Essity’s external environment and market Hygiene and health market
Favorable market trends
Essity operates in the growing hygiene and health market. Essity’s categories, geographies and distribution channels are subject to several favorable market trends:
During 2020, the COVID-19 pandemic further increased awareness of the importance of hygiene and health. For example, people now have a greater understanding of the importance of washing and drying your hands to avoid diseases and the spread of infection. This is expected to increase demand for several of Essity’s product categories.
Demand for hygiene and health solutions is also positively impacted by the gradual reduction in poverty worldwide and as families achieve a higher standard of living and disposable income. When people fulfill the most basic needs for food and shelter, the next priority is hygiene and health. Access to health care is increasing above all in emerging markets in pace with rising prosperity and accelerating urbanization.
The global population is growing and average life expectancy is rising, which means greater demand for hygiene and health solutions and offering growth opportunities for Essity. An aging population increases demand for such items as incontinence products as the prevalence of incontinence rises with age. A higher age also increases the risk of chronic conditions, which leads to increased demand for medical solutions, for example.
Due to the pandemic, e-commerce and digitalization of production and services as well as remote working have increased sharply. Digitalization offers Essity a variety of opportunities and has led to increased efficiency in the business, higher sales of digital solutions and growth in e-commence sales.
Global awareness of sustainability issues, climate change and resource scarcity is rising. Sustainability work is a way for Essity to increase sales and profitability, but also to reduce the company’s risks. The starting point is to reduce the climate footprint of Essity and of customers and consumers. Essity is working proactively to identify, assess and manage climate-related risks.
Global market by region
In 2020, the hygiene and health market in mature markets amounted to approximately SEK 660bn and in emerging markets to approximately SEK 580bn.
Growth potential in different regions
The growth potential is greatest in emerging markets where market penetration of hygiene and health products is significantly lower than in mature markets and where urbanization, infrastructure, retail trade, e-commerce and health care are evolving rapidly. One example of the lower market penetration in emerging markets is that the consumption rates for incontinence products in Asia are only about one-sixth of those in Western Europe. Another example is that tissue consumption in Eastern Europe is only about one-third of that in Western Europe.
As shown on the map above, market growth is expected to be particularly high in Asia and Latin America where Essity has a rapidly expanding business with many leading market positions.
In mature markets, baby care and feminine care have attained high market penetration. However, market penetration for incontinence products is still relatively low for certain product segments, particularly among men, which Essity believes is due to lack of awareness and the stigma associated with incontinence. An aging population is expected to increase demand for incontinence products and medical solutions.
Essity’s market positions
Source: The information has been compiled by Essity for presentation purposes based on statistics taken from external market sources, including IRI, Fastmarkets RISI, Price Hanna Consultants, SmartTRAK and National Macro Economics.