The market
The global soap and detergent market is valued at $38 billion, equivalent to 35 million tons of product. It is a highly concentrated industry, with 50 companies holding 90% of the market. While the sector is not characterized by double-digit growth rates, it continues to grow in both industrialized and developing countries at a steady pace of 1 to 3% annually. Laundry detergents account for 40% of the market, soaps 20%, and dishwasher detergents 15%. The soap and detergent industry has been described as the SUV of consumer goods: it is old, wasteful, expensive for the consumer, and profitable for producers.
Soap was once expensive and used only by the wealthy until the French chemist Nicolas Leblanc discovered an inexpensive way to make soap from salt. For centuries, olive oil, widely available in France, Spain, and Italy, was used as the primary ingredient. In the 19th century, palm oil gradually replaced olive oil in formulations. The Germans first produced synthetic detergents from coal tar in 1916, and by the 1950s, the industry was dominated by petroleum derivatives. It is a high-capital-return industry with an average income per worker of $700,000 per year. Due to a trend toward automation, the industry employs fewer workers. American soap and detergent companies increased their revenue by 18% over the past decade while reducing employment by 28% during the same period.
The market is highly diversified, with a standard supermarket offering 40 different laundry detergents, including liquids and powders. The industry is constantly evolving. First introduced at the turn of the millennium, liquid detergents outsell all other cleaning products by a ratio of 4 to 1, which is remarkable given that liquid cleaners are generally more expensive than powders, thus ensuring higher profitability and slower market growth.
Innovation
The industry was constantly attacked for its negative environmental impact. Synthetic detergents simply don't break down in cold climates, allowing people to "keep washing fish and frogs for weeks after the laundry is finished." The return to palm oil as a renewable and biodegradable active ingredient seemed like a step in the right direction. Unfortunately, a dramatic increase in demand for fatty acids from palm oil led to an expansion of palm plantations in Asia and Latin America, accelerating rainforest destruction, including the loss of orangutan habitat.
Yusuke Saraya, president of a mid-sized Japanese detergent manufacturer, became aware of the damage being caused, creating a negative trend that was far from appreciated by consumers. As a result, he created wildlife corridors, including refuges for the endangered dwarf elephant in Kalimantan, Indonesia. And while large companies have agreed to manage palm oil production sustainably, the reality is that cleaning rivers in Japan, the United States, and Europe cannot come at the expense of wildlife habitats in the developing world. The key innovation is not ease of use or increased performance, but rather the search for ingredients that have no unintended consequences and do not cause collateral damage.
While market leaders are putting their research teams to work on less toxic optical brighteners, more efficient enzymes, soaps that work in cold water, and detergents that require less water, Vivian Stars of Louisiana is focused on finding an alternative use for the leftover orange peels from local factories. With increased orange juice consumption, processing has expanded, and the peels, previously used as animal feed, have become waste due to the preservatives used to maintain freshness between harvest and processing. Once tanker trucks were filled with juice, Brazilian producers quickly began extracting limonene from the peels. Because the extraction is relatively simple, using liquid CO2, which could also be sustainably harvested, a new economic model has begun to emerge.
The first cash flow
Vivian then founded Naturally Yours Inc. in Louisiana and successfully penetrated institutional markets through a different type of life cycle assessment (LCA). Rather than simply arguing for price and performance, and producing a highly concentrated product because the market increasingly demands reduced packaging, which is a major source of pollution, she argued that using a raw material extracted from peel waste that would otherwise rot and generate methane gas creates a significant "systemic" benefit. Utilizing what is locally available and giving value to what is previously considered worthless is one of the fundamental principles of the Blue Economy.
