The faltering condom sales mean growth in sex toys

The condom giant began to “winter”. Sales at Recreation, the world's largest condom maker, have fallen 40 percent in two years. The Chinese condom brand Jishibang was sold by the parent company and the parent company Gaobang was acquired; many companies turned around and started production. Gloves. At the same time, sales of sex dolls such as masturbation cups, vibrators, silicone and TPE sex dolls have risen sharply. what happened in the middle

Contrary to all expectations, growth in condom sales is stagnating.

Declining sales of the condom giants are a wake-up call for the industry. Not long ago, Karex Berhad, the world's largest condom manufacturer, announced that its sales had fallen by 40% over the past two years. Kangle is a condom manufacturer in Malaysia. It produces about 5.5 billion condoms each year, or a fifth of the world total. It manufactures products from well-known brands such as Durex, ONE and Neurosci. At the start of the outbreak two years ago, the company was optimistically forecasting a "double-digit" increase in demand for condom goods. But reality has been obscured. In early 2020, the three factories in Malaysia were temporarily closed. At the time, it was rumored that "the global condom shortage has reached 100 million." But the reality is that Kangle posted a loss in fiscal 2020 for the first time since it was listed in November 2013; its shares in Bursa Malaysia fell nearly 50% over the year.

Other condom manufacturers face the same dire situation.

In May 2022, CPR GmbH, manufacturer and seller of one of Russia's best-selling condom brands "VIZIT", filed for insolvency. The company produces more than 200 million condoms every year and sells them in several countries. The Jissbon brand, which often appears on supermarket shelves alongside Durex, saw its sales fall from 1.928 billion yuan in 2019 to 1.758 billion yuan in 2020. The brand's parent company is described as "the first in the world." At the end of "China's No. 1 Condom," Renfu Medicine, known as "stock," "sold" at a price of $200 million.
Industry data shows that since 2020, more than 40,000 condom manufacturers in my country have written off the condom, averaging 17,300 condoms per year, much more than the 14,987 cancellation dates in 2019.

In contrast, adult sex toys such as condoms, including masturbation cups, vibrators, torsos, love dolls and more saw a jump in sales during this time. How does it work? Can the sex toy industry herald spring?

Why is condom sales growth stagnating?

According to media reports, when the Kangle factory stopped production in 2020, Jiang Zhiming, general manager of North Technology, also judged that there will be no shortage of condoms in the Chinese market, although some supermarkets had inconvenient transportation in the early stages of the epidemic due to "hard to find a complete set". However, with the resumption of work and production of most companies and the full recovery of the transport industry, the condom supply market will not experience major fluctuations.

Finally, staying at home during the epidemic has allowed couples to spend more time together. Coupled with the advantages of the three-child policy, all the favorable conditions have come together so that everyone thinks that the condom sales of the past two years should herald a bang. However, things just didn't go the way everyone had imagined.

Why don't condoms sell well?

Southern Weekend cited a Sexology report, The Impact of COVID-19 on Sexual Life, which said that before the epidemic, people were 4.4 times more likely to have sex than during the epidemic. The report pointed out that all animals have an innate ability to protect themselves, and the protection of life far outweighs the desire to reproduce; therefore, during the epidemic, people will feel fear of death, which will reduce the desire to form intimate relationships with others.
Additionally, a fact that turns some perceptions on its head is the fact that nearly half of condom use occurs outside the home. A number of industry insiders told Caijing World Weekly: "There are not many instances of male-female condom use, but it is a habit to sell condoms. More condoms are used in service industries.”
But Lilac Garden once quoted authoritative foreign medical journals as saying that during the epidemic, in addition to husband-wife sexual behavior, casual sexual behavior such as sex and dating also declined. It was also reported that an online survey of nearly 500 male and female Chinese consumers between the ages of 18 and 45 found that 44 percent of respondents said they had fewer sexual partners and 37 percent said they had fewer sex. The reason for this may lie in the influence of the lives of most Chinese youth on their parents. A Kangle official also said that demand for condoms fell as hotels and motels closed; moreover, governments have also significantly reduced the amount of condoms distributed during the epidemic. Condoms consumed in such scenarios are mainly sold through offline channels such as supermarkets, convenience stores and pharmacy chains. During the epidemic, consumption in these places was also affected. Taken together, these could explain the decline in condom sales in recent years.

The growth of condom sales has stagnated and the manufacturers have heralded the fate of "self-sale".

