2- ABOUT AEROSOL MARKET

Short History of Aerosol

The aerosol dispenser was invented in 1927 by Erik Rotheim, a Norwegian engineer. The first

mass-produced aerosols were developed in the USA during the late 1940s, and they soon became

popular in Europe as well. In the 1950s and 1960s, the aerosol industry experienced rapid growth,

as a wide range of new products were introduced to the market. However, in the late 1970s, the

industry came under fire for its use of Chlorofluorocarbons (CFCs), which were thought to be

contributing to the depletion of the ozone layer. In response to this criticism, the aerosol industry

voluntarily moved away from CFCs and began using alternative propellants. By the 1990s,

European consumer aerosols no longer contained CFCs. In the 2000s, the aerosol industry

continued to focus on environmental sustainability. The bicompartimented aerosol was introduced,

and research was conducted on how to make aerosols more recyclable. Today, the aerosol industry

is still growing, and it is committed to developing even more sustainable products and packaging.

Production By Segment and Region

Value Chain Supply Chain Analysis

3- CUSTOMER ANALYSIS
The customer segmentation for the aerosol market can be categorized into four main groups:

multinational brands, local brands, discount store brands, and copy products.

The Influence of Multinational Companies

Around 70% of the aerosol market is controlled by multinational companies, making them the

main players in this industry. Even one brand which is AXE, a Unilever brand, sold roughly 1

billion units each year. In the never-ending battle for market share, multinational companies are

always looking for new ways to differentiate themselves from their competitors. This can include

things like introducing new product designs, focusing on sustainability initiatives, or simply

offering a better overall value proposition. Multinational companies are using their purchasing

power to negotiate better prices from suppliers, which gives them a cost advantage over their

competitors.

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 Company Market Share (2022)

Unilever 12,30%

Beiersdorf 10,20%

Coty 9,50%

L Brands 8,70%

L' Oreal 8,40%

Procter & Gamble 7,90%

Henkel 7,20%

Avon 6,30%

*Source: Gran View Research

Local Brand Owners & Tax Barriers

In addition to multinational brands, there are also strong local brands in each market. These

companies face a significant challenge in competing with multinationals, as they often have much

larger marketing budgets. However, local brands can use their advantages, such as lower prices

and more personalized service, to compete effectively. Local brands are also using tax barriers to

their advantage in order to gain market share and increase their margins. If multinational

companies are not producing domestically through contract manufacturing, local brands can

benefit from the higher taxes that are imposed on imported goods due to de-globalization. This

gives them a competitive advantage, as they can offer their products at a lower price than

multinational brands.

Contract Manufacturers' Impact Alongside Retails Stores' Power

Supermarket chains worldwide, especially discount stores, are increasingly focusing on private

label products to boost their margins and customer loyalty. This is also true for the aerosol segment.

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Companies such as Walmart, Target, Lidl, and Aldi all have their own aerosol brands, and they

work with aerosol filling contract manufacturer companies around the world to produce and

distribute these products. These chains typically give contract manufacturers the freedom to select

their own supply chains. As a result, it is important for suppliers to have strong relationships with

these contract manufacturers.

Huge Counterfeit Version Products Market & Sanctioned Countries

In emerging countries but mostly in developing countries, there is a high demand for counterfeit

versions of multinational brands. This is because there is often a lack of enforcement of trademark

laws in these countries, which allows local companies to produce and sell counterfeit products

without fear of legal repercussions. As a result, many local companies have been able to fill the

gap in the market by producing counterfeit versions of popular multinational brands. Sanctioned

countries such as Russia and Iran have limited access to imported goods, especially those from

multinational brands. As a result, these countries are prioritizing access to supply over price when

it comes to domestic production. This creates opportunities for countries that can still supply these

markets, such as Turkey and China.

4- COMPETITION FOR AEROSOL VALVE & ACTUATORS

It is difficult to obtain accurate information about the competition in the aerosol valve and actuator

market. This is because there are no publicly traded companies in this industry, so their financial

data is not available. There are some market research firms that provide industry reports, but their

accuracy is often disputed. However, in the aerosol valve industry, there are only a few major

players. Additionally, one part of an aerosol valve, the inner gasket, can only be supplied by a

limited number of companies. This means that the market is somewhat aware of the numbers, and

its mostly accurate.

