Ecover

Since the financial crisis set in, green product sales have dropped off. We examine why companies like Belgium’s pioneering green household product-maker Ecover look set to weather the commercial climate change

There are two reasons why a company like Ecover, Belgian purveyor of green cleaning products, will have suffered in recent years: the economic crisis has forced households to tighten their budgets and switch to cheaper brands and the momentum behind environmental issues has eased after United Nations talks in 2009 failed to secure a global treaty to fight climate change.

In the United States - one of Ecover's biggest markets - the Natural Foods Merchandiser Index shows that consumers cut back on green products during the height of the recession. While sales picked up in 2010, profit margins decreased due to rising commodity and fuel costs. On the UK market, Ecover saw a drop in sales in 2009 due, it says, to the credit crunch and competition from supermarkets own green brands.

While a couple of years ago, the world was abuzz with the environment in the run up to the UN climate talks in Copenhagen, the media and the general public now appear jaded. After all, if world leaders cannot reach a deal to cut emissions from the world's largest industrial polluters, what difference will an individual household's decision to buy green make to saving the world?

Yet Ecover, active in 35 countries, shrugs off the impact of the crisis and says that green cleaning products are here to stay. "People are still buying green," says Effi Vandevoorde, international communications manager. "Consumers who want a sustainable product pick their brand and stay loyal to it. We haven’t seen a decline in this type of buyer."

Ecover launched in Belgium in 1980, bringing a phosphate-free washing powder (with a view to minimising the effect on aquatic life once the product was washed down the drain) to the market long before excluding such pollutants became a requirement under European Union law. In the beginning, however, its devotees were the die-hard environmentalists, a rather small market segment.

But as the green movement gathered momentum, Ecover started to see demand for its products from a wider audience. In the late 1980s, it won distribution deals with large retailers; from 1989, its products were sold in supermarkets. However, the sales boom was short-lived: by the early 1990s, owing to its rapid expansion and lack of strategic vision, Ecover was standing on the verge of bankruptcy.

The key problem it faced was that, even though the green movement was gathering momentum, green products were in and out of fashion during the ‘80s and early ‘90s. To negotiate the mass market successfully, the company had to develop a strategy. "We had to come up with a business model but it was very hard to do," says Vandevoorde. "The company went through a very difficult time."

Rescue was on the way. A Danish securities risk analyst, Jørgen Philip-Sørensen, saw the potential in Ecover and bought it up in 1992. "He invested in the business and turned it around. If Ecover used to be a green company that made washing products, it became a company that made washing products that were also green," explains Vandevoorde.

Luckily, Sørensen came not only with money but a strategy to put Ecover in the fast lane. "From the moment he took over, he had a vision of building an international business," says Vandevoorde. And yet, even now, Ecover, she says, is a market follower. "That's probably not the most strategic way to run a business but we've always had to contend with the fact that the market is dominated by bigger green players than us," she says.

With solid financial backing, Ecover was well positioned for the incredible rise of the green movement during the latter part of the last decade. "The consumer had environment on the agenda. You couldn't step outside without hearing about climate change. Green became mainstream," says Vandevoorde.

But consumers panic over the shocking revelations in former US vice-president Al Gore's 2006 documentary and book An Inconvenient Truth about the potentially devastating effects of climate change has given way to more immediate concerns about the credit crunch, rising unemployment and fears over the impact on global markets of the euro crisis. Ecover fears not.

According to Vandevoorde, the company has ridden out the crisis because while a typical customer, the woman of the household, has lost her interest in the global climate change issue, she still cares about the health and safety of her immediate environment. "During the financial crisis we weren't on her agenda anymore. But she is now thinking about her welfare and that of her kids."

Ecover devotee, Alia Papageourgiou, an Australian communications expert living in Belgium, says while the green issue is still important, she's primarily a fan of Ecover's products because they are efficient and use ingredients that find favour with women: "I use them because I like to think that fewer unnecessary chemicals going down the drain can only be a good thing. Plus, the products work well, from kitchen sink cleaner to fabric softener. The branding is very appealing as well: natural and calming."

Nevertheless, the company still retains hard-core green supporters among its customers who wish to service the public good with their product choices as well as have a healthy personal environment. Marilyn Donahue-Schiller, a social activist who has lived in Brussels, the UK and the United States, says: "I suppose I don't separate green and health issues. If you make a product green, it will be both healthy for you and the environment, from the cradle to the grave."

Vandevoorde says: "With Ecover, people buy us because they want to be green from the outset." Nonetheless, other considerations are coming into play. "If we want to keep her custom, we have to make the product more personal. For example, we need to approach her from the point of view of her health and that of her kids. Our consumers won't buy us unless we are relevant."

Having weathered its own financial crisis, the global financial storm and the diminution of climate change concerns, Ecover is looking ahead to expand its position on global markets with its sights set on the Middle East, South-East Asia and possibly South America.

While China and India have dragged their heels in the United Nations climate talks, Ecover sees potential in these markets. Vandevoorde notes that in a recent compilation by Newsweek magazine of the world's greenest companies, there were two Indian companies. "These countries have growing populations and lots of green consumers."

But the focus has shifted even in the rhetoric of Ecover. With her marketing hat firmly on, Vandevoorde says: "We're very ambitious,” adding that the goal is to make Ecover "the leading brand for a sustainable and healthy lifestyle”.  While such brands rode to success on the back of consumers' desire to buy with the public good in mind, they still succeed as consumers’ concerns shift back to their homes.

Timeline

1980: Ecover is founded by Belgian Frans Bogaerts (died August 2011, aged 76); his team creates the world's first phosphate-free washing powder

1989: Ecover products first hit supermarket shelves and win fans in the mass market

1990: Danish securities risk analyst Jørgen Phillip-Sørensen buys Ecover, saving it from bankruptcy

1992: Ecover builds its first ecological factory in Malle, Antwerp province. The factory is made mostly from recycled or recyclable materials

1993: United Nations Environmental Programme gives Ecover a place in the Global 500 Roll of Honour for outstanding achievements in the protection and improvement of the environment

1996: Ecover starts exporting to the United States. The UK, too, becomes a large market.

1997: Ecover builds its second ecological factory in Boulogne-sur-mer, France

2008: TIME magazine names Ecover chief executive Mick Bremans as one of 29 Heros of the Environment
 
2010: Ecover's sales total €62 million

How green is green?

Ecover founder Frans Bogaerts dreamed of a world where our cleaning products once swilled down the drain would have a limited impact on aquatic life. Long before countries in Europe started to ban phosphates in cleaning products, he had developed the world's first phosphate-free soap powder.

The company now has a complex set of criteria in place to determine whether a product passes ‘green’ muster, tracing the origin of the ingredients right through to the impact they will have on the environment after use.

A 2010 report by UK consumer magazine Which? found that Ecover did not provide enough evidence for its "green claims". While a panel of experts comprising two scientists and a green marketing expert acknowledged that Ecover used renewable, plant-based ingredients, it said there was not enough proof that regular cleaning products would have any worse effect on aquatic life than the company’s ‘green’ ones.

A crucial indicator of how green our cleaning products are is the Critical Dilution Value, used by the European Union as a criterion for its eco label. This is a calculation of how many litres of water are required to neutralise a product so that it is longer harmful to aquatic life.

According to Ecover, 9,700 litres of water are needed to neutralise just one dose of a conventional non-eco washing-up liquid, even one without perfume. For perfumed Ecover washing-up liquid, the critical dilution value is only 4,200 litres per dose.