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Essity: The Hygiene Giant You've Never Heard Of
The $13 Billion Swedish Empire Hiding in Plain Sight
Picture yourself walking into a hospital in Munich, a luxury hotel in Tokyo, or a suburban home in São Paulo. In each location, the odds are remarkably high that you'll encounter products from a company most people have never heard of. The incontinence products helping an elderly patient recover dignity. The professional-grade hand towels in the restaurant restroom. The feminine care products that millions of women trust every day. These are the invisible essentials of modern life—and they share a common owner: Essity.
This Swedish multinational serves approximately one billion people daily across 150 countries. Its purpose is to break barriers to well-being for consumers, patients, caregivers, customers, and society. Yet despite this staggering reach, Essity remains virtually unknown outside investor circles and procurement departments.
The company's scale is formidable. For full-year 2024, Essity achieved sales of SEK 146 billion and its highest-ever profit of SEK 20.3 billion, corresponding to a margin of 14%. That translates to roughly €13 billion in revenue—placing Essity among the top 50 largest fast-moving consumer goods companies globally.
How does a 19th-century Swedish textile company evolve into a €20 billion global hygiene empire? And why did it take a dramatic corporate divorce in 2017 to unlock its true potential? The answers reveal one of the most underappreciated industrial success stories in European business history.
Origins: From Mölnlycke to SCA's Hygiene Empire (1849–1975)
A Textile Mill Finds Its Calling
In 1849, the same year that gold prospectors flooded California and Europe convulsed with revolutionary fervor, a textile business called Mölnlycke AB was founded in the Swedish town of the same name. The company spent its first century doing what Swedish textile manufacturers did—producing fabric for an industrializing nation.
Mölnlycke began supplying the healthcare industry with products such as gauze in the 1940s. They were the first to mass-produce wound dressings and the first to offer single-use drapes, tubular bandages, and powder-free coated surgical gloves, enhancing performance in the operating room. This pivot from textiles to medical supplies would prove prescient—disposable hygiene products were about to transform from luxury items into daily necessities.
Meanwhile, across Sweden's vast northern forests, a different kind of giant was taking shape.
SCA: The Forest Products Conglomerate
Svenska Cellulosa Aktiebolaget (SCA) was founded by Ivar Kreuger on November 27, 1929, as a holding company for ten Swedish forest industry companies. Kreuger was one of Europe's most powerful industrialists—and ultimately one of its most notorious. His business empire would collapse spectacularly in 1932, but SCA survived.
Following Kreuger's bankruptcy in 1932, the company came to be controlled by the bank Handelsbanken, who along with associated funds and companies continue to control SCA. This stability would prove essential. Under conservative Swedish banking stewardship, SCA methodically built itself into a forestry powerhouse, owning vast tracts of northern Sweden and developing integrated operations from tree nurseries to paper mills.
Founded in 1929 by the famed Swedish financier Ivar Kreuger, SCA initially served as a marketing organization for pulp producers in northern Sweden. After transforming itself from a holding company into an integrated forestry concern in 1954, SCA gradually expanded into the areas of newsprint and linerboard over the next two decades.
The Strategic Pivot: 1975
In 1975, the company entered the consumer products field with the purchase of Mölnlycke AB, a manufacturer of fiber-based disposable hygiene products. This marked the start of SCA's increasing concentration on value-added products based on wood and its decreasing activity in traditional forestry products, such as pulp and low-grade paper.
The logic was elegant: SCA owned forests, which produced pulp, which became paper, which could be transformed into higher-margin consumer products. Instead of selling commoditized paper to printers, why not sell diapers directly to parents?
This acquisition boosted the Group's sales by 40% and resulted in tissue, diapers, feminine hygiene, and incontinence products being included in the product portfolio.
By the mid-1980s, Mölnlycke had become the market leader for disposable consumer hygiene products, such as diapers and female hygiene goods, in Scandinavia and the Benelux countries and was Europe's leading supplier of disposable hygiene products to hospitals and industrial users.
One piece of Mölnlycke would later go its separate way. Part of Mölnlycke was divested in 1997 under the name Mölnlycke Health Care AB. That company—focused on surgical supplies and wound care—remains an independent entity today under different ownership. The hygiene consumer products business stayed with SCA, eventually becoming the foundation of Essity.
