Take the lead in every market and channel
Essity aims to hold a number one or number two position in the markets, channels and categories we choose to participate in. We over-invest in the fastest growing customer, category and channel segments to take the lead in attractive markets and generate profitable growth. Essity has sales in approximately 150 countries. In approximately 90 of these, Essity holds the number one or two position in at least one product category.
Leading market positions
Holding a number one or number two position offers economies of scale for example in sourcing, production, distribution and marketing. Moreover, Essity’s negotiating position is stronger when we have a brand and product that is demanded by customers and consumers. For some time, Essity has invested in e-commerce with the ambition to have a higher online market share compared with offline. This favored the company in 2020 since more consumers chose e-commerce. E-commerce sales increased from 10% of net sales in 2019 to 13% in 2020. The rise in e-commerce also increased sales of Essity’s strong brands as consumers are more likely to choose brands they recognize and trust when buying online.
Attractive emerging markets
Essity has a clear priority for which geographic markets it wants to operate in, and which product categories it will offer in these markets. We aim to increase the emerging markets’ share of net sales and earnings, since the potential for growth is higher in emerging markets because of lower market penetration for hygiene and health products compared with mature markets. We are prioritizing growth in selected emerging markets such as China, Southeast Asia, Latin America, Eastern Europe and Russia, where we already have strong market positions. In 2020, the adjusted EBITA margin for emerging markets was 12.9%, which is an improvement of 6.4 percentage points compared with 2015. Emerging markets increased to 37% of net sales in 2020.
Expanding the offering
To grow our product categories and strengthen market positions, we are improving and expanding our offerings through adjacencies. We achieve this organically through innovations and collaborations and through acquisitions of technology and product offerings. Today, Essity’s offering includes wet wipes, skincare products and soap in several product categories. Expanding the customer offering is also about providing service and solutions to customers and consumers and developing digital solutions and sustainable business models that increase our customers’ efficiency and reduce environmental impact. For example, in 2020 we strengthened our continence care offering through the acquisition of Novioscan, which develops smart ultrasound technology for monitoring the bladder.
Essity’s innovation-driven category and channel strategy with leading brands combined with comprehensive efficiency improvements have contributed to good organic sales growth and a gradual increase in profitability. Net sales increased by SEK 5.6bn annually and adjusted EBITA by SEK 1.4bn annually during the 2014–2020 period. Structural profitability in Consumer Tissue has increased for example due to a higher share of own brands, a focus on growth in segments with high margins, successful innovations and more efficient production. In Baby Care, we exited underperforming positions in North Africa and Russia during the year. Profitability in Baby Care has improved and the ambition is now to grow. The focus in Incontinence Products, Medical Solutions, Feminine Care and Professional Hygiene is on continued growth.