The Disinfectant market in Saudi Arabia is an oligopoly market with the dominance of only 2-3 key players. Majority of the global players have registered and obtained approvals to supply detergents through their national brand owners (NBO).
Its products sales in Saudi Arabia was estimated to be US$ 153 Million in 2020 and expected to grow at a CAGR of 2.5% during 2020-2024. The current demand was mainly driven by the increasing per-person consumption, despite of a continuous exodus of expatriates.
The disinfectant market in Saudi Arabia is mainly dependent on the imports as there are limited local manufacturers in the country. The import value of disinfectants was US$ 17 Million in 2019 and net import is around US$ 15 Million in 2019.
It is broadly classified into multi-purpose cleaners, hand sanitizers, Dishwashing Products and surface & floor cleaners.
Multipurpose cleaners are designed to be used on many different surfaces and for a variety of cleaning tasks around the house. It can typically act as a disinfectant, detergent, degreaser, and solvent.
Hand sanitizers are a type of antimicrobial agent that kills or permanently inactivate at least 99.9 percent of microorganisms when used on the hands
Dishwashing Products is an all-purpose dishwashing formula with anti-bac and intensified grease-cutting power for faster and more efficient removal of grease
Surface and floor cleaners – a chemical disinfectant used to wash or wipe down environmental surfaces such as floors, chairs, bench tops, walls and ceilings.
Reckitt Benckiser is the leading player in the disinfectant products market with almost 40% of the market share, most of it coming from their flagship product Dettol. R&B performs its operations mostly through its NBO – Arabian Trading Supplies. The other products of R&B group are Cillit Bang and Drummer.
Dac is the second most preferred product in this segment and is endorsed by Henkel AG and Co and has a 12% market share. It operates through its NBO – Henkel alki SA.
SC Johnson and Son has around 8% market share in this category it has three products in this segment. The three products are these Mr Muscle, Windex and Pledge, it operates in Saudi through its NBO Basamh Trading Co.
Clorox and Unilever both have around 5% of market share each. Unilever has one product named Jif in this segment and operates through its NBO BinZagr Lever. Clorox Co. has two products in this segment- Clorox and The Green Works, it operates through its NBO Abu Dawood Co.
From the customers’ preference standpoint, prevalence of private label products is also growing in the country, as they are restively cheaper compared to the branded products in the market. A lot of small players have tied up with some of the major supermarkets and hypermarket chains to provide them private labeled manufacturing support.
The remaining 26% of the market is distributed among some very small local players – there are 35 to 40 such local players in the market. We have provided details of those companies in the appendix of this report.
Demand by End- users
The Private consumption leads the way with 72% of the total demand while the remaining 28% is by the Public (government) sector. The government purchases the product directly from wholesalers and NBOs through contract. The main criteria in this type of transaction are the lowest price, and their ability to fulfill the ordered quantity in time; however, product should meet a basic standard requirement.
The household segment accounts for the 62% of the total demand and the remaining 38% is by segments such as the corporates, hospitality and the healthcare, and others. The household consumption is mostly of the surface & floor cleaners and multipurpose disinfectants.
Healthcare consumers usually prefer multipurpose disinfectants, glass cleaners, and surface cleaners which have superior disinfectant property. This consumer segment does not compromise with the quality of the disinfectants and are willing to pay premium for a superior quality product.
The Disinfectant demand in public as well as on private sector has increased on the back of current COVID 19 situation. The household consumption used to be mainly of surface and floor cleaners; however, the awareness of personal hygiene has increased the consumption of hand sanitizers as well.
Consumers are very price sensitive in Saudi Arabia hence choosing the right price point is of paramount importance. Healthcare and hospitality segments prefer pack size of 3 liters for surface and floor cleaners as this pack size is easy to store and carry for cleaning purposes. Strength of the product plays a major role in choosing surface and floor cleaner. Most popular pack size for dishwashing liquid in Saudi Arabia is 500 ml pack, Key brand in this segment is Pril from Henkel owing to the perceived high quality of the product. Multipurpose spray cleaners such as surface cleaners have a wide range of use across different end-users and are preferred in pack sizes of 3 liters or less.
