Henkel North America (US)


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Consumer products group Dial Corp became the local arm of German consumer goods giant Henkel in 2004, and was renamed Henkel North America in 2009. It manages a small but diverse portfolio of US personal and household care brands, mostly in the value segment. Lead products Dial soap and laundry detergent Purex are among North America's best-known household brands, although the group trails the likes of Procter & Gamble or Unilever in overall size. Dial's performance flagged significantly during the 1990s before making a recovery in the mid-2000s, but even after acquisition by Henkel, the company has maintained a comparatively low profile compared to its larger competitors. In 2005, it acquired leading deodorant brand Right Guard. In a major boost to its profile, Henkel acquired larger US laundry care rival Sun Products in 2016, a deal that elevated it into the local #2 position behind P&G. A separate division of Henkel North America is the local leader in industrial and consumer adhesives, formed from the 1997 acquisition of Loctite Corporation. See also Henkel Germany

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Competitors

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Contact

Henkel Corporation N America
One Henkel Way
Rocky Hill, CT 06067
United States
Tel: +1 860 571 5100
Henkel Consumer Goods
19001 North Scottsdale Rd.
Scottsdale, AZ 85255
United States
Tel: +1 480 754 3425

Brands & Activities

Henkel was comparatively slow to shake up the operations of its acquired US household care business, although a new CEO was appointed in 2005, and changes began to take place the following year. The purchase of Right Guard and sale of Armour tinned meats were a good start. However, the group is still heavily reliant on the value sector, as well as on sales through Walmart, thought to account for as much as 30% of revenues.

Despite its acquisition by Henkel in 2004, Dial continued to operate for several years as a separate unit from the German company's Schwarzkopf & Henkel haircare subsidiary based in California, as well as the adhesives division. All three units were finally combined under the Dial North America umbrella during 2009. The former Dial businesses now operate across two segments of Laundry & Home Care and Personal Cleansing. The group's biggest sector is Laundry Care. The key brand here is Purex, which serves as the umbrella for a range of detergents, bleach and fabric softeners. Traditionally seen as a value product, it has steadily repositioned itself as a mid-market or even premium brand through a string of innovative variants, not least Purex Complete 3-in-1 Laundry Sheets, combining detergent, fabric conditioner and anti-static ingredients in a single easy-to-use sheet; and Purex Crystals scented conditioner. Henkel ranks as the #4 in the US liquid laundry detergent sector with around 8% share in 2015. That year, the group launched its top-selling European brand Persil in the US for the first time in an exclusive partnership with retail giant Walmart. That group began stocking the brand as a premium-priced competitor to P&G's Tide. It already stocked Persil in some stores in Mexico. Other laundry brands include the #3 stain remover Zout, acquired by the group in 2000. A clutch of traditional favourites like Borateem bleach, Sta-Flo laundry starch, 20 Mule Team borax and Fels-Naptha laundry soap have been gradually phased out or divested.

In 2016, Henkel announced a deal to acquire local rival Sun Products, owner of All, Sun and Snuggle, for $3.6bn. The deal was completed in September that year, catapulting Henkel into the #2 position in US laundry behind P&G, with around 19% combined market share. (P&G still dominates the sector with 61% share in 2016). Sun also produces an extensive collection of private label detergents for retailers. The company was formed in 2008 from the acquisition of Unilever's local laundry business by private equity fund Vestar Capital Partners, and the merger of that unit with private label manufacturer Huish, already owned by Vestar. The Sunlight dish care brand was acquired from Unilever two years later, and the group also acquired some of Unilever's technology such as the "Small & Mighty" process for creating concentrated detergents. Revenues were around $1.6bn in 2015.

In home care, the company markets a wide range of air freshener products under the Renuzit brand, including sprays, aerosols and scented candles. Competitors include SC Johnson, Reckitt Benckiser and P&G. In 2004, the Home Care division was expanded to house a range of insecticide products under the Combat banner and Soft Scrub household cleaner, transferred from Clorox as part of the latter's buy-back of shares formerly owned by Henkel.