In June this year, "Mask King" Steady Medical issued an announcement announcing the acquisition of 100% equity of Guilin Zizhu Latex Products Co., Ltd. (hereinafter referred to as "Guilin Latex") announced with its own cash funds of 450 yuan. Million. Guilin Latex is the parent company of "Gaobang" brand condoms. After sales fell by around 200 million yuan in 2020 compared to the previous year, the condom brand Jisbon was also "abandoned" by the parent company. In November 2020, Renfu Pharmaceutical announced that its subsidiary Renfu Singapore plans to transfer 40% of Le Fusi Group's equity to Hillhouse Capital at a price of US$200 million. The Jessbon brand is operated by the Lefors Group.

In 1998, two years after the establishment of Renfu Medicine, it was involved in the establishment of Jissbon (Wuhan) Sanitary Products Company. After Lisbon's official launch in 2001, it has shown a strong ability to make money. According to reports, Jissbon's net worth at the end of 2005 was about 60.1879 million yuan, and net profit could reach more than 30 million yuan. Since then, Renfu Pharma has sold the Ghisbon brand to Ansell in Australia. However, in 2017, Renfu Pharmaceutical spent another $120 million to buy back 54% of Jasperbond and bring it back under its roof. Gishibon, which also prospered under Ansell's leadership, has won more than 25% market share in China and is classified as a high-end condom brand along with Durex, Okamoto and other brands.

It is worth mentioning that in addition to Lisbon, Loves Group also operates a number of well-known condom brands such as Lifestyles, ZERO, Manix, Unimil, Blowtex, SKYN, which by definition is second in the world.

But just three years later, Jissbon was back from his

parent company sold. Renfu Pharmaceutical said the company will develop its core business around product lines such as narcotics, psychotropics, hormonal drugs and natural medicines, and focus its gender health business on research and development, production and sales of gender health products. Health-Related Medicines.
Under the terms of the agreement, Renfu Medicine will not engage in the manufacture and sale of condoms and sex toys for a period of three years from the signing of the Jissbon Equity Transfer Agreement. Some investors believe this will almost explain Renfu Pharmaceutical's complete exit from the condom business.
The outside world has speculated about it. However, most opinions suggest that Renfu Pharmaceutical's move should be related to Jisbon's sharp drop in revenue in 2020. Although the gross profit margin of Renfu Pharmaceutical's condom segment was 59.45% in 2019, much higher than the revenue from its main pharmaceutical and pharmacy business, the condom business accounted for less than 10% of its total revenue since the last stock sale for consecutive years. The condom market did not develop well, and Renfu Medicine also resolutely took "slim down" measures again.

To make up for the losses, various condom companies began to transform themselves. Since the raw material for condoms is mainly natural rubber, the use of latex gloves made of the same material has become the main transformation direction of many companies.
Kangle plans to start manufacturing glove-related products in Thailand mid-year. Among Chinese companies, Guilin Hengbao Health Protection Co., Ltd., the parent company of the "Sexy Condom" brand, has already built 15 medical glove production lines in the past year. The company has already started planning an IPO, hoping to become "the first stock in China's latex industry."

Guilin Latex acquired from Wende Medical mainly includes latex products such as medical latex surgical gloves, medical examination gloves and condoms. In 2021, the company's revenue is 320 million yuan and net profit is 51 million yuan, of which about 55% is attributed to latex medical surgical gloves. And Steady Medical also appreciated its production capacity for low-value medical consumables such as medical gloves.

Sex toy sales are on the rise

An interesting phenomenon is that sales of condoms, which appear to be "just needed" in life, have declined while sales of other sex toys have grown significantly in recent years.

The 2020 adult product data displayed on the Jingdong platform is similar to the general sales trend of family planning, functional and sex products for the three years from 2018 to 2020. Among them, sex products are firmly prominent, among which male airplane cups and female vibrators are particularly popular . In 2020, just half an hour after the "Double 11" store opened, JD Health's family planning medical devices heralded overwhelming sales growth, from which sex toy sales jumped 200% year over year.

According to data from JD.com, the sales volume of silicone dolls in China is also around 600,000 in 2020, with an average of 50,000 per month; the world market sells about 2 million. In 2015, the annual sales of silicone dolls was only 150,000. A number of adult doll factories in Guangzhou told the media that orders for adult sex dolls have doubled during the epidemic in recent years, and 80% of their products have been exported to Europe, America and Japan.

According to data from iiMedia Research, the size of China's sex toy market exceeded 100 billion yuan in 2019, and there is still plenty of room for growth. According to a survey, 34.82% of respondents said they would try sex toys, 28.13% found sex toys "enjoyable," and less than 10% of users declined.

