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GLOBAL PEST NEWS – SUMMER 2021

UK pest management journalist Frances McKim reports on Rentokil Initial’s big play in the hygiene and wellbeing sector.

“Hygiene and wellbeing is the new pest control.” This is the statement made by Andy Ransom, CEO of Rentokil Initial plc at a meeting held in London to a group of financial journalists and analysts on September 28, 2021. UK-based international journalist Frances McKim shares her insights.

With Covid-19 causing a reduction in pest control activities, especially in the hotel and catering sector, a need for professional disinfection treatments emerged in 2020. Rentokil, within a matter of weeks, launched its hygiene services in 20 new territories and now operates in a total of 65 countries. Following the growth in the hygiene sector during 2020, non-pest-control activities accounted for just over a third of Rentokil’s global revenue of £2,644.5 million ($4,841 million).

 

Rentokil Initial annual revenue (in GBP) in 2020 (source: Rentokil Initial plc Annual Report 2020)

 

A change in direction

From January 1, 2022, Rentokil is establishing a new Hygiene and Wellbeing business division, which will be on an equal footing with its Pest Control division. There were clear indicators in the Rentokil 2020 Annual Report that this might be the direction the company was going to take, as the disinfection market presented a lucrative and relatively untapped opportunity. The move is a significant one, and not just for the UK pest market.

During the presentation, Mr Ransom explained how the new Hygiene and Wellbeing division will operate. In short, it will see Rentokil’s existing core washroom hygiene services joined by new no-touch, digital and e-commerce services. These new services will include air care, dental hygiene, medical, specialist hygiene, wellbeing, plants and scenting. There’s also Rentokil’s flagship product, the Viruskiller air purifier; launched in December 2020, it claims to kill 99.9999% of viruses including Covid-19 with a single pass of air.

“Following the Covid-19 pandemic, the public’s attitudes to health, hygiene and wellbeing has changed forever,” stated Mr Ransom. The findings of a global hygiene survey undertaken in June 2021 covering 20 countries (including Australia) with over 20,000 respondents certainly support this statement. The survey examined the impact of the Covid-19 pandemic on the attitudes and behaviours towards hygiene. It concluded that people now have a greater awareness of germs and their spread, with hygiene now a common concern. Concluding, the report stated: “Those businesses that embrace this fundamental mindset shift and implement all aspects of hygiene will undoubtedly have an advantage over those that do not.”

 

Sector similarities

When considering these two sectors – hygiene and pest control – it’s easy to identify the similarities. Both sectors include the same types of commercial customers, and appeal to an increasingly urban middle-class population living in countries with ever-tightening regulations and standards. From an operational perspective, country management, technology, infrastructure and backend services can be shared. Within the hygiene sector the main players are as fragmented and diverse as they are within pest control, meaning the same opportunities exist for mergers and acquisitions. Unsurprisingly, Rentokil already has its well-oiled M&A team in place. Mr Ransom indicated that roughly 80 targets had been identified with the potential for larger transactions if available. One recent example is the acquisition of Aces Medical Waste, a clinical waste disposal company based in Victoria, early in 2021.

 

A look at the competition

Whilst other international pest control companies took advantage of the Covid situation and expanded their disinfection services, in the longer term their plans appear less ambitious.

Matt Turek, Division President of Orkin International commented, “In regards to hygiene and disinfection services, we offer these services in many countries around the world. We were quick to respond to the needs of our customers at the start of the pandemic and rolled out VitalClean. While the demand for disinfectant service has waned in some countries, we are seeing a greater demand these days in countries such as Singapore.

“As the needs and requirements vary by country we are making the decisions on what lines of business to get into at a local country level always making sure to never lose focus on our core businesses.” Another global player, Anticimex Group, has adopted a similar stance. CEO and President, Jarl Dahlfors, was keen to stress that while washroom hygiene and disinfection services are offered, the company’s focus remains on pest control with the continuing success of the SMART digital system being paramount.

In terms of the Australian market, however, it may be a case of business as usual for Rentokil. The Pacific region, comprising Australia, New Zealand and Fiji, is the only geographic area where the existing hygiene sector is larger than that of pest control. It will be interesting to see if Rentokil’s major play in the hygiene sector will see more pest managers offering such services in the coming years.