Drivers of Choice
Product quality is the primary criteria for disinfectants it plays a crucial role in determining the market demand. The basic quality standards vary such as for household the standards are relatively low, while for hospitality and healthcare it is high.
Product availability is another key factor in determining the success of the product. Disinfectants are utility products and the customer may not wait long for the availability of the desired brand and can be substituted. These products need frequent stocking up in households and other consumer segments. Availability of these products in different pack sizes improves the saleability.
Being a low-value product, customers constantly look for promotions in disinfectant products in Saudi Arabia. The promotions which are endorsed by the retailers attain higher visibility of the buyer as it creates an impression of higher bucket value than the price paid, resulting in the delight of the purchaser.
Logistics and Warehousing
Companies follow two logistics and warehousing strategy for disinfectants in Saudi Arabia:
- Material made to stock are the products that are stocked in the warehouse on the basis of anticipation of demands and is purely dependent on the demand forecasting
- It starts with the demand planner anticipating the demand using inputs from wholesalers and retailers. The anticipated demand is then conveyed to the manufacturer which produces the required product and is stored in the company’s warehouse.
- Material made to order are the products that are stocked in the warehouse on the basis of order by the customer
- In this strategy the products are manufactured and stocked based on customer orders. The products are either stored in the company’s warehouse or delivered to the customer’s warehouse as per the agreement.
Warehousing are either performed by the manufacturers or outsourced to third party companies who own and operate the warehouses. Currently most of the warehouses in the Saudi Arabia are fully automated in nature and organizations prefer having large central warehouse and smaller regional warehouses.
The household demand is expected to support the growth rate of the disinfectant market in Saudi Arabia as families are getting more aware and conscious towards personal hygiene due to the current pandemic.
Raw materials availability such as Soda Ash is expected to increase in the country as Saudi Arabia government planned its investment in the petrochemical industry to diversify its economic prospects.
Growing Demand for Textile Products has been seen in the country. It is currently estimated to be over US$ 4 Billion and expected to increase at 13-15% annually. The demand is mainly from Ihram for men and Abayas for women, these cloths are mainly used by Haj and Umrah pilgrims.
Also, the income of the residents has increased over time, resulting in higher purchasing power and consumer spending.
Consumer’s awareness and concern about environmental and personal health is fueling the demand for natural products. As per the Parthenon survey, over 20% of consumers globally prefer products with packaging that is sustainable.
Growth in Co- branding activities has been seen, the recent partnership between S.C. Johnson’s Mr. Muscle and Glade and Procter & Gamble’s Tide and Downy are major examples.
Innovation in home and kitchen product materials have created the demand for specialized surface cleaning agents for these materials. Surfaces such as mirrored, glass, vitrified and wood create require specialized cleaning agents. Novel dispensing systems, infused wipes, and smart tube drop technologies are designed to clean specific surfaces.
There is also a rise in demand for range of fragrance in products. Consumers associate fragrance with the cleanliness and freshness. Fragrance helps mask smells of chemical ingredients and also personalize the customer experience.
Disinfectant imports value has observed a sharp decline during 2015-2019; decreasing at a rate of ~37.6% from US$ 60.9 Million in 2015 to US$ 16.8 Million in 2019. The volume followed the similar trend and decreased from 11.7 thousand tons in 2015 to 3.7 thousand tons in 2019. Most of the disinfectant products are being imported from UAE in Saudi Arabia, followed by imports from Switzerland, Bahrain and USA.
The exports value and volume has been fairly constant during 2015-2019. The export value varied between 0.8 to 1.7 Million US$ and export volume varied between 0.6 to 1.5 thousand tons.
As per GCG’s analysis, distribution network and strategic partnership with retailers are the key success factor in the disinfectant market in Saudi Arabia. The Detergents market in Saudi Arabia is an attractive proposition for new manufacturers despite its competitiveness.