For investors, the 1975 acquisition represents a turning point worth studying: a commoditized industrial company recognizing that vertical integration into branded consumer products could unlock structural margin improvement. The lesson applies far beyond paper products.
The Acquisition-Fueled Growth Era (1990s–2015)
Building Global Scale Through M&A
The late 1980s through mid-2010s marked SCA's transformation from a European regional player into a global hygiene powerhouse. The company executed a systematic acquisition strategy targeting scale in key geographies and product categories.
In the 1980s, SCA made several acquisitions, expanding within the packaging, hygiene, and printing paper segments. In 1995, SCA acquired a majority stake in the German company Papierwerke Waldhof Aschaffenburg (PWA), thereby becoming Europe's largest forest-based hygiene products company.
The PWA acquisition deserves particular attention. Germany represented the largest consumer market in Europe, and PWA brought established brands and manufacturing infrastructure. This deal cemented SCA's position as a continental leader in tissue products.
In 2001, the division Wisconsin Tissue of the United States company Georgia-Pacific Tissue was acquired. This marked SCA's entry into the professional hygiene market in North America—a critical geographic expansion that would later become a cornerstone of Essity's business.
Later, it invested R$242 million in a plant in Jarinu, in the interior of São Paulo, consolidating the brands TENA and Tork. In July 2012, the acquisition of Georgia Pacific's tissue operations, including the brand Lotus, was closed. The total price amounted to €1.32 billion.
The Lotus acquisition was significant—it gave SCA a major consumer tissue brand with strong recognition across Western Europe, complementing its Tempo and Zewa brands.
The China Strategy: Vinda Investment
Perhaps the most strategically important move of this era was SCA's entry into China through Vinda International Holdings.
In 2007, SCA acquired its first minority share in the Asian tissue company Vinda. What began as a small stake gradually increased over subsequent years. Essity's ownership of 51.59% in Vinda had been consolidated to 100% by Essity since 2014.
The Vinda investment represented a classic emerging markets thesis: China's per capita consumption of hygiene products was a fraction of Western levels, and as middle-class incomes rose, demand would inevitably follow. Vinda provided access to manufacturing capacity, local brands, and distribution networks that would have taken decades to build organically.
Yet Vinda would also become a source of strategic tension—a story we'll return to.
P&G's European Exit: An Opportunistic Acquisition
In 2007, SCA bought the European business of Procter & Gamble, significantly expanding its hygiene product business. Procter & Gamble sold their European tissue business to SCA for €512 million ($672 million).
P&G's decision to exit European tissue was notable—the world's largest consumer products company concluded that tissue didn't fit its portfolio strategy in the region. SCA gladly absorbed the capacity and customer relationships.
Market Position by Mid-2010s
In 2015, SCA was the largest producer of tissue paper in the world. In August 2015, it was announced that SCA's hygiene operations and forestry operations were to be divided into two different divisions.
By this point, SCA had assembled a remarkable collection of assets: global leadership in professional hygiene through Tork, market leadership in incontinence products through TENA, strong consumer tissue positions across Europe, and a strategic foothold in Asia through Vinda.
But the company faced a fundamental problem: it was two very different businesses sharing one balance sheet.
The Great Separation: The 2017 Spin-Off
The Conglomerate Discount Problem
The announcement came in August 2015, but the strategic logic had been building for years. In August 2015, it was announced that SCA's hygiene operations and forest operations were to be divided into two different divisions. A year later, on August 24, 2016, the company announced that it intended to split SCA into two separately listed companies.
The rationale was straightforward: forest products and consumer hygiene are fundamentally different businesses. Forest products are capital-intensive, cyclical, and commodity-like. Consumer hygiene is brand-driven, less cyclical, and generates predictable recurring revenue. Investors who wanted exposure to Swedish forestland didn't necessarily want exposure to incontinence products in Latin America, and vice versa.
Moreover, capital allocation became increasingly difficult. Forest products require massive investments in mills and processing capacity, with returns tied to volatile pulp prices. Consumer hygiene requires investments in brands, marketing, and innovation. Forcing both businesses to compete for capital under one corporate structure inevitably led to suboptimal decisions.
The conglomerate discount—where diversified companies trade at lower valuations than focused peers—was becoming increasingly costly.
