PG Procter and Gamble Co

By Sharon Terlep 

Procter & Gamble Co., seeking to prove that the consumer-products giant that invented Ivory soap, Crest toothpaste and disposable Pampers diapers hasn't lost its touch, has spent nearly a decade working on a new line of products it hopes will fill American homes.

P&G has developed a way to make laundry detergent, hand soap and shampoo without a key ingredient: water.

Executives said the new dry soaps and cleaners, which come in the form of small, fabric-like "swatches" that foam when users add water during washing or cleaning, will reduce substantially water used in production and be lighter and smaller to package and ship. That could make it easier for P&G to sell them online, bypassing retailers such as Walmart Inc. and Amazon.com Inc.

P&G said it doesn't yet know how much mass appeal the products, which are expected to appeal to younger and environmentally conscious consumers, will have. The company will face the challenge of convincing consumers that the soaps and cleaners are as good as something they would buy in a bottle, analysts said.

P&G launched Monday a website selling limited quantities of dry hand soap and laundry detergent, with six more products going on sale in early June, also in limited quantities. They will range in cost from 60 swatches of face wash for $19 to 30 swatches of laundry detergent for $29.

Initially called EC30, P&G executives are still deciding whether the products, should they go on sale for the mass market, would have their own brand or bear well-known P&G names such as Mr. Clean, Tide and Olay.

The rollout comes as P&G is riding a sales rebound, and more than a year after activist investor Nelson Peltz joined the company's board following a costly proxy fight.

Mr. Peltz has pushed P&G to more aggressively pursue breakthroughs, which P&G Chief Executive David Taylor has said the company is already doing.

Despite a solid U.S. economy, household-goods makers in the last couple of years have experienced stagnating sales amid increased competition, a consumer shift toward smaller brands and higher materials costs.

P&G late last year said it would increase prices for several products to address rising costs and reverse a trend of price cutting, and other consumer-goods companies have followed suit.

Lee Ellen Drechsler, the dry-soap project's research and development director at P&G, in 2011 began tinkering with the idea of condensing cleaning chemicals into minuscule fibers that dissolve when wet -- similar, she said, to cotton candy.

"We realized we could make a suite full of products that performed as well or even better than those made with water," said Ms. Drechsler, a 26-year P&G veteran.

P&G earlier this year decided the lineup was ready for broader public consumption after testing the idea with board members and some consumers through a crowdfunding website last summer, in which people paid to help fund the project in exchange for receiving early versions of the product.

Mr. Peltz made P&G's lack of recent blockbusters a central issue of the 2017 proxy fight, saying that the 182-year-old company that pioneered laundry detergent had become too mired in bureaucracy to innovate. Its last billion-dollar business, Tide Pods, was released in 2012.

P&G executives said the company's pipeline hadn't dried up but acknowledged a need to develop new products faster and with different goals in mind. P&G said it needed to look more broadly at factors such as packaging, emotional connection and rival offerings, not simply quality and efficacy as measured in labs and by consumer feedback.

P&G shares are up roughly 45% in the past year as the company cut costs, reorganized internally and experienced stronger sales. In the decade prior, P&G shares gained just 8% while the S&P 500 nearly doubled.

Using the old metrics, "you would have thought P&G was growing in every category," Kathy Fish, the company's R&D chief, recently told investors. "It was very humbling to find we weren't as good as we thought we were."

The dry soaps represent a test case for P&G. Typically an R&D team must work with other departments to manufacture, package and market a new offering. In the case of EC30, Ms. Drechsler's team includes people from each unit. The EC30 lab has its own production line.

Instead of waiting until the project was fully baked to begin selling to consumers, P&G used crowdfunding site Indiegogo.com to generate interest and real-life product testers. P&G quickly sold out on the site.

The swatches meet the safety standards of any P&G product in the market, Ms. Drechsler said. P&G had to repackage its Tide Pods several years ago after young children and elderly people ingested the colorful, concentrated detergent packets.

The company missed a few deadlines and had to ship the products, which come in boxes made of bamboo to eliminate plastic waste, in plastic bags. P&G is close to eliminating the bags, but still needs them to keep the products dry throughout the shipping and delivery process, said Tom Dierking, the project's design director. It is also is working on packaging that better keeps swatches dry, since several are used in or near water.

The amount of water used in the production of soaps and detergents represents a fraction of water consumed in the process of using the products. To substantially reduce water use, P&G would need to work on ways to cut down on how much water is needed to, for instance, do a load of laundry, said Deepak Rajagopal, an assistant professor at the Institute of the Environment and Sustainability at the University of California, Los Angeles.

"Most of the impact happens on the consumer side," he said.

P&G's Mr. Dierking said high-quality cleaning and personal-care products require less washing time. "The most we can do is use the best ingredients possible to minimize water usage," he said.

Elizabeth Bain, a 46-year-old lawyer from Oregon, got both the personal-care and household cleaning lines through the Indiegogo campaign. She has used the toilet cleaner, which mostly dissolved overnight, and then she used the remnants to scrub the bowl clean with a brush.

She said she might be more likely to buy the items if they came with a new, non-P&G name. "I'm less concerned with brand names," she said. "And more concerned with efficiency."

Write to Sharon Terlep at sharon.terlep@wsj.com

(END) Dow Jones Newswires

April 22, 2019 11:37 ET (15:37 GMT)

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