Starting a detergent powder or synthetic washing powder business is one of the most feasible business options owing to the straightforward manufacturing process involved. Detergent powder market is one segment of the FMCG market in the world with significant growth potential. Being a consumer good, people use it on a daily basis for clothes, hand wash and kitchen utensils and its demand is found in the market all through the year. Moreover, an entrepreneur can initiate a detergent manufacturing business with moderate capital investment.
The per capita detergent consumption in India is around 2.7kg per year, while it is 3.7kg in Malaysia and Philippines and around 10kgs in the USA. Moreover, the global liquid detergent market is expected to grow steadily over the next four years and post a CAGR of more than 8% by 2021. Seeing such huge growth potential of the detergent industry, it comes as no surprise that we would like to throw some light on the steps that are needed to start a detergent manufacturing business in this section. Take a look:
Niche and Demographics
The detergent powder market can be broadly categorized to cater to the following market types: lower, middle and higher end. India alone boasts of a Rs. 5,000 crore market and is amongst the biggest categories in the FMCG industry, following edible oils and biscuits. Rapid urbanization, emergence of small packs and sachets, wide range of choices, health awareness and urge for good living are some of the reasons that are attributed to the growing demand for detergent powder all over the world, both for commercial and residential purposes.
Every family has different laundry needs. Kids’ clothes face very different challenges in comparison to working professionals in an office environment and so every detergent need is distinctive. So, it is important to decide the right category of powder that you plan on manufacturing, keeping in mind your business plan and budget.
Here is a list of categories of detergent powder:
- Heavy duty detergent
- Phosphate-free detergent powder
- Light duty detergent
- Fabric soft detergent powder.
Moreover, there are 2 broad categories for a detergent based segment: Oil-based laundry soaps and synthetic detergents. These detergents are available in wide variety options in the market depending upon a different percentage of active ingredients and other components. These forms include:
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Formula of Washing Powder
The manufacturing of detergent powder is not so complicated and involves mixing of different ingredients in the right proportions. Each detergent making company has its own customized formula that can be crafted keeping in mind your target market. Here is a list of basic ingredients that are needed in a detergent powder manufacturing process:
- 85% active LAB acid slurry
- Sodium Carbonate
- Sodium metasilicate
- Alkaline sodium silicate
- Sodium bicarbonate
- Sodium sulphate
- Sodium tripolyphosphate
- Sodium carboxymethyl cellulose
- Phthalocyanine blue color or oil-soluble yellow color
- Optical whitener
Budget needed for Detergent Business
Budget is mentioned for a medium sized detergent powder manufacturing unit with a 1000m sq. ft. area. Keep a minimum budget in mind to be Rs. 25 lakh. This is because of the presence of a large number of competitors in the detergent manufacturing industry so initially, the struggle for selling would be too high.
- Manufacturing unit rent: Rs. 1 lakh per month
- Raw Materials: Rs. 4 lakh
- Branding: Not fruitful for business on this budget initially
- Plant manager at Rs. 50,000 per month,
- Purchase officer at Rs. 30,00 per month
- An accountant at Rs. 30,000 per month,
- Factory workers with a salary of Rs. 10,000 per month each
- Supervisors at 40,000 per month per employee
- Engineer at Rs. 35,000 per month
- Salesmen at Rs. 30,000 per month
- Quality control manager at Rs. 30,000 per month
- Other staff like security guards, drivers, and electricians at Rs. 8,000 per month.
- Equipment: Rs. 10-15 lakh onwards
- Advertisement: Rs. 50,000 per month
- Insurance: Rs. 1 lakh cover
- License and registration: Rs. 50,000
Business Plan for Detergent Business
A great deal of market research and a well framed Business Plan is needed before starting a detergent manufacturing business. The business plan should be able to incorporate your company’s mission statement, budgeting, and target market. Here are some of the most important elements that should be included in a business plan for a detergent business:
- Target Market
- Cost and Source of raw materials
- Plant capacity and Machinery cost
- Capital investment
- Management structure
- Marketing strategy
- Detergent manufacturing process
- Detail financial plan
Incorporating all these crucial aspects in your business plan helps you in keeping your expenditure in check. It also helps you to understand where all you intend to spend your finances and how you would be achieving your business goals.
