Dalli-Werke GmbH & Co. KG

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Dalli-Werke GmbH & Co. KG

Zweifaller Strasse 120
Stolberg, D-52220
Germany
Telephone: (49 2402) 89-00
Fax: (49 2402) 89-2222
Web site: http://www.dalli-group.com

Private Company
Incorporated: 1845 as Maurer & Wirtz
Employees: 1,780 (2006)
Sales: EUR 560 million ($706 million) (2006)
NAIC: 325611 Soap and Other Detergent Manufacturing; 325620 Toilet Preparation Manufacturing

Dalli-Werke GmbH & Co. KG is Europe’s second largest manufacturer of private-label laundry detergents, headquartered in Stolberg, Germany. Dalli-Werke supplies laundry detergent to a number of large retail and drugstore chains in Germany, including Aldi, Lidl, Schlecker, dm, Rewe, and Tengelmann. In addition, the company makes its own laundry detergent, related household cleaning products, and special textile care products under the brand names Dalli, Evidur, and Glix, which account for about 10 percent of total sales. Dalli products are manufactured in Germany and the Netherlands. The company maintains sales subsidiaries in France, the United Kingdom, the Netherlands, and Spain.

Dalli-Werke’s independent subsidiary Maurer + Wirtz GmbH & Co. KG is one of Germany’s leading perfume manufacturers with about 320 employees, roughly EUR 100 million in sales and a market share of approximately 5.5 percent. The company’s own mid-price brands of fragrances are primarily sold in drugstore chains and department stores and include longtime bestsellers Tabac Original for men and Nonchalance for women as well as the Cologne-based brands 4711, Tosca, Sir Irisch Moos, and Extase acquired in 2006. Maurer + Wirtz also cooperates with international fashion designers and markets perfumes under well-known fashion brand names such as Betty Barclay, s.Oliver, Venice Beach, Carlo Colucci, Otto Kern, New Yorker, Fishbone, and Mustang. Core markets for Dalli-Werke’s household cleaning and cosmetics products are Germany, Austria, Benelux, and Switzerland. Dalli-Werke is managed and owned in fifth generation by the German Wirtz family whose descendants founded the business in the 19th century.

HOMEMADE SOAP FILLS MARKET NICHE IN THE 19TH CENTURY

When Andreas August Wirtz married Apollonia Marx on November 24, 1845, his stepfather, baker and store owner Michael Maurer, gave him a special wedding gift. He made 24-year-old Wirtz a partner in his import goods shop in Stolberg, a small town near Aachen in westernmost Germany, and renamed the business Maurer & Wirtz. In addition—despite the fact that neither one of them had any experience in the trade—Maurer and Wirtz decided to try their luck making soap, since there was no one in their hometown doing that. Their only experience at that time was selling soap in their store, which was managed mainly by Maurer. Wirtz took on the task of learning how to make soap—from scratch. He began studying soap recipes in English, French, and German handbooks and read any other available literature about soap making. He set up a large soap kettle in the backyard of Maurer’s bakery and bought the necessary raw materials, mainly fats and oils, potash, soda, and salt. Finally, with the assistance of a few helpers, he started experimenting. The first batches of soft soap Wirtz successfully produced were sold in the family store. Encouraged by the commercial success of their homemade soap, Maurer and Wirtz applied for and were awarded an official concession for making soap by the government of Prussia in 1851. When Maurer died five years later, Wirtz became the sole proprietor of Maurer & Wirtz.

By that time Wirtz had expanded his product line to shaving soap and bar soaps, including curd soap, a bar soap used in private households for various cleaning jobs, as well as colored and perfumed toiletry soaps. They were made from various ingredients such as tallow, linseed oil, coconut and palm oil, resin, essential oils, and color mixtures. However, reading about soap making and actually producing soap of sufficient quality were two different things altogether. Small wonder it took countless trials before a saleable product resulted. To spare future generations the trouble he had gone through with his experiments, Wirtz began recording their results in 1855. His handwritten book called Soap Fabrication contained detailed descriptions of proven mixtures and processes, as well as the pitfalls to avoid. By the end of the 1860s Maurer & Wirtz offered 13 different kinds of bar and liquid soaps.

