How Dropps got its eco-friendly cleaning products into Target

0:17Welcome to the Modern Retail Podcast. which I'm sure was interesting. It was. I got to meet so many sources in person and put faces to names and emails. I met lots of new people who are doing really cool things at brands. And, you know, everyone's just kind of trying to figure stuff out. But there was a lot of optimism. I think there's a there's a there's a realistic optimism right now of what it means to go ahead in uncertain times. And I'm trying to take that with me. Yeah, optimism around trying to go ahead in uncertain times is a good way to put it. Yeah, yeah. You got to keep putting one foot in front of the other.

0:55Well, today we're looking into one of my favorite CPG areas, and that is the home essentials category. Anna, riddle me this. How do you wash your dishes? To be honest, I'm a pretty brand. Well, no. I was like, I'm a pretty brand agnostic person, but I don't think that's true. When it comes to just cleaning products in general, I use a lot of Lysol, Clorox, kind of the big guns, Dawn for dishes. I think I have started to gravitate towards some other products. So if you want my current stack of dish cleaning products, it is Dawn soap for hand-washing dishes and then seventh generation tablets for my dishwasher.

1:42sure. Oh, all right. Those are good choices. Those are some standouts of the category from my perspective. Well, we're here today to speak with Drops, a cleaning brand with CEO Alistair Dorward. He's the former CEO of Method and has a lot of expertise in this space. And with Drops, he's taken what was sort of an early pioneer in the pod space and a DTC kind of darling into a more mass and omni positioning. So Drops this week has launched in Target. It's a big launch for them after already going into smaller stores and regional grocery chains like Meyers and places like that. Had you heard of Drops before this?

2:26I had not. Well, I will say I've edited some stories of yours that mention Drops, but I actually have not come across them in the wild. Yeah, you know, I'm thinking that's about to change because they're going to be getting shelf space in Target in what is a very competitive aisle where people tend to have their favorites. You know, the cascades of the world kind of have dominated for a long time, but we're starting to see more players come in like Seventh Generation that you mentioned and Drops is just the latest. What's interesting to me about this brand is they have a really, really interesting packaging factor.

3:02Instead of a tub or a plastic bag, they come in a paperboard box that's very easily, you know, compacted to recycle. It's not something that you really have to monkey around with or figure out how to dispose of. So what's interesting is I think they're trying for a play to really stand out on shelves and catch a consumer's eye who may be looking for something different. But as I said, this is kind of a competitive category. And, you know, them coming from the DTC world means they have some awareness, but not a ton, you know, unless you were, if you weren't editing my stories, you probably wouldn't have heard of this brand yet.

3:36So, you know, from your perspective, what's Drops going to have to do to catch shoppers' eyes at Target nowadays? Well, I won't comment on Drops specifically, but I would say at large, what I have learned over the years from talking to startups is that something that is really eye-catching on a DTC website does not always translate to what is eye-catching on target shelves. I think when you are on the shelf of a mass retailer, you're right next to the competition. People are going to be comparing you to what else is on the shelf. They're going to be looking at your price, looking at what kind of taglines or attributes are very easily visible on the front of the package.

4:23So yeah, I think the package question is really fascinating. And I also do think cleaning category in particular is interesting because I think that laundry detergent sheets, for example, right? I think that's a format many of us were used to the Tide Pods or the liquid detergent, but I know personally of more people picking up the laundry detergent sheets. And so I think maybe cardboard packaging, some type of format that's a bit like easier to ship, more eco-friendly. I do think we might see more of that in the cleaning category in general as other brands in cleaning kind of adopt that format.

5:05Yeah, I think you're spot on. And that's something that Alistair and I talked a lot about in this conversation. We also talked about, you know, that idea of messaging and how you get across to people that your product is just as effective as what they might be used to. And importantly, you know, how to do that in a way that maybe is a cleaner product. You know, people are increasingly concerned about toxins and microplastics. So we get into some of that in this conversation. And Alistair has some really good insights into, you know, the whole PFAS discussion, which I'm kind of fascinated by and some of the misconceptions that are out there about it.

5:41So there will be a lot of good stuff for listeners, and let's get into it.

