Chemicals are the stuff of life, literally, and they’re big business. There is precious little on Earth that doesn’t pass through the chemical industry. The German behemoth BASF, which sits atop the list of the world’s leading chemical companies, generated $84.6 billion in revenue in 2021.1 And that’s just one company among thousands producing industrial chemicals worldwide, from household names such as Dow and Mitsubishi, to commodity petrochemical producers, to local producers of small-batch specialty chemicals.
The size, reach and ubiquity of the industry convey exceptional opportunities for chemical companies of all sizes. That scope, however, also makes the chemical industry susceptible to headwinds from all directions. After all, even the most local of chemical companies likely source something from somewhere else, whether that be protective gear, packing materials or parts to run their manufacturing equipment.
Let’s take a look at three trends that will shape the global chemicals sector—and B2B chemical marketing—in 2023.
Trend 1: Geopolitical and economic instability
From supply chain issues to material scarcity, geopolitical concerns loom large in the chemicals sector. The fallout from trade wars and territorial disputes impacts chemical companies’ ability to source raw materials, keep production afloat, get products to customers and expand into new markets, among other business-critical activities. The butterfly effect has been on full display as nations impose a hodge-podge of regulations to eradicate COVID-19, safeguard scarce feedstock materials and secure economic dominance in key sectors.
Geopolitical and economic instability often go hand in hand. Which leads and which follows is a matter for the economists. Suffice it to say, economic instability also wreaks havoc on chemical companies. Investors reconsider where to put their money, limiting growth opportunities. Customers reduce or delay spending on non-core products and services. That said, by definition instability includes favorable conditions. Chemical companies are expected to see strong demand for commodity and specialty chemicals into 2023.2
With chemical companies navigating ever-changing conditions, savvy B2B marketing that focuses on a company’s ability to provide stability in an unstable world will attract attention, as will sister concepts such as removing roadblocks and eliminating complexity. So, too, will efforts that highlight the essential nature of one’s product or services. Scarcity sells. As always, B2B marketing is about identifying customer pain points and showcasing solutions that make them go away.
Trend 2: Balancing ESG and the profit motive
As people become more aware of (and advocate for) environmental sustainability and social responsibility, companies have taken note. They are putting more weight behind environmental, social and governance (ESG) initiatives than ever before, and for good reason—so are investors, customers and employees. In 2020, 85% of investors considered ESG factors in their investment decisions, which is especially noteworthy for capital-intensive sectors such as the chemical industry.3 A solid ESG stance has been linked by McKinsey & Company to stronger top-line growth, lower regulatory risk, greater productivity and a better brand image, among other benefits.4 Slowly but surely, the profit motive and the “let’s do the right thing” motive are coming together for publicly traded and privately held chemical companies alike.
The American Chemical Society (ACS) has devised 12 principles for green engineering and 12 principles for green chemistry that set out to influence the way chemists and engineers worldwide approach their work.5 Their goal is to “catalyze innovative thinking” to better balance product/process efficacy with human/environmental impact, which is of growing interest to international, regional and domestic companies alike. The principles can be a goldmine of ideas for chemical companies looking for meaningful ways to market their organizations to investors, partners, customers and employees whose decisions rest, in part, on whether or not a company is environmentally and socially responsible.
The principles include reducing the amount of waste it takes to produce a product, designing processes that use and generate substances that aren’t toxic, and making all fuels, chemicals and materials from renewable sources. Engineers can be more deliberate about ensuring that the materials and energy used to produce products are environmentally sound. And if all else fails, there is opportunity in the monetization of waste. Marketing grounded in these principles can prove effective as the influence of ESG in buyer decision making grows.
Trend 3: Regulations, regulations, regulations
While government regulations could be included in either of the topics above, they are so ubiquitous, byzantine and mutative that they warrant their own section. Companies in the chemical sector are as highly regulated as those in the food and healthcare sectors, if not more so. They must contend with laws governing material extraction, import/export, the environment and human health. They must oversee their own compliance as well as that of their contractors and supply chain partners. And somehow, they have to do it all while maintaining profitable growth.
From their manufacturing processes to their finished products, everything is under the microscope. Many raw materials, by-products and finished chemical goods are polluting, toxic or both. Deloitte anticipates that the ever-more-apparent impacts of climate change will increase regulation around decarbonization, and that governments will pressure chemical companies to act as people become more adamant about eliminating plastic waste and disposing of products in a way that doesn’t harm humans or the environment. They also predict that chemical exports will grow significantly in the coming quarters, which places chemical companies squarely in the crosshairs of regulators in external markets.
Marketing centered on compliance—one’s own or the services that help chemical companies stay on the right side of the law—can be powerful. Generally speaking, legal compliance isn’t a chemical company’s core competency. Manufacturing chemicals is. But in the spirit of simplifying the complex, marketing that makes it clear to partners and customers that they are in good company from a compliance standpoint builds trust that paves the way for increased sales.
Opportunity for the chemical sector is, literally, everywhere
There are ample opportunities for growth in every subsector of the chemical industry. Demand is strong for basic and specialty chemicals. Marketing chemical companies effectively in 2023 requires that one stay grounded in the realities of a highly scrutinized and regulated sector while amplifying just how essential their products are services are to people around the world.
Partner with a B2B agency that specializes in chemical marketing. With over 20 years of marketing experience in the chemical industry, Elevation can help target your unique audience with the right message, across the right channels. Contact us to learn more about how our marketing services can benefit your business.
- 2022 Global List of Leading Chemical Companies Based on Revenue, Statista, July 27, 2022
- 2022 Chemical Industry Outlook, Deloitte
- Solving the ESG Puzzle, Noora Mukhtar, Gulf Petrochemical & Chemicals Association
- Five ways that ESG creates value, Henisz, Koller and Nuttall, McKinsey Quarterly, McKinsey & Company, November 2019
- American Chemical Society, Green Chemistry Design Principles