The Impact of the Coronavirus Pandemic on the Australian Industrial and Institutional Cleaning Chemicals Market

Much has been said about the widespread COVID-19 induced panic buying that has resulted in an acute shortage of face masks and gloves (effectively putting healthcare workers at risk!). But what of the pandemic's impact on the industrial and institutional (I&I) cleaning chemicals market?

Even as the scale and pace of the pandemic spread changes each week, here are initial pointers as to the short-, medium- and long-term implications:

Short- and Medium-term Implications

• Massive surge in demand for hand rubs and sanitisers for personal hygiene and hard surface cleaners for disinfection of high-touch areas and general areas
• The key I&I end-sectors driving demand are healthcare and aged care
• To address this spike in demand (at this stage primarily from consumer markets; not I&I end-sectors), additional production capacity is being brought online through the conversion of other manufacturing facilities into production lines for sanitiser and cleaner
• Additional manufacturing workforce being mobilised to ramp up production of sanitiser and cleaner
• Increased sale of cleaning chemicals to the public on-site at wholesale/factory store outlets
• Closures of retail stores, restaurants, bars, cafes, fast-food and other food service outlets, airlines, tourism attractions, hotels, resorts, motels, theme parks, sports venues, entertainment venues (cinemas, concert halls, casinos, etc.), educational institutions (universities and schools), as well as the cancellation of events (conferences, exhibitions, etc.) to result in weakened demand for I&I cleaning chemicals
• Work-from-home practices to reduce use of I&I cleaning chemicals in office buildings
• The food & beverage sector (the single largest end-sector that uses I&I cleaning chemicals in the country) is expected to see reduced demand for cleaning chemicals on the back of reduced processing and food service activity

Long-term Shifts

• Over the long term, higher demand levels for cleaning chemicals than historical averages expected (as workplace health and safety regulations tighten further and as enterprises and public sector organisations improve their overall hygiene and sanitation standards and practices). While news of the spread of contagious diseases (e.g., SARS and Bird Flu) has in the past led to a spike in the use of hand hygiene chemicals, this was generally a temporary phenomenon in end-sectors that traditionally had low safety and hygiene standards. This is however likely to change for the better moving forward
• Strong long-term demand forecast for commercial cleaning service providers and facilities management providers focused on cleaning services; thus supporting demand for cleaning chemicals
• Slower growth in volume uptake in the commercial office building sector as remote working becomes more the norm in the future
• Increased shift away from conventional chemicals that reduce, but do not eliminate pathogens
• Increased focus on antiviral activity of disinfectants (in contrast to the traditional focus on antibacterial activity only)
• Increased focus of new product development on no-touch sanitisers and dispensing. For example aerosol or vapourised versions of sanitisers
• Continued strengthening of demand for environmentally-friendly cleaning chemicals
• Infection prevention expertise, as well as support in educating end-users on proper safety and hygiene practices to emerge as opportunities for competitive differentiation among cleaning chemicals suppliers

In the short- and medium-term, weakened GDP growth in Australia and in its main export destination markets (for example, in China), lower household and business expenditure on account of the lockdowns, job losses and business closures will combine to reduce demand for I&I cleaning chemicals in most end-sectors bar healthcare and aged care. In the long-term, however, this unprecedented virus outbreak is expected to shock the market into new ways of achieving optimal cleaning outcomes and higher health and safety standards.

Frost & Sullivan Insights on COVID-19