The BSN Medical Power Move
Before executing the split, SCA leadership made a bold strategic move. In December 2016, SCA announced the acquisition of BSN Medical, a company specializing in the areas of Compression Therapy, Wound Care and Orthopaedics. The purchase price amounted to €2,740 million and included brands such as Jobst, Leukoplast, Cutimed, Delta Cast and Actimove.
The timing was deliberate. By completing the BSN Medical acquisition before the spin-off, SCA ensured that the new hygiene company would debut with an expanded addressable market and enhanced growth profile.
On April 3, 2017, the Group closed the acquisition of BSN medical, a leading medical solutions company. BSN medical develops, manufactures and sells products within wound care, compression therapy and orthopedics. BSN medical, with well-known brands such as Leukoplast, Cutimed, JOBST, Delta-Cast and Actimove, has leading market positions in several attractive medical product categories and provides a new growth platform with future industry consolidation opportunities.
"The BSN medical acquisition is an excellent strategic fit for SCA, supporting our vision to improve well-being through leading hygiene and health solutions, two closely interlinked areas. Our incontinence business, with the global leading TENA brand, shares similar positive market characteristics, customer and sales channels with BSN medical, which provide opportunities for accelerated growth through cross-selling," said Magnus Groth, President and CEO.
The acquisition was expected to generate annual synergies of at least EUR 30m with full effect three years after closing. The company has high cash conversion and an asset-light business model.
BSN Medical brought something critical: healthcare relationships. The incontinence care market overlaps significantly with wound care and compression therapy—the same nurses, the same healthcare systems, the same procurement departments. Cross-selling opportunities were real and substantial.
The Listing
In 2017, SCA split off Essity as a separate company, and Essity listed on the Stock Exchange in Stockholm on June 15, 2017.
Nasdaq announced that Essity AB (short name: ESSITY A, ESSITY B), a large cap company within the consumer goods sector, had started trading on the main market of Nasdaq Stockholm.
On April 5, 2017, the Annual General Meeting of Svenska Cellulosa Aktiebolaget SCA decided in favor of the Board of Director's proposal to distribute all shares in Essity Aktiebolag (publ) to SCA's shareholders. The Board of Director's were at the same time authorized to determine the record date for the distribution.
The name itself carried meaning. Essity's name stems from the words "essentials" and "necessities". Hygiene and health are the essence of well-being. As a leading global hygiene and health company, we offer products and services that are essentials and necessities in everyday life.
Essity had about 48,000 employees and net sales in 2016 amounted to approximately $12 billion.
The spin-off represented a clear strategic statement: the new consumer company was positioned as the more attractive part of the old SCA, with higher growth, better margins, and less capital intensity than the cyclical forest products business.
For investors, this was a textbook case of value unlock through corporate action. Two distinct investor bases could now own exactly the business they wanted, with management teams focused on their specific markets and competitive dynamics.
Building the Independent Company (2017–2022)
Finding Its Footing as a Standalone
The first years of independence validated the spin-off thesis. The Group's net sales for 2017 increased 8.0% compared with the preceding year. Organic sales increased 1.2%, while adjusted EBITA rose 12%.
Management under CEO Magnus Groth focused on several key priorities: integrating the BSN Medical acquisition, driving efficiency improvements across the supply chain, and positioning the company for profitable growth in emerging markets.
In emerging markets, which represented 35% of net sales, organic sales rose 5.9%, while in mature markets organic sales declined 0.3%. This divergence highlighted both the opportunity and the challenge: growth was coming primarily from developing economies, while established European markets faced headwinds from private label competition.
Sustainability as Strategy
A science-based target for emissions reduction in line with climate science was approved in 2018. The company has qualified for inclusion in both the Dow Jones Sustainability World Index and Sustainability Europe Index, and has also been named industry leader in the household products sector. Company representatives participate in the Ellen MacArthur Foundation's "New Plastics Economy" initiative and have committed to sustainability targets for packaging, for example that 85% of the company's packaging is to be manufactured from renewable or recycled material by 2025.
Essity's ambition aligns with science-based targets for Scope 1, 2, and 3 emissions. For instance, Essity reduced its emissions in Scope 1 and 2 by 26 percent in 2023.
Sustainability wasn't merely corporate virtue signaling—it represented a genuine business opportunity. Healthcare systems and professional buyers increasingly demanded sustainable suppliers. Consumer preferences were shifting toward eco-friendly products. And regulatory pressure on single-use plastics was intensifying.
