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Enormous global demand for cleaning & hygiene products increases M&A activity
The pandemic has thrown the spotlight on the cleaning and hygiene industry like never before, causing major shifts in mergers & acquisitions activity, reports Clearwater International.
At the start of the pandemic, demand for cleaning & hygiene products was naturally focused on keeping hospitals, care homes and other essential services as safe as possible. However, with many offices, factories and schools open again, stricter hygiene measures have only accelerated the need for cleaning products to limit the spread of the virus.
The enormous demand for cleaning & hygiene products that we are witnessing, has created its own set of problems for the industry - including supply chain issues and safety concerns due to an easing of laws across the EU to fast-track market access to new disinfectant products. This represents a significant opportunity for those operating in the hygiene and cleaning categories to leverage this emerging science and technology and to draw inspiration from it for the development of the next generation of products.
In recent years, large groups in the cleaning and hygiene sector have looked to acquisitions to mitigate the effects of lower organic growth, to generate cost savings in materials sources in order to differentiate their own product offers, and counteract new market entrants. However, the global drive to develop solutions to tackle viruses, points towards much more collaboration in years ahead.
In fact, we can expect to see a significant uplift in M&A activity as players respond to the continued heightened demand for cleaning & hygiene products amid rising health and food safety concerns. Investors are likely to remain highly attracted to the sector due its strong performance, the attractive end market dynamics and differentiated product offerings, and will appreciate the defensible market position in these companies.
"As the pandemic shifts personal hygiene toward a daily priority, we expect cleaning and hygiene chemicals specialists to continue to perform well, and we may see early stage, dynamic businesses in the sector grow as innovative products come to the market," says Michael Loudon, partner, Clearwater International.
"All of this sets the market up nicely for PE investment opportunities and continued consolidation by larger groups."
22nd October 2020