Delays Put Laundry Titan Tide on Defensive in $300M Pod War

Rivals Happy to Fill Vacancies Brand Has Created on Retailers' Promotional Calendars

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When Procter & Gamble Co.announced last spring that Tide Pods would be on store shelves in September, it appeared to have a first-mover advantage in the biggest laundry innovation in 25 years.

But now, with the launch delayed nearly six months, Tide faces a pod war. A slew of ultra-concentrated detergent "packs" that are slated to hit stores in February are expected to ratchet up marketing outlays in the category by nearly $300 million.

Big things are at play here. It's a chance for media and marketing agencies to grab those dollars and a chance for the laundry category to reverse a sales decline as consumers used lower-priced products or did fewer loads to save money. And marketers of all stripes struggling with speed-to-market issues will be watching to see how P&G fares.

In addition to Tide's expected $150 million push, Henkel is putting at least $50 million into its Purex UltraPacks. Competition is also coming from the All Mighty -- Pacs that is -- as Sun Products prepares a $25 million launch for its take on unit-dose liquid detergent.

Church & Dwight Co.'s Arm & Hammer is rolling out Toss "N Done Power Paks early next month, and Phoenix Brands is launching concentrated detergent packs across three brands -- Fab, Ajax and Dynamo. Both Church & Dwight and Phoenix are introducing dry crystal or powder products.

They join Dropps, a small, eco-positioned brand of liquid-detergent packs marketed mostly online via such sites as Walmart Stores.com and Amazon.com in the U.S. since 2010. Dropps, which had $2 million in offline sales for the 52 weeks ended Dec. 25, according to SymphonyIRI, will try to weather the onslaught by launching ultra-concentrated fabric-softener packs to go with its detergent packs.

Tide has long dominated the U.S. market, boasting a 43% share, according to IRI. But the postponement of Pods has given rivals an opening in a segment that could reach 30% of sales in the $6.5 billion U.S. laundry-detergent category. That projection is based on the European and U.S. auto-dish detergent market, where tablets and packs have a 44% share.

After delaying the launch last year, P&G announced earlier this month -- just six weeks before the scheduled Feb. 21 ship date -- that it could supply only enough Tide Pods for shelf displays, not off-shelf promotions, until at least July. P&G's marketing, which the company had indicated would feature a lot of social media, is also expected to be pulled back so as to not stoke demand among consumers too early. Saatchi & Saatchi is Tide's agency.

Rivals are only too happy to fill vacancies Tide has created on retailers' promotional calendars.

"Anytime you have to limit promotions, others are going to have some benefit, because there's a vacuum," said Kiem Ho, laundry-care marketing director for Henkel North America. "Retailers will probably look for alternatives. We've been making sure we're ready with quality product at the best timing possible."

An executive at another P&G competitor said that "retailers are furious" and that P&G's sales force is "having to use up chips saying they're sorry" for changing plans twice in six months.

P&G has blamed the revisions on the challenge of ramping up a complex manufacturing process fast enough to meet the high demand expected. But the delays have led competitors and retailers to speculate that there is a quality problem with the three-chamber Pods, which are more complex than anything yet on the laundry market.

A P&G spokeswoman dismissed that speculation in an email. "Tide Pods is stable across foreseeable shipping and consumer-use conditions," she said, adding that it hasn't yet been widely sold to consumers. That makes it unlikely the conjecture about quality problems is based on consumer feedback.

In P&G's consumer testing, Pods got by far the strongest satisfaction scores of any P&G laundry detergent product, with 95% preferring it to their current detergent. Competitor interest clearly indicates that Pods have "great potential," and P&G sees that interest as "a motivational factor," the spokeswoman said.

Investors aren't at all happy about the delays.

"For P&G investors this represents another frustrating misstep," Deutsche Bank analyst Bill Schmitz said in a research note last week about the promotion delay. Had the company maintained the original timeline for launching Pods in September, it would have probably had a six-month jump on competitors, he said.

Rival packs will actually ship as much as three weeks before Tide, with Purex starting Feb. 1. But the products will effectively hit shelves together, as retailers reset their laundry sections at the same time, said Mr. Ho.

Henkel appears to have ramped up social-media seeding of its rollout, distributing samples to 2,000 "Purex Insiders." It's part of a "Prove It To Yourself" campaign that , in addition to TV, print and digital advertising, will disseminate 3 million product samples.

Energy BBDO, Chicago, is leading the agency team on UltraPacks, but the brand and agency are parting ways this year, which Mr. Ho said was a mutual decision. Henkel is considering Omnicom siblings such as TBWA/Chiat Day in Playa Del Rey, Calif., and non-Omnicom shops as replacements.

Henkel considers the more the merrier in the pod/pack battle. Data show that simultaneous launches in France by multiple competitors produced a 20% share for liquid and powder tablets within about a year, Mr. Ho said.

Nielsen Bases has estimated that having a second simultaneous entrant in a category can add 30% to overall sales. Making a major push in a fast-growing segment is the sort of "disruption" that could allow Purex to gain ground on Tide and others, Mr. Ho said.

"Very few times in your career do you get a chance to work on an innovation that changes the landscape," said Michael Lyons, senior brand manager for Sun's All. Having more players helps consumers climb "a large education curve," he said.

All is pitching in with TV, print and digital advertising led by Merkley & Partners, New York. And, in an effort to address environmental concerns, the company has also enlisted corporate-social-responsibility specialty shop Cone.

Though convenience and performance are the main themes, the sustainability aspect of products that require less water to make or energy to transport will figure in Earth Month promotions in April, when Tide won't have promotional merchandise available.

All five brands challenging Tide Pods are value players and will sell at a discount to Tide, but they'll be priced at a 25% to 50% per-load premium in packages priced similarly to their existing liquid detergents.

Some competitors acknowledged that P&G does have a "wall of patents" around Pods that makes it harder to duplicate performance. It may have led a few, such as Church & Dwight and Phoenix, to opt for the dry form.

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CORRECTION: In a previous version of the story the first name of Kiem Ho, fabric care marketing director for Henkel North America, was misspelled.

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