Issues Bubble Up for Detergent Makers

Manufacturers that are able to demonstrate pricing power derived from innovation, capital discipline, and margin expansion can become Wall Street darlings, but issues raised at the recent Soap and Detergent Association meeting in Boca Raton, FL, highlight how tough it is to get pricing power in the chemicals sector. Even as specialty chemical companies innovate to provide better cleaning attributes, the key question is: Will consumers be willing to pay? Slim margins in chemicals for household laundry detergents are limiting the introduction of new ingredients. Instead, formulations to maintain value while lowering the cost of detergents are moving into the spotlight. In addition, green formulations that allow for washing in cold water while using shorter wash cycles are gaining prominence, reflecting the societal shift towards environmentally friendly products. With the environment becoming ingrained in the collective consciousness, the chemical industry must be viewed as a big part of the solution rather than the problem. Chemical companies have to respond to that challenge to earn that "darling" tag.