Until 1860 the soap varieties were sold exclusively through the family store, packaged in small containers or artfully wrapped in parchment paper. Within a few years, however, it became obvious that Maurer & Wirtz had tapped into a growing niche market. In the following decade the soap products were distributed in small containers by handcart to private customers in Stolberg and later shipped in barrels via horse carriage to new customers outside of Stolberg.

The progressing industrialization of the region opened up new avenues of growth for Maurer & Wirtz. The company’s first industrial customers were textile factories in nearby Aachen. Among the products used in the textile industry were Walkseife, a special soft soap used in the process of making compressed fabrics, and Bleichseife, used for bleaching fabrics. By the end of the decade, the customer base of Maurer & Wirtz had expanded into the northern Rhine and Westphalia regions, including Bonn, Cologne, and Düsseldorf, as well as into nearby Belgium and the Netherlands. In addition, the company’s soaps were delivered as far away as Berlin and Mannheim; London, England; and Bordeaux, France. Business soared even more during the 1870s and 1880s when glycerin, a byproduct of the soap-making process, and crystal soda, which was inexpensively available from nearby chemical factories, were added to Maurer & Wirtz’s products for sale.

KEY DATES

1845:: Andreas August Wirtz sets up a soap-making workshop.
1885:: Franz Wirtz introduces soap powder as a new product.
1899:: The Dalli brand name is launched.
1913:: Maurer & Wirtz moves to a newly built factory in Stolberg.
1938:: Vienna-based luxury soap manufacturer Riva is acquired.
1950:: Perfumed luxury soap Nonchalance for women is introduced.
1951:: Men’s luxury soap Tabac Original is launched.
1967:: Dalli-Werke enters an agreement with German retail chain Aldi to produce its store brand soap powder Tandil.
1976:: The first exclusive license deal to distribute luxury perfume Azzaro is realized.
1979:: Special textile care product manufacturer Nicco is acquired.
1992:: Dutch soap product manufacturer de Klok is acquired.
1995:: Liquid household cleaner and detergent manufacturer DICOM is taken over.
1996:: Dalli-Werke buys liquid detergent, cosmetics, and textile care products manufacturer Win Cosmetic; Maurer + Wirtz launches the fragrance Culture by Tabac.
2006:: Maurer + Wirtz acquires the brand 4711 Eau de Cologne from Procter & Gamble.

TRANSITION TO INDUSTRIAL MASS PRODUCTION

After Andreas August Wirtz died in 1884, his wife Apollonia officially headed the company for five years. Their then 25-year-old son Franz had joined the family enterprise nine years earlier and was familiar with running the business. In 1885 he introduced a novelty that was already emerging as a serious competition to soap— soap powder. Said to greatly enhance the cleaning effect and easier to portion out, the first powders on the market consisted merely of soap ground in powder form. Over time, however, other ingredients such as soda and oxygen were added to improve the powder’s strength.

Due to the company’s market success, Maurer & Wirtz grew significantly during the 1880s. With ten employees on the payroll and every corner of the family property used up, Franz Wirtz began searching for a larger site and finally found it in a complex of buildings called Grunenthal. When the local church community vetoed the move of the soap manufacturer into their neighborhood—due to concerns about the health hazards to the inhabitants of their monastery and hospital of fumes emitted—Wirtz wrote a letter to Otto von Bismarck, chancellor of the German Empire, asking him to speed up the decision process. In December 1888 Apollonia Wirtz signed the purchase contract for the new site. When she died in the following year, Franz Wirtz became the sole proprietor of Maurer & Wirtz. He decided to give up the retail store and focus solely on soap production.

The move to the new location marked the transition of Maurer & Wirtz from preindustrial manufacturing to mechanized production. Formerly used for manufacturing copper and brass, the new site, with its many production buildings and warehouses, was perfectly suited for making soap products. The abundantly available water from a nearby stream was used to generate electricity—ten years before the first public power station began operating in the city of Stolberg. Following the move to Grunenthal, Maurer & Wirtz enjoyed two decades of rapid growth. Within the first six years the company’s staff tripled. The turn of the millennium initiated the introduction of the steam engine, powering new machinery that mechanized many production steps previously done by hand—from mixing and stirring to cutting and packaging. In 1912 the first truck was added to the company’s fleet of five horse carriages and 12 horses. However, what was missing in Grunenthal was a railway connection. Moreover, by that time the new site had again reached its limits of growth.