The Leakproof Apparel Bet (2022)
One of the most interesting strategic moves of the independence era came in 2022. Hygiene and health company Essity finalized the acquisitions of the Canadian company Knix Wear Inc. ("Knix") and the Australian company Modibodi, both leading providers of leakproof apparel for periods and incontinence.
The transactions made Essity the global market leader in leakproof apparel, the fastest-growing product segment in intimate hygiene, which includes feminine care and incontinence products. Essity predicted the market segment would grow by more than 20% annually over the next five years, excluding Asia.
Modibodi and Knix are leaders in the leakproof apparel category. The Swedish hygiene products maker agreed to buy Modibodi for $93.70M; the purchase price for Knix amounted to $320M on a cash and debt free basis for 80% of the company.
Essity acquired 80% of the shares in Knix. Founder and CEO, Joanna Griffiths, holds the remaining 20% share and stays on as President of Knix.
These acquisitions revealed several strategic insights. First, Essity was willing to move beyond traditional disposable products into reusable alternatives—a potentially cannibalistic move that nonetheless positioned the company for where consumer preferences were heading. Second, the company was investing in direct-to-consumer capabilities through Knix and Modibodi's e-commerce platforms. Third, management recognized that sustainability and growth could align—reusable products command premium prices while reducing environmental impact.
Essity is now becoming the global market leader in leakproof apparel, which is an important step towards our goal of being the world's fastest growing company in Intimate Hygiene, providing increased well-being for customers and consumers," said Magnus Groth.
The Vinda Divestiture: Strategic Portfolio Rebalancing (2023–2024)
The Strategic Review
Despite years of investment and integration, Vinda had become a source of strategic tension within Essity's portfolio. Consumer tissue—particularly in Asia—faced several structural challenges: low margins, high capital intensity, significant pulp price exposure, and currency volatility.
In April 2023, Essity announced it would initiate a review of its Consumer Tissue division to reduce the share of Consumer Tissue in total sales revenues. The review was completed in December 2023 and concluded that while the division remained competitive, the company would benefit from a more focused portfolio.
The Exit
Isola Castle Ltd, a company indirectly wholly owned by Asia Pacific Resources International Limited (APRIL), announced that it would make a pre-conditional public offer to the shareholders of Vinda International Holdings Limited (Vinda) to acquire 100% of the shares in Vinda for a price per share of HKD 23.50. Essity supports the offer and has signed an irrevocable undertaking to accept the offer in respect of all of its 51.59% shareholding in Vinda. The price in the public offer will correspond to an equity value of Vinda of approximately HKD 28.3bn (SEK 37.3bn). The transaction is expected to generate cash proceeds to Essity of approximately HKD 15bn (SEK 19bn).
The hygiene and health company Essity completed the divestment of its entire holding of 51.59% of shares in the Asian hygiene company Vinda International Holdings Limited (Vinda) for HKD 23.50 per share. The sales proceeds amounted to HKD 14.6bn (approximately SEK 19bn).
The completion came on March 21, 2024, marking a strategic watershed for the company.
The Strategic Rationale
"Following the divestment of Vinda, the categories with the highest margins and lowest capital intensity account for a larger part of the company. The company's pulp consumption has halved, and we have a more attractive portfolio with higher profitability and lower volatility. The transaction reduced Consumer Tissue's share of net sales in 2023 from 41% to 33%."
Essity will retain a presence in Asia and in Vinda through continued licensing of Essity's brands.
Vinda is listed on the Hong Kong Stock Exchange and had a market capitalization of approximately HKD 25 billion (SEK 33 billion) at the end of trading on Dec. 14, 2023. 83% of Vinda's net sales were related to tissue and 17% to personal care products.
The Vinda exit encapsulated a broader strategic shift: from geographic diversification toward category optimization. Rather than being everywhere in every category, Essity chose to be dominant in high-margin categories regardless of geography.
For investors, this represented a significant portfolio transformation. The post-Vinda Essity is more profitable, less volatile, and less exposed to commodity input costs—but also has a smaller growth opportunity set in emerging markets.
