segment accounted for a majority of the market share and this dominance is likely to be maintained over the study period. The surge in millennials with a busy lifestyle and lesser time for household activities coupled with a rise in the sale of washing machines in developing countries is the segment’s key drivers for market growth.
Vendors are focusing on increasing their footprint with manufacturing facilities in low- and middle-income countries, stimulating washing machine sales having huge revenue potential. For instance, the sale of washing machines among Chinese households increased by more than 7 percent, in the period between 2010 to 2015. The emergence of variants such as automatic and semi-automatic, particularly in India and other south Asian countries also contributed to its growth.
The industrial segment is expected to register a lucrative growth rate over the study period. Key factors responsible for such high growth include applicability in varied industries such as dry cleaning, hospitals, engineering, paper, textile, rubber, and housekeeping and increased focus of manufacturers towards liquid laundry detergents suitable for the manufacturing industry and high marketing spend. Moreover, the increase in the number of international tourists also spurred the demand for hotel rooms and other stays.
Asia Pacific laundry detergent industry accounted for the largest revenue share in 2019 owing to the intense competition among multinational and local players and the growing popularity of local brands. Competition has shifted industry dynamics in the laundry detergent market. For instance, multi-national companies like Unilever and Procter & Gamble lost their market share in India, to the regional local players such as Rohit Surfactants Pvt Ltd and Nirma Ltd.
Urbanization in emerging countries, particularly in India and China also contributed to the region’s growth. China has a population of around 1.4 billion, of which more than 56 percent lives in urban cities. Moreover, increasing disposable income, innovative brand marketing strategies, have stimulated the region’s growth. The booming middle-class population is largely responsible for such growth.
Key players in the market include Procter & Gamble, Henkel AG & Co. KGaA, Chruch & Dwight Co. Inc., and Method Products, PBC, Unilever, Lion Corporation, Kao Corporation, Reckitt Benckiser Group plc.