P&G Reinvents Laundry With $150 Million Tide Pods Launch

New Detergent Form Could Become Multibillion-Dollar Product Proposition

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Procter & Gamble Co. is preparing to launch what it describes as its biggest laundry innovation in more than a quarter century with Tide Pods: a line of highly concentrated liquid detergent tablets, backed by a massive $150 million marketing budget.

Tide Pods will be available in September and are twice as concentrated as Liquid Tide.
Tide Pods will be available in September and are twice as concentrated as Liquid Tide.

Pods, which are similar but more complex than the single-chamber liquid-filled laundry tabs P&G sells in Europe, will be widely available in September. But P&G will begin limited "pre-seeding" sales and sampling in July to start building buzz for the product, said Alex Keith, VP-North American laundry. "We want marketing that's as innovative as the product technology," Ms. Keith said, though she declined to provide specifics.

P&G has told retailers that, ultimately, liquid-filled tabs could take a 30% share of a U.S. laundry market that industry executives said totals $6.5 billion, making them a multibillion-dollar product proposition. In the U.K., currently the most-advanced market for unit-dose laundry tablets, all forms of tablets including powder now exceed 30% of the market, according to an executive familiar with the matter.

The packaging and three-chamber product certainly are different than anything U.S. consumers have seen before. Tide Pods have an orange and blue swirl pattern from two smaller chambers on top of a larger chamber of white fluid, all housed in a clear fishbowl-style container with a flip-top lid. Ms. Keith said the product has produced the highest consumer-satisfaction scores the company has ever seen for a new laundry product.

People familiar with the matter said P&G will put $150 million in marketing support behind the launch. Publicis Groupe's Saatchi & Saatchi, Digitas and Starcom MediaVest Group handle advertising, digital and communications planning, and media buying, respectively, for Tide.

Tide Pods are twice as concentrated as Liquid Tide, said P&G laundry researcher Shellie Porter, and contain only 10% water, as opposed to 50% water in current Tide Ultra liquid detergent and 90% water in a value detergent such as Church & Dwight Co.'s Xtra. P&G had to take water out in part because the plastic film holding the detergent is water soluble so it dissolves in even the coldest water, she said.

While P&G has priced seemingly less advanced single-chamber Ariel Liquitabs as a substantial premium to liquid detergent in some European markets, Tide Pods will be priced in line with existing Tide liquid products on a per-use basis, Ms. Keith said. Pods will also come in the widest range of sizes ever for a new P&G laundry line, she said, ranging from packs designed for "a small cash purchase" to large, bulk-size packs.

The launch is a big risk for a U.S. market that has resisted all laundry tablets up to now, dating to the 1960s, when P&G launched Salvo tablets. Like other laundry tab brands that followed, Salvo disappeared from the market by the 1970s. Success of a new generation of laundry tablets from P&G rivals Unilever and Henkel in the late 1990s in Western Europe led laundry players to make another go with tablets in the U.S. early last decade. But those products, too, were largely discontinued in a couple of years. Like the prior generation of tablets, they sometimes didn't dissolve fully in U.S. washers. An old tale among P&G laundry veterans recounts a consumer who actually preferred the '60s-era tabs because she could reuse them in multiple loads.

Liquid tabs, or "pods," however, work differently, housed in plastic wrappers that dissolve in the wash similar to increasingly popular dishwash detergent tablets from P&G and Reckitt Benckiser. And the more recent history of single-dose laundry products and new laundry forms in general has been more favorable, with the single-dose gel pack form of Tide Stain Release, launched in 2009, turning out to be the most-popular form of that product line.

"I believe it's going to be different this time," Ms. Keith said. "The powder-based tablets we launched last time came right as the market was making an inflection point toward liquid detergents," she said, so it may have been tainted by growing consumer dissatisfaction with powders that didn't fully dissolve.

"We've seen phenomenal after-use results" in consumer testing with Pods, Ms. Keith said, with 25- to 40-percentage-point increases from pre- to post-use in satisfaction scores on such factors as "provides a deep-down clean, removes difficult stains" and "provides excellent results with minimal time and effort." On that last point, P&G saw a 40-point improvement to 97% of consumers tested agreeing with the statement, Ms. Keith said.

