Oxi Clean rides direct to the top

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As some big players in household cleaning categories struggle or shed brands, a small Colorado-based family company has unleashed a stealthy juggernaut that ranks among the largest household product launches in recent memory.

Since Orange Glo International began moving its Oxi Clean laundry additive and all-purpose cleaning brand into food, drug and mass retail distribution last year, the brand has picked up $22.4 million in annual sales, according to Information Resources Inc. But that only begins to describe the brand's growth.

Oxi Clean, launched and still backed with direct-response TV advertising, began moving into mass retail via such club store chains as Costco and Wal-Mart Stores' Sam's Club in 1999. Syndicated scanner data don't track either direct-response or club sales, but privately held Orange Glo reports overall sales of $120 million for 2000, up 39% from a year earlier, primarily on the strength of expansion of Oxi Clean. And as Oxi Clean expands into Wal-Mart, Target and several national food store accounts, Orange Glo projects 2001 sales will reach $225 million.

By comparison, Procter & Gamble Co.'s Febreze fabric deodorizer and laundry pre-treater brand, launched nationally in 1998, had first-year sales of $250 million, while Swiffer, launched in 1999, reached U.S. sales of $300 million its first year. Those brands have been the two biggest household cleaning launches since 1990, though sales of both brands have since declined.

"Assuming the numbers are accurate, in the household products business this is a phenomenal success," said Michael Hoye, managing partner of consulting firm Hoye & Partners, Stratford, Conn. and a former exec VP at Colgate-Palmolive Co. Orange Glo's reported sales numbers of $87 million for 1999 gibe with the data included in the 2000 edition of the Inc. 500 list of fastest growing privately held companies, where Orange Glo ranked No. 4. Inc. requires either signed tax returns or audited financial statements for inclusion in the list.

While Orange Glo wouldn't break down its numbers by distribution channel, Mr. Hoye estimated reaching the $225 million mark would require at least $100 million in direct-response sales.

A spokeswoman for Clorox admitted the company was watching Orange Glo and Oxi Clean but said "we don't think it's having an impact on us in home care." Deutsche Banc Alex. Brown analyst Andrew Shore, however, said it wouldn't be unusual for a small company to "fly under the radar" of major players for several years before reaching $100 million plus in sales and getting their attention, as USA Detergents did in the early 1990s.

Oxi Clean was first introduced in 1993 by Orange Glo founder Max Appel, who then sold products mainly through state fairs and a small catalog operation. Then, in 1998, Orange Glo began running direct-response ads from CRTV, Seattle, focusing on Oxi Clean but also promoting the company's Orange Glo furniture polish and Orange Clean all-purpose cleaner products. The ads boosted company sales from $11.2 million in 1998 to $87 million in 1999 and $120 million last year. Sibling brand Orange Clean, which has been in mass distribution since the mid-1990s, had sales of $11.1 million for the year ended June 17, up 13.8% but less than half of Oxi Clean's sales despite broader distribution during the period.

Oxi Clean ads are a combination of classic, breathless direct-response copy and classic package-goods product demos. TV shots highlight how the activated oxygen in the product dissolves away organic-based stains in carpets and other fabrics. They also tout Oxi Clean as safer and more pleasant than chlorine bleach or other household cleaners-a positioning also staked out by a host of smaller brands, such as Seventh Generation and Earth Friendly Products, now working their way from natural food stores to broader distribution.

"I think there's a real need out there for cleaners that are highly effective and yet healthy for your home and family," said Cindy Heller, director of marketing, who joined Orange Glo in 1999 after working for General Mills and Quaker Oats Co.

While the direct-response approach is still unusual for big marketers, Ms. Heller said retailers haven't objected. "It allows us to create demand for the direct channel and also cross over into retail," she said. "It makes the retail sell-in and sell-through much more effective. We're able to spend, as a small brand, equal to or more than our traditional package-goods competitors."

Orange Glo did not disclose spending, and data were not available from Taylor Nelson Sofres' CMR. But whatever the spending comparisons, Orange Glo is clearly besting some of its bigger rivals.

While P&G has focused on its newer Febreze and Swiffer brands and is preparing to launch a new line of scents for Mr. Clean, the company in the past year has sold its Spic and Span cleaner and Biz dry bleach brands and put Comet up for sale. Cleaning category leader Clorox Co. has blamed slowing cleaner category growth in part for recent quarterly earnings disappointments.

Neither Clorox nor Orange Glo would comment on whether growth of Orange Glo products in alternative channels was responsible for falling cleaner sales in food, drug and mass merchandisers. But Ms. Heller said IRI household panel data show Oxi Clean bringing new and "lapsed" users into household cleaners, and she denies that bigger rivals have lost interest. "They're still investing their product development and marketing dollars," she said. "The question is whether they've been as innovative as we have."

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