Deciding on the legal pattern of your company is the next important step. Registering your business name is of utmost importance and you can initiate your business as LLP, Pvt. Ltd. Or Ltd Co., partnership or as a sole proprietor. Registering your business as SSI unit helps in obtaining government subsidy. Next comes opening a bank account under your business name to carry out all business transactions.
Especially in a detergent making business, it is important to apply for a ‘Consent to Establish’ and ‘Consent to Operate’ from the Pollution Control Board. For this, in India, for instance, you need to have BIS registration and IS: 4955-1968. It is specified for synthetic detergent powder for household use. Also needed is a trademark registration to protect your brand name and trade license from the local municipal authority. To initiate distribution network, opt for ‘Distribution Agreement Paper’. In India, additionally, you can apply for MSME Udyog Aadhaar online registration and GST registration.
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The factory location should be chosen carefully keeping in mind that the location should have adequate availability of water, electric power, and transportation. Moreover, it should also be set up in a region having close proximity to the source of raw materials and somewhat nearby the target market.
The factory should be in compliance with state and government zoning requirements. Also, the leased property should be suitable for your equipment and should have ample parking facility. The factory should be located in an industrial zone and there should be easy access to the factory through land transportation.
An average detergent powder manufacturing plant needs a few modernized tools and equipment and ample space to work in the manufacturing facility to initiate the manufacturing process. Below is the list of equipment needed:
- Mixing vessels
- High-pressure tanks and reactors
- Weighing scale
- Storage and raw materials tanks
- Conveyors sieve
- Spray dryer
- Packaging machine
- Waste disposal baggies and plastic bags
- Anti-pollution unit
- Gas or electric stove
- Blenders, hand gloves, and basins
Raw Materials Required
The next important step is to look for the most ideal and cost-effective supplier of raw materials who can ship these to you at your manufacturing facility warehouse. Purchasing raw materials consumes about 60% of the detergent business’s working capital. One can also purchase these raw materials yourself from the wholesale market, however, doing this can be cost-effective and very time-consuming in the long run.
Detergent powder manufacturing formulations essentially consist of active ingredients, STPP, Filler such as sodium sulphate and silicate. Here is a list of raw materials needed to initiate a detergent making process:
- Sodium sulphate
- Soda ash light
- Trisodium Phosphate
- Sodium Tri Polyphosphate (STTP)
- Sodium Meta Silicate
- Carboxy Methyl Cellouse
- Glauber’s salt
- Fabric softeners
- Detergent builders
- Bleaches and compounds
- Caustic soda
- Sodium silicate
- Synthetic perfumes and fragrances
- Alkyl benzene sulphonate
- Polythene bags for packaging
Manufacturing Process of Detergent Powder
There are predominantly 2 processes of detergent manufacturing:
- The Raw Material Mixing process (suitable for small-scale production), and
- The Spray Dried Process (for large-scale industrial production).
Let us take a look at both of these processes in detail:
Raw Materials Mixing Process/Blending Process
In the blending or mixing process, first ingredients like surfactants, builders, and perfumes are fed to a large blender. This process involves 2 types of blenders with varying capacity. One blender is rectangular shaped blending type while the other one is a cylindrical ribbon blender. The latter one comprises of built-in blades that allows scraping and mixing of all the ingredients. Solid phosphates, additives, sodium silicate and linear alkyl benzene paste are mixed in a slurry tank. Once all the ingredients are mixed together, the mixture is fed to a conveyor belt through a doorway at the bottom of the blender. The belt then shifts the detergent to a rotary sealing machine and the product is then finally packed and sealed for selling purpose.
Spray dried process
First, all the dry, as well as liquid ingredients, are mixed together in a slurry or thick suspension in a tank known as a Crutcher. The slurry is then heated and pumped into the top of a tower, and eventually sprayed through nozzles under high pressure until small droplets are formed. The droplets fall through a current of hot air, forming hollow granules as they dry.
The dried granules are collected from the bottom of the spray tower where they are screened to achieve a relatively uniform size. After the granules have been cooled, heat sensitive ingredients that are not compatible with the spray drying temperatures (such as bleach, enzymes, and fragrance) are added.
Traditional spray drying produces relatively low-density powders.New technology has enabled the soap and detergent industry to reduce the air inside the granules during spray drying to achieve higher densities. The higher density powders can be packed in much smaller packages than were needed previously.