A man with foresight, Franz Wirtz was on the lookout for a larger property in the early 1900s. When a large site with direct access to the railroad in the outskirts of Stolberg became available in 1909, he did not hesitate to buy it. Within four years a brand-new factory complex was built on the new property and equipped with state-of-the-art technology. In 1913 the company’s 150 employees started operations at the new site. The outbreak of World War I in the following year interrupted the growth of Maurer & Wirtz with isolation from export markets abroad, strictly restricted access to raw materials, and government intervention in its wake. Galloping inflation during the postwar period contributed even further to holding down consumption levels. Not until 1925 did the German economy enter another growth cycle. It was during that time period that Franz Wirtz’s three sons—Hermann, Alfred, and Artur—took over more and more responsibilities in running the business. In 1927 Maurer & Wirtz was transformed into a limited liability company. Three years later Franz Wirtz passed away.

BRAND-NAME PRODUCTS DRIVE SUCCESS UNTIL WORLD WAR II

Under the joint leadership of Hermann Wirtz, with his commercial training, his twin brother Alfred, an engineer, and Artur Wirtz, a trained perfume maker, Maurer & Wirtz entered the league of Germany’s largest manufacturers of laundry detergents and toiletry soaps. A major driving force for the company’s dynamic growth in the second half of the 1920s and during the 1930s was the strategic decision to create a range of products under the Dalli brand name. Officially registered in 1899 by Franz Wirtz, the brand received a significant boost when a new Dalli series including Dalli curd soap, Dalli washing powder, the oxygen-enriched washing powder Dallix and Dalli soda bleach were introduced in 1929.

Five years later the Dalli product line was presented in a unified package design. Until 1940 the series was complemented by a Dalli-Fix rinse detergent, Dallita, an enzymatic prewash detergent, and even a tooth cleaning soap called Dallidont. With the support of a massive advertising and promotion campaign, the brand quickly gained a large following. In addition to conventional marketing methods such as newspaper ads and posters, coupons, and free trial packs, the company also used movies and records, loudspeaker-equipped promotion trucks, and specially trained saleswomen who approached potential female customers in stores or even visited them in their homes.

Artur Wirtz, who had studied perfume making in France, opened a new chapter in the history of Maurer & Wirtz. He headed the newly created cosmetics division, the so-called culture-perfumery. The division’s lab created a stream of new products, such as cold creams, face powders, perfumed luxury soaps, and perfume. Its first perfume creations were sold under the Kultur label. The emergence of large department stores resulted in a surge in demand for the perfumed toiletry soaps that were enhanced by newly developed scents from the “Culture lab.”

Beginning in the early 1930s Maurer & Wirtz’s export business expanded very quickly. Export agents in the trade centers of Hamburg and Bremen sold the company’s products to customers in North and South America as well as Africa and even Asia. Due to the commercial success of Dalli brand products, the high-volume demand for toiletry soaps, and rising exports, the company’s production facilities had to expand significantly. When the company was changed into a limited partnership with the three family partners Hermann, Alfred, and Artur Wirtz in 1937, its name was changed to Dalli-Werke Maurer + Wirtz. The year 1938 saw the acquisition of two soap manufacturers: Berlin-based Döringwerke and Vienna-based luxury soap maker Riva. Just before the onset of World War II, Maurer + Wirtz had achieved a leading position in the industry, employing as many as 700 people.

During the war, under strict government administration and raw material restrictions, Maurer + Wirtz produced standardized soap and soap powders for the German army as well as newly developed fat-free Dalli products for the German civilian population. The company’s lab created additional new products using raw materials to which access was not restricted. Among them were two washing powders, Kutil and Botil, based on synthetic fatty acids, and the paraffin-based soap Mersol. Production in Stolberg continued until the autum of 1944 when American Allied troops seized the region.

