Sustainability in Indian Detergent Industry

What does sustainability mean to the Household care industry?

“The ability to improve the quality of life for this and future generations, by creating products that promote hygiene and cleanliness, are environmentally sound and are economically successful”

Definition adopted by the American Cleaning Institute

Household care industry in India

The Detergent industry is very interested and pro-active in pushingforward sustainable cleaning and sustainability in these sector is a keyissue shared by producers and consumers alike

Market size estimated at ~ US$ 3.8 billion and the sector is projected to grow 19 percent annually until 2019

Household care segments: fabric care, dish soap, surface care, toilet care, home insecticides, and air care

Laundry care (detergents and bar) dominate the segment and is marked by high penetration in both Rural and Urban India

Global

Consumption

Patterns

Need for Sustainability in the Industry

• Rapid global population growth• The rise in middle and lower-income

consumers • A culture of “consumerism”

ConsumersAwareness and concernConsumer Willingness

BusinessesInnovation (improved

products and services ) Choice influencing

Choice editing

• Global consumption pattern is putting unsustainable and increasing stress on:

• The Earth’s ecosystems - The supply of material resources needed for industrial growth

• Human social systems and well-being

Sustainable production

Sustainable Consumption

Drivers Impacts

Sustainability in the Detergent Industry - Timeline

Setting standards of emission or discharge of environmental pollutantsHazardous Waste (Management and Handling) Rules

20001986-1990

The Ozone Depleting Substances(Regulation and Control)

Plastic waste (management and handling rules)

Product StewardshipPrograms

I Prefer 30 Washing atlow temperatures

2010 20141991

Compact detergenttechnology

Removing Phosphates from All Detergents (P&G)by End of 2015

2015

2005

Charter for sustainable cleaningBy A.I.S.E

Regulatory Acts

Voluntary Initiatives

2012

2013

1950

Detergentmanufacturersswitch tobiodegradablesubstances

2011

…What next ?

UnileversustainableLiving plan

Business case for sustainability

Conditions such as population growth, an expanding middle class, urbanization, and economic growth are

contributing to an increasing demand for food, water, energy, land, and other resources - These

conditions are creating volatility and uncertainty for companies

Addressing sustainability challenges helps companies to better anticipate and understand long-termtrends and the effect of resource consumption

How important is sustainability to key market players in the industry?

Key market players in the Indian detergent industry

38%

18%15%

22%

7%

HUL

P & G

Nirma

Rohit Detergents

Others

• Fabric care is a major category accounting for 68 percent of the household care sector in India andthe fabric wash market is currently worth $ 2.8 bn

• In India HUL holds a 38 percent market share in the washing powder segment clearly standing asthe winner with its three brands-Surf, Wheel and Rin. Procter & Gamble (P&G) with Tide and Arielhas 18 percent share and Rohit surfactants holds 22 percent as per the latest industry reports

Powder67%

Bars33%

Powder Bars

Market share of Indian detergent brands

Where do they stand on sustainabilitySustainability Procedures across the Product life cycle from raw material selection to product disposal based on

A.I.S.E Key performance indicators (KPI)

Raw Material

Resource use

Production Consumer Disposal

Raw material selection and safety evaluationRaw material packaging and supplier design

Consumed energy and co2 emittedConsumed water, Packaging material used

Occupational health and safetyManufacturing environmental management system

Consumer and customer safetyConsumer and user information

Packaging usedWaste offsite for disposal

Life cycle

Easy to adopt with some actions needed

Key market players in the Indian Detergent industry

On Radar Not Enough information available

Key sustainability issues across the value chain

Health issues related to chemical ingredients

Use of non renewable petrochemical surfactants

Safeguarding of water resources

Energy consumed by the use of detergents

Carbon footprint across the value chain

Supplier

Transport

ManufacturingPackaging

Use Phase

Disposal

Industry specific sustainability issues across the value chain

60 – 80 percentage of energy during laundry life cycle is consumed in the in-use phase

Ingrdients Formulation Packaging

Distribution use Phase Disposal

Cradle to Gate

Distribution of energy demand/carbon consumption throughout the life cycle of a laundry cycle

