COVID-19 Outbreak - Impact On Hand Sanitizer Market

Impact Assessment : Demand and Supply

The Coronavirus, Covid-19, outbreak has led to a huge uptick in the demand for hand sanitizers globally. The major CPG players are ramping up their production and optimizing their supply chains to cater to the sudden spike in demand.

Impact on Supply – Suppliers ramp up production to prevent shortages

The major hand sanitizer manufacturers have increased their production since January 2020 in anticipation of the increase in demand. However, the sudden spike in demand in the past few days have been quite significant and majority of the retailers and chemist stores have run out of stock. The suppliers are currently operating at full capacity and working on adding additional capacity as early as possible by leveraging their third party manufacturers and other small scale suppliers

Suppliers are monitoring the market situation  closely and increasing their inventory levels to be prepared to cater to any sudden increase in demand

	Impact on Supply Chain – Temporary shortage leads to purchase limits by retailers
	The demand is more via the retail and online channels with Chinese consumers topping the online sales channel. Majority of the retail channel stores are running out of stock  as consumers buy in large quantities in anticipation of shortages. Some of .the retailers in the UK and U.S. have limited the maximum number of purchase per customer to two, in order to serve as many people as possible.

Large companies like Reckitt Benckiser (Dettol) and Unilever (Lifebuoy ) have formed dedicated teams and are investing in their supply chains to prevent shortages

	Impact on Price – Third party sellers hike prices in online channels
	Third part vendors who sell major brands in online channels like Amazon and eBay have hiked the prices. Case: Defendol hand gel marketed in the UK, which is sold at £3.49 in retails stores is being sold for £109.99 on Amazon by an online vendor. However, none of the manufacturers have increased the prices and hence we anticipate no potential increase in the retail price.

Key Takeaways:

• The hand sanitizer market got a sudden boost as the global demand for hand sanitizers increased rapidly after the coronavirus outbreak.
• All CPG suppliers immediately responded by increasing their production to meet the increasing demand for hand sanitizers.
• After the news of the virus outbreak in China, a steady demand for hand sanitizer was witnessed across the globe.
• The demand increased suddenly due to the unexpected spike in COVID-19 cases across the U.K., the U.S., and Italy among other regions. 
• As news of the outbreak spread across the globe, people started to panic. This led to panic buying as people started to stock hand sanitizers to keep themselves safe from the virus. 
• The U.S. CDC released a statement that read any alcohol-based hand sanitizer with alcohol content 60% or above can help curb virus spread which may have contributed to the US hand sanitizer market demand. 
• The U.S. CDC also mentioned that regular cleaning with soap and water is a better approach for preventing Covid-19 spread. 
• The UK hand sanitizer market witnessed a demand increase of more than 250% as of February 2020.
• The Italy hand sanitizer market witnessed a year-over-year increase in demand of more than 1800% as of February 2020..
• The hand sanitizer market in US witnessed a whopping increase in demand of 1380% from December 2019 to January 2020.
• The India hand sanitizer market witnessed 10 times the demand for hand sanitizers as of February 2020. The demand for hand sanitizer market in India continues to soar. 
• The impact of COVID-19 on hand sanitizer market supply resulted in the ramping up of the production of hand sanitizers from major players to ensure there was no shortage. 
• Retailers and pharmacies ran out of stock despite an increase in production due to the sudden unprecedented surge in demand for sanitizer supplies in January 2020.
• All hand sanitizer suppliers are operating at complete capacity and will continue to increase capacity if the need arises. This includes expanding with the help of other suppliers and manufacturers. 
• Major companies such as GOJO Industries, Godrej Consumer Products Ltd., Reckitt Benckiser, Unilever, and Clorox significantly expanded their production to meet demand. ITC Ltd. admitted to having adequate supply. 
• Suppliers are constantly monitoring the supply and demand of hand sanitizers to ensure supply does not fall behind demand.
• Some hand sanitizer sellers in the U.S. and the UK put a restriction on how many hand sanitizers each customer can purchase due to the shortage of hand sanitizers. This can help ensure more people get access to hand sanitizers. 
• The China hand sanitizer market witnessed high demand from online channels. 
• Due to the demand for a large quantity of hand sanitizers, many online retailers on channels such as eBay and Amazon have increased prices. 
• On Amazon, some retailers have taken the liberty to increase the price 30 times the actual price. For example, Defendol in the UK which used to retail at £3.49 earlier was sold at £109.99.
• Marketing hand sanitizers the optimal way is underway as sanitizer manufacturers have not increased the prices of their products.