How Tide Pods restarted the innovation engine for Procter & Gamble Co.

Analyst: This one is a market changer
How did those nifty Tide Pods come to be?
How did those nifty Tide Pods come to be?
How did those nifty Tide Pods come to be?
How did those nifty Tide Pods come to be?
Posted at 8:00 AM, Sep 21, 2016
and last updated 2016-09-21 15:06:59-04

CINCINNATI -- One dose, three chambers, eight years and 50 patents: That’s all it took bring P&G’s Tide Pods product to life in 2012.

In less than five years, laundry pods have become a $1.5 billion product line for Procter & Gamble Co., which touts a 78 percent market share against the single-serving laundry products of its rivals.

Tide Pods

And the growth could be just starting. P&G is planning a major new product launch using its patented pods technology early next year.

“This is a journey,” said Jose Vega, a research and development director at P&G who guided teams in England, Brussels and Cincinnati through the eight-year development process for Tide Pods. “When you bring it all together, that’s the big aha. But it takes many small steps to get there.”

For P&G, the journey began in the 1960s, when its scientists first experimented with detergent tablets that could take the guesswork out of laundry.

The first laundry tablets were compressed-powder solids that were easy to make but slow to dissolve, a big disadvantage when it comes to laundry products. Why? The laundry cycle is quick, with variable water temperatures that make it hard to predict whether one tablet (or three) will deliver enough cleaning power.

Laundry science celebrated at Ivorydale research center

Because of those complexities, P&G moved into liquid detergents in the 1980s. But it continued to experiment with tablets until Vega had a “Eureka Moment” in 2002.

Editor's note about Eureka Moments: This is part of a continuing series of stories about innovations that had a big impact on the Tri-State. Others in this series explore the marketing strategy that made Cincinnati's Flying Pig Marathon a national phenomenon and Jimmy Bernstein's rise in the night club industry with his Howl at the Moon concept, invented in Covington.

That’s when a researcher for P&G’s Cascade brand made a game-changing observation about its compressed-powder tablet.

“If you vacuum the bottom compartment, it actually creates an interesting curvature,” said Vega. So, a researcher in Newcastle, England, decided to fill the gap with a liquid cleaning solution.

“And we thought, ‘Ooh, isn’t that great?’” Vega said. “Suddenly, we had a powder with a liquid on top.”

Vega was working in Brussels at the time, but he immediately recognized the potential.

What if P&G could develop a tablet that delivered multiple laundry solutions at the same time? That would solve a big problem with liquid detergents: Mixing ingredients in the bottle can erode their impact. But if you separate liquid detergents into chambers separated by plastic film, each could deliver maximum impact when it matters most -- inside the washing machine.

“The trick is to make it dissolve quickly,” Vega said. “That’s not easy.”

As a matter of fact, it took eight years to solve the riddle.

P&G worked with MonoSol LLC, a Merillville, Ind.-based vendor, and academic researchers to develop plastic sheets that were strong enough to survive the manufacturing process but soluble enough to quickly decompose inside a washing machine.

At the same time, P&G developed new chemical innovations to reduce the amount of water inside its detergents and keep water molecules from interacting with the film.

“A lot of trial and error,” Vega said. “This film is alive … If you’re not careful, these detergent components can make it insoluble or make it brittle. So, that balance is very, very delicate."

By the time it launched in 2012, more than 100 P&G researchers contributed to the project. And consumers quickly adopted it as a better way to do laundry.

“This one is a market changer,” said Amin Alkhatib, Home Care analyst at Euromonitor, which estimates P&G has a 49 percent share of the world’s $2.7 billion global market for laundry tablets. That includes an 80 percent share inside the U.S., where Tide Pods were first to launch.

Here’s how P&G described its Tide Pods success in a conference call with analysts this month:

Our unit dose detergents now generate over $1.5 billion in annual sales, behind the three-in-one technology of a combined detergent, stain remover and brightener. In the U.S., unit dose products account for 15% of category sales, with P&G holding a 78% share of the form. Premium products like Pods are driving market growth with the U.S. detergent category up 4 points last fiscal year.

While it isn’t the kind of innovation that invents a new product category, Alkhatib said P&G has established a long-term competitive advantage with the invention.

That’s because rivals don’t appear likely to meet or exceed P&G’s innovation, so it could continue to gain market share for the next several years. At the same time, liquid tablets are more profitable for P&G because they use fewer raw materials and aren’t as bulky, making them cheaper to store and ship.

“It is the best innovation they’ve had in a while,” Alkhatib said.