Technological innovation is a key means of achieving cleaner production

and sustainable industrial growth

Sustainability via the Bio based economy

Conventional technology

Pollution(e.g.,Co2, toxicity, water Consumption)

Economic development (e.g. GDP)

Eco efficient Enzyme Solutions

LCA supports cold wash Enzymes

-100

-80

-60

-40

-20

0

20

g C

o2

em

issi

on

g Co2 emission per wash

Enzyme use (low Dose) Electricity savings

850

900

950

1000

1050

Standard detergent Standard detergent Standard withaddition of extraenzymes( Dosage

level 1)

Standard withaddition of extraenzymes( Dosage

level 2)

Tota

l Rem

issi

on

at

46

0n

m

Performance of standard detergent and enzyme added detergent at 40°C and 30°C

• The standard detergent performed better at 30°C than at 40°C with just a small increase in enzyme concentration

• The positive impact of washing at 30˚C is almost 100 g less CO2 emissions per wash. Looking at electricity consumption for heating wash water, the enzymes save 20 times as much energy as it takes to produce them

Life Cycle Assessments (LCAs) are the method to scientifically document sustainability improvements of the product value chain

Using LCA, the environmental impacts of four different washing situations on machine washing laundry at 40°C and 30°C – a European standard detergent containing 0.4% Savinase®8T was tested at 40°C and 30°C, and the same standard detergent at 30°C but with the addition of extra enzymes designed for cold-water washing

Enzyme Industry – An overview

• Enzymes were proteins that catalysed biochemical reactions and were derived from micro organisms such as bacteria,fungi and yeasts

• Enzymes are used in many environmental - friendly industrial purposes and find their applications in various sectorssuch as Food and Beverages, Detergents, Biofuels, Animal Feed, Leather, Textile, and Paper and Pulp

• At present, almost 4000 enzymes are known, and of these, approximately 200 microbial original types are usedcommercially however, only about 20 enzymes are produced on truly industrial scale

• Developing economies of Asia-Pacific, Eastern Europe, along with Africa, and the Middle East regions emerged as thefastest growing markets for industrial enzymes

• India currently has a marginal share in the global market for industrial enzymes that is estimated to reach about US$ 4.4billion by 2015

.

50%

20%

20%

5% 5%

Pharmaceuticals

Detergent

Textile

Food and Feed

Leather and Paper

Sector wise demand for enzymes

• Novozymes long term target includes delivering biological solutions to 6 billion people by 2020 and save 100 million tons of CO2 a year through their product applications

• Deliver 10 transformative innovations that really change the lives of many people and fulfill ambitious sustainability goals

Novozymes – Market leader in Industrial Enzymes

• The Company’s vision is to create necessary balance between better business, a cleaner environment, and better lives• In 2014, customers reduced their CO2 emissions by an estimated 60 million tons through the application of Novozymes products, equivalent to taking

25 million cars off the road• Novozymes is committed to the UN Global Compact principles as a LEAD Member and takes an active part in the U.N.-led Sustainable Energy for All

(SE4All) initiative

Vision and Sustainability

• In 2014, Novozymes has strengthened its position as the world’s leading producer of industrial enzymes with an estimated 48 percent of the global enzyme market share.

• The Company sales revenues in 2014 were reported to be DKK 12,459 million a 6 percent increase compared to the previous FY2013• Sales to the Household Care industry increased by 3 percent in DKK compared with 2013. Sales in Europe and emerging markets were the most

significant drivers of global growth in 2014

Business Performance

Targets and Outlook

Novozymes is the world leader in biological solutions. Together with customers, partners and the global community, we improve industrial performance while preserving the planet’s resources and helping to build better lives

Business

• Industrial enzymes, microorganisms, andbiopharmaceutical ingredients

Novozymes – Revenues by industry and market share

Others52%

Novozymes48%

35%

18%26%

14%7%

Household Care

Bioenergy

Food & Beverages

Agriculture & Feed

Technical & Pharma

4353 3%

2270 19%

3278 3%

830 10%

1728 4%

Revenue by Industry (DKK million) Global market share of Enzymes

Current trends in the Household care industry

Current trends

Growth Drivers

Growth barriers

• Better-performing laundry detergents – also at low temperatures

• Optimization of detergent formulations to decrease cost and cost volatility

• More sustainable operations and products• Changing consumer preferences toward liquids

and compacted products

• Innovation to raise detergent performance at lowtemperatures, increase sustainability and optimizeFormulations