The Modern Era: 2024 Record Performance & New Leadership
Record Financial Performance
Essity is in better shape than ever and our focus on accelerated profitable growth is yielding results. For full-year 2024, sales amounted to SEK 146bn and profit reached its highest level ever at SEK 20.3bn.
The numbers tell a compelling story. Profit more than doubled from SEK 9.8 billion in 2023 to SEK 20.3 billion in 2024. The adjusted EBITA margin rose from 12.8% to 14%.
The company improved the portfolio mix through the divestment of Vinda and by prioritizing growth in categories that yield a high return. Continuous efforts to improve efficiency resulted in cost savings of SEK 1.5bn. Essity also presented new financial targets during the year, raising the level of ambition for growth and profitability, and launched a share buyback program financed by the strong cash flow from operations.
Sales increased in all of Essity's business areas in the fourth quarter. High organic growth was noted in our most profitable categories: Incontinence Products, in both healthcare and the retail trade, Medical Solutions, Feminine Care and, excluding restructuring, Professional Hygiene.
New Financial Targets and Capital Allocation
The new financial targets raised the level of ambition even further. The aim is to grow organically by more than 3% per year and have a margin of above 15%.
A share buyback program was initiated on June 17, 2024, and was completed on March 13, 2025. A total of 10,070,500 Class B shares have been repurchased for a total amount of SEK 3bn.
Essity also initiated a share buyback program financed by the strong cash flow generated by operations. The ambition is to continue the share buybacks as a recurring part of Essity's capital allocation.
The dividend trajectory underscores management's confidence. The company reported long-term stable and rising dividends that increased 43% from 2018-2024, with attractive EPS growth of more than 50% over the same period.
CEO Transition
After 14 years with the Group, and almost ten years as president and CEO, Magnus Groth informed the Board of Directors of Essity Aktiebolag that he had decided to step down as CEO and from the Board during 2025. A recruitment process for a successor was initiated immediately.
"As President and CEO of first SCA and then Essity, Magnus has successfully listed and led Essity on a significant journey of change over the past 10 years to increase profitability, growth and innovation. Through his leadership and commitment, Magnus has played an important role in creating the platform that Essity has for continued global profitable expansion," said Jan Gurander, Chairman of the Board.
Essity's Board of Directors appointed Ulrika Kolsrud as President and CEO on May 9, 2025. Ulrika Kolsrud assumed her position on June 1, 2025. Previously, she held the position as President of Essity's business unit Health & Medical.
Ulrika has extensive and broad experience across the industries in which Essity operates. She has worked in all areas of the value chain, such as innovation, production, and sales.
The selection of Kolsrud—an internal candidate with deep operational experience—signals continuity. Her background in Health & Medical aligns with Essity's strategic emphasis on higher-margin, healthcare-adjacent categories.
Latest Acquisition: Edgewell Feminine Care
Just weeks ago, Essity made another strategic move. Essity will acquire Edgewell's feminine care business, which offers liners, pads, and tampons, through an asset deal. The acquisition includes the well-known brands Carefree, Stayfree, and o.b. in the USA, Canada, and the Caribbean, global feminine care rights for the Playtex brand, as well as a production facility in Dover, Delaware.
"With this acquisition we are building a stronger personal care business in North America, in line with our strategy to focus on high yielding categories in attractive geographies," said Ulrika Kolsrud, President and CEO of Essity. The total purchase price of USD 340m on a cash and debt free basis represents an EBITDA multiple per June 30, 2025, of approximately 12.1x on a pro-forma IFRS basis, and 8.3x including estimated run-rate synergies on a pro-forma basis.
The business has net sales of approximately USD 260 million or SEK 2.5 billion. This means that Essity's global Feminine Care business will increase 18% in net sales based on 2024 numbers.
The transaction is subject to customary regulatory approvals and is expected to close in the first quarter of 2026.
This acquisition addresses a notable gap: despite being a global hygiene powerhouse, Essity had minimal presence in the U.S. feminine care market. The deal brings established brands, a manufacturing footprint, and an entry point into the world's largest hygiene market.
Business Model Deep Dive
Product Portfolio & Segments
Essity's range of products includes personal care items, consumer tissue products, professional hygiene solutions, and medical care goods. The company is known for its well-established brands like TENA, Tork, and Libero. Its products are designed for single use and include items like tissue paper, baby diapers, feminine care, incontinence products, compression therapy, orthopedics and wound care.
