By Nivedita Bhattacharjee and Yashaswini Swamynathan
(Reuters) - Chemical companies Dow Chemical (NYSE:DOW) Co and DuPont (NYSE:DD) are seeing increased benefits in building sustainable "green" products, as they look for newer avenues of growth and build a stronger connection with millenials.
A growing demand for healthy food and environment-friendly detergents was in part responsible for DuPont's better- than-expected second-quarter results on Tuesday.
"In the traditional chemicals (business) there is not a lot of innovation happening. They have to find new innovation drivers for competitive edge and biology is in that space," Bernstein analyst James Oxgaard said.
"It's the millenials who are driving this demand."
Consumer demand for healthier products should result in more sales of products such as probiotics, DuPont said on a call with analysts.
Its Danisco business, which makes probiotic cultures and emulsifiers used in baking, helped boost margins in its nutrition and health unit by nearly 1 percentage point.
Apart from food, both Dow and DuPont are working on building products such as detergents that do not need hot water to clean, or paints that remove formaldehyde - a chemical linked to certain cancers - from the air.
"When we are developing products that link to (global) trends, we grow sales," Neil Hawkins, Dow's chief sustainability officer, said in an interview.
The push into eco-friendly products, however, isn't just about sales and profits.
The companies are also using the strategy to build a positive brand image, which in turn is helping hire young talent, Hawkins said.
Several chemical and agricultural companies have come under scrutiny in the past for making products that could be harmful.
Earlier this year, DuPont and one of its former units agreed to settle years-long lawsuits related to the leak of a toxic chemical used to make Teflon. (http://reut.rs/2kKjnyD)
The companies' "green" push doesn't mean that they are turning away from their mainstay chemical businesses.
It is more a matter of tying those two ends, Hawkins said.
"It shows to those who are listening and watching that the practice of chemistry is absolutely critical for the sustainability of the planet."