• Demand for better-performing products in emerging markets

• GDP and population growth in emerging markets

• Sustained low input costs that compete with enzymes for share of COGS

• Traditional consumer wash habits• Regulations favoring surfactants over enzymes in emerging

market product standards• Technology development needed to enable enzyme

performance in liquid detergent formats

Household care

TAR

GET

S

Processes&

Products

Primarilynon-technological change

Primarilytechnological change

Eco-innovation

Modification Re-design Alternatives Creation

MECHANISMS

Higher potential environmental benefitsInstitutions

Organisations&

Marketing methods

Sustainable Production calls for multi-level eco-innovations

The target of the eco-innovation can be technological or non-technological in nature. Eco innovation in products andprocesses tends to rely heavily on technological development; eco-innovation in marketing, organisations and institutionsrelies more on non-technological changes

sustainable laundry behaviour goes beyond switching to 30ºC

The Detergent industry presents several sustainability challenges. Research and analysis from various sources

suggests we need to move beyond a focus on technological efficiency and isolated changes in behaviour to look

more closely at the interconnected activities driving unsustainable household consumption

• 72 percent of consumers look for advice and commitment on sustainability for detergents

• Communications clutter also emerged as an issue: less people read the information on packs but, when

asked, consumers believe that there is sufficient or even too much information provided

• The homecare industry has a responsibility to educate and inform consumers about its products

Consumers Perception by region

0 10 20 30 40 50

Low awareness/ understanding

Perception of high cost

Perception of reducedquality/performance

Perception that the green label is amarketing gimmick

Lack of interest in green issues

Lack of affinity/loyalty towardsgreen brands

Not enough Products on themarket

Asia EU North America

Green Issues that consumers find most important when considering/Purchasing detergents

Biggest barriers to consumers purchasing more Greenproducts

2

1

3 1

2

3

0 10 20 30 40

Lower temperature

Shorter cycle

Less Packaging

Natural Ingrdients

Locally produced

Less Pollution

Asia EU North America

Actions (Non technological) needed to improve the sustainability profile

of the industry

Sustainability marketing strategies should aim towards improving the awareness of consumers to use the product in an informed/sustainable way

Existing mechanisms such as Eco labels and safe use tips provided on the pack are fraught with confusion or consumers believe that there is sufficient or even too much information provided

Tips for saving water, energy, co2 and money

Need for standardisation

Raising awareness and influencing consumer purchase decisions

towards more sustainable choices in the laundry detergent arena

More often consumer purchase decisions are influenced by comments, opinions, and experiences

90%of consumers trust

recommendations from

family and friends

Word-of-mouth Push marketing

Independent retailers connect with customers frequently with a significant percentage of shoppers visiting weekly

Shopper Frequency

Retailer BUY Customer

Market awareness and benefits about

sustainability products

Key Insights

• A growing global population with a rising need for food, water, energy and other commodities is pushing industries to get smarter and produce more with less

• Business-to-Business consumers are concerned about the reputation of those with whom they do business. For business-to-consumer companies, the focus in India has been on promoting responsible usage of products to limit the life cycle impact of the product

• Recent innovations in Enzymatic technologies provide a natural solution for addressing the market demand for cheaper and cleaner alternatives

• Companies which innovate in a sustainable development perspective must implement a combination of process innovations, product innovations, organisational innovations and market innovations among which priorities are established pragmatically, in view of opportunities and constraints

• Consumers behaviour remains a key factor in making washing even more sustainable. Raising consumer awareness about the benefits of sustainable products will allow consumers to make informed choices

• The sustainability roadmap of the Indian detergent industry in the future will be shaped by Collaboration, competition and novel innovations

“There are no passengers on spaceship earth. We’re all crew.”— Marshall McLuhan

Contact:KrishnaChandranSustainability consultant

@krizhnah