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Analysis of the Industrial and Institutional Cleaning Chemicals Market in Australia

  • July 2014
  • 133 pages
  • Frost & Sullivan
Report ID: 2231908

Summary

Table of Contents

Structural Shifts in Economy Will Drive Growth

This research service Aims to provide an overview of the industrial and institutional cleaning chemicals market in Australia through a detailed analysis of the industry and its end-user segments. Company profiles are included for Tier-1 companies across various end users. The research topics covered in this study include an industry overview and background, mega trends, as well as drivers and restraints for the industrial and institutional cleaning chemicals market in Australia.

Executive Summary
-The Australian industrial and institutional (I&I) cleaning chemicals market is a large, diverse and mature market that caters to a wide range of end-user sectors and offers a large variety of cleaning chemical products and services.
-The food and beverage sector is the single largest vertical that uses cleaning chemicals. This is followed by the cluster of verticals usually served by building service contractors (office buildings, other manufacturing, resources, education, transport and infrastructure, leisure, sport and entertainment).
-The need to ensure the health and safety of customers and employees is the single strongest driver of demand for cleaning chemicals. Another significant driver is the need to reduce waste volume and control the composition of waste streams (which improves the attractiveness of green cleaning chemicals). Tier-1 suppliers continue to innovate to protect profitability; these innovations (such as product, dispensing, packaging) help sustain overall market growth as well.
-Growth is largely attributed to the growth of food-related sectors (production, retail and service), which are among the largest end users of cleaning chemicals in Australia. The healthcare and aged-care sectors also contribute to market growth.
-Conversely, the offshoring of heavy industry and related types of manufacturing activities is rapidly shrinking the addressable market for cleaning chemicals related to these industries.
-The occupancy of commercial offices throughout the country is at an all time low, reducing the usage of cleaning chemicals in a traditionally large end market. This trend may be the result of an increasing shift towards working-from-home culture in the Australian white-collar workplace.
-As the resources sector shifts from investment to production phase, the impact of this change is difficult to predict. Demand from the mining sector is likely to remain stable. However, the economic flow-on impact from the boom in the resources sector to other industries is assumed to have ended.
-Also, in the current weak macroeconomic environment, cleaning appears to be the target of cost-cutting initiatives across verticals.
-The use of improved cleaning technologies, practices and design, as well as efforts to reduce chemical use (prompted by environmental concerns) are reducing the volume of cleaning chemicals used.
-As customers seek further operating cost reductions, significant growth in average prices is not expected in the short term. However, several suppliers of cleaning chemicals in Australia managed to increase their prices slightly in 2013.
-While activity-based billing is an option to standard purchase-and-consume contracts, manufacturers are seeking to move away from activity-based billing to protect margins and improve long-term outcomes.
-Two-thirds of the market is served by manufacturers supplying directly to customers, with a third served through distributors.
-While a large proportion of base chemicals is imported, end-product manufacturing occurs mostly in Australia, as importing diluted liquid products is not financially viable.
-Ecolab is the clear market leader in the country; it is followed by Diversey and Jasol.
-The Tier-2 segment is comprised of mainly Australian-owned manufacturers with strengths in a specific geographic market or end-user vertical.
-The Tier-3 segment is extremely fragmented, and characterized by a high degree of price-driven competition.
-Acquisitions by Tier-1 and mergers among Tier-2 companies are expected to witness increased consolidation in the market.

Market Overview—Definitions
Cleaning generally refers to the removal of visible dirt, soil and grease from a surface, while sanitising is the process of destroying micro-organisms (such as bacteria) on a surface. To achieve both, a range of chemicals are used. Cleaning chemicals are available in various forms such as liquid concentrates that need to be diluted, ready-to-use liquids, powders and blocks. As their role is to facilitate safety, they are ubiquitous and used in all industrial and institutional organizations. Cleaning chemicals are not only used on open surfaces, but also in Clean'In?Place (CIP) procedures for cleaning tanks, pipelines and process equipment by circulating water and cleaning chemicals through them without dismantling them. Depending on the task and the surface, application of the chemicals is either manual, semi-automated or fully automated. Cleaning chemicals are usually manufactured using one or a combination of the following base chemicals:

-Chlor alkalis (caustic soda or sodium hydroxide, sodium hypochlorite, caustic potash, potassium hydroxide)
-Acids (nitric acid, phosphoric acid)
-Chelating agents
-Surfactants
-Solvents
-Phosphates
-Biocides
-Industrial and institutional cleaning chemicals are mainly sold on a business-to-business or business-to-government basis. This market includes:
oCleaning chemicals
oRelated services only when offered as a part of a total cleaning solution (services related to dispensing compliance, procedural support, product Material Safety Data Sheets (MSDS), wall charts, maintenance and replacement of dispensing equipment, audits, data collection, analysis, reporting on usage)
oRelated dispensing equipment only when offered as part of a total cleaning solution (including associated equipment lines such as ware-washing racks, microfiber cleaning programs, specialized housekeeping tools and foodservice specialty equipment lines such as grill cleaners)

The following products are excluded from this study:
oFast-moving consumer products for household/domestic markets
oPaper and other janitorial supplies (brooms, brushes, mops)
oClinical-use cleaners for the disinfection of surgical instruments, decontamination of medical equipment, etc.
oRelated general-purpose cleaning equipment such as vacuum cleaners and scrubbers

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