The hygiene industry
continues to be something of a force of nature when it comes to consistent
growth; rain or shine, recession or boom, the industry has continued to deliver
6.5% value growth since 2008. While other industries such as apparel or
consumer appliance can boast double digit growth in some years both suffered in
the aftermath of the financial crisis, not hygiene, an industry which continued
to 'plough on' seemingly ignorant of the worsening economic climate.
have made themselves integral to modern life and through a combination of low
(financial) access points, broad distribution and manufacturers' efforts to
promote their brands have continued to trade well with further value gains of
7% likely for 2014, the pace of growth picking up as the retail hygiene
industry will see sales fall just short of US$100 billion.
Key drivers of
growth were once again the emerging markets, with China in particular leading
the way. In 2013, the country was responsible for over 50% of global incremental
value growth, which is a measure of just how significant China has become to
the health of the industry as a whole. Regardless of the size of its population
the Chinese market (although economic growth has slowed) possesses an
unparalleled combination of factors which have made for almost the perfect
conditions for unfettered growth for both now and for the foreseeable future.
penetration rates in the key diaper category, growing disposable incomes,
prevailing hygiene awareness and manufacturers extending their distribution
networks had a particularly positive influence. Even in sanitary protection
where penetration is in the 90th percentile premiumisation and the
wider use of pantyliners has helped keep growth buoyant.
A one trick pony?
However, the hygiene
industry is not just a one trick pony as many of the beleaguered developed
markets also reported value growth. In relative terms, retail incontinence
recorded the strongest growth rates among all hygiene categories, likely to post
a 9% value increase in 2014, which, to a large extent, will be generated by
developed countries. Recession-weary economies such as Japan and Spain reported
medium to high single-digit value growth rates, indicating that it is not all
doom and gloom for the hygiene industry in developed markets despite low birth
rates, private label competition and tight financial budgets hampering (but not
undermining) the industrys overall performance.
With incomes finally
catching up in emerging markets, manufacturers, both international and local,
are eagerly investing in new production facilities, looking for potential
acquisition targets and extending their product portfolios. While Procter &
Gamble and Kimberly-Clark are banking on their strong international brand
equity and are mainly opting for 'greenfield' investment or licensing
agreements to manufacture their well-known brands locally, SCA has been on a
spending spree for local players and brands.