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    Essity Sets Out on Its Own

    Once a part of SCA, this personal care giant continues to focus on growth through acquisition, expansion and innovation

    Essity Sets Out on Its Own
    Essity Sets Out on Its Own
    Essity Sets Out on Its Own
    03.20.18
    Established in June 2017 following the split of SCA into two separate businesses, Essity comprises the personal care, tissue and professional hygiene businesses once owned by SCA. SCA’s forest businesses remain under the SCA umbrella.

    The company was split—after the measure was approved by shareholders in April 2017—to allow each separate company to individually carry out its own strategies.

    “I am pleased that the shareholders support the Board’s proposal regarding two separate listed companies. This will increase value for shareholders in the long-term through increased focus, customer value, development opportunities and enables each company to successfully realize its strategies. We look forward to an exciting future for our two strong listed companies,” says Magnus Groth, former CEO of SCA and current president and CEO of Essity.

    SCA was founded in 1929 as a forest products company operating in Sweden. Over the years, the company expanded geographically and into other business activities, such as paper products production, personal care, consumer tissue and Away-from-Home tissue. In 2016, the hygiene business accounted for approximately 86% of the Group’s net sales and the forest products business for approximately 14%. Synergies between the operations have diminished over time.

     

    Expansion Via Acquisition

    SCA laid the foundation for a global hygiene business in 1974 when it acquired Mölnlycke, which not only added products like tissue, diapers, feminine hygiene items and incontinence products to its product portfolio but also boosted the company’s sales 40%. In 1980, the acquisition of Sancela Mexico provided it with a feminine hygiene business in Mexico and marked the start of the company’s growth through acquisition in many world regions. Major acquisitions in the hygiene segment include Algodonera Aconcagua, one of Argentina’s largest feminine care manufacturers in 2009, Copamex, a Mexican baby diaper manufacturer in 2010, and Pro Descart, a Brazilian hygiene company, and San Saglik, a Turkish incontinence company, in 2011.

    And, as Essity, the company has continued to focus on growth through acquisition, purchasing BSN medical, a leading medical solutions company that develops, manufactures, markets and sells products within wound care, compression therapy and orthopedics. Essity has combined this business, which reported sales of about €850 million in 2016, with its incontinence business and renamed the division Health and Medical Solutions.

    “The BSN medical acquisition is an excellent strategic fit for Essity, supporting our vision to improve well-being through leading hygiene and health solutions, two closely interlinked areas. Our incontinence business, with the global leading Tena brand, shares similar positive market characteristics, customer and sales channels with BSN medical, which provide opportunities for accelerated growth through cross-selling,” says Groth.

     

    A Comprehensive Hygiene Offering

    Essity continues to be a global leader in the three main hygiene categories—baby diapers, feminine hygiene and adult incontinence—and continues to invest to growth these categories both in developed areas like Western Europe and developing markets like Latin America, Russia and Asia.

    In the baby diaper category, Essity offers open and pants style products, as well as ancillary items such as wet wipes, shampoo, lotion and baby oil, and is the world’s fourth largest player in the world and the second largest in Europe.

    In Europe, Essity markets baby diapers under its own Libero brand and under retailers’ brands. Essity’s strongest market is the Nordic region, where the Libero brand is the market leader. Examples of other strong regional brands are Drypers in South East Asia and Pequeñin in South America. 

    Essity has worked hard to strengthen its branded positions in both mature and emerging markets and to improve the profitability in the baby care segment. The strategy is to hold the number one or two position in its selected markets and the company is particularly strong in Western Europe, where growth allowed the business to stay flat despite exiting the markets in India and Mexico in 2016-2017.

    In 2016, the Libero brand launched a new premium offering, Libero Newborn and Libero Comfort. In 2017 the company relaunched its Libero Newborn, Libero Comfort and Libero Up and Go brands in Russia. Not only were the products improved for the relaunch but so was the packaging after Essity studied market preferences. Also in 2017, Essity introduced the Baby Touch diaper and wipes brands in France, where the company’s Lotus brand also enjoys a strong position.

    In feminine care, Essity offers a broad product portfolio that includes pads, panty liners, tampons, intimate soaps and intimate wipes. Essity is the world’s sixth largest player within the product segment and the third largest in Europe. Essity is the market leader in Latin America.

    A large and growing share of Essity’s sales takes place in emerging markets such as Latin America, Russia, Eastern Europe, the Middle East and Asia. Examples of regional brands supported by Essity’s global brand platform include Libresse in the Nordic region, Russia and Malaysia, Bodyform in the U.K., Nana in France, the Middle East and North Africa, and Saba and Nosotras in Latin America.

    Essity’s strategy is to be the fastest growing brand within the product segment feminine care globally and to increase sales while maintaining good profitability. Essity uses innovation to improve customer offerings and broaden the product category with such items as intimate wipes and intimate soaps to increase market share and brand loyalty. Essity’s feminine care brand platform and global advertising campaigns enable it to reach more consumers in various geographic markets with the same product improvements. Essity endeavors to break the taboos surrounding menstruation and promote awareness of hygiene and menstruation. Educational programs are arranged in Latin America, Asia and Europe that aim to educate girls about what happens to their bodies during puberty and when they have their period.

    Meanwhile, in incontinence Essity offers a broad range of incontinence products under the globally leading brand Tena. Its offering includes both products and services that improve the quality of life for consumers and reduces costs for institutional customers, such as nursing homes.

    In 2017, Essity launched Tena Lady Pants Discreet, an absorbent underwear that strives to be as similar as regular underpants as possible. Essity worked with professional lingerie designer Ceri Williams to develop the product.

    Essity has been working to strengthen Tena’s global market-leading position by driving profitable growth and expanding at a faster rate than the market. Growth is expected to be achieved through increasing market shares and penetration and by broadening the customer offering by increasing sales in areas outside of absorbents like as skincare products and wet wipes. Innovation will be achieved through understanding customer and consumer needs to continuously enhance products and services to increase customer satisfaction and brand loyalty.

    In North America, the situation for Essity’s Tena brand has been more challenging and the priority has been to achieve satisfactory profitability ahead of sales growth. Actions have been taken to reduce costs, discontinue unprofitable products and focus on fewer but more profitable products. For example, Tena Overnight Underwear was launched in North America in 2016.

    These strategies seem to be working. In 2017, the company reported 3% organic growth and improved margins across all of its businesses. “We are delivering on top line growth and margin improvements,” Groth says. “We continue to work on this and we want to accelerate this growth and improvements as we continue on our transformation journey.”

     

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