Tuesday, March 24, 2009

US Fragrance Compound Sales to I&I clients

What are the stakes for the Fragrance industry with the proposed environmental criteria that will reduce the materials that previously were deemed safe? Two market research firms, Kline & Co. and The Freedonia Group, have published reports projecting the US I&I estimated sales to be $10 billion. Kline has provided the segment breakdown to be:

Janitorial    3.25 b
Industrial    2.75 b
Food Service     1.9 b
Food Processing   1.9 b
Laundry      880 m

Sales of fragrance compounds are directly sold to the I&I manufacturers and developed specifically for their product formulations. Aromatic chemicals, like benzaldehyde, methyl salicylate as well Essential Oils, like orange, pine oils and their by-products, mainly terpenes are also used in certain cleaners for their odor and lower cost value. They can be used by themselves or in combination with a compound. These materials are usually resold or transfer sales, therefore the sales amounts are often double counted within the Flavor and Fragrance industry.

The Green Nose has built a projected fragrance compound sales from actual customer sales experience and a wide knowledge of typical price points and end-use dosage. Many of the fragrance company sales to I&I clients include air freshener compounds, of which those sales amounts were omitted from the projection. Therefore the total US I&I fragrance compound annual turnover for products that are rinsed off is $18 million.

Within the Fragrance industry companies (thirty plus), market share to I&I clients is widely segmented. Almost all of the top I&I formulators have an exclusive list of fragrance vendors based on a variety of capabilities and resources. All of the top tier Fragrance companies do not market target the total I&I industry firms due to sales potential, cost of sales and product development return. Typically, I&I segment sales for the top five companies are only ten percent of their compound mix. And due to acquisitions within the past few years, the top fragrance companies have spun off (or tried)"long tail" unit sales due to the same target account strategies. 

Thusly, few fragrance companies service the I&I needs of many. These same few have an influential and biased view which lead to a not-so-desirable response from Trade Associations to the environmental standards of EPA DfE.  $18 million divided among dozens of fragrance companies should not be a roadblock for the Perfumers to replace where needed re-formulated fragrances and should be a corner stone to responsible sustainable policies and product standards. The formulators will hopefully rotate these fragrances into their products very soon.

Friday, March 20, 2009

Definitions, Co-operation and Disruption

Nothing complex can be acheived without co-operation between parties. Nothing moves forward without a foundation of co-operation. The Sustainable Fragrances for Cleaners 2009 Convention in June will be a prime opportunity to put the debate and dialogue of the past few years into action.

The time for action is now. The great strides in the sciences behind this dialogue and thinking have been amplified by recent events. Even while governments around the world are intervening, civilization's footprint is being detected in places more far reaching then ever.  The Fragrance industry, their supply chain and their customers must make a stand.

There will be a host of convention presenters who will be proposing their unique visions and notions of progress, representing avant-guarde thinking and traditional roles.  

One of the most important convention sessions will try to define "sustainability" and "green fragrance" with industry peers: toxicologists, chemists, perfumers, product formulators, suppliers, regulators, marketers, and NGO's. 

This is a very bold step, but I caution the session not to linger too much on the actual wordings of these definitions. Why? Strong definition disagreements are about bias and delay. The session's objective deserves an excellent result. Any compromises read more like a mission statement which only defines a self-igniting purpose or concept for existing. Whereas a definition of standards creates strong guidance and enforceable attributes and criteria.  There is no time to get bogged down in bureaucratic self-regulating politics and filibustering.

Why would definition setting get purposely bogged down? Classically, any innovation improves a product for a larger set of consumers in ways the market did not expect. A disruptive innovation  is particularly threatening to market leaders and suppliers because early adopters are competition from an unexpected direction. Lets examine the concepts of Sustainability and Green Chemistry as a disruptive innovation.

Disruptive innovations are not always recognized by consumers and often take a long time before they are significantly disruptive to established companies and the supply chain. Often it is entirely rational for incumbent companies to ignore these effects. Early green cleaner products compared badly in performance to brand leaders and the current improved green cleaner market share is so small, that established products can still afford not to notice. 

Even as a disruptive innovation like DfE is recognized , businesses are often reluctant to take action since it would involve competing with existing and profitable products. And no one can afford risking profits in this economy.

But in a fragrance product sustaining disruptive innovation is incremental and subtle. To prevent any further bioaccumulation of unnecessary fragrance ingredients lets take the subtlety to a degree of obviousness and continuous improvement.  Let us all embrace the fragrance DfE program, gain from its environmental benefits and quickly move them into the established products before it is too late.

Disruption can be a cause for the moral good and with careful technical guidance, cooperation between suppliers, producers and government, we can all be winners.




River Keepers update

Mentioned in my February 13th post was a river environmental study in Europe that revealed personal care contaminants. Another study this time stateside, was released last month, disclosing materials of concern that are present in the Columbia River basin. The Columbia River serves communities of nearly eight million residents for power, water, fisheries and recreation. The Columbia River has and continues to be in danger.

This particular report will be used to analyze historical contamination levels like DDT and fire retardants and will be the basis for further studies of emerging contaminants. Because of the presence of these new chemicals of concern, a future study will be sponsored by the US Geological Survey (USGS)  as limited samples were taken to characterize these contaminants. It will be four years before another study will be completed. 

The purposes of studying banned materials like DDT is to be certain that the dangerous toxics are declining. Evidence of emerging contaminants are most serious to environmentalist and the regional river community because of the likelihood their concentrations will increase without preventative action. The Green Nose examined the list of fragrance materials. Significant in the report were musk chemicals which are found in nearly every cleaner fragrance for their pleasant long lasting fresh clean perception and fixative properties.

Reports like the EPA study about our waterways give gravitas to the June Sustainable Fragrances 2009 for Cleaning Products meeting. We must stop the use of unnecessary perfume ingredients that are rinsed off down the drain.  Immediate PREVENTION is the only acceptable outcome. It's that simple.