Agglomeration, which leads to higher density powders, consists of blending dry raw materials with liquid ingredients. Helped by the presence of a liquid binder, rolling or shear mixing causes the ingredients to collide and adhere to each other, forming larger particles. Dry mixing or dry blending is used to blend dry raw materials. Small quantities of liquids may also be added.
Understanding your target market makes it easier to adopt branding strategies for your product. Some consumers differentiate between various brands by looking at various ingredients while others focus primarily on the packaging. Besides, a single brand is often available in various forms: liquid, powder form or single dose, calling for different techniques for each one of them.
Also, think of some catchy and unique business names that would be most suited for your detergent making business. Eventually, it is your brand and you would want it to be a reflection of your visions and values. Create a unique brand logo that it enticing and appealing to the masses and underlines your core values.
Consider, for example, the premium detergent brand ‘Tide’ that has a trademark that is easily recognizable in striking colors of orange and yellow, superimposed by the name ‘Tide’ in blue. It was one of the first brands to be packaged in Day-Glo colors that are known to be strikingly eye-catching. The coloring scheme was meant to convey an aggressive impression of the ‘rugged strength’ of the brand.
Estimate your annual production cost keeping in mind the cost of raw materials, utilities, labor, and maintenance. On the basis of your target market and product, you would have to finalize a pricing for your detergent. Also consider additional parameters like lease cost, overheads, marketing and distribution expenditure, in addition to the cost of finance and depreciation. One must also consider the fact that the prices of some raw materials might increase at a later stage so you cannot change your product pricing every time, nor can you sell your detergent at losses. So, one must carefully consider a potential price inflation too before setting up the pricing.
Even though the detergent manufacturing business is highly profitable, there is stiff competition from various big brands. And so, products should be priced accordingly considering all the above factors. Learn more about your competitors’ prices in your area and then set prices, on the basis of sales tactics.
Detergent Waste Disposal
Being a synthetic product, laundry detergents are subject to grave risk to the environment. The phosphates used in the making of these detergents are a source of pollution in the region. Additionally, a great amount of industrial waste faces an issue of safe disposal. These wastes pose a lot of health hazards to the surrounding ecosystem and also contribute to a high level of pollution.
The Proper arrangement should be made for disposal of solid waste as well as liquid waste. All bio-medical waste shall be destroyed as per the provisions of the Bio-Medical Waste Rule, 1996 in India. Apart from it provision should be made for proper and safe storage of waste material waiting for disposal.
Advertisement of Detergent Business
Promotion of the product plays an essential role in the success or failure of a business. Now there are so many mediums through which you can advertise or promote your washing or detergent powder and can reach a maximum number of people. Because detergent is a consumer goods business, a huge amount of media promotions are required to establish the brand. At first, you can focus on targeting your local market and then think of expanding your operations to nearby areas.
Focus on a detailed company website that speaks a lot about your organizations and product. Opt for different marketing strategies such as traditional printing and television advertisement. Successful marketers also utilize social media to boost the popularity of their company’s laundry detergent brand. For example, the makers of Gain laundry detergent launched a “sniff contest” via Facebook, inviting consumers to purchase a bottle of Gain, smell the scent, and share a brief story or video about their sniffing experience. The campaign drew more than 300,000 stories, videos, and new Facebook fans. Following the success, the company dubbed their fans “Gainiacs” and continues to engage them through social media. Likewise, you can consider arranging competitions between same budget detergent powders to gain customers’ confidence in your brand. Additionally, you can place dealer boards at various locations with your brand name and even distribute some of the products to the shopkeepers for free initially.
Washing Powder Sellers
By this time, your product is legally ready to be rolled out in the market and it should be worth all the hard work that has gone into it till now. One way is to focus on maximizing your B2B channels to the maximum. Establish strong distributor-dealer network. Do some outdoor media activity. Employing commission based sales representatives can help a great way in boosting sales. Also, ensure that your product is available at all the retail counter within the area you are catering.
You can also give offers to retailers also in the beginning so that they only sell or at least introduce your products to their customers. Offer some perks or discounts to shop owners to improve your sales like a short domestic or an international trip, a yearlong free supply of your products and so on. Some of the opportunities that you can explore in order to sell your product are:
- Local co-ops and Natural product stores
- Online Retailers
- Company’s website
- Super Markets
- Brick and Mortar store