Post-Vinda, the business breaks down as follows based on recent data:
Human Care Products (~54% of net sales): Incontinence products (TENA brand), feminine protection products, diapers, compresses, and bandages. This segment represents Essity's highest-margin business.
Paper Hygiene Products (~26% of net sales): Paper towels, toilet paper, handkerchiefs, wipes. The consumer tissue business that remains after Vinda's divestment.
Professional Hygiene (~20% of net sales): Including toilet paper, handkerchiefs, hand lotions and hand soaps, hand sanitizers, cleaning and wiping products—sold to commercial customers under the Tork brand.
The Power of Two Global Brands
KC has five "billion-dollar" brands, while Essity has two (TENA and Tork).
This concentration is worth noting. Essity's competitive advantage is built primarily around two dominant global platforms:
TENA: Essity is the global market leader in the market for incontinence products with a global market share that is about twice the size of the second largest player. Essity is the market leader in Europe, Asia (excluding Japan) and Latin America.
Essity's TENA brand ranks No. 1 in the global retail adult incontinence market with a 16.4% share in 2022 by retail value. Tork is a "billion-dollar brand", meaning a brand with annual sales exceeding USD 1bn.
Tork: Essity is the world's largest supplier of products and services in the market for professional hygiene with the globally leading Tork brand. We are the market leader in Europe and hold a market share that is more than twice the size of the second largest player. Essity is the second largest supplier in North America and holds a particularly strong market position in the food service segment, where we estimate that the company supplies approximately every second napkin.
Geographic Footprint
Sales are conducted in approximately 150 countries under the leading global brands TENA and Tork, and other strong brands such as Actimove, Cutimed, JOBST, Knix, Leukoplast, Libero, Libresse, Lotus, Modibodi, Nosotras, Saba, Tempo, TOM Organic and Zewa.
In 2024, Essity had net sales of approximately SEK 146bn (EUR 13bn) and employed 36,000 people. The company's headquarters is located in Stockholm, Sweden and Essity is listed on Nasdaq Stockholm.
Following the Vinda divestment, emerging markets now account for a smaller but still significant portion of sales across the three business areas.
Competitive Landscape & Market Positioning
The Competitive Arena
Essity is amongst the top 50 largest fast-moving consumer goods companies in the world and some of its competitors are Unilever, Procter & Gamble, Georgia-Pacific, Kimberly-Clark, Sofidel, Unicharm, Ontex, CMPC, Santher and 3M.
U.S.-based KC is Essity's closest peer. It is the No. 2 player in tissues and incontinence products, while Essity is No. 3 globally.
Essity ranks No. 3 in the global tissue and personal hygiene market with a stable 5.6% market share by retail value at year-end 2022. The global tissue and hygiene market was worth U.S.$205.2 billion by retail value at that time, according to Euromonitor, showing 2% annual growth rate versus 2021. Euromonitor estimates the market will expand by mid-single digits on average over 2022-2027.
P&G and KC are the largest industry players with a 14.2% and 13.4% market share respectively.
Where Essity Leads
Despite being third globally overall, Essity holds commanding positions in specific categories:
Incontinence Products: Essity is the global market leader in the market for incontinence products with a global market share that is about twice the size of the second largest player. Essity is the market leader in Europe, Asia (excluding Japan) and Latin America.
Professional Hygiene: Essity is the market leader in Europe and holds a market share that is nearly three times the size of the second largest player. In North America, Essity is the second largest player with a particularly strong market position in the food service segment.
The Market Opportunity
In 2019, the global hygiene and health market amounted to approximately SEK 1,240bn, of which personal care accounted for approximately SEK 610bn and tissue accounted for approximately SEK 630bn. Personal care breaks down into baby care (~SEK 250bn), feminine care (~SEK 140bn), incontinence products (~SEK 100bn) and medical solutions (~SEK 120bn).
The global tissue and hygiene market was worth US$201.6 billion by retail value at the end of 2021 according to Euromonitor. It estimates the market will expand at a compounded annual growth rate (CAGR) of 5.5% over 2021-2026 compared with the 4% average over 2016-2021. The adult incontinence segment has the strongest growth prospects and over 2021-2026 is expected to grow at 8.5% CAGR in the light adult incontinence segment and 10% in the moderate/heavy adult incontinence segment, according to Euromonitor. This is supported by aging populations in mature markets and increasing awareness of incontinence issues in young adults.