GROWTH AFTER WORLD WAR II

Luckily, Dalli-Werke escaped the fate of many other large firms whose production facilities were completely destroyed during the war. However, the company did suffer a major loss when 38-year-old Artur Wirtz, who successfully started up the cosmetics division that would play a significant role in the years to come, passed away after a short illness in 1940. Consequently, Dalli-Werke Maurer + Wirtz was restructured into two independent business divisions after the war: the Dalli brand products division (DMA) and the cosmetics and perfume division Maurer + Wirtz (M+W). The company’s subsidiaries in Berlin and Vienna had to be given up, but the main factory in Stolberg resumed production in summer 1945. Yet, it took another three years until most raw materials were freely available again on the market.

Immediately after the war the DMA division continued putting out Kutil and Botil. By the early 1950s Botil had become Germany’s second most popular soap powder brand. In 1949 DMA relaunched the Dalli product series, which underwent several remakes in the following two decades. The 1950s saw the introduction of Germany’s first soda-free soap powder in bead form made by Dalli-Werke. Beginning in the 1960s Dalli soap powder was packaged in family-size boxes with carrying handles. At the same time DMA entered the promising emerging market for store brands. In 1967 the company received its first order from the German discount retailer Aldi to produce the chain’s soap powder brand Tandil. Over time DMA was able to win contracts with other large supermarket chains, resulting in high-volume orders.

Meanwhile, the company’s M+W division set out in the 1950s to conquer the market for luxury cosmetics. Despite the loss of Riva after the war, the jewels of the former Austrian subsidiary—its soap mixtures and brand names—were rescued. It was one of Riva’s prewar creations, the perfumed luxury soap Tabak for men, that evolved as one of M+Ws lasting successes. Packaged in little bast fiber pouches with a red signet and sold at an extremely high price, the soap bar became a bestseller. Over the years the renamed men’s series Tabac Original grew into a full line of 35 different cosmetics products such as Eau de Toilette, shaving cream and aftershave, antiperspirant sticks, shower gel, and even hair spray. Nonchalance, a newly created perfumed cosmetics series for women, was no less successful. By the mid-1950s the new M+W creations won more and more customers outside of Germany and export levels began to rise once more.

The transition from the third to the fourth generation of managing family members began in 1957 when Alfred Wirtz’s son Richard joined the business. Artur Wirtz’s son Andreas joined in 1960 and Hermann Wirtz’s son Hermann followed suit 15 years later. They were the driving force behind the company’s internationalization that began in the 1960s with the acquisition of French soap manufacturer Savonnerie Wagner in Strasbourg, France, and Paris-based cosmetics distribution firm Cosmeurop. Dalli-Werke Maurer + Wirtz enjoyed continued growth well into the 1970s. The number of employees doubled from 1,000 in 1950 to 2,000 in 1970. In the 1970s Stolberg headquarters saw many additions, and a modern distribution center with a large warehouse tower was erected in nearby Eschweiler. In 1979 the acquisition of Nicco-Werke, a manufacturer of special textile care products under the Evidur brand, complemented Dalli-Werke’s product line.

GENERATION CHANGE AND REORGANIZATION

Richard Wirtz followed in the footsteps of his uncle Artur when he dedicated himself to the perfume business. In the late 1970s he began cooperating with renowned Paris-based fashion designer Loris Azzaro. In 1976 Maurer + Wirtz started distributing the luxury perfume Azzaro the couturier had created for women wearing his evening gowns. One year later the joint venture Parfums Loris Azzaro S.A. was set up that successfully created, manufactured, and marketed a series of products under the Azzaro label throughout the 1980s. The year 1991 saw the acquisition of the French Montana Fragrances S.A., a firm that marketed perfumes under the name of French fashion designer Claude Montana.

