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Opportunity for Chemical Distributors Continues to Grow Worldwide

New Research by The Boston Consulting Group Shows Continued Growth in the Distribution Market Outpacing That of the Overall Chemical Industry, Thanks to Greater Outsourcing by Suppliers and More Value-Added Services by Distributors


BOSTON - The chemical industry is continuing to outsource its distribution to third-party distribution providers, according to a new report by BCG. The report, titled The Growing Opportunity for Chemical Distributors: Reducing Complexity for Producers Through Tailored Service Offerings, is being released today. Between 2008 and 2012, the worldwide chemical distribution market grew approximately 9 percent per year, in nominal terms, to roughly €165 billion. Such growth outpaces the expansion in chemical consumption worldwide, at a nominal 8 percent per year over the same time period, reaching €2,560 billion in 2012.

The report builds on earlier research that BCG published in 2010, which identified the scope of the global opportunity for chemical distributors. This follow-up study is based on the most recent market data, supported by a comprehensive Web survey and interviews of more than 150 key players in the industry—producers, distributors, and customers.

“Chemical distributors are growing faster than the overall industry, mainly due to two factors: increased outsourcing among suppliers and greater value-added services offered by distributors,” says Udo Jung, a BCG senior partner and coauthor of the report. “Both are driven by industry trends, and neither is likely to change for the foreseeable future.”

Distributors Help Reduce Complexity for Producers

Overall, the chemical industry is large, fragmented, and diverse, with more than 100,000 products across a range of technical categories, including petrochemicals, solvents, polymers, and customized specialty chemicals. The size of the customer base for these products varies widely, as do regional and national requirements and logistical challenges driven by the chemical products themselves. As a result, manufacturers face significant complexity in getting their products to customers, and third-party distributors are increasingly considered a vital element of their go-to-market strategy.

Many producers are developing “preferred partnerships” with key distributors—an approach that allows producers to expand into new markets. Among these markets, China is now the largest, worth about €35 billion. Among third-party distributors, Brenntag, Univar, and Nexeo Solutions were the three largest in 2011, with a combined global market share of 12.5 percent.

Significant Growth Opportunity for Distributors

While third-party distribution has grown, there is still considerable room for expansion, as roughly €165 billion comprises just 10 percent of the overall chemical market. “Going forward,” says Stefan Scholz, a BCG project leader and coauthor of the report, “We expect the real growth rate in the chemical distribution market to slow from 7 percent to a stable 6 percent per year within the next five years, mainly due to a weaker underlying economic situation that will reduce chemical consumption.” In addition, the report notes that distributors will continue integrating along the value chain, in order to provide more value-added services for customers and further reduce complexity for chemical producers.

To succeed in this environment, distributors need to strengthen their competitive position by expanding into new geographic regions and building their segment-specific expertise through acquisitions. Scale counts, and small and mid-sized players will only succeed by adopting a niche strategy and focusing on either a specific local territory or within a narrow band of industry expertise.

A copy of the report can be downloaded at

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or

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About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 78 offices in 43 countries.


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