5:51Alistair Dorward, thank you so much for joining the Modern Retail Podcast today. Melissa, it's my great pleasure to speak with you again and to have Drops represented today. Excellent. Well, we have a lot to talk about today, so let's jump right into it. For the uninitiated, tell us about Drops. Tell us about your home care brand. Perfect. So Drops was the original inventor of the liquid laundry pod. Almost 20 years ago, our founder, Jonathan Proper, came up with this great idea that wouldn't it be great from a sustainability and convenience point of view to do away with the bottle entirely and have this little pod that you can put straight in your washing machine or your dishwasher with delivering great efficacy.

6:43So that is our heritage as the inventor of the laundry pod. And since then, we've been building a dish and laundry business that has really delivered some remarkable, sustainable efficacy to these two efficacy-driven categories. Love it. So when we think about where Drops is today, we're speaking right as you're launching in Target, but this is not something that happens overnight. Talk to me about how the brand has changed its distribution over the years. Absolutely. So I joined the company as CEO just over two years ago. And the mission was to really transform what Jonathan had created into something bigger and better, but based on his initial principles and philosophy.

7:32And I think job number one was to really work on the product efficacy and make it on a par with a tide or a cascade in the respective laundry and dish categories. Because if we're to compete on the retail shelves with these major players, we have to work as well. So job number one was to work on taking great products to the next level. The next task was to really start taking our learnings and success from the online channels, whether it's our own subscriber base or our success at Amazon, and establishing proof points in regional grocery with partners like Wegmans and Meijer. So the journey started with the work to transform what had been simply an e-com based business to one that is competing on the shelves as an omni-channel brand with the largest conventional brands.

8:36And so this month represents a really important milestone as we go from a regional player to the national stage with Target. it. Yeah. Well, let's get into some of those decisions that have been made along the way as you make that jump from e-com to Omni, because I think it's a trajectory a lot of brands want to navigate these days. And there's a lot of different things to think about. One of the things that stands out to me about drops is your packaging. You know, when you see drops on a shelf, it comes in a paperboard carton and it looks different than the big plastic jugs of pods that it's sitting alongside or, you know, the Zip Poly bags that some other companies use.

9:17You know, has the paperboard always been part of Drops Packaging? And how did you make that work for retail? So it has always been part of the approach that eliminating plastic from our packaging foundation has been always the intent. And when Jonathan invented the pod, it was with this idea that finally you could leave plastic jugs behind and move to a different form. However, the industry kind of said, well, we're going to go from plastic jugs into plastic tubs and plastic bags. So kind of some of the environmental and sustainability benefits of the original innovation was kind of lost in translation.

10:00But we stayed true to that. And through our econ days, we were in small boxes that were designed to be most efficient in e-com. And as we were transitioning from e-com only to omnichannel, we wanted to stay true to that heritage. And we took encouragement as we looked into, you know, what the laundry category is like in Europe. You know, I'm from Scotland and I was walking in the beautiful city of Dundee and saw the entire laundry category in Scotland in pods is in boxes. So it's very clear that this is something that can be done. and it actually helps as a way to stand out on shelf right in a sea of plastic we've developed this pretty remarkable trapezoid style package that really stands out on shelf firstly in its form and shape that it is paperboard within a sea of plastic and the the unique form the shape really presents an excellent billboard on shelf and from our point of view you know you look at recycling behavior in the US.

11:04Only 9 % of plastic is recycled, whereas something like 67 % of paper board is recycled. So we wanted to place a bet on existing consumer behavior and design a product that can deliver against that while still having maximum shelf impact. Yeah, that recycling stat is really eye-popping. But I think if any of us sit and think about our own behavior at home, it kind of makes sense. Sometimes when you have a plastic package, you're just not sure what to do with it. Or it's very large, and it's not going to fit in your, you know, home recycling bin that's in your kitchen. And sometimes life feels too busy to walk out to the blue bin, let's face it.