The group has long been a major force in the personal cleansing sector, although the enormous lead it enjoyed in the 1950s and 1960s has been substantially reduced in recent years. Nevertheless, Dial remains America's leading deodorant bar soap and the second largest liquid hand soap, as well as a growing force in body washes. There is a large range of different products. Among recent additions was Dial ColorClean, a liquid soap with "Timer Beads" which actually made the lather change colour when hands are clean. Other products include Dial Complete, a foaming anti-bacterial handwash. In 2008, Dial sponsored a detailed study by the US scientific Journal of Food Protection which appeared to prove that Dial Complete was significantly more effective than other products in reducing the risk of food poisoning from transferred bacteria. Other brands include Coast and Tone soaps and body washes, and Pure & Natural soaps. 

Dial's personal products portfolio was boosted significantly in 2006 with the acquisition of the Right Guard deodorant and anti-perspirant brand from Procter & Gamble, along with other products. Purchase price was around $420m. The deal made Dial the #3 in this sector in the US. A Right Guard variant, RGX bodyspray, was launched in 2007. The personal cleaning division was finally combined in 2009 with the local arm of Henkel's Schwarzkopf haircare business. In the US, this is mostly known for a collection of styling products including, DEP, got2b, Citré Shine and Smooth 'N Shine. Several non-core brands including LA Looks and Soft & Dri were later sold on to private equity investors. In June 2014, the group added three professional brands, SexyHair, Alterna and Kerna, for E270m.

Henkel's adhesives subsidiaries still remain more or less separate from the household and personal care business. The main consumer-facing brands here are LePage, Loctite and Pritt, but the group also produces an extensive range of professional and industrial adhesives, of which Bonderite and Technomelt are perhaps the most well-known. Henkel acquired The Loctite Corporation in 1997, long before it began to market personal or home case products in the US.

Dial's foods division was finally wound down in 2006, with the sale of the Armour range of canned meats to Pinnacle Foods, for around $183m. (The Armour fresh meats brand is owned separately by ConAgra). Dial's international business has also gradually been wound down since the late 1990s, and is now focused on Canada and Puerto Rico, although the group also exports to Asia and Latin America. The company's substantial operations in Argentina were sold at a loss at the end of 2002. 

Financials

Dial's group sales in 2003, its last full year as a separate entity, were $1.3bn. It no longer reports separate figures. Henkel derived sales of E4.1bn (around $4.5bn) from the US in 2016. A considerable part of that sum is generated by the North American operations of the group's adhesives business, especially industrial adhesives used in automobile manufacturing.

Management

Jerry Perkins is president of Henkel North America, and head of adhesive technologies across the Americas. Jens-Martin Schwaerzler is president & CEO of Henkel Consumer Goods. Divisional heads include Ed Vlacich (SVP & GM, Henkel Beauty Care retail) and Stefan Mund (SVP & GM, Henkel Hair professional).

Marketers include Ken Krasnow (VP, omnichannel marketing), Bibie Wu (VP, marketing detergents), Nadine Berghaus (VP, new business), Justin Giouzepis (VP, marketing, beauty care), Wendy Warus (VP, sales & brand management, home care), Janell Holas (VP, marketing, laundry detergents), Marla Bradbury (marketing director, beauty care), Michael Giombolini (senior brand manager, Dial soap), Caroline LaBarre (marketing director, premium laundry care), Sami Myohanen (marketing director, laundry care), Andrea Jeannet (head of US media, consumer goods) and Jessica Powell (media & integrated marketing manager, beauty care).

Dan Brogan is president, North America adhesives, supported by Fred Chupin (VP, global marketing, adhesive technologies), Ken Martindale (VP, global market development, adhesive technologies) and Pierre Tannoux (marketing director Loctite Consumer Adhesives).

