KLANG: Online sales for house brand condoms manufactured by Malaysian company Karex shot up by seven-fold during the first half of this year, due to the national lockdown period which began in March, its CEO Goh Miah Kiat said.
The demand for condoms at physical retail avenues, while suffering a dip when people's movements were restricted, has now recovered and even reported a gradual increase.
“A lot more people are engaging in bedroom activity because there’s nothing else to do and you don’t get out.
"And I guess it’s also a time when I don’t think you would want to have a baby, especially if you’re a young couple, because it’s so unpredictable at the moment,” Mr Goh told CNA in an interview.
Founded in 1988, Port Klang-based Karex claims to be the world's largest condom manufacturer, producing more than five billion condoms a year and one in every five condoms globally.
The listed company supplies prophylactics to some of the world's well-known brands under original equipment manufacturer (OEM) and original design manufacturer (ODM) agreements.
Overall, 50 per cent of Karex’s condom output goes towards government contracts for reproductive health programmes, but this comprises only one-third its revenue. The rest is from OEM and ODM as well as its own brand of contraceptives and sexual wellness products.
Previously, Karex’s online channels for its house brand products barely moved the needle in sales, and they were more of a “presence” for the brand.
“We’ve seen a (more than) 600 per cent increase online on our e-commerce channels. We’re starting to see a trend that’s moving from offline to online,” Mr Goh said.
Riding on the boom, the company has decided to beef up its online marketing team.
Nonetheless, while sales coming from the website of Karex's house brand condoms and e-commerce platforms Shopee and Lazada have jumped seven-fold from where they were a year or two ago, Mr Goh noted that Karex still sells more condoms through traditional retail channels.
"This has been a big change for us, but they are still a long way off traditional retail," he said.
Previously, Karex's own flagship stores on Shopee and Lazada saw sales of about RM7,000 (US$1,684) a month.
“We are seeing a consistent contribution of approximately RM50,000 per month since MCO started,” Karex spokesperson Ian Leong said when asked by CNA.
However, he noted that this was a small representation, as various chain stores also sold the same products on their own online platforms. These chain stores do not share the breakdown of physical versus online sales with Karex.
PRODUCTION DISRUPTION AND SUPPLY ISSUES
The COVID-19 pandemic and border closures have disrupted manufacturing industries around the world, and condom manufacturers are not spared.
This is particularly so for major producing countries such as Malaysia and Thailand, as well as China and India, which mainly produce the contraceptives for their domestic markets, according to Mr Goh.
Earlier this year, Karex had entertained production requests from China when the country was in lockdown.
When Malaysia was placed under the movement control order (MCO) beginning Mar 18, Karex's three factories - one in Port Klang and another two in Johor - had to be closed for 10 days. A Reuters report back at the end of March reported that this resulted in a shortfall of 100 million rubbers.
During that period, Karex also struggled to bring in raw materials such as liquid latex from southern Thailand, until its suppliers' special permits were approved.
READ: Malaysia's glove industry is booming amid COVID-19, but are rubber smallholders seeing the benefits?
Other suppliers in the manufacturing process, such as printers for the condom packaging, also had to remain shuttered because they were not considered essential services.
Karex's factories were subsequently running at half capacity in April, before production returned to normal. With the subsequently easing of movement restrictions, disruptions have been ironed out, Mr Goh said.
“But that means you’re now dealing with a backlog of orders that everyone is chasing,” he said.
GOING ONLINE AND INNOVATION
The recent online retail boom came as a surprise for Mr Goh and his team at first.
“It does make sense, you know, for people to buy condoms online. You’re shy, you want to buy condoms, but you don’t know what you’re buying.
“But at home, you can actually glance through, there’s privacy. And when you go to the online store, you can pose questions, and our people answer queries. People do ask us for suggestions, like what’s the difference between this rubber and that,” he explained.
Contrasted with this was the typical purchasing experience at a pharmacy or convenience store, where people even bought newspapers just to hide the fact they were buying contraceptives.
In Malaysia, 24-hour convenience stores are still Karex's top retail channel. Most sales happen at night around hours such as 10pm, Mr Goh said, according to sales data and feedback.
“Actually, it’s the most expensive place to buy your condoms, but that’s the place most people want their condoms. It’s just at the cashier, and you can just buy it and go,” he said.
In China, Mr Goh said, citing his industry sources, over 50 per cent of condoms were distributed online.
Malaysia is still far away from that, but that meant that the potential for the condom industry to grow online was tremendous, he added.
For a start, Karex has pumped more money into online marketing and strengthened the team.
“It’s so much easier for us to penetrate the online market. Information flow is so much faster and (it's) easier to come up with a campaign.
"On the whole, this is something we would continue to invest in,” Mr Goh said.
However, he believed it was not likely for Karex's online sales to cannibalise its existing physical retail avenues, based on feedback from the latter on the upward trend lately.
When Karex was first established, it made both condoms and gloves, but the company chose to focus on condoms and other medical items such as catheters and probe covers for medical scopes when its glove business did not take off.
Now it plans to enter the glove market by building a new plant at its existing Songkhla factory in southern Thailand.
Mr Goh said the venture would serve as an avenue for Karex to look into new materials to play around with and hopefully to apply back into its condom manufacturing process.
One issue that Karex is researching on is the heat transfer property of the rubbers to enhance users' enjoyment.
NOVELTY FLAVOURS TO SPARK CONVERSATIONS
Karex is known for its limited edition condoms that come in novelty flavours.
After the introduction of durian flavoured condoms in 2016, it subsequently rolled out nasi lemak, teh tarik and rendang flavours in the following years, usually in the third quarter of the calendar year.
These are to spark conversations, hopefully responsible ones, among the public, Mr Goh said.
"The thing is, we don't talk about condoms. You think of them as a taboo thing right? Different people go out and buy condoms, and actually, it's quite the responsible thing to do," he said.
"It's perception, and the thing is that there are a lot of people who don't buy condoms. Number one because they're just too shy, and there's a stigma, because if you're using a condom, you're sexually active," he noted.
"The thing is that, for me, I want to have fun, and I want people to break the taboo, and the only way you can break out of that is by talking about it, which is why we launched the durian flavour back in 2016, and then nasi lemak in 2017," said Mr Goh.
This year's launch date may have to be delayed slightly due to the setbacks caused by the pandemic, he added.
Meanwhile, Mr Goh also stood by his earlier prediction that the risk of a global condom shortage still looms, especially for reproductive health and humanitarian programmes run by governments and non-government organisations.
Funds traditionally channelled to these programmes have been repurposed to help with the COVID-19 pandemic, he noted.
In the latest United Nations Aids (UNAIDS) 2020 Global Update executive summary report, its executive director wrote that a six-month disruption to medical supplies could result in an extra 500,000 AIDS-related deaths in just sub-Saharan Africa by end 2021.
Meanwhile, international organisation The Global Fund, which was set up to finance and create partnerships to fight AIDS, tuberculosis and malaria, reported disruptions to programmes in all three diseases mentioned above.
Leong, Karex's spokesperson said: "Yes, we have seen government orders being reduced in recent months."
"This is largely due to condom purchasing being derived from the overall 'humanitarian aid budgets'. These are the same budgets that most governments and NGOs are using for COVID-19 relief," he told CNA.