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 World Aerosol Valve Production
2022
Company Name Units (1.000.000) Share
Lindal 3.500 17%
Precision 3.100 15%
Aptar 3.000 14%
Summit 3.000 14%
Majesty 2.700 13%
Coster 2.200 11%
APU 800 4%
Vilo 750 4%
Kohinoor 300 1%
Viocap 200 1%
Others 1.300 6%
Total 20.850 100%
*Source: Confidential
Based on C4 analysis, share of the top 4 players makes 60%, which makes the market oligopolistic.

According to the Herfindahl Index, calculation is 1265. We can’t say this is oligopolistic or

competitive market according to the HHI calculation, we can say there is a moderate level of

competition.

Turkey 's Aerosol Valve Production 2022

Company Name Units (1.000.000) Share
Viocap 200 40%
Lindal Turkey 150 30%
7M 100 20%
Fareva 50 10%
Total 500 100%
*Source: Confidential
For Turkey, according to the Herfindahl Index, calculation is 3000 and this market is highly

oligopolistic.

VIOCAP is the market leader for both aerosol valves and actuators in Turkey. The global leader

Lindal also has a factory in Turkey, which was established right before VIOCAP’s aerosol valve

investment. Lindal's goal was to gain market share in Turkey and the surrounding countries, but

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they were not successful. The majority of their production is now exported to Europe to support

their facilities there.

7M is the oldest supplier of aerosol valves in Turkey. They have been a distributor of global giants

Aptar and Summit for many years. In 2020, they began producing aerosol valves with the support

of Aptar. With their extensive experience, 7M is well-positioned to succeed in the high-profit

technical aerosol valve market.

Fareva's core business is contract manufacturing of aerosol filling. They have the technology of

global player Coster to produce valves, but they are not interested in selling those valves to the

market. Instead, they use their own produced valves in their own production.

When it comes to the aerosol actuators, VIOCAP main competitor in Turkey is Guven-El Plastic,

which was established around 30 years before VIOCAP. Güven-El Plastic's expertise is injection

mould construction, which is a highly imported. They were the market leader for standard caps on

aerosols without function. After VIOCAP entered the field, Güven-El Plastic also started to

produce aerosol actuators. However, VIOCAP took a long way with the automation process and

gained a significant market share. Güven-El is still considered a market leader for no-function caps

for aerosol. They are continuing to invest in functional products and have also begun plans to

automate their actuator production with 40 pcs/minute lines. They are following VIOCAP in an

effort to gain more market share in aerosol actuators.

Porter ‘s 5 Forces Analysis

Bargaining Power of Buyers

The bargaining power of buyers in the aerosol valve market is moderate. The total production

volume of suppliers does not exceed the total world production by a significant margin. For

multinationals, China is not an option, and the business is switching between European companies.

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Multinationals prioritize product quality over pricing. To ensure a sustainable supply,

multinationals are not eager to change their sources easily unless there is a capacity and quality

issue. Competition is more challenging for local players than multinationals, and pricing is

becoming increasingly important in these markets. The bargaining power of buyers for aerosol

actuators is low. Buyers have many alternatives for standard caps without functionality, so they

can easily control pricing and switch between suppliers. However, actuators have limited capacity,

and buyers need to provide forecasts in advance to ensure a reliable supply.

Bargaining Power of Suppliers

Aerosol valves consist of seven parts, including rubber gaskets, tinplate, plastics (mostly

polyamide 6.6), and spring. The gaskets, tinplate (especially coated for the application), and plastic

(polyamide 6.6) are the most critical parts, and there are only a few suppliers worldwide for these

parts. As a result, the bargaining power of suppliers in the aerosol valve industry is considered to

be extremely high. The supply of actuators is mostly raw material (polypropylene), which is a

highly competitive market. However, as a petrochemical product, these goods have a market price

internationally. Suppliers differentiate themselves mostly through their services.

Threat of New Entrants

Both the aerosol valve and actuator industries require very high technical capabilities. Simply

producing is not enough to survive in these industries; high-volume production is the only way to

compete on cost and customer satisfaction. Technical capabilities have a significant impact, even

when initial investment costs are ignored. As a result, the threat of new entrants is low.

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Threat of Substitutes

Aerosols have been a popular packaging method since their invention. Although there are

substitutes for aerosols, such as roll-ons for personal care, pump sprays, and gel formulations.