One drawback of unit-dose products is that consumers who prefer to be "home chemists," mixing a variety of products in the laundry, don't like them. But Tide Pods is promising to "shift the complexity from the doer of laundry to Tide," she said, promising a single Pod can address each of 900 potential "load situations" a U.S. consumer may face.

"There are always going to be doers of laundry who want to be that master chemist," she said. "But we know over 70% of women out there are asking for a solution that provides excellent results with minimal time and effort. So some of them are chemists because they want to be, and some of them are chemists because they think they have to be."

While the quantitative results have been encouraging for Tide Pods, some of the person-to-person feedback has been perhaps even more so, said Jorge Mesquita, group president-global fabric care. "The sparkle in their eye, the smile, how much they want to keep it," are among factors that make Mr. Mesquita "very excited" about Tide Pods, he said. "When we gave these to women to test and then we took them away, they were begging us to give them back," Ms. Keith said.

The U.S. laundry market generally, and P&G in particular, could use a dose of enthusiasm like that for a change. Sales of liquid detergent fell 3% to $3 billion and sales of powder detergent fell 10% to $506 million in the 52 weeks ended March 20, according to SymphonyIRI data that exclude Walmart. Sales at Walmart have been even worse, according to SymphonyIRI panel data reported earlier this month by Deutsche Bank, with sales there down 10% in liquid detergent and 20% in powder last quarter. P&G has been regaining share lost in prior years over the past year, in part based on cuts in price for such brands as Cheer and Era and because of more aggressive price promotion for Tide.

"None of us are happy with market deflation," Ms. Keith said, referring to both P&G and retailers. And while P&G has diversified heavily into beauty, developing markets and other areas, the U.S. laundry business, where P&G has more than a 60% market share overall (more than 40 points of that for Tide) and fat margins, remains crucial to overall company health.

"Tide is part of the heart and soul of the company," she said. "I think most of our leaders have worked on Tide and worked on laundry. So I think if for no other reason than emotional, it's an important business to the company."

Laundry, Ms. Keith said, is "really ripe for reinvention. It's a category that's 100% penetrated. Everyone does their laundry. And yet it really hasn't changed since we launched Liquid Tide in 1984. So ultimately when we really dig deep for our deep consumer insights, we see a lot of deep dissatisfaction with current products or disengagement from the total process."

That disengagement, driven by the idea that all products are the same and don't necessarily work that well, has driven some of the shift toward cheaper value detergents, she said. She found a similar story in her last stop at P&G on the deodorant business, where 50% of women had a "wetness failure" weekly, driving some to just buy the least expensive products, she said. Secret addressed that dissatisfaction, she said, with its "Clinical Strength" product, and she believes Tide Pods can make similar inroads in detergent.

Some of the most noticeable innovations in laundry over the past few years have come not from P&G but from a surprising source, Henkel, and its relatively small value brand Purex.

Henkel's Purex Complete 3-in-1 laundry detergent and fabric softener topped $100 million in sales in its first 11 months despite coming at a premium price from a value brand and launching into the maw of a deep recession in May 2009, helping disprove the notion that U.S. consumers aren't open to unit dosing or new forms.

Beyond detergent, another new form -- Henkel's Purex Complete Crystals fabric softener launched earlier this year - also appears to be off to a strong start. Purex Crystals can be added directly to the wash at the start of the cycle and have a different chemistry designed to last longer and not reduce the absorbency of towels.

"The launch of Purex Crystals has more than doubled Henkel's share, and expanded the size of a sleepy category that has shown multiple years of decline," said Eric Schwartz, VP-marketing for North American laundry at Henkel, in a statement."We are scrambling to double our manufacturing capacity behind unstoppable consumer demand."

Indeed, Purex Crystals appear to have caught on quickly enough that P&G is following with a similar version of Downy in September in the U.S. But Downy Unstopables, while also a crystal form, is meant to be a "scent booster," Ms. Keith said, rather than a replacement for existing fabric softeners. It confers a scent strong enough to last for 12 weeks after the wash cycle, she said.

That launch is part of a campaign that includes a restage of the core Downy business. WPP's Grey Global Group, New York, handles Downy, and Starcom MediaVest Group handles communications planning and media buying.

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