11:45Or that tiny little number on the bottom of the yogurt pot, you can't quite read it, right? So there's sometimes there's a ease of use is challenging, you know, one through six different numbers, meaning different things in different municipalities. You know, we toyed with compostability because ultimately that's where, you know, you want your product to go back to nature in a truly circular manner. But the reality is that, you know, municipalities across the U.S. aren't really ready yet to accept municipal compostable packaging. That's a work on, I think, for the industry. But we felt that we wanted to meet with the consumer where they are today with their current behavior and the current existing infrastructure that municipalities have.

12:26So paperboard, FSC certified paperboard was absolutely the way to go for us. Yeah. You know, as a packaging nerd, I'm so glad that we're in this conversation right now. I think it's so important because when we think about recycling, when we think about sustainability, when we think about material waste, there's sort of, there's almost a triangle of responsibility, right? There's the municipalities and institutions that do the recycling or composting. There's a consumer who's buying the product and there's the company making the product. And, you know, everyone there shares some level of responsibility.

12:59Sometimes I like to argue that it's the ones who are making the product that have the most responsibility. I think some people fight me on that, but that's where I'd come down on it. You know, talk to me about some of the other choices that you can make in the Home Care Essentials brand to make sure that your product is leaving as little trace as possible, whether in the package or the product itself. So look, the package is clearly the most obvious part that is easy for a consumer to understand. And then there's a number of other important elements that third-party bodies measure. So something like the leaping bunny, a PETA symbol for never-tested animals, I think across all consumer segments is something well understood in terms of making a conscious choice.

13:41And it's particularly prevalent in personal care and beauty, but also applies in household essentials as well. For us, the most important measure that is really important for our category is this notion of bio-based. And that's something which is front and center on our packaging. The USDA bio-based symbol is something that is essential. And what that is a measure of is that there's a scientific process. They measure different carbon isotopes in your product. And it's a measure of the extent of which your ingredients are from a renewable source versus from a petroleum-based source. So, bio-based percentage is something that's super important to us as we strive towards 100%.

14:31Our latest four-in-one laundry is at 84%. We've got work still to do there, but we're transparent in disclosing every element. So bio-based percentage is a really important measure for consumers that read labels and are concerned about ensuring that their ingredients are not coming from a non-renewable, i.e. a petroleum-based source. So I'd say beyond Leaping Bunny, this USDA bio-based is super important for us. We also, as a company, believe that this B Corporation certification as a B Corporation and being held accountable for a company's impact on environment, on community, on employee welfare, these are things that are important for a company to measure and to be measured against.

15:21So these are important criteria that we subscribe to that are particularly relevant. Another one would be EPA Safer Choice, which while it doesn't apply in the laundry pod segment, in the dish segment it does. And we'd like to, you know, EPA Safer Choice, I think, is another good way of communicating the conscious manner in which a manufacturer kind of selects and curates all ingredients and everything according to the marketing mix. I want to stay on the materiality of the product for one second, because in the laundry and dish category, you're creating a product that's going to wind up in wastewater, right?

16:03And I know that there's some discussions that folks have been having online that I see frequently about whether pods are good or pods are bad, if you're someone who cares about the microplastics that may be going into wastewater. What is Drops' approach on this topic? So, firstly, not all PVOH is created equally, right? You have some PVOH that's used in fishing tackle that you see on the beaches and snorling around seabirds. And clearly, there is some PVOH that has clearly a negative impact on marine life. The PVOH that is selected for pods and that we pick is fully biodegradable, both short term and long term.

16:47And we have rigorous certification process. It's an OECD standard. And ensuring biodegradability of PVOH is essential. I think the second step in PVOH is to recognize that the higher bio-based, the better, right? You want your PVOH not coming from petroleum, but from a renewable feedstock. And we've seen some great innovation there. And I think later this year, we'll be able to announce being first to market with a bio-based film that is north of 50 % as the first starting point. And we think that once the consumer understands that actually PVOH is coming from a feedstock, whether it's sugarcane or another, then this perception, and it is a perception, there's been some, I think, some confusing or misleading science that has been introduced into the consumer world.