The demographic tailwind in incontinence is particularly compelling. Aging populations in developed markets drive structural demand growth, while increasing awareness and reduced stigma expand market penetration among younger demographics.
Porter's 5 Forces Analysis
1. Threat of New Entrants: LOW-MODERATE
The barriers to entry in hygiene products are substantial but not insurmountable.
Capital Requirements: Manufacturing tissue and hygiene products at scale requires significant investment. Essity operates production facilities across dozens of countries, representing billions of dollars in cumulative investment.
Brand Recognition: Essity is the global market leader in incontinence products with the TENA brand and the leading global player in professional hygiene with the global Tork brand. Building equivalent brand equity takes decades and hundreds of millions in marketing investment.
Distribution Networks: B2B relationships with hospitals, care facilities, hotels, and offices create meaningful switching costs. Professional buyers establish long-term contracts and integrate supplier systems into their operations.
Private Label Pressure: In Western Europe, private labels accounted for 42% of the tissue and hygiene market in 2022 by retail value, according to Euromonitor. Other developed countries such as the U.S. have a lower proportion of private labels in the market, at 20%-25%.
2. Bargaining Power of Suppliers: MODERATE
Pulp represents the primary input for tissue products. Following the Vinda divestment, the company's pulp consumption has halved. This strategic choice reduced supplier power by decreasing commodity exposure.
Pulp prices fluctuate with global supply and demand, creating periodic margin pressure. However, the industry includes multiple global suppliers, limiting individual supplier leverage.
3. Bargaining Power of Buyers: MODERATE-HIGH
Buyer power varies by segment:
Professional Hygiene: Large institutional buyers (healthcare systems, hotel chains, airports) command significant negotiating leverage due to contract sizes and the ability to switch suppliers.
Consumer Products: Retail consolidation has increased buyer power. Major retailers demand favorable terms and shelf space fees, squeezing manufacturer margins.
Healthcare: Reimbursement systems in many countries effectively set prices, limiting pricing power for incontinence products sold through healthcare channels.
4. Threat of Substitutes: LOW
For most hygiene products, substitution threats are minimal. Toilet paper, incontinence products, and feminine care products address fundamental human needs with limited alternatives.
The emergence of reusable products (like Knix and Modibodi's leakproof apparel) represents a partial substitute threat, which Essity has addressed through acquisition rather than competition.
5. Industry Rivalry: HIGH
Competition in tissue and hygiene is intense. Because tissues and diapers are highly commoditized and white-label competitors have increased their presence in the hygiene market, it has become very competitive and crowded. Essity is among the leading players because it continues to invest in its brands and particularly in innovation.
P&G and Kimberly-Clark command significant resources and compete aggressively. Private label manufacturers continually pressure margins. Regional players compete in specific markets.
Hamilton Helmer's 7 Powers Framework
Scale Economies: MODERATE
Tissue manufacturing exhibits meaningful scale economies in production and distribution. However, these benefits are shared across several large global players, limiting differentiation.
Network Effects: LIMITED
Hygiene products generally lack network effects. One customer's purchase doesn't make the product more valuable to others.
Counter-Positioning: PRESENT IN LEAKPROOF APPAREL
The acquisition of Knix and Modibodi represents potential counter-positioning against traditional disposable-only players. Reusable products potentially cannibalize disposables—an investment incumbents may hesitate to make.
Switching Costs: MODERATE IN B2B, LOW IN CONSUMER
Professional hygiene creates meaningful switching costs through dispenser systems, service contracts, and purchasing relationships. Consumer products have negligible switching costs.
Branding: STRONG IN SPECIFIC CATEGORIES
With over 50 years of experience, TENA is the worldwide leader in the management of continence care and personal hygiene. Brand power in incontinence and professional hygiene is substantial, commanding premium pricing and customer loyalty.
Cornered Resource: LIMITED
Essity doesn't control scarce resources that competitors cannot access.
Process Power: MODERATE
Decades of accumulated operational expertise in tissue manufacturing and healthcare distribution represent embedded process advantages that are difficult to replicate quickly.
