Aurora Magazine

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Hand Sanitizer Anyone?

How Pakistan’s average monthly grocery basket has changed forever.
Updated 13 Aug, 2020 03:21pm

Ever since the outbreak of the Covid-19 pandemic, manufacturing across the world has been focused on securing raw materials and components to protect supply lines that are increasingly under strain from an unprecedented supply chain shock. In the last half century, manufacturing and production systems have been organised as Global Value Chains (GVCs); raw materials and semi-finished goods are sourced from different regions and then assembled at a factory at another location and the finished goods are shipped to end consumers in developing and developed markets.

For most products, China is at the heart of such GVCs. It is home to the majority of manufacturers of high value products and components, it is the largest consumer of commodities and industrial goods and the source of many intermediate inputs. Therefore, given that China was also the source of the outbreak, it was only a matter of time before the strict quarantine zones, imposed by various governments since last December, would start a ripple effect of supply chain disruptions impacting consumer demand, labour, materials and delivery – thereby compromising the operational viability of businesses that relied on global sourcing.

Businesses in Pakistan faced a similar dilemma. Although the first confirmed case of Covid-19 was reported on February 26 (almost two months after some of the world’s largest economies had been hit), most companies were unprepared and without a contingency plan on how to stay operational during the pandemic.

As a result, if acute shortages of toilet paper made waves in the West, in Pakistan hygiene products experienced an exponential spike in demand and immediately sold out. Across the country, there were stock outs of well-known brands of soaps, hand washes, surface cleaners, antiseptic liquids and surprisingly, hand sanitizers – as maintaining personal and home hygiene became the top priority for almost every household.

In the pre-Covid-19 world, sanitizers were a niche product category in Pakistan, with consumption mostly concentrated in the three metropolitan cities. As the number of cases surged, the message across all media platforms pushed by the government, media, brands and NGOs, was two-fold: maintain social distancing and wash hands regularly and if at a public place, use sanitizers after coming into contact with any kind of hard surface. The fact that almost all banks, money changers and even a few retail outlets suddenly had a designated employee dispensing sanitizers to incoming customers created product awareness like no marketing campaign ever had.

The result was a massive supply-demand gap in the market, as most major brands were unable to ramp up production immediately and ensure nationwide distribution to fulfil the unprecedented surge in demand. Furthermore, given the fact that all MNC companies in Pakistan import the formulations for their sanitizers, these brands did not have the ingredients they needed to continue manufacturing and were unable to sustain uninterrupted market supplies.

According to Humayun Farooq, Marketing Director, RB Pakistan, “initially, we had 15 to 20% surplus stockpiles of raw materials, but there was a labour shortage due to the lockdown in mid-March and we were faced by the danger of factory closures. On top of that, there were restrictions on freight movements. These issues took weeks to resolve and when our supply lines could operate at maximum capacity, the raw material was used up quickly and we ran out of supplies and as the rest of the world was in lockdown too, factories there were not in a position to send us the raw materials we needed.”

The outcome was that with the established brands unable to fulfil the surge in demand, a host of new sanitizer brands suddenly appeared on store shelves to take advantage of the opportunity. While consolidated statistics are not yet available, manufacturers estimate that demand for sanitizers increased by 500 to 1,000% within two weeks of the first confirmed case.

The problem was that most of the ‘new’ brands were substandard and made by unregistered manufacturers with low or zero alcohol content, whereas the WHO recommendation is that there has to be 96% ethanol content for a sanitizer to be effective against the virus. However, such was the panic that people were rushing to get their hands on any product available. Furthermore, given the fact that the formulation of sanitizers in Pakistan did not then fall under the purview of any government department, it was not until April that the government took note of the sale of substandard/fake brands and raids were conducted to remove them from the market. Additionally, a list of 23 sanitizer brands in contravention of WHO standards was released by the Minister for Science and Technology. Furthermore, the government placed hand sanitizer manufacturing under the control of the Drug Regulatory Authority of Pakistan (DRAP) and now only those manufacturers with a valid Drug Manufacturing Licence (DML) or Enlistment Certificate can legally manufacture hand sanitizers. As an additional measure, given that alcohol is the main component in making sanitizers, the government permitted local distilleries to manufacture sanitizers until the end of June as these companies already have a license for procuring ethanol for commercial use.

Now, as cases of Covid-19 continue to increase, even as different sectors of the economy open up, experts are of the view that easy access to good quality sanitizers that are also affordable will remain a priority to ensure public health as people return to work. It cannot be left entirely to the MNC brands to cater to this demand because for the majority of Pakistani workers buying a branded hand sanitizer regularly is unaffordable. To this end, it seems that public health officials are urging the government to increase local production as this will reduce input costs and allow uninterrupted manufacturing in case of another major spike.

Luckily for Pakistan, there is no shortage of ethanol (it is produced from molasses, a natural bi-product of sugarcane farming) and average ethanol production stands at 500,000 tons per annum, 95% of which is exported in a typical year. Since Pakistan’s traditional exports are expected to decline by more than four billion dollars during the current fiscal year as per initial government estimates, this is an excellent time to increase production of hand sanitizers that can be exported. Although, since the pandemic started, a ban has been imposed on the export of soaps, sanitizers and ethanol from Pakistan so that local demand is met first, the Pakistan Soap Manufacturers Association as well as major players in the business community are urging the government to lift the ban once the local demand-supply gap is met.

Simultaneously, another area garnering a lot of attention both from consumers and businesses is e-commerce. Although the current government has long been emphasising the need for businesses to go digital, the crisis has perhaps forever changed consumer buying behaviour in Pakistan. While official statistics of the total increase in online buying in Pakistan have yet to be reported, there is no question that more people are choosing to have their groceries and other daily consumption items home delivered through online ordering (see Aurora’s Covid-19 Consumer Behaviour Survey here whereby 18.7% of respondents reported making more online purchases than ever before, with 54.5% spending more on personal protection items); this trend is likely to increase even once the pandemic is over.

Clearly, be it off the traditional retail shelf or through online, Pakistani consumer awareness and knowledge of hygiene has increased exponentially in a matter of weeks, a milestone that years of public service campaigns by governments as well as brands had failed to accomplish. Even lower income and less educated population groups are realising the importance of personal and home hygiene to their well being and therefore, the monthly grocery basket of the average Pakistani household will likely change forever to include surface cleaners, disinfectants and quality soaps and hand washes.

Ayesha Shaikh is a freelance writer.