CAse study 9.2
Ansell condoms: is acquisition the right way to gain market shares in the European
condom market?
ansell Limited is the new name of the company formerly known as Pacific Dunlop Limited.
The company’s name was changed in april 2002
as a result of its strategic repositioning to concentrate on its core business, protective products and
services in a broad health care context, and following
the disposition of a series of other business units that
did not fit within the strategy. ansell Limited is an
Australian publicly listed company with its corporate
head office located in richmond, Australia.
In 1905, Eric ansell, a former Dunlop employee,
took the machinery and set up his own company, The
Ansell rubber Company, in Melbourne, Australia,
manufacturing toy balloons and condoms. The rest is
history: Ansell made strategic acquisitions and expansions and invested in the research and development
necessary to bring a number of products to the world
market.
Today ansell Limited is a global leader in barrier
protective products. With operations in the Americas,
Europe and asia, ansell employs more than 11,000
people worldwide and holds leading positions in the
natural latex and synthetic polymer glove and condom
markets.
Ansell Condom brands are marketed globally
through the Personal Healthcare division of Ansell
Healthcare, and their main office in Red Bank, NJ, US.
This 100-year-old company has fostered some innovations in latex condoms and gloves. It manufactures
and markets a variety of condoms with flavours, colours, spermicide, studded and ribbed features.
Ansell markets branded condoms worldwide, each
with its own unique marketing strategy that has been
tailored to the particular country or region. Their
brands around the globe include LifeStyles (for the
US market), Mates (for the Uk market), kamaSutra
(for the Indian market), Contempo, Manix, Primex,
Pleasure and Chekmate.
Additionally, the company participates in the public sector market where condoms are supplied
through health and social welfare programmes and
agencies, mainly in developing countries around the
world. Ansell also participates in a broad range of
studies and educational activities and continues to
expand its market presence with the introduction of
new products. Lifestyle Ultra Sensitive condoms
with spermicide, for instance, were developed to
meet demand for a thinner condom that includes a
spermicide to maximize protection from sexually
transmitted diseases (STDs).
Global manufacturing
Estimated worldwide condom production is around
16 billion pieces annually (2014). Currently there are
about 100 manufacturing plants operating globally.
The majority of these plants manufacture only condoms made from natural rubber latex, and some also
produce other latex products, such as gloves, finger
cots and catheters. The majority of the plants are
therefore in locations that have natural rubber latex
plantations and where labour costs are competitive.
The production of condoms is much more labourintensive than that of glove manufacturing, because
of more stringent testing needs, more complicated
packaging and significant product differentiation.
An estimate of condom production per country in
2014 is shown in Table 1.
Source: Ansell.CHAPteR 9 SOME APPrOACHES TO THE CHOICE OF EnTry MODE 361
World market for male condoms
Condoms offer protection against both unwanted
pregnancies (contraception) and STDs (prophylaxis). The latter property is unique to condoms.
Although there is considerable superficial variation in
the types of condoms available (e.g. ribbed, thin and
thick), there has been little fundamental change in
the latex condom over the years.
Organizations that are part of the global public
health sector currently distribute approximately 10
billion male condoms, generally free of charge or at
a nominal cost, to sexually active people throughout
the world, mostly in developing nations. It is estimated that another five billion male condoms are
distributed through commercial channels, mostly in
developed countries such as the US, Japan and
European nations. The size of the world market for
male condoms and how it is made up is shown in
Table 2.
In 2014, 35 per cent of condoms were purchased
by the United nations Population Fund. The World
Health Organization (WHO) is also a buyer.
Besides the direct competitors, described in
Table 3, it is essential to emphasize the role of the
indirect competitors, i.e. those with a product of
substitution. According to the Durex Sex Survey,
the male condom is globally the most popular
form of contraception (41 per cent of people use
it). Among the 59 per cent non-condom users,
most of the population use the pill or no contraceptive at all.
With 14 per cent of the global market share for
condoms, Ansell is the second largest manufacturer
of condoms. The company has 50 per cent of the
Polish market, 8 per cent in germany, 20 per cent in
Brazil (third largest), is number one in Australia, and
is the fastest-growing brand in Canada.
In the distribution of male condoms in the commercial sector, there has been a movement from the
pharmacies toward the retail chains (supermarkets).
For example, in the early 1990s, supermarkets
accounted for around 25 per cent of the UK retail
sales of condoms while pharmacies accounted for
over half. Today, the supermarkets account for
around 40 per cent of retail sales, a share mostly
drawn from the pharmacies, which have seen their
share fall to 30 per cent. Therefore, national retailing
chains (supermarkets, Boots and Superdrug) now
account for at least 65 per cent of condom sales in
the Uk.
table 1 Estimated 2014 condom production
by country
Country Annual production in billions of
pieces
India 3.3
Thailand 2.8
China 2.7
Japan 2.0
Malaysia 1.5
US 1.2
Europe 1.0
South korea 0.5
Indonesia 0.3
South America 0.4
Vietnam 0.2
Other 0.1
Total 16.0
Source: based on different public sources.
table 2 World market for male condoms
(2014)
Per year
(billions)
global public health sector (Un, WHO and
local governments)
10
Commercial channels (mainly in the US,
Japan and European nations)
6
World market 16
Source: adapted from different public sources.362 Part III Market entry StrategieS
Key competitors (manufacturers) in
the world male condom market
SSL International
In 1929, the London Rubber Company (LRC) registered the Durex condom trademark, whose name
was derived from durability, reliability and excellence. The next important steps as a global condom
provider came, first, in 1951 with the introduction of
the first fully automated production process, and two
years later with the development of the first electronic testing machines.