Also, electric mosquito killers can be a substitute for insecticide killer aerosol sprays, depending

on the trend at any given time temporarily. None of these offer the same convenience as aerosols.

As a result, the aerosol market is expected to grow at a CAGR of 9.24% from 2022 to 2027.

Competition in the Industry

According to the Herfindahl-Hirschman Index (HHI), the aerosol valve industry has a moderate

level of competition globally. This means that there are a few dominant players in the market, and

each player has a significant share of the market. As a result, competition is relatively limited, and

companies are able to earn profits.

The Impact of Technology on Production Process

In the production of aerosol valves and actuators, automation is essential. For aerosol valves, a

production rate of at least 300 pieces per minute is required. (VIOCAP’s current level) The quality

of the parts used in the automation process, particularly the plastic parts that are produced in-house,

is critical to achieving these figures. To obtain the best possible parts, you must have the best

injection molding machines and molds. This is only possible with cutting-edge technology. Global

market leaders have an average production rate of 500 pieces per minute, thanks to the

advancement of technology in recent years.

VIOCAP is the domestic leader in actuator production, with a production rate of 50 pieces per

minute. VIOCAP's ability to produce its own assembly machines is a key differentiator in the

market. This ability has helped the company to achieve its current position.

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However, the international market is a different story. The market leaders produce at least 200

pieces per minute, and in some cases, they can reach 500 pieces per minute. This is a highly

expensive technology, but it is worth the investment if there is a market to sell to.

Quality control of the parts and produced products with enhanced technology is essential to gain

market trust, which also requires high technology and significant investments.

5- GROWTH & PROFITABILITY DRIVERS

Growth Drives & Opportunities

Aerosols are still consumed in developed countries, with Europe leading the way. Emerging and

developing countries are adopting aerosols at an exponential rate year after year. In addition, the

growing population in these countries is a driving factor.

The growth of the aerosol industry is largely driven by personal care products, and deodorants are

the leading category. Rapid urbanization is a megatrend that is driving demand for deodorants

around the world. People feel more comfortable in public when they smell pleasant or at least not

unpleasant.

Demand and Volume

According to a 2023 report by Grand View Research, the average aerosol product consumption in

some countries is below

AEROSOL PRODUCT CONSUMPTION PER

PERSON PER YEAR
Countries Units (pcs) Countries Units(pcs)
USA 10,4 Brazil 5,9
France 10,8 Russia 6
Germany 10,4 Turkey 5,4
UK 9,2 Mexico 5,8
China 7,5 South Africa 4,4
*Source: Global View Research

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According to a Global View Research, emerging and developing countries are expected to reach

an average of 7.2 aerosol units per person in the long term. However, given the large populations

in these countries, there is still a significant potential for growth in aerosol consumption.

Developed countries have the potential for significant growth in the Pharma aerosol category.

Market professionals expect the category to have a compound annual growth rate (CAGR) of

200% in the next 5 years. The Pharma aerosol category is more profitable for aerosol producers

and their suppliers than other aerosol categories, such as personal care and household.

The deodorant category needs to be the focus for increasing volume concentration in packaging,

while the Pharma category needs to be prioritized for high margins.

7- THE FUTURE OF AEROSOL INDUSTRY IN THE ERA OF

SUSTAINABILITY
The aerosol industry is facing a number of challenges in the era of sustainability. These challenges

include:

• The use of propellants in aerosol cans, which can contribute to air pollution.

• The use of metal cans, which are not recyclable or compostable.

• The waste generated by aerosol cans, which can end up in landfills.

In order to address these challenges, the aerosol industry is moving towards more sustainable

packaging solutions. These solutions include:

• The use of natural propellants, such as compressed air or carbon dioxide.

• The use of recyclable or compostable materials for the cans.

The aerosol industry is also working to reduce the overall waste generated by aerosol cans. This

includes initiatives to collect and recycle aerosol cans, and to develop more efficient

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manufacturing processes. If the industry is able to address the challenges it faces, it is likely to

maintain its strong position in the global market.

• Strategically grow through either an investment fund or a merger and acquisition (M&A)
with a global leader in the industry in order to be the most powerful player in the region.

Depending on the type of M&A, this could also be considered an exit strategy.

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