Low-cost imports capture rising share of US cotton personