been successful in convincing people sold its Blue Island, 111., surfactants with science-based arguments that they plant to A&W, which used the site to are safe." enter the U.S. market. A&W added Carbide's confidence is evident in new products such as betaines and the 300 million-lb-per-year ethoxylated amine oxides and expanded output five products plant that it started up in Janu- to 10 times, Fallon says. ary 1999 in Taft, La. The facility is now Two years later, however, surfactant producing essentially all of the compa- profits were still poor, and A&W, its ny's NPEs, White says, although NPEs stock price at a longtime low, was acand other surfactants are also planned quired by a Rhodia affiliate. A&W and for Carbide's large joint-venture com- Rhodia are scheduled to merge fully plex in Malaysia, now under construc- this year, following antitrust review. tion and set to start up in 2001. In surfactants, Dow Chemical's pending acquisition of Union Carbide has the potential to bring together Carbide's NPEs and specialty surfactants business, based at two West Virginia plants, with Dow's Dowfax line of alkyldiphenyl oxide disulfonate surfactants and the sarcosinate and acyl glutamate surfactants of Dow's Hampshire Chemical hoppers walking down the supersubsidiary. market or mass merchandise store aisles in most towns in America latThomas Frazier, Dow's senior market manager for surfactants, says he er this year will come across competing can't comment on the merger but notes bottles of new fabric softener liquids: that Dow's surfactants are already part Procter & Gamble's Downy Premium of a larger package of ingredients that Care and Unilever's Snuggle 2. These Dow offers to the household and per- two next-generation products represent the latest weapons in a long-running war sonal products industry. The surfactant profit situation is no between P&G, the fabric softener categobetter for producers that use natural ry leader, and its Anglo-Dutch rival. feedstocks, according to Fred Hessel, While the consumer product giants North American Care Chemicals busi- battle on the retail shelves, a similar, ness director at Cognis, the chemicals less public competition is being waged unit of Germany's Henkel. He says pric- on the fabric softener feedstock front. It ing for coconut oil—which, along with involves the two leading cationic surfacglucose, is a feedstock for Cognis' alkyl- tant manufacturers—Akzo Nobel and polyglucoside (APG) surfactants—is SKW Group's Goldschmidt A.G.—and well over its traditional levels. 'The mar- centers on the fate of the longtime workket hasn't allowed price increases to be horse fabric softener active ingredients, pushed through easily," he says. 'To- nitrile-based dialkyl quaternaries. day's pricing is not sustainable over the The basic question at issue—whethlong haul." er these dialkyl quats have a future in Hessel isn't complaining about de- North America—has its roots in Eumand, however. He says the company's rope. It was there, beginning in Germaeight-year-old APG plant in Cincinnati is ny in 1990, that concerns arose about virtually sold out, despite a modest ca- the biodegradability of dialkyl quats, inpacity expansion last year. Cognis is cluding the most prominent variety, diplanning a more significant expansion hydrogenated tallow dimethyl ammonifor the end of 2000. um chloride, or DTDMAC. Hessel attributes the growth in APGs According to Robert McConnell, a to their continued acceptance in new former cationic surfactant industry exproducts. During 1999, he says, APGs ecutive who now runs McConnell Conwere formulated into a major "value" sulting in Dublin, Ohio, these concerns brand laundry detergent; several per- quickly grew in an environmentally sensonal care products, including a new dry sitive Europe. Consumer product manufacial wipe marketed by a major soaper; facturers responded equally quickly by and some of the popular tub and shower moving to an alternative family of catcleaning sprays. ionics known as ester quats. By the At Albright & Wilson, there is a sim- mid-1990s, McConnell says, the entire ilar "good growth-bad pricing" story. European fabric softener market had Faced with poor profits in 1997, Witco switched to the new quats.
