For French hand gel producer, an opportunity and challenge

CAEN, France – The production lines are whirling at Gilbert, one of France’s main producers of sanitizing gels, in a bid to meet the soaring demand for the bottles by people hoping to fend off infection in the face of the coronavirus outbreak.

But executives warn against seeing the boom as a win-win situation for producers, saying it is a struggle to keep up with demand for a product that is far less profitable than high-end cosmetics.

“The phones don’t stop ringing. This morning we had the schools, the town halls, the public transport company,” said Muriel Jehanne, the telephone operator at Laboratoires Gilbert in Herouville-Saint-Clair, outside the city of Caen in northern France.

“Everyone wants gel. We are under siege,” she said. (READ: France announces first coronavirus death outside Asia)

Pharmacies and shops have reported major shortages of sanitizing gel as people seek an instant and quick hand cleaner to protect themselves from the risk of contracting the virus without the need for running water.

Governments have insisted that while such alcohol-based gels are helpful, it is just as effective to properly wash hands.

No comparison

This family owned business, which mainly supplies pharmacies and hospitals, produces 80,000 to 100,000 plastic bottles of gel every day at 3 sites in the region.

Dominique Lecomte, its deputy director, said even the surge in demand during the 2009 swine flu pandemic was nothing like the current clamor for the product.

“With the H1N1 outbreak, we had a considerable increase in production. But what we are seeing now has no comparison,” he said. 

Gilbert, which says it is the second largest producer of gels by sales in pharmacies in France, has sold 1.7 million bottles in the last 6 weeks compared with 800,000 for all of 2019.

But despite the ramped up production, demand at pharmacies is still exceeding production. “We have sold out since Saturday (February 29) when we sold 20 bottles in a single day,” said the director of a pharmacy close to the factory.

“If there are 20,000 pharmacies in France and if 10 bottles are sold every day, you are going to need to produce 200,000 a day,” added one local pharmacist, who asked not to be identified.

Gilbert has taken on some 30 more employees for now, and also plans to keep production lines running on a Saturday.

The company expects to produce up to 4.3 million plastic bottles in the first 5 months of this year – 5 times more than for all of 2019.

‘Not the best margins’

Until now sanitizing gels represented just a minuscule part of the company’s activities, accounting for just 1% of its annual sales of around 200 million euros. Its most successful product is a saline solution.

But on Monday, March 9, it will open a new production line for gels at its plant in Plouedern, which produces 65 bottles a minute.

Lecomte would not be drawn on what kind of financial profit the company would make on the ramped-up gel production, but indicated it was not to be seen as a straightforward windfall.

“It is not the product on which we realize the best margins and we have transferred some cosmetic production to less efficient lines in order to free up production capacity,” he said.

The coronavirus “is not good news for the economy,” he added.

With the French government announcing it will impose a ceiling on the price of gels, Lecomte insisted that the company would not be raising prices for the product.

“We took the decision that prices would not be increased, that we would follow our pricing strategy. We did not take advantage of or speculate on the growing demand for the hydroalcoholic gel,” he said.

The French government announced a price ceiling of 3 euros ($3.50) for a 100 ml (3.4 fl oz) bottle on Friday, March 6, in the latest edition of its official gazette. with a ceiling of 2 euros for 50 ml and 5 euros for 300 ml. 

Those prices will be guaranteed until the end of May, whereupon the government said it would assess the market situation with consumer priority its priority. 

Paris added that retailers who had acquired stock at a price which would cause them to make a loss could request an indemnity to make up the difference. – Rappler.com