Selling sex toys for women is also quickly “unlocked”. According to media reports, the sale of sex toys for women on the Tmall platform will increase 11 times in 2021 compared to the previous year. Statistics from Dingdong Kuaiyao also show that female users have become the main force in consuming adult products (including family planning and sex toys) on its platform, accounting for more than 65%.

As women's confidence has grown in recent years, there's no shame in "pleasing yourself" without hurting others.

The "2021 China Women's Health White Paper" published by First Financial Business Data Center also shows that in the online sex toy consumer market, the proportion of consumption by women continues to increase, and the growth rate is significantly higher than that of men at present, accounting for almost 40% out. In 2021, the per capita consumption of female users will exceed that of men. The white paper also states that the consumption of sex toys is dominated by married women, but the proportion of single women and women in love is gradually decreasing, single women prefer feminine utensils and lovers sexy underwear.

This particular hidden potential sex toy market is growing rapidly

In July last year, news broke that sex toy company Zui Qingfeng was playing "sex first." Zuiqingfeng's annual income exceeds 1 billion yuan, and the products sold include gender-specific health products such as home appliances, family planning, clothing and nursing care. Among them, sales of household appliances account for 40%, which is one of the main sources of income, including various types of male and female electric masturbators, soft or silicone molds and sex toys. The main brands are Xuanji, Dozi Hart, etc., followed by family planning products.

Previously, although five companies including Hequ, Juzi, Chunshuitang, Taohuawu and Ailu Health were listed on the New Third Board, as of the last date Qingfeng published the prospectus, none of the A-share-listed companies had A-share companies. Its main business is gender specific health products. Although it was later revealed that Zui Qingfeng had an invoice amount of more than 40 million yuan, as well as problems such as plagiarism and lack of R&D capacity, the listing application was eventually withdrawn, but this did not affect a large number of companies optimistic about the business. Won the favor of capital.

According to the data from Tianyancha, the number of
Sex toy companies in my country have shown a rapid upward trend since 2020, and the annual growth rate of the number of registered companies is 99.4%. In 2021, the annual growth rate of China's sex toy company registrations will peak at 183%, and more than 120,000 new companies will be established during the year. There are currently more than 242,000 companies in China whose business includes "sex toys".
At the same time, a new generation of young people living alone is growing up. Their concept of consumption has also changed than before, their desire to consume is increasing and they also prefer higher quality and more innovative brands of the new generation. "In my opinion, everyone's preferences are different, and buying sex toys is not 'vulgar' behavior at all. Whether people buy sex toys or not is the same as choosing to eat dirty stalls or western food. There is no difference.” In Huahua, a young woman who was born in the 1990s and had worked in related industries told Caijing Weekly.
Among the emerging brands that have emerged in recent years, hardware company "Little Monster", which focuses on women's healthy and comfortable experience, received two consecutive rounds of funding in 2016 and 2017.

Many brands will be financed in 2021. In March 2021, "Love Heart", a new retail brand for fun in the hotel scene, received tens of millions of A+ rounds of financing, with a valuation of 300 million yuan; in April, "SauceDesign Irrational" in the form of a popular gift box for silicone doll was launched to complete a million-dollar seed funding round; In September, the original female sex brand Adult Candy announced it had closed a 250 million yuan Series A financing.

In addition, in 2021, the fun social e-commerce "Xingfutun", the fun smart vending machine "Hey Cat", the toy brand "Pink Fist" and other brands will also be funded.
According to the observation of Liu Chen, an industry insider who has made erotic underwear, "Adult candy is the most watched in the circle. The company has conquered the market segment of female adult channels."

It is understood that the star Xiao S is the first Chinese brand spokesperson to be announced by Adult Candy. The company's Weibo opening ad also marks the first time a Chinese sex brand has appeared on social media.
Zhang Zhiwei, the founder of Adult Candy, revealed to Financial World Weekly that the company's customer acquisition and revenue channels include offline and online channels such as private domain traffic of the Tmall and Youzan platforms, including the Bean Watch and the small seal of the company have accumulated two single products. Sales volume has surpassed one million, and this year's "618" omni-channel transaction volume is up about 30% year-on-year.

It's difficult to publicly expose a sex shop's sex toy business

Sex toy sales led to growth, and China's adult products market is huge. But that doesn't mean that the business has become "easy to do".

“Consumer demand for sex toys seems to be increasing every year.

However, given the development of the sex toy industry or the development of the adult product industry as a whole, it is too early to say that "spring" has arrived. ' said Liu Chen.

