Method Home Cleans Up With Style and (Toxic-Free) Substance
Adam Lowry and Eric Ryan, high school pals from suburban Detroit, are not exactly the kind of folks you would expect to launch a cleaning products business. They are, for lack of a better word, slobs. When they started Method Home, they lived in what they called one of the dirtiest apartments in San Francisco. And the total lack of interest in tidiness was nothing new: Ryan's mother says she's never seen him make his bed.
And yet, this unlikely duo — Lowry, a Stanford-trained climatologist who worked on the Kyoto Protocol, and Ryan a strategic planner who did branding for The Gap and Saturn — has come up with a unique formula that changed the way consumers think about the products they use to wash their hands, floors and clothes. In the process, they have changed the entire $5.2 billion cleaning products industry. By adding innovation (odor-neutralizing kitchen soap), cool packaging (laundry detergent in a pump), and fun fragrances (ginger yuzu!), to the traditionally staid green cleaning products category, they brought eco-friendly cleaning out of the natural foods stores and onto mainstream shelves.
"That was their brilliance — understanding not to limit the audience to people interested in the environment," says Candace Corlett, President of WSL Strategic Retail, a marketing consulting firm in New York. "They have pretty bottles so even if you are not inclined to be eco-friendly you want that bottle on your shelf."
At a time when more cash-strapped consumers are comparison shopping, clipping coupons, and moving to private label, Method has seen growth in sales in the last year in its premium-priced laundry and cleaning products. Its 100 products — from pink grapefruit phosphate-free dish soap to green tea and aloe foaming hand wash — are sold nationally in Target, CVS, Lowe's, and Bed Bath & Beyond. The products are also available in Canada, France, Japan and the UK; with the help of those markets, the San Francisco-based private company expects to generate more than $100 million in revenue this year.
A commitment to trying new things in new ways is what keeps Method ahead. Perhaps the best example, and Method's biggest investment — it spent $10 million on laundry ads last year alone — is laundry detergent. Calling the laundry jug the "SUV of consumer products, heavy but supremely profitable," Lowry claims Method was the first to launch a "triple concentrate" product, taking the water out and reducing the packaging material. Method eventually evolved its formula to 8X concentrate and put it in a lighthouse-shaped bottle with a pump that eradicates the need for pouring detergent into the cap. "It's one of the most functional packaging styles in the category," says Whole Foods Market's Senior Global Grocery Coordinator, Errol Schweizer. "They are the Herman Miller chair of cleaning products."
It's been a decade since Lowry, 36 and Ryan, 38 figured out a new way to clean up in the cleaning products aisle. In 2000, when their friends were investing their efforts in dot-com companies, the pair spied an opportunity in the "sea of sameness" and total lack of fun in the category. At the same time, they zeroed in on the cultural shifts toward aspirational home living and health and wellness. "People were eating more healthfully, and organic, but cleaning products were filled with pesticides and poisons," says Ryan. Method's idea: Aveda for the home — an "eco-chic" approach to home care.
The housemates tapped Lowry's chemistry background and started making spray cleaning products in their sink (and, from time to time, in a beer pitcher) and gave out samples at parties. They went to independent stores and befriended the managers who made buying decisions. They did demos in the stores and gained consumer insight. "We were surprised how quickly it resonated," says Ryan. Consumers liked the bright candy-like colors and the unusual cucumber, lavender, and mandarin orange scents. After first getting into Bay Area stores, Method soon found its products in 1,000 regional grocery stores.
The founders initially financed the effort with $90,000 in savings and money from friends and family. In 2001 they received $1 million from private investors, including Tim Koogle, the former chairman and CEO of Yahoo, and it couldn't have come a moment too soon; at the time they had $16 in the bank and with $300,000 on their credit cards, they couldn't even charge a celebratory dinner after signing the deal.)
Method used the new funds to hire famed industrial designer Karim Rashid, whom they emailed cold and asked for his help to "reinvent" the dish soap bottle that sits on every sink. Rashid did just that, creating unique bottles, including one that looked like a bowling pin, which won attention — and opened doors, namely a 90-store trial in Target in 2002.
"The biggest impact they've had is to get companies and consumers to rethink what a product looks like and where you keep it," says Lynn Dornblaser, Director, and new product trend expert at Mintel, a market research firm in Chicago. "It was the first time you wanted to leave a package for something as prosaic as dish soap out on the counter."
Innovation, however, can come with a price. The bowling pin dish soap looked great, yet it leaked onto store shelves when consumers pulled off a seal to smell the product. The founders and their friends dashed from Target to Target cleaning up the spills with paper towels. ("I have nightmares still," says Ryan.) And, some experiments had poor results: A 2006 foray into personal care like shaving creams and moisturizing soaps was ended within three years and a foray into air fresheners was similarly shelved as the pair faced tough competition in this crowded category. "They went too far too fast," says Mintel's Dornblaser, "but they're not done yet."
While few companies other than eco-pioneer Seventh Generation (which makes both cleaning products and paper goods) were interested in the green cleaning space when Method started, giant competitors have since recognized profit and purpose in this pursuit. A 2008 ban on phosphates that has been adopted by more and more states each year has forced many cleaning product companies to reformulate their offerings. Now, the green cleaning products market is expected to grow to $623 million in retail sales in 2013, rising to 30% of the household cleaning market, from just a 3% share in 2008, according to research group Mintel.
The growth is driven by the entry of far bigger companies, including S.C. Johnson, maker of Windex, which in 2008 acquired the earth friendly Mrs. Meyer's brand and also launched its own line of products made of plant-based ingredients. There's also a green Martha Stewart line owned by The Hain Celestial Group. But it's clear that Method is holding its own. Last year, Clorox, which launched its Green Works line in 2008, sent Method a cease-and-desist letter for using a daisy, which it claimed as its trademark, in its marketing. Method, which had been using the daisy in ads for six years, responded with a cheeky marketing campaign in which people voted on who "owned" the daisy: Clorox, Method or Mother Nature. Mother Nature won, but so did Method. They have not heard anything from Clorox since then. (Clorox is not commenting on the dispute.)
Looking ahead, Method isn't looking at the competition, but towards new products. It launched a new laundry detergent (8X concentrated) and new dish soap refill pouches that can be recycled. It has also partnered with Disney on Minnie and Mickey Mouse-shaped bottles that came out in this Spring. Most of all, the company is staying focused on its original mission — to clean the home; they say there's still a lot of work to be done. "People ask us to do toothpaste and a lot of people would buy it, but we are still a small player in a big category with a lot of room to grow," says Lowry.