Background

Dial is best-known for its cleaning products, but Armour canned meat is actually where it all began. Philip Danforth Armour was one of thousands who raced to California in the 1860s to stake his claim in the Great Gold Rush. He found no gold on the West Coast, but instead made his fortune after returning home to the MidWest where he set up a meat-packing business to produce canned meats for sale to other prospectors. The business firmly established Chicago as the centre of the American meat industry, and made Armour enormously wealthy. Famously, he revolutionized the trade by making use of all body parts from the animals slaughtered in his yards ("except the squeal"). Eventually, along with meat, Armour sold glue, oil, fertilizer, hairbrushes, buttons, oleomargarine and drugs, all made from animal by-products. As a result in 1888 he expanded into the soap business, introducing Armour Family Soap (derived from animal fats). For more than 50 years, however, this remained just a sideline to the huge meat packing operation, which eventually came to cover more than 14 acres of land in Chicago.

In the 1940s, Armour & Co revitalized its soap business with the commercial launch of a product it had developed for use in its meat packing plants. This new soap contained a germicide which had been used to kill bacteria from raw meat in Armour's packing plants. However Armour's chemists had also noticed that it killed the bacteria which created body odour. More than 700 names were considered before Dial was selected, to suggest that the product worked around the clock. Priced well above competing soaps, Dial was launched in 1948 with a full page advertisement in the Chicago Tribune newspaper, using perfumed ink. It proved a huge success, and by 1953 Dial was America's best-selling soap. That year, the company introduced the slogan "Aren't you glad you use Dial? Don't you wish everybody did?", and subsequently expanded the range into shaving products and deodorants.

In 1970, Armour & Co was acquired by The Greyhound Bus Company, then diversifying widely into a number of unconnected industries. Almost inevitably, the company began to struggle with its portfolio, and began unbundling again in the early 1980s. Following labour disputes mid-decade, the Armour meat-packing business was sold off to ConAgra, although the company held onto its canned meats range. The core Greyhound business was also sold in 1987, and the company rebranded itself as Armour-Dial, refocusing on the cleansing market. At around the same time, Armour-Dial acquired detergent manufacturer Purex Industries, whose other brands included Brillo soap pads and Trend detergent. This was followed by 20 Mule Team and other Borax-based products in 1988, and Breck shampoos in 1990. A year later Armour-Dial became The Dial Corporation in honour of its biggest brand.

During the course of the next decade the group spun off its remaining transport and services businesses, while also building its consumer products portfolio. Renuvit was acquired from SC Johnson in 1993; two years later the company introduced the Nature's Accents range of soaps and skincare products for key client Wal-Mart. In 1997 Dial sold off Brillo and a number of other surface cleaning brands to Church & Dwight, but added a large range of soaps and detergents in Argentina, as well as Freeman Cosmetics and Sarah Michaels bath products. In 1999, the group announced a US-based joint venture with German laundry and personal care group Henkel to market a range of enhanced Purex Advanced laundry detergents based on Henkel technology. Shortly afterwards the joint venture also acquired regional home dry cleaning range Custom Cleaner in a bid to compete with P&G's new Dryel product. However both proved disappointing and were dissolved in 2001. A range of specialty skin, hair, bath, body and foot care products sold under the Freeman and Sarah Michaels brand names were sold at a substantial loss in 2001. 

With sales now stagnating, new CEO Herb Baum was brought in to restructure the group, initially in order to prepare it for a trade sale. However no bids were received for the whole company, although individual brands received offers. Rather than carve up the business piece-meal (like one of Armour's hogs), Baum set about repairing much of the damage of over-diversification by concentrating on core lines in the US market, and also strengthened the portfolio with the purchase of Coast men's soap and Zout stain remover. Having cut the group's debt dramatically through disposals, Baum suggested he might begin to look at further acquisitions in 2003. But instead, the relationship with Henkel blossomed once again, and in December 2003 the German group announced plans to acquire Dial for around $2.9bn. Baum eventually retired from the group in April 2005. Brad Casper, an executive well experienced in laundry products after years spent at P&G and Church & Dwight, was appointed as president & CEO of Dial in April 2005 and spent five years at the company before departing in 2010.

Last full revision 15th March 2017


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