Within adult incontinence products, the company holds a number two position in China and a number one position in Taiwan. In the baby diaper markets, the company holds a number five position in both China and Taiwan. Sales were reported at about $250 million in 2010. Sixty percent of its business is within baby care, while 40% is in adult incontinence. Clearly, this acquisition will give SCA instant entry into Asia.
Saying the deal will reinforce its position in Asia and will give it better access to Chinese growth, SCA has made acquisition a key tenet of its global expansion plan in recent years. In the past 12 months alone, SCA has made two hygiene-related acquisitions in Turkey and one in Brazil, in addition to the Everbeauty deal. In August, Jan Johansson, CEO of the Swedish hygiene conglomerate, cited interest in Brazil and China as key growth strategies.
“We are very interested in entering Brazil,” he said. “And, we are looking continuously in China, to see whether we can accelerate our presence there through any acquisitions.”
Choosing acquisition as a vehicle into a new market is a good strategy. Not only does a company gain access to market channels and achieve instant recognition, it picks up a skilled, local workforce in tune with the needs of the existing market. Additionally, a local brand’s built-in recognizability combined with the global marketing strengths and R&D capabilities a company like SCA has to offer can add up to rapid growth in a short period of time.
That’s not to say, of course, that acquisition is the only strategy when it comes to targeting a new market. SCA has chosen to invest in manufacturing lines to help expand its Tena adult incontinence brand in North America and Procter & Gamble is betting big bucks that its new Egyptian diaper manufacturing plant will help it gain access to markets in North Africa, the Middle East and beyond.
Either way, it is certainly the emerging markets, beyond North America and Western Europe, where most of the growth in hygiene will be. Once exception to this, of course, is the adult incontinence market where a growing aging population in places like the U.S. and Western Europe will continue to open up doors for new players and new products that can meet the needs of this population. This month, we present our annual look at this market, both with a Euromonitor-penned report on the demographic shifts within adult incontinence (page 36) and with a staff-written feature story profiling how the major players are responding to changes in the adult incontinence market on page 30.
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