Asia poised to be biggest condom market for Karex
Karex

Its group CEO says the company has set its eyes on the whole Asia continent

By RAHIMI YUNUS & NG MIN SHEN / Pic By AFIF ABD HALIM

World’s largest condom manufacturer Karex Bhd expects Asia, the continent that is inhabited by 4.43 billion people, to be the biggest market for its contraception product.

The Malaysian-based company sees Asia as the next major growth area for condom as the developed regions reach maturity levels, while Africa continues to bend on more developmental support.

“The condom markets in Europe and the US are already well developed. Not much can grow in those regions. Africa is a developing market, but it still relies heavily on support.

“As for Asia, the region is evolving from being government-driven to a commercial business,” Karex group CEO Goh Miah Kiat told The Malaysian Reserve.

He said the company has set its eyes on the whole Asia continent, either through direct sales of its own brands, or as an original equipment manufacturer (OEM) for brands such as Durex.

“There are very good opportunities in Asia, not just for premium brands like ONE, but also for other brands like Pasante — which we recently acquired. That will be suitable for the mass markets,” Goh said.

The Klang-based company produces over five billion condoms annually or enough to supply to more than two-thirds of the world’s population.

The company expects production of the male contraception product to reach six billion within the next 12 months. The condoms are produced at its four factories, of which three are in Malaysia and one in Thailand.

Karex’s condom business currently comprises three market segments namely OEM, tender (supplied mainly to governments and non-governmental organisations) and own-brand manufacturing (OBM).

As at end-June 2016, the OEM segment contributed 54% to the group’s revenue, followed by tenders at 38% and OBM at 8%.

Asia is presently Karex second-largest market in revenue generation at 31%, after Africa with 33%. The Americas and Europe contributed 26% and 10% respectively to the firm’s top line.

Goh said condom manufacturers should not execute their business strategy based on the history of Asia since the mar- ket is transforming.

Changes in Asian government policies with regards to sexual protection and family planning have opened up more business opportunities for Karex.

Goh said, while China’s government used to produce its own condoms and distribute them for free, the country has now relaxed its one-child policy. Rapid improvement in economic conditions and standards of living in other Asian countries is also opening up the path of commercialisation as governments edge away from subsidising condoms.

“In Malaysia, condoms used to be distributed for free, but many donors have now pulled out, so the market is considered more developed. Others like Vietnam, Myanmar, Cambodia, Laos and Thailand still rely on free distributions but given their economic developments, I believe there is tremendous growth potential there, especially with their growing youth population,” Goh said.

The firm’s OBM brands include ONE, a US condom brand that appeals largely to younger consumers. Karex purchased a 55% stake in Global Protection Corp, the owner of ONE, in 2014, for US$6.6 million (RM21.1 million).

Goh said Karex currently exports its products to almost every part of Asia, except for Japan. After Malaysia, it is planning to expand its own-brand condoms to Singapore this year, and Thailand, next year.

It also acquired British condom producer Pasante Healthcare Ltd in July 2016 for £6 million (RM33.37 million) and is looking at bringing the brand into Asia.

“People in Asia generally put more trust in British brands, especially for condoms. They would definitely trust a British brand more than a Chinese or Malaysian brand,” he said.

As per United Nations data, there are 717 million young people aged 15 to 24 in Asia Pacific, comprising 60% of the world’s youth.

Meanwhile, Asean is expected to be the world’s fourth-largest economy by the year 2050. More than half of its 629 million people are under 30.

“I am very optimistic with the demand coming from Asia. Its definitely going to be the biggest in terms of consumptions. We have the biggest population anyway and the youth will drive the demands,” Goh said.

Karex made headlines recently with its much-anticipated nasi lemak panas condom to be released into the local market in November, following the success of its durian- flavoured condom last year.