17:43I think once it's understood that a PVOH film actually comes from an organic or plant-based feedstock, that perception can start going away. And that's within the next 12 months will be well above 75, 80 % in terms of the bio-based film. And I think ultimately, we're probably two or three years away from a world where the best films are actually something like seaweed-based or whey-based. So there's a ton of innovation there. And this is just partly our work on constantly improving our percentage of USDA bio-based. If we're at 25 % bio-based today in our film, if we get to 75%, that's going to move the needle.

18:28So that's how we're thinking about it. And we want to encourage a lot of innovators to develop this latest film. And as kind of the clean, clean pioneer, the pioneer of sustainability and efficacy, we're really fortunate that a lot of great innovations coming our way because they like seeing drops as the brand, the vehicle to bring new technology to market to benefit the consumer from an efficacy, a convenience and affordability and a sustainability point of view. So PVOH film, I think, is going to be an area of substantial change. But your point on microplastics in the laundry industry, I think, is something that we should pay attention to.

19:09But it's a different issue. And it's an issue that's becoming much bigger in Europe right now. And that's the issue of the microfiber shedding associated with synthetic fibers, both in the manufacturing of textiles and then in the wash process. is really problematic. We have a microplastic problem in laundry and textile that contributes to, I've seen some reports that 35 % comes from laundry and textiles. So that's the core issue that we're trying to be a thought leader in drawing consumer attention to, working with textile manufacturers, apparel brands, manufacturers of appliances, municipalities to play a role in addressing this shedding of microfiber.

19:59People are wearing a lot more synthetic or synthetic hybrid garments these days. They're high performance. And so it's a problem that's accelerating as that change in the textile industry goes ahead. So one of the things we're particularly excited by is we actually have an ingredient in our four-in-one detergent that's the first to actually have the fiber shield technology. It's actually reducing the shedding of microfiber with each wash. So you'll start to see more of that type of theme. And that is the fundamental issue of microplastics in laundry. And I think the PVOH issue we'll soon see as being a little bit of a red herring, but one where the consumer is being confused.

20:41Yeah, thank you for that thorough answer. I feel like there's so much to unpack here. But my general thought is that when we think about how to make brands cleaner and more eco-friendly, there's also ways to make them more effective and or solve other problems, right? And that's something that I'm kind of hearing underlying all in your answer. And, you know, I think then there's sort of a natural pivot here to the consumer, right? I mean, there is a consumer out there who's really concerned about the environment or their own personal choices and what their buying habits are doing to affect the environment.

21:16And there's also consumers who could care less or couldn't care less. I never know which one it is. You know, but I think that and that's where it comes down to the brand needing to make sure that the product is going to be OK, regardless of who's using it and how they use it. You know, on the point of who you're going to be courting in Target, you know, how do you get the target consumer to notice drops or switch now that you're on shelves there? Yeah. Look, I think it starts with our reputation and the awareness we have as an online brand. I mean, we have built such a strong subscriber base of over 300 ,000 users that use our laundry and dish pods on a regular basis.

22:00And our net promoter score, the NPS score, is something like 25 points higher than the industry average. So our repeat purchase is quite extraordinary. And as we've upgraded into our multi-chamber form, we've seen the efficacy score of our NPS increase about 25 points. So the first part is to know that you have a brand that works well and it is worthy of repeat purchase. And you look at the rankings and the performance on Amazon, where we're the leading sustainable brand in terms of ranking in both laundry and dish. I think that helps consumers get comfortable in a category that's efficacy driven, that this is worth a shot.

22:52And I think the other part is around, you know, prominence of visual merchandising. The at launch drops will be on end cap for nine weeks at Target. We'll have our four dish SKUs and four laundry SKUs represented on the end cap showcased. So I think having an opportunity for a brand launch is essential, not just something showing up on a shelf. And then I think, as we described, our packaging design, from a graphic point of view, it's going to be distinctive because it's paperboard and because it's trapezoid. We've really gone out of our way to show up with a bold look, right? Our mission is to make our box look brilliant.