The Bull Case
Demographic Tailwinds
The incontinence market benefits from an unstoppable demographic reality: global populations are aging. The global Incontinence Care Products Market, valued at US$13.99 billion in 2024, stood at US$14.81 billion in 2025 and is projected to advance at a resilient CAGR of 7.1% from 2025 to 2030, culminating in a forecasted valuation of US$20.85 billion by the end of the period.
Market penetration in emerging markets remains a fraction of developed market levels, providing runway for decades of growth.
Portfolio Transformation Complete
The Vinda divestment marked a strategic turning point. "Essity is now in better shape than ever. Following the divestment of Vinda, the categories with the highest margins and lowest capital intensity account for a larger part of the company. The company's pulp consumption has halved, and we have a more attractive portfolio with higher profitability and lower volatility."
Operational Excellence
Continuous efforts to improve efficiency resulted in cost savings of SEK 1.5bn. Management has demonstrated consistent execution on cost programs while maintaining market positions.
Capital Return Potential
The combination of strong cash generation, completed deleveraging, and share buybacks positions Essity for attractive shareholder returns. The buyback is part of Essity's strategy to enhance shareholder value through recurring share repurchases.
The Bear Case
Margin Gap vs. Kimberly-Clark
At about 23%-24%, KC's EBITDA margin is structurally higher than Essity's, at approximately 17%-18%. We attribute this partly to KC's domestic market being more profitable than several of the European countries in which Essity operates. Private labels have a lower market share in the U.S. than in Europe, which allows U.S. players to maintain higher prices.
Geographic mix creates a structural margin disadvantage that may prove difficult to overcome.
Private Label Pressure
Budget-conscious consumers could increasingly opt for private-label products to save money, which could hit Essity's volumes, mainly in Europe. In Western Europe, private labels accounted for 42% of the tissue and hygiene market in 2022 by retail value.
European market structure favors private label more than the U.S., creating ongoing pricing pressure.
Reduced Emerging Market Exposure
The Vinda exit improved margins but reduced access to high-growth markets. Because Vinda mainly operates in China and parts of Asia-Pacific, Essity's exposure to emerging markets will reduce drastically.
Commodity Exposure
Despite reduced pulp consumption, tissue manufacturing remains fundamentally tied to commodity inputs. Raw material price spikes can compress margins.
Currency Risk
As a Swedish company with significant European revenues, Essity faces translation effects from EUR/SEK movements and transaction effects from USD and other currency exposures.
Key Performance Indicators to Watch
For investors following Essity, three metrics deserve particular attention:
1. Organic Sales Growth
Target: >3% annually. This metric strips out currency translation and acquisition effects to reveal underlying business momentum. Watch category-level breakdowns—strength in Incontinence and Medical Solutions matters more than Consumer Tissue performance.
2. Adjusted EBITA Margin
Target: >15%. The post-Vinda portfolio should deliver structurally higher margins. Progress toward and beyond this target validates the strategic transformation thesis.
3. Return on Capital Employed (ROCE)
This measures how efficiently Essity deploys capital. Given the capital-intensive nature of tissue manufacturing, ROCE improvement signals disciplined capital allocation. The Vinda divestment should drive ROCE higher as capital exits lower-return businesses.
Concluding Thoughts
Essity represents a fascinating case study in corporate evolution and value creation. From its origins in 19th-century Swedish textiles, through nearly a century as part of a forestry conglomerate, to its emergence as an independent global hygiene and health leader, the company has continuously adapted to changing markets and opportunities.
The 2017 spin-off crystallized decades of strategic positioning into a pure-play hygiene company. The subsequent Vinda divestment refined the portfolio further, trading growth potential for margin quality. The BSN Medical, Knix, Modibodi, and now Edgewell acquisitions have expanded addressable markets and enhanced competitive positioning.
"Essity is in better shape than ever and based on the profitable platform we have created over several years of working on structural improvements, we launched new, more ambitious financial targets during the year. Our efforts to accelerate profitable growth have yielded results, and we grew strongly during the year in several of our most profitable categories and gained market shares."
Under new leadership, with a transformed portfolio and record profitability, Essity enters its next chapter from a position of strength. The company's products touch a billion lives daily—even if most of those people have never heard the name Essity.
That relative anonymity may be the ultimate testament to the company's success: when essential products work perfectly, they fade into the background of daily life. For Essity, invisibility is a feature, not a bug.
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