"Advertising and customer acquisition are still the core issues for brands. Everyone thinks that consumers in modern society have accepted these things on a cultural and conceptual level. But in fact, before I entered the industry, I didn't understand them at all. Still very much." limited," said Liu Chen. It can be said that e-commerce has enabled the sale of sex toys, which are difficult for most people to "talk" offline. But in terms of online marketing, Liu Chen said that almost all channels are not suitable for the emergence of sex toys."You can't imagine what it would be like to have a vibrator ad and an elevator ad on Douyin. As a new brand, you can't even take the first step of self-promotion. How can you talk about customer acquisition?" During my more than one-year activity as an entrepreneur, almost no investor is willing to invest.

Zhang Zhiwei once used the word "nearly perverted" to describe the strictness of censorship of sex toys on each platform. In the beginning, Adult Candy's approach was to heavily customize the presence and scope of the brand's marketing content, even abandoning exposure to category words, product names and product images, and exposure to branded content, he said. No product features are highlighted.

“Now, on the one hand, Adult Candy has invested heavily in brand building to increase brand influence, on the other hand, it is also actively expanding offline channels and private domains. The offline aspect has achieved results, and the next Adult Candy will be in the top shopping malls (shopping malls) in first and second tier cities will open stores and present sunny and non-pornographic sex brands to the public," Zhang told Zhiwei Caijing Weekly.

Zhang Jinjin, the designer of another adult brand "Qingnan", is not very optimistic about the short-term traffic generated by throwing money. “It doesn't make much sense to invest in advertising in this industry. After our experiments, we found that the sales curve completely followed the advertising costs. she stopped. If you want to develop healthily, you still have to form your own blood." , rely on products and word of mouth."

Previously, several companies listed on the New Third Board were not optimistic about profitability. Lover Health was removed from the New Third Board in May 2020. In 2019, before delisting, lovers' health loss was about 27 million yuan. In 2020, Chunshuitang and Taohuawu lost 4.17 million yuan and 653,600 yuan, respectively.

Hequ will also be delisted in June 2021 and corporate banking will be phased out. Earlier in 2017, Hequ had turned losses into profits with a profit of 10.02 million yuan; from then until 2020, the company's annual net profit exceeded 15 million yuan. "Financial World" Weekly learned from the person in charge of the company that his current business focus is on marriage and love. By the end of 2020, the company's sex toy revenue accounted for about 50% of its total revenue.

Another company, Orange Shares, initially mainly sold the "Sanhe" series of breast enlargement products and the "Maca" series of aphrodisiac products; In 2017, the company completed the acquisition of Orange Technology and gradually expanded into selling adult products. Extension. Orange Technology is well known to consumers, namely "Orange Master" offline franchise chains. There are currently up to 850 branches. By 2021, revenue from adult products, or "Orange Adult" stores, will account for more than 70% of Orange's revenue, which is actually the backbone of its solid performance. "Chengzi now mainly relies on franchisees to make money," said Liu Chen.

In 2021, however, Orange's adult product sales will fall by 27.53%, dragging down the company's overall sales by 36.12%, and its net profit will fall by as much as 91.77%. In this regard, the company explains that due to the impact of the epidemic in 2021, the franchisees' physical stores will be severely affected, which will lead to a decrease in purchases.
The development challenges of the sex toy industry go far beyond that. Huahua told Financial World Weekly, "The existence of plagiarism and quick money has caused the industry to develop abnormally and progress is slow."

According to their real-world experience, the products developed by some small brands were quickly "plagiarized" by some big companies. But on the outside, this industry is always wrapped in a foggy veil, and many problems are "not easy to bring to the table".

Huahua said from the consumer point of view, "Many designers of sex dolls are male and cannot really understand the real needs and experiences of female users. All have copied each other and the products that are really easy to use bring the ultimate experience to women. Rare."

According to Hua Hua, one of the products that has impressed them in terms of design and experience is "Little Godzilla Jumping Eggs" with a cute little monster theme. ; In addition, there are Da Rentang Dou Bird products, "user feedback is also good".
“It's just that some companies have also started raising prices after their brand power improves. You've fallen into a vicious cycle of "appearance is greater than product function." They are focusing on traffic and short-term revenue, and their product intentions are becoming less," Huahua said regretfully.

Liu Chen and Huahua also chose to leave the sex toy industry. They believe that although the industry has an increasingly popular trend, the reality will inevitably disappoint them.

Walking in the sun in the "sex" industry is still difficult for most people. But for entrepreneurs who are still struggling in the industry, "there's still a long way to go." With this sentence, Zhang Zhiwei summarized his views.