Green works… just ask Clorox

In my last post “When does Green shine as an investment opportunity?”, I discussed the requirements a product or brand that wants to leverage the current Green trend needs to meet in order to have a significant opportunity to succeed.

One company that is doing it right is The Clorox Co. (CLX). A few months ago, Clorox launched a full line of natural cleaning products named GreenWorks. The positioning and messaging around GreenWorks is spot on. Let’s evaluate it based on the model discussed in my last post.

Integrity: The sound design of this product line starts with the smart selection of its name. It precisely describes the line’s main promise: products that are ecologically friendly, and most importantly, that are effective. The name for itself directly disarms one of the main prejudices in the mind of potential users: natural products are unlikely to be effective enough. It addresses that preconception head on: green does work –or more specifically, this line was able to make it work!-. In their website, they reinforce that point indicating: "You wanted a natural cleaner that worked. And we listened". In its communications messaging and tone, Clorox makes a point of explaining, in detail, how these products work. They provide abundant, factual information about how the GreenWorks line was designed from the ground up with 99% natural ingredients that minimize its impact to the environment. They disclose its ingredients, and how they interact to achieve the level of cleaning power consumers expect. Finally, the tone of the communication is soothing, reassuring, clean and confident. There is not hype at all. They acknowledge the consumers’ concern with their health and the environment and explain how their products meet that interest.

Performance: Clorox makes sure that the issue of effectiveness is directly addressed in all its communications around GreenWorks. The promise is clear: GreenWorks are as effective as conventional cleaners. Based on my own experience, they deliver. In trying both the general and the glass cleaners, we found that they worked up to standard.

Affordability: GreenWorks are sold at a small premium to conventional cleaners, according to their website. In my experience, the price gap was not significant and therefore, not a deterrent for adoption.

GreenWorks meet all the criteria to become a relevant green product with potential to achieve widespread adoption. And that, in my view, is a great promise of profits to come. The final ingredient to qualify this initiative as a potential blockbuster is support. Clorox is very conscious of the opportunity at hand, and has launched GreenWorks with a vigorous advertising campaign that includes TV, web and, most importantly, a very robust distribution and adequate shelf space and visibility at retail.

Clorox share price closed this week at $55.70, close to its 52-week low. This might represent a great entry point to start building a position. I think the GreenWorks line will show to be a significant success for Clorox, and naturally, the greenbacks should follow.