India Spat Causes Durex Condom Shortage -- Can you name a condom brand other than Durex? Many will find it difficult: Durex is by far the world's top-selling condom maker. But, in the short term at least, some consumers may have trouble spotting the multicolored Durex boxes in pharmacies and supermarket shelves.
This is because Durex's supply of condoms from India has stopped since May, according to a spokesman for Reckitt Benckiser, the U.K.-based group that owns Durex. This is a pretty big deal: in a recent note to investors, Citibank estimates that the Indian manufacturer produced between 50-60% of Durex condoms globally.
Durex accounts for 42% of the global condom market, according to a 2010 research note by stockbroker Taylor Collison, so simple mathematics tells us that this spat could affect over 20% of the contraceptive's supply world wide. (The U.S. is a big exception: this is one market where Trojan condoms reign supreme.)
So what is threatening a global shortage of Durex condoms? A spat between Reckitt Benckiser and TTK Lig, their Indian joint-venture partners. Reckitt Benckiser did not say what was causing the dispute but said via email that it hoped this would be resolved soon. It declined to comment in more detail because it is “involved in legal action“ over the supply halt. TTK were not reachable for comment.
The effects of the dispute are already starting to show. In its report, Citi notes that the “Indian supply disruption is beginning to result in supply shortages of Durex condoms at the retailer level.“ In a note posted on its Web site late last month, the U.K.'s National Health Service said it “regrets to inform customers“ of the possible Durex drought and offered them a list of alternative brands.
Durex competitors are already cheering. The Citi report said that Durex rival Ansell is set “to make a windfall gain“ since it is “well placed to pick up the majority of Durex's lost sales across many markets.“ With a around 15% share of the market, Ansell is the world's second-largest condom producer.
This pushed Citi to lift their earnings forecast for Ansell for the year through June 2012 by 0.8%. They are maintaining their “Buy“ recommendation on Ansell stock.( wall street journal )
This is because Durex's supply of condoms from India has stopped since May, according to a spokesman for Reckitt Benckiser, the U.K.-based group that owns Durex. This is a pretty big deal: in a recent note to investors, Citibank estimates that the Indian manufacturer produced between 50-60% of Durex condoms globally.
Durex accounts for 42% of the global condom market, according to a 2010 research note by stockbroker Taylor Collison, so simple mathematics tells us that this spat could affect over 20% of the contraceptive's supply world wide. (The U.S. is a big exception: this is one market where Trojan condoms reign supreme.)
So what is threatening a global shortage of Durex condoms? A spat between Reckitt Benckiser and TTK Lig, their Indian joint-venture partners. Reckitt Benckiser did not say what was causing the dispute but said via email that it hoped this would be resolved soon. It declined to comment in more detail because it is “involved in legal action“ over the supply halt. TTK were not reachable for comment.
The effects of the dispute are already starting to show. In its report, Citi notes that the “Indian supply disruption is beginning to result in supply shortages of Durex condoms at the retailer level.“ In a note posted on its Web site late last month, the U.K.'s National Health Service said it “regrets to inform customers“ of the possible Durex drought and offered them a list of alternative brands.
Durex competitors are already cheering. The Citi report said that Durex rival Ansell is set “to make a windfall gain“ since it is “well placed to pick up the majority of Durex's lost sales across many markets.“ With a around 15% share of the market, Ansell is the world's second-largest condom producer.
This pushed Citi to lift their earnings forecast for Ansell for the year through June 2012 by 0.8%. They are maintaining their “Buy“ recommendation on Ansell stock.( wall street journal )
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