Clorox Sees Growing Sales from Green Works Line
Date: 18-Aug-08
Country: US
Author: Brad Dorfman
"We think that this could be a multi-hundred-million dollar business over time," CEO Don Knauss told Reuters in an interview.
Clorox, whose namesake bleach is a household staple, had US$5.27 billion in sales in the fiscal year ended June 30. Knauss said that the eco-friendly Green Works line is already contributing about one-third of the 4 percent to 6 percent sales growth management has forecast for the entire company.
Clorox launched the Green Works line last December with seven products -- including an all-purpose cleaner, a toilet bowl cleaner and a glass cleaner -- looking to take advantage of growth in an industry dominated by smaller players like Seventh Generation and Nature Clean.
The products tap into consumers' growing concerns about the environment and using harsher chemicals in the home. Clorox brings a large-scale manufacturing and distribution platform to the business. The line features biodegradable, nontoxic plant-based cleansers.
In the interview on Thursday, Knauss said Clorox already has about 40 percent to 45 percent of the natural cleaner market, according to retail data that excludes Wal-Mart and some other outlets.
The company expects Green Works sales to reach an annual retail sales range of US$75 million to US$100 million this year, based on products already in the market, a spokeswoman for the company said on Friday.
Earlier this month Clorox lowered its earnings forecast due to soaring oil prices.
Knauss said that even though oil has fallen sharply since the US$3.60 to US$3.75 a share forecast for fiscal year 2009 was issued, the commodity was too volatile to prompt Clorox to review that forecast yet.
LEMONS, CORN AND COCONUTS
Green Works products, made from lemons, corn and coconuts, cost more to make than Clorox's conventional cleaners. But at prices that fall between those of conventional cleaning products and pricier natural cleaners, they also are more profitable, Knauss said.
Margins for Green Works products are 20 percent to 25 percent higher than the company's overall margins, he said.
Clorox recently launched a Green Works dish cleaner after seeing that while the overall dishwashing liquid segment was stagnant, natural dish soap was growing at 30 percent or more, Knauss said.
The next Green Works product could be wipes, Knauss said, and the company will likely bring out other products.
"About every six to nine months there will be news on Green Works (moving) into an adjacent space that we think will be relevant to the franchise," Knauss said.
The company also is looking to sell Green Works to janitorial services and other businesses.
Clorox shares were up US$1.27 at US$60.54 on Friday on the New York Stock Exchange.
The stock is down 7.3 percent this year, while larger competitor Procter & Gamble Co is down 2.15 percent.
(Editing by Carol Bishopric)