Topline
It’s not just gas prices climbing amid the Iran war—surging condom demand and mounting supply chain strain have pushed Karex, the world’s biggest condom manufacturer, to potentially hike prices by 20% to 30%, with more increases likely as disruptions drag on, the firm told Reuters.
In this picture taken September 20, 2017, packs of “nasi lemak” flavoured condoms are seen amidst others at the Malaysian condom-maker Karex Industries headquarters in Port Klang. After enjoying success with an inventive range of condoms, a Malaysian industry giant will add an unusual flavour to its arsenal of contraceptives — the country’s beloved national rice dish, nasi lemak. Karex Industries, which claims to be the world’s biggest condom maker, already offers an array of flavours in various pleasure-boosting textures, from grape to the pungent tropical fruit durian. (Photo by MANAN VATSYAYANA / AFP via Getty Images)
AFP via Getty Images
Key Facts
Karex CEO Goh Miah Kiat said the price of key raw materials, including aluminum, foil and silicone oil, has increased 25% to 30% since the start of the war nearly two months ago.
The Malaysia-based firm produces more than five billion condoms annually and is seeing demand outpace supply as shipping delays leave customers without product.
Karex says more inventory is stuck on vessels than reaching its destination, with some shipments taking up to two months to arrive to the U.S. and Europe, while developing countries already facing shortages are also seeing a delay in shipments.
The company is a major supplier for brands like Durex and Trojan, as well as public health systems such as the U.K.’s National Health Service and aid programs run by the United Nations.
Key Background:
Karex, said demand for condoms has risen roughly 30%. Despite that surge, the company’s growth is being constrained by escalating supply chain disruptions tied to tensions around the Strait of Hormuz. Traffic through the Strait has been choked off since the start of the Iran war, when Tehran closed the waterway in retaliation to the U.S. A standoff between the U.S. and Iran continues this week after Iran reopened the Strait last week before reversing course over the weekend.
Tangent:
Aluminum, which is used in condom foil packaging, has been hit especially hard, with prices reaching their highest level in four years as energy and shipping costs climb. Silicone oil is up by 30% as oil prices spike due to the conflict, further straining production costs.