23:35A lot of sustainable brands have shown up in a beige craft box with pictures of planets. It's certainly signaling sustainability. We wanted to go out of our way to signal that drops really works. So we've picked up a lot of cues of the category, a lot of motion of fabric, a lot of bright rays, and important claims such as tackling tough odors, targeting everyday stains, delivering against long-lasting freshness. These are important icons of the category that you might see on a conventional brand. And we're doubling down that we're every bit as good against these. And also talking a little bit about our heritage is we're not some brand new player in the category.

24:21We actually have been doing this for a couple of decades. So our heritage is of pioneering bio-based cleaning is essential. So these are some of the elements that have gone into our design of our launch simply from a merchandising and a package design point of view. Yeah. No, I think some of those taglines and call-outs make me think about how when we are shopping for a product that's a cleaning product, we really just want it to work. We don't really care how it's made, right? You know, unless you're a shopper who's very specifically looking for something that has very specific ingredients. And this makes me think, and we've sort of talked about this before in other conversations, you know, the modern shopper sometimes has doubts about a product that's branded as sustainable or eco-friendly.

25:08They don't think it's going to be as effective when it comes to cleaning. You know, and it sounds like you're working to overcome that with some messaging that's more in line with what traditional brands might do. I think it's a hurdle. I think there has been disappointment with sustainable brands in the past. This is my second foray into the detergent category. About 20 years ago, ironically, I was launching Method as the founding CEO at Target. And there were a number of green brands that entered the laundry category and the dish category and delivered results that were mediocre. If you have to run your machine a second time, that's an epic fail.

25:48That's a failure of waste of your time. You know, it's a waste of energy. So for Dropsitz has been always about first time perfect. You cannot have a second attempt. And I would say that what I've seen in the last 20 years is, you know, the advances in green chemistry have been fantastic, right? We spend our time with some small innovators, some larger global players. and the toolkit that's available to formulators today in terms of sustainability is spectacular. And that's something that gives me, you know, encouragement that these sustainability themes are not just a consumer fad. It's not something that a particular administration wanted to lean into.

26:36This is a global advance of science that, you know, companies across the world are coming to the fore with. So it has meant that drops in its iteration of an omni-channel brand, we're able to deliver efficacy that we would never have dreamt of 20 years ago. And it is allowing us to do certain things with chemistry that you will not have seen from a sustainable brand before. And that is simply this idea of a multi-chamber pod where you have different chemistries, different green chemistries in different compartments of the pod. It allows you to combine things that would not work together in a single chamber.

27:21And when you separate a bleaching agent from an enzyme and bring them together in a load, then you are delivering an unusual level of results. And that's how Cascade works. That's how Tide works. And the fact that as a sustainable brand, we're really the first to show up with a product form. This is our multi-chamber dish, our UltraWash Plus, that the actual product form itself, because it is multi-chamber, looks like it's going to work. So that's the other part of our packaging form, putting the product form front and center, and then doing sampling and education and demos around the product, I think is convincing a consumer who may have been disappointed in the past, oh, this looks like it's going to work, is a big help to the point of focus on shelf.

28:12Yeah, it's amazing what a visual cue can do. I think it can never be underestimated when you're talking about a brick and mortar retail environment. Any learnings from your 2024 launches that made you rethink how you were going to do things at Target or incorporate any different elements there? Because I know it's always sort of different for every store, but just wondering if some of those smaller regional launches, you know, helped prep you for Target and how they did that. Yeah. So we've learned that Dish is a multi-tier category where consumers are kind of trained. If it's a Cascade Complete, Platinum or Platinum Plus, there's kind of a different tiers of efficacy that the consumer can buy into according to their needs.

28:57And so we've replicated that with our Ultra Wash and Ultra Wash Plus, which give kind of Cascade Platinum to Platinum Plus level equivalent efficacy. We've learned quite a lot about the interest in free and clear, right? That's quite a substantial consumer base for whom no fragrance is the right choice because of sensitivities or preference. And then there's a whole other group of consumers where they're fragrance obsessed, where fragrance is actually a leading role. So fragrance is quite polarizing and you have to have offerings in both. And I think we've learned from our discussions with our merchant partners is that if you can come forward with a laundry detergent and you can demonstrate that it's going to work as well as Tide three in one and is a bio-based form, that is a white space that is really exciting to occupy because it has not been occupied before.