March 2015 came with the somewhat surprising news that Henkel is introducing its Persil brand into the US market through an exclusive deal with Walmart. While the story in home care has typically revolved around multinationals jockeying for position in faster-growing developing and emerging markets, this has sometimes belied the opportunities offered in slower-growing and often saturated developed markets, such as the US.

The development of Tide Pods, a decade in the making, was a clear sign that there are opportunities to develop categories in the upper pricing range.

Early reports illustrate that Persil is being positioned as a premium product and in liquid tablet format (Persil Power-Caps), even at a price in excess of Tide Pods, the category instigator and current leader in terms of value sales. So we have premium Persil going head to head with Tide in 4,000 or so Walmart stores across the US. This is a story in itself, one that highlights the ever-evolving brand owner/retailer tussle over supply and pricing. Also an interesting story for Henkel, with a fairly unique (at least in the world of home care) supply agreement that could realistically earn the Persil brand $100 million (retail) in revenue through 2015, given current levels of support and Walmart’s likely enthusiasm to give its “new kid on the block” prime positioning on its shelves.

Low Risk, High Pressure
In any other circumstance the launch of a new detergent brand in the US would come with high risk attached to it—how does one compete with the orange wall that is Tide? In this instance, Henkel appears to be risking very little, even though it is going head to head with the local champ. Persil in the US is a fascinating example of a tactical product launch which, with the backing of the world’s largest grocery retailer, has every chance of succeeding, not least due to the retailer’s motivation to make it a success. Walmart lives and breathes its “Productivity Loop”—buy for less, sell for less, grow sales, operate for less; within this system the balance of the retailer/supplier relationship is crucial and Persil can be seen as a lever in this on-going “discussion” with Procter & Gamble and its Tide brand in the context of laundry care.

Quasi-Private Label
Laundry care in the US is a strong suit for Procter & Gamble, for all intents and purposes it “owns” the mid-upper price tiers of laundry care, and for every retailer, not stocking Tide is simply not an option. Looking around the world there are very few examples of other retailers looking to establish this kind of “quasi-private label,” but that is not to say Persil is a one-off either.

One interesting example can be found with Amazon gaining exclusive rights to sell Huggies diapers in Japan, again a hugely recognizable international brand that has hitherto had no presence in that market, but is just right for the task at hand, namely to convert the rapid movement of online sales, both in Japan as well as the increasingly important personal imports to China, to Amazon-based purchases. An alliance in this particular case that appears certain to benefit both parties, with the brand owner in particular seemingly at very little risk, a similar story to Persil and Walmart.

Similar Opportunities
An interesting question is what other opportunities are there to leverage this kind of brand owner/retailer collaboration, and in which markets or categories? Certainly there are a number of  them that need to be met and the following is a rough sketch of the kinds of features we would expect to see in a landscape suitable for:

• A consolidated modern retail environment;
• Rapid on-line sales migration;
• A consolidated and competitive environment;
• Limited forecast growth potential;
• Less developed private label;
• International brands with pedigree; and
• Easy access to local production and distribution.

While the opportunity for development through rapid online sales migration is still someway off, other elements can be found in a number of markets. One region which boasts more than most is Australasia and this suspicion was confirmed with the news last month that Henkel had moved to fill another “blank” in its coverage with the acquisition of Colgate-Palmolive’s laundry care business across the region. While given the brands Henkel has purchased the opportunity to add Persil would appear limited, the application of brand features seen in relation to Persil in Western Europe and North America could be a great opportunity to strengthen its position in liquid laundry detergent and kick-start what is a very underdeveloped liquid tablet detergent category.

Bruno Piacenza, executive vice president, laundry & home care, Henkel, stated following the Colgate-Palmolive brand acquisition “this agreement is another step in the execution of our global strategy to selectively invest in attractive country category positions.”
Expect more to follow—but in what form very much remains to be seen.

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Ian Bell
Euromonitor International
Email: [email protected]

Ian Bell manages the research program for the global home care industry at Euromonitor International. He has direct responsibility over the content and quality of Euromonitor’s home care research, which provides strategic analysis of the global market, as well as in-depth coverage of 80 countries worldwide. Euromonitor International is the leading provider of global strategic intelligence on consumer markets with offices in London, Chicago, Singapore, Shanghai, Vilnius, Dubai, Cape Town and Sydney, and a network of 600 in-country analysts worldwide.