Industry Overview The US soap and detergent manufacturing industry includes about 650 companies with combined annual revenue of more than $30 billion. Major companies in the consumer sector include divisions of Procter & Gamble (P&G); Colgate-Palmolive; and Dial. Major companies in the commercial sector include divisions of Ecolab and US Chemical. The industry is highly concentrated: the top 50 companies generate about 90 percent of revenue. Competitive Landscape Population growth, particularly among households with children, drives demand in the consumer sector, and economic growth drives demand in the commercial sector.
The profitability of individual companies depends on efficient operations and effective sales and marketing. Large companies have scale advantages in purchasing, manufacturing, distribution, and marketing. Small companies can compete effectively by offering specialized products, providing superior customer service, or serving a local market. The industry is capital-intensive: average annual revenue per worker is more than $1 million. The industry is about evenly split between the consumer and commercial segments.
Both segments are highly competitive, and large companies spend millions to maintain market share. Products, Operations & Technology Major products include laundry detergent, soap, dishwashing detergent, and toothpaste. Laundry detergent accounts for 40 percent of industry revenue, soap for 20 percent, and dishwashing detergent for 15 percent. Laundry detergent comes in powder or liquid form, and may contain bleach additives or color brighteners. Dishwashing detergent comes in powder, liquid, or gel form.
Soap comes in bars or liquids, and may have moisturizing, antibacterial, or deodorant benefits. Companies in the commercial sector may also sell dispensing equipment and provide related training. Detergent production starts by combining liquid and dry ingredients. Spray drying produces powder detergents by spraying the liquid mixture through nozzles under high pressure to create small droplets. The droplets fall through hot air and dry into hollow granules. Heat-sensitive ingredients, such as bleach or fragrance, are added after spray drying.
Agglomeration produces higher density detergent powders by using a liquid binder and a different mixing process known as "rolling" or "shear mixing. " Dry blending mixes dry raw materials with small quantities of liquids. Detergents are packaged in cartons, bottles, pouches, or bags. Soap production starts by heating fatty acids or fats and oils, and combining them with alkali, such as sodium or potassium. The process, known as saponification or neutralization, produces a combination of soap and water (known as neat soap) plus glycerin, which can be resold.
Neat soap is converted into dry soap pellets through vacuum drying. An amalgamator mixes pellets with fragrances and colors. Rolling mills and refining plodders refine the mixture to achieve uniform texture. The final mixture is extruded, cut into bars, and stamped into shapes in a soap press. Soap bars are wrapped and packaged into single or multiple packs. Soaps and detergents are made of surfactants or surface-active agents, chemicals that help water soak and clean surfaces. Many surfactants are petroleum-based.
Oleochemicals are surfactants derived from natural fats and oils. Soap reacts with minerals in hard water, diminishing cleaning properties. Builders boost the efficiency of surfactants by counteracting hard water, emulsifying oil and grease, and preventing soil from redepositing. Phosphates, an environmentally controversial chemical, are a commonly used builder. Raw materials include surfactants, solvents, phosphates, silicates, alkalis, salts, and perfumes. Suppliers include major chemical manufacturers like Shell Chemical (a division of Royal Dutch Shell) and Dow.
P&G has a separate business unit that manufactures key chemicals as part of a global supply network. Packaging is about 20 percent of product costs, and includes bags, boxes, bottles, tubes, and labels. Companies may rely on or provide third-party contract manufacturing services. Large companies may own multiple plants, including many facilities outside the US. Soap and detergent manufacturing is highly automated, and involves significant capital investment in plants and equipment. Computers control production equipment and inventory management. Many companies use electronic ata interchange (EDI) to optimize the purchasing process. Due to the high level of automation, the average plant has fewer than 20 employees. R&D involves creating, testing, and improving product formulation, and evaluating environmental compatibility. Technological advances have reduced the amount of product needed, thereby reducing the amount of packaging. Micro encapsulation technology allows manufacturers to deliver unstable ingredients, like vitamin C, through soap to the skin. Manufacturers also test new enzymes and bleaches that improve the efficacy of products.