Fallon expects the deal will be positive for both firms, combining A&Ws global surfactant network with Rhodia's strong North American presence. Others, though, see the combination in a different light—as evidence that the surfactants industry is a cutthroat business in need of consolidation. "We will continue to see consolidation; the market has to correct," Cognis' Hessel says. 'The smaller, weaker companies will continue to get bought up."^
Suppliers Square Off Over Fabric Softener Actives
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In the U.S., however, the only major company to switch was P&G, moving its flagship Downy liquid fabric softener to ester quats about four years ago. Moreover, McConnell says, P&G made the move quietly and without any environmental claims, leaving little incentive for its rivals to do the same. Today, Unilever continues to use DTDMAC in its U.S. Snuggle line. Frank Sherman, Akzo Nobel's general manager for surfactants in the Americas, doesn't see this situation changing any time soon. He acknowledges the European shift—one that Akzo Nobel played a major role in facilitating—but says subsequent biodegradability studies by a European consortium in 1993 and the Soap & Detergent Association in 1996 absolved dialkyl quats of shortcomings. "The studies came too late to reverse the change in Europe but did slow the conversion in North America," he says. Indeed, Sherman sees P&G's switch in the U.S. as driven mainly by a desire to globalize its fabric softener formulas. Other companies, he says, found that dialkyl quat systems offer advantages such as better softening, good fragrance stability, and ease of fabric ironing. "They are still using dialkyls, even after doing a lot of development work with alternatives," he says, emphasizing that Akzo Nobel is investing in actives of all types, including ester quats. "Our commitment is to fabric softeners in general, not to any one product family," he explains. However, executives at Goldschmidt, which became a leading manufacturer of fabric softener active ingredients on Sept. 1,1999, when it completed JANUARY 24, 2000 C&EN
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product report never allowed cationics makers the acquisition of Witco's oleoto get much additive profit from chemicals and derivatives group, Downy leads fabric softener converting the amine to the quahave a very different view of the market in U.S. ternary," he says. situation. A harbinger of the direction of 'The U.S. is ready for a change," Downy Other Nice'n (Procter & the U.S. fabric softener actives 15% says Greg Christakos, vice presiFluffy Gamble) (USA Detergents) market may come from Mexico, dent of sales and marketing for 46% 4% McConnell says. Colgate-PalmolGoldschmidt's fabric care busiCling Free ive—a fabric softener producer in ness. In Christakos' view, dialkyl (Benckiser) Mexico and Canada but not the quats are old technology, and it's 4% U.S.—has been expected to only a matter of time before they switch its Mexican business to esare phased out. "In about two to Bounce ter quats for almost two years, but four years, everyone will be using (P&G) hasn't to date. "I don't see anySnuggle 15% ester quats," he predicts. (Unilever) thing major happening unless Christakos does acknowledge 16% they or Lever decide to switch or that the early ester quat formula3 U.S. sales = $1.3 billion P&G starts making biodegradabiltions had performance drawa Sales in food, drug, and mass merchandise stores for 52-week period ity claims," McConnell says. backs compared with the dialkyls ending Nov. 21. 1999. Source: Information Resources Inc. Another indicator for softenthey were replacing, but he says er actives is how consumers relater developments such as quat/ coquat combinations and modification drogenated to fatty amines and then fur- act to Downy Premium Care, which deof their fatty acid-amine ratio have im- ther derivatized to yield quaternaries. But buted last year, and Snuggle 2, which proved ester quat performance. "Be- Christakos points out that the intermedi- is said to be in test marketing now. cause of changes made over the past 12 ate amines have significant applications Both products claim to deliver fabrics to 24 months, ester quats can match di- in their own right, including outlets in that have fewer wrinkles and are more alkyls," Christakos says. "Goldschmidt specialized markets where prices are absorbent than ones treated with other has played a major role in this effort better than in the larger volume quater- softeners. According to patent literature, P&G even though we produce both types of nary market. quats." McConnell, whose firm is conduct- is using a diol-based solvent that proThe differing views of the two major ing a study of the global cationic and vides increased flexibility in blending cationic surfactant manufacturers is amphoteric surfactant arena, confirms ester quats and other ingredients. As a likely rooted in existing supply relation- that the amines business in North result, Downy Premium, which is about ships. According to McConnell, Akzo America has growth opportunities of its 40% solids instead of the traditional 28%, Nobel is considered to be Unilever's ma- own and isn't any less profitable than costs substantially more than the stanjor supplier of DTDMAC, whereas the quaternaries. "Market conditions have dard Downy formula. Unilever's Snuggle 2, in conP&G ester quat business is more trast, is thought to be a variation evenly divided between the two on the standard Snuggle fabric firms. A switch by Unilever softener formula—a blend of would be a challenge for Akzo, DTDMAC and an amidoamine but could present opportunities quat, a less expensive quaternary as well. made by manufacturers such as All agree that a switch would Stepan, Croda, and Goldschmidt require investment in new ester and often found in private-label quat capacity and the concurrent fabric softeners. According to development of uses for the old caMcConnell, this combination alpacity left idle. Interestingly, the ready offers good antiwrinkle 1994 merger between Akzo and and rewetting properties and Nobel Industries that formed helps Unilever make its claim Akzo Nobel was precipitated in without making a major ingredipart by the need to consolidate the ent change. European cationic surfactant inIt's too early to tell whether dustry following the fabric softenthe P&G product will be successer switch there in the mid-1990s. ful, but some industry observers However, Christakos mainsay initial consumer acceptance tains that the manufacturing chalhas been slow, mainly because of lenge of a U.S. switch would be the higher price. 'Whatever hapmanageable—and possibly even pens," Akzo Nobel's Sherman to the benefit of cationic surfacsays, "the new softeners show tant makers. there is a substantial opportunity In the dialkyl quat production for cationic surfactant suppliers process, fatty acids, usually tallow to bring enhanced properties to based, are reacted with ammonia fabric care products."^ to yield fatty nitriles, which are hy- Goldschmidt worker tests efficacy of fabric softener. 5 2 JANUARY 24, 2000 C&EN
