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Continued Solid Performance from the Global Hygiene Industry

By : Ian Bell
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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.

Hygiene products 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.

Relatively low 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.

Expansion, expansion, expansion

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.


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