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Global demand for cleaning products points to uplift in mergers and acquisitions

10 November 2020

THE GLOBAL pandemic has thrown the spotlight on the cleaning and hygiene industry like never before, causing major shifts in mergers and acquisitions, according to a new study.

A study by Clearwater International reveals that at the start of the pandemic, demand for cleaning and hygiene products was naturally focused on keeping hospitals, care homes and other essential services as safe as possible. However, with offices, factories and schools all open again, stricter hygiene measures have only accelerated the need for cleaning products to limit the spread of the virus.

According to the study, the enormous demand for cleaning and hygiene products 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 in order to fast-track market access to new disinfectant products. However, 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.

The report observed: "In recent years, large groups in the cleaning and hygiene sector have looked to acquisitions in order to mitigate the effects of lower organic growth, 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 expect to see a significant uplift in M&A activity as players respond to the continued heightened demand for cleaning and hygiene products amid rising health and food safety concerns. PE 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."

Michael Loudon, partner at Clearwater International, said: "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. All of this sets the market up nicely for PE investment opportunities and continued consolidation by larger groups.”