Like many other sectors, the cleaning and disinfection products market has had to endure a lot since the pandemic and the war. Many companies were in survival mode last year, having to lean on already very limited financial reserves to bridge the high burden. Meanwhile, commodity market pressures are slowly easing in a number of areas. However, the flag is not yet flying: although some commodity prices are falling, on average they are still significantly higher than two years ago. Moreover, other challenges in the market are also still fully present. The sector is making major investments for the near future due to increasing regulatory pressure.
Personnel, energy and logistics pose biggest challenge
By drawing on reserves, companies, especially SMEs, have managed to keep their heads above water. This has preserved jobs and prevented shortages and supply problems. Unfortunately, breathing space is very limited, despite the slight stabilisation of the commodity market. This is partly due to ongoing challenges in the labour market: the necessary but very sharp increase in wages and the scarcity of staff. The same challenges also play out in the transport and logistics sector, where transport costs are still at an all-time high. In addition, energy costs also remain at historically high levels for the time being. No significant improvement in this situation is expected in the coming period.
Preparing for the future: regulatory pressure and chain vulnerability
Replenishing reserves is very important for producers of detergents and disinfectants to prepare for the future. Investments must be made to make production more sustainable and future-proof. The pandemic and war show how vulnerable supply chains can be, especially in terms of raw materials. Disproportionate regulatory pressure and a frankly bad business environment have driven many commodity producers to countries outside the EU. Geopolitical tensions therefore have a major impact on supply chains and alternative suppliers are hard to find.
The high regulatory burden also creates huge administrative burdens in our sector. Developments in European and Dutch regulations only bring more uncertainty and high (often unnecessary) administrative burdens in the near future. This while the war and pandemic have shown that sustainable production of essential products within the EU is of great strategic importance.
So, despite better prospects, compared to the past two years, the detergents, cleaning and disinfectants sector still faces major challenges. For a healthy market, business needs breathing space so that you can continue to rely on Dutch and European production of sustainable, effective products – in good times and bad.
Source: www.nvz.nl