Clean Goes Green

By Coeli Carr

Sarah Gallop likes her clothing made of natural fabrics, house paints free of toxins and biocides, appliances efficient and home products eco-friendly. "My bottom line is my health," says the interior-design consultant, who lives in Santa Monica, Calif. But Gallop, 24, admits to coming up short in one area. "It's difficult to find green products that clean well."

This is the opportunity that Clorox Co. hopes to exploit with a natural cleaning line called Green Works, featuring products that it proclaims are biodegradable, are nonallergenic, are not tested on animals and--befitting a company whose name is synonymous with bleach--really give dirt a run for its money. "The challenge for us was to produce a natural cleaning product that actually worked as well as conventional ones and that you could deliver at a reasonable price," says Larry Peiros, Clorox's coo for North America. Last year the company's earnings increased 12%, to $496 million on sales of $4.8 billion, but its stock price has lagged the S&P 500.

Clorox's entry into this blossoming segment has created somewhat conflicting reactions. Rivals think the giant will make the category, not take it. "It's good news for us. Clorox can help educate the market," says Monica Nassif, founder of the Mrs. Meyer's Clean Day brand. She also thinks the company will help expand the availability of eco-friendly ingredients, like plant-based surfactants, from suppliers.

As for consumers, it all depends on your shade of green. Peiros acknowledges that Clorox's daring "to mainstream the idea of natural cleaners" has fueled a healthy amount of skepticism among consumers all too aware that Green Works was sired by a company that sells carbon-releasing Kingsford charcoal and petroleum-based Glad bags, not to mention cat litter and even water filters. Karen Hernandez, a jewelry designer in Sarasota, Fla., who considers bleach a "necessary evil," says that given Clorox's product portfolio, she would not buy their green line of products. "Something's amiss that makes me feel uncomfortable about it," Hernandez says.

Peiros doesn't whitewash such public scrutiny, but he believes if the market wants green, there's no reason a trusted brand like Clorox can't provide it. "We're doing something that we think is the right thing for the business and society, and we'd love to be doing more of it over time," he says. "But we don't pretend we've converted ourselves." To up Clorox's eco-cred, the products will carry the logo of the Sierra Club (in return for a portion of sales). And to up its distribution, Clorox got Wal-Mart Stores to carry the entire line; so do a "very high percentage" of Clorox's other retailers. Cleaning is a $3.4 billion category, says Tom Vierhile, director of research firm Datamonitor's Productscan Online. "The natural market is still a little niche," he says, "but the bigger companies perceive a high-growth area."

What does Green Works bring to the table? Clorox spent about $20 million to develop the products--all-purpose, dilutable, bathroom, toilet-bowl and glass-and-surface cleaners. But perhaps most significant, Green Works products are priced at a 15% to 20% premium compared with conventional ones (suggested retail price for 32 oz. [1 L] of the all-purpose cleaner is $3.39). "The prices are much lower than for products typically found in Whole Foods," Peiros says. "Consumers will be getting a great product at a cheaper price, so if I were one of those companies, I'd probably feel a little concerned."

Well, Larry, actually they don't. Alastair Dorward, CEO of Method Products, a San Francisco-based firm whose line of 150-plus household products grossed "well over $100 million" in 2007, says the presence of Clorox will prompt people "to start to question whether the products they currently use are good for families and the environment." He likes his odds.

Michal Ann Strahilevitz, a professor of marketing at Golden Gate University in San Francisco who researches consumer interest in green, thinks Clorox's pursuing its core customer base--rather than trying to convert loyalists of other natural brands--is the smarter strategy. "Consumers come in different shades of green," she says. "Some are dark green, as in almost obsessive. But it's more typical for consumers to be light green, when the price they pay does not involve too much inconvenience or too much money." And that's exactly the way Clorox is shading it.