The mid-1980s marked the beginning of a prolonged period of organizational changes. At that time a new management unit was installed to support the Wirtz family members in charge of the enterprise. In 1991 the three business divisions, including the perfume division, which was named Parfums & Accessories (Parfac), became independent profit centers, operating independently under the umbrella of the management holding company Dalli-Werke Maurer + Wirtz GmbH & Co. KG. The new structure, however, was only short-lived. After Richard Wirtz died from heart failure in 1992, Parfac was sold three years later to finance major investments in the two other profit centers. By the end of 1999 holding company Dalli-Werke Maurer + Wirtz was merged with the DMA division to form Dalli-Werke GmbH & Co. KG. The profit center M+W became Maurer + Wirtz GmbH & Co. KG.

SOAP POWDER MARKET UNDER COST PRESSURE, MORE PERFUME LICENSE DEALS

Dalli-Werke’s strategic shift of focus from the company’s own brand-name products to store brands had favorable and less favorable consequences. Manufacturing store brands, on one hand, saved the company huge marketing budgets for promoting brand-name products. As the company’s list of German retail chain clients grew, the number of Dalli brand-name products was cut back from 26 in the 1990s to eight in 2004. Advertising for them was stopped completely. Producing store brands, on the other hand, made Dalli-Werke dependent on only a few clients whose main focus was to offer high-quality products at very low prices. As the company had to face increasing cost pressures, significant changes and investments in the latest technologies were required to stay on top of the game. Therefore, the company erected Europe’s most modern bottling plant for liquid household cleaners, dishwashing detergent, fabric care products, shampoo, liquid soap, and bubble bath in Flörsheim-Dalsheim near Mainz in 2003. Yet, in the following years profit margins continued to shrink.

At the end of 2005, 38-year-old Albrecht Wirtz, the son of Andreas Wirtz who had succeeded his father as CEO of Dalli-Werke in 1999, left the company to make way for newly structured leadership. In 2006 Andreas Wirtz and his family sold their shares in Dalli-Werke to the rest of the Wirtz family, leaving Hermann Wirtz the last family member actively involved in running the business. In addition to his responsibilities as managing partner of Dalli-Werke, Hermann Wirtz was the driving force behind the successful face-lift of Maurer + Wirtz beginning in the late 1990s. Under his leadership the company successfully relaunched the Tabac Original and Nonchalance product ranges to extend their appeal to younger target groups, and sealed long-term licensing agreements to produce and market perfumes under recognized fashion brand names such as Betty Barclay, s.Oliver, Venice Beach, Carlo Colucci and Otto Kern.

The launch of the fragrance Culture by Tabac was the most successful product launch in Germany in 1996, whereas the introduction of the unisex perfume Provocation featuring German pop music star Dieter Bohlen in 2004, failed. Another success followed with the launch of fragrances under the young fashion labels New Yorker in 2004 and Fishbone in 2005, geared at 14- to 29-year-olds. In December 2006 Maurer + Wirtz acquired 4711 Eau de Cologne, presumably Germany’s longest-lived perfume brand, with a history going back to 1792. The Cologne-based manufacturer with a popular flagship store in the city center and, in addition to 4711, the perfume brands Tosca, Sir Irisch Moos, and Extase, were a major addition to the company’s product portfolio. Launching new perfumes being an increasingly risky and costly business, and the market for cleaning products becoming increasingly competitive were but two major challenges on the horizon for Dalli-Werke and Maurer + Wirtz.

Evelyn Hauser

PRINCIPAL SUBSIDIARIES

Maurer+Wirtz GmbH & Co. KG; Win Cosmetic GmbH & Co. KG; Win Aerosol GmbH & Co. KG; Dalli-de Klok B.V. (Netherlands); Dalli-Dicom B.V. (Netherlands); Dalli-Cult Iberica S.L. (Spain); Dalli Benelux B.V. (Netherlands); Dalli France Distribution S.A.R.L. (France); Dalli France S.A.R.L. (France); Dicom-Dalli U.K. Ltd. (United Kingdom); Theany Cosmetic GmbH; Cosmeurop Parfums GmbH; Venice Beach Cosmetics GmbH; comma, Cosmetics GmbH; s.Oliver Cosmetics GmbH; NewYorker Cosmetics GmbH; OTTO KERN Cosmetics GmbH; MUSTANG Cosmetics GmbH; M+W Prestige Cosmetics GmbH; Glockengasse KÖLN GmbH; Maurer + Wirtz Austria GmbH.