Our external environment
In drawing up Essity’s business strategy, we analyze our external environment and market as a means of identifying external trends, drivers, opportunities and risks.
The foundation of our strategy is a materiality analysis where Essity and the company’s stakeholders rank the issues and areas that are perceived as being important for the company. Read more about the results of the 2019 materiality analysis. The annual strategy process includes an analysis phase and assessment of the risks present in the business units. A description of the most significant risks that impact Essity’s opportunities to achieve its established targets, and how these risks are managed, is presented in the chapter Risks and risk management.
Trends and drivers
We identify and analyze how trends and drivers affect Essity in order to capitalize on the opportunities that arise and to address the associated risks.
Growing and aging population
The world’s population is growing and living longer. By 2020, the population of the world over the age of 60 is expected to have increased to over one billion. This growing population is resulting in an increased demand for hygiene and health products and thus creating favorable growth opportunities for Essity. The greatest global population increase is expected to occur in Asia, Latin America and Africa. An aging population is increasing demand for incontinence products and medical solutions, both in mature and emerging markets. For example, the occurrence of incontinence among people over the age of 65 is estimated to be between 15 and 20%. Incontinence, which is classified as a disease by the World Health Organization (WHO), affects 4–8% of the world’s adult population, corresponding to approximately 400 million people.
Higher disposable income and living standards
At the same time as the population is growing, the level of poverty in the world is decreasing. Once people’s most basic needs for food and shelter are met, hygiene becomes a top priority. Higher disposable income and living standards increase demand for hygiene and health products.
Greater awareness of hygiene and health
Limited access to hygiene and sanitation is a major global challenge. There is a growing awareness of the relationship between good hygiene and health, and how this improves well-being in the world, as indicated by the UN’s 17 Sustainable Development Goals. We prioritize goals 3, 5, 6, 12, 13 and 15, as our business can best contribute to change and development in these areas.
Market growth for hygiene and health products is positively impacted by increased awareness of the importance of hygiene to avoid diseases and improve health.
Increased access to health care
Access to health care is increasing above all in emerging markets along with rising prosperity and increasing urbanization. The healthcare sector accounted for 18% of Essity’s total net sales in 2019.
Increased prevalence of chronic conditions
Increased prevalence of chronic conditions and greater life expectancy of people with chronic conditions are expected to increase demand for incontinence products and medical solutions.
Digitalization entails substantial changes and opportunities. The manner in which products and services are developed, produced, purchased, paid for and consumed is rapidly changing, largely driven by digitalization. For Essity, digitalization offers a variety of opportunities to improve and evolve all parts of our value chain. We are digitalizing production, administration and logistics to achieve efficiency and quality improvements. In product development, we are working to create digital solutions that improve our offering to customers and consumers. Essity is striving for synergies between different sales channels and that customers and consumers recognize the offering regardless of channel and platform.
Development of new business models
New business models are needed as a result of digitalization and the greater focus on sustainable and circular solutions. At Essity, we develop business models and offerings to help our customers become more cost-efficient, digital and sustainable.
The empowered consumer
Digitalization offers consumers today limitless opportunities to assess the market and purchase products. Consumers are therefore increasingly well informed and demand transparency about the products and services they buy. Essity is actively engaged in dialogue with customers and consumers and monitors the discussions on our own websites and in social media to receive feedback and to constantly improve.
Continued focus on sustainability
The rising awareness worldwide about sustainability issues, climate change and resource scarcity means every company must integrate these issues into their business models to remain successful in the long term. For Essity, sustainability issues have always been closely linked to business benefits and value creation. Essity promotes sustainable consumption by being innovative in how we meet the needs of customers and consumers and aims to develop solutions for a sustainable and circular society. We strive to reduce environmental impact and resource consumption throughout the life cycle of our products and services.
Our business contributes to the UN Sustainable Development Goals
We believe that the work to fulfill the sustainability goals will make the world a better place while offering favorable business opportunities. We are working to overcome global challenges together with customers, consumers, suppliers and other partners. We have elected to specifically focus on goals 3, 5, 6, 12, 13 and 15 where we can make a contribution through our operations, expertise and experience.