Ontex Strengthens Focus on Partner Brands, Healthcare – Nonwovens Industry Magazine
A leading manufacturer of baby diapers and other disposables, based in Belgium Ontex has focused more on healthcare and partner brands in Europe and North America, where the growth potential of this market is strong, under a plan called New Ontex. As part of this new plan, the company will focus more on its already successful relationships with partner brands in the absorbent hygiene market in North America and Europe as well as on its healthcare business.
In 2020, this part of the portfolio represented € 1.43 billion in revenue and an adjusted EBITDA margin above the group average of 13%. At the same time, commercial activities in the rest of the world, centered on Ontex own brands, represented 0.65 billion euros in sales in 2020 with an adjusted EBITDA margin of 8%. These businesses will be managed for value while exploring future strategic alternatives.
“The new Ontex will focus on partner brands and healthcare in Europe and North America. This marks a shift in strategy that will allow us to leverage our inherent strengths and harness the full potential of our expertise, scale and capabilities, ”said CEO Esther Berrozpe. “Faced with an unprecedented rise in raw material prices and inflation on other input costs, we have accelerated our cost reduction initiatives by identifying new opportunities to rationalize the group. “
The new Ontex will encompass a core business portfolio where the strengths of the business lie. This includes private labels and lifestyle brands, for which the company has for years been a partner of choice for retailers, independent brands and institutional clients, primarily in Europe and North America. Ontex’s industrial footprint is well positioned to serve these regions and offers considerable opportunities for synergies and economies of scale to provide its partner clients with innovative solutions and the best quality and cost.
Ontex’s product offering will remain in three existing categories – Baby Care, Adult Care and Feminine Care – and the company will accelerate its focus on faster growing, accretive margin products in these categories. This includes all adult care products, baby pants and more durable products. The company will focus its investments on maximizing synergies across its European industrial footprint and accelerating its operations in the United States, fostering operational excellence to improve costs, quality and service. Ontex entered the US market earlier this year with the purchase of a hygiene products manufacturing site in Albaad in Rockingham County, North Carolina.
“We see that the private label diaper business is not all about price,” says Annick De Poorter, group R&D, quality and sustainability director. “The emphasis is on continuous product improvement. To match the quality of the A brands at a more affordable price, but also to have the best quality among the different store brands. Good quality diapers attract consumers to the retailer and will encourage more shoppers to spend their cart at the retailer. That’s why retailers choose carefully through consumer panels and lab testing which diaper manufacturer to choose for their store brand, not just looking at the price.
To remain a preferred supplier, Ontex continually improves its products by focusing not only on performance, but also on skin care and softness, which play an important role in the diaper purchasing decision. “Over the years, we’ve made our diapers faster to absorb, breathable, and softer and softer, in some cases even surpassing the softness of national A-brand diapers,” says De Poorter.
Last month, the company showcased new core technology for diapers, which is being rolled out to its partner brands. Climaflex provides comfort, protects the baby’s skin and ensures absorption even under the most difficult conditions, with many baby movements.
Diapers with Climaflex technology have a dual-layer core in which one diaper quickly attracts liquid and a second diaper retains it very quickly and securely even in the most difficult conditions, when baby is moving a lot.
“In general, Ontex has seen over the last few years how private labels have evolved from a type of pure white label products against price to a true branding of retail store brands as if they were was a national brand with beautiful packaging, advertising claims, etc. “De Poorter adds.
Ontex has responded to these needs with innovations such as its SeconDry technology, which claims to be up to twice as drier, delivering the dryness of market leaders even when portrayed side-by-side like in TV commercials in the recent past. .
In recent years, Ontex has expanded its private label program to become the contract manufacturing partner of choice for many start-ups or insurgent brands, working with these partners to design and produce their diapers. “Some of these brands grew so much that even the A brands started to copy their brand proposition,” De Poorter said.
Whether it’s developing a private label product for a lifestyle brand, Ontex’s research and development is focused on targeted development for its contract manufacturing partners, to help them grow a portfolio. of products and claims to support their unique value proposition and differentiate their brands. “In some cases, we even co-develop specific solutions with our partners, involving them from the start,” she adds.
These efforts respond to strong consumer demand for premium products at all levels of disposable income.
“Consumers know they feel better when they buy premium products and are more likely to trust premium brands compared to non-premium brands,” says Colin Hanna, director of market research at Price Hanna Consultants. “This is especially true when it comes to hygiene products for themselves or for their loved ones. They also want alternatives to traditional, top-notch branded products – alternatives that use fewer hard-to-pronounce chemicals that seem potentially harmful, fewer scents, and so on.