In the UK home market during the 1980s, Durex
condoms began to be sold in public areas (e.g.
supermarkets, pubs), due to the AIDS fear. That
decade showed a sharp development in marketing
with the first Durex poster campaign in 1982, as well
as the first condom advertising on television (1987).
In the 1990s, Durex followed a marketing policy
aimed at increasing the awareness of the brand with
the installation of free-standing outdoor Durex vending
machines (1992); the sponsorship of MTV events
(1995); the first Durex Sex Survey (1995); the launch
of the first selection of coloured, flavoured and ribbed
condoms in the same pack (1996); and the launch
(1997) of the first non-latex protection, called Avanti.
At the beginning of the twenty-first century, Durex
launched www.Durex.com over 30 countries. These
websites, featuring localized pages, in particular the
use of local language, provide sexual information,
allow people to question specialists, give details of
Durex condoms and any sponsored events.
Durex is nowadays part of SSL International plc,
which was formed in 1999 from the merger of the
Seton-Scholl group and London International, the
former owner of the LRC. It is a worldwide company
producing a range of branded products such as
Scholl and Marigold gloves, sold to medical and
consumer health care markets.
With a market share of approximately 24 per cent,
Durex’s position can be defined as the world market
leader of the sector. Obviously, at different national
table 3 Company shares on the world market for male condoms (2014)
Company Nationality Major brands Key strategies Market
share (%)
Seton Scholl London
(SSL)
Uk Durex, Durex Avanti,
Durex Pleasure, Durex
Fetherlite, Durex Extra
Sensitive, etc.
A true global brand with strong
positions in all main markets,
except the US (15 per cent MS)
and Japan (5 per cent MS). In the
Uk the Durex MS is 85 per cent
24
ansell Limited Australia/
US
LifeStyles, Mates,
Contempo, Manix,
Primex, kamaSutra,
Pleasure and
Chekmate
Semi-global company with relatively
strong market positions in the US,
Uk and the Asian and Australia/
New Zealand markets. Local/
regional brands, e.g. LifeStyles for
US and Mates for Uk
13
Church & Dwight Co US Trojan, Trojan Magnum,
Trojan Pleasure, Trojan
Enz
Market leader in the US market,
minor position in the Uk
8
Okamoto Industries Japan Beyond Seven,
Skinless Skin
Home market-oriented: 60 per cent
MS of the Japanese market, but
with little exports, mainly to US
10
Others: Sagami rubber
Industries (JP), Fuji Latex
Co (JP), DkT Indonesia
(Indonesia), Mayer
Laboratories (JP) and about
70 other manufacturers
around the world
Domestic- and regional-oriented
companies with strong positions in
local markets
45
Total 100
MS, market share.
Source: estimations based on different public sources.CHAPteR 9 SOME APPrOACHES TO THE CHOICE OF EnTry MODE 363
levels, rankings can be slightly different, with, for
example, 80 per cent of market share in the UK, 55
per cent in Italy, 10–15 per cent in the US and
around 5 per cent in Japan.
Durex condoms are manufactured in 15 factories
worldwide.
Church & Dwight Company Inc
armkel, LLC, Church & Dwight’s 50/50 joint venture
with the private equity group, kelso & Company,
acquired the remainder of the Carter-Wallace consumer products businesses in 2001, including Trojan Condoms.
The Trojan brand accounts for the largest proportion
of condom supplies in the US, with around 60–70
per cent market share.
The company markets condoms under the Trojan
brand name in Canada, Mexico and recently, in limited distribution, in the Uk. In Canada, the Trojan
brand has a leading market share. It entered the Uk
condom market in 2003, but at present has only a
small share. The company markets its condoms
through distribution channels similar to those of its
domestic condom business.
Okamoto
Okamoto has been in existence since 1934. It holds
a remarkable 60 per cent market share in Japan,
where condoms are the preferred method of birth
control.
In late 1988, Okamoto introduced its condoms
into the US market, but without great success until
recently.
Recent developments – possible
acquisition of a european key condom
player
Following financial problems in 2014 at some European
condom manufacturers with relatively strong local
brands, Ansell is now considering acquiring one of
these manufacturers.
QuestIoNs
1. What are the differences between the global
strategies of Ansell and the other three
competitors?
2. Which entry mode would you recommend for
Ansell’s sourcing (purchasing or production) of
condoms?
3. What are the pros and cons for Ansell acquiring a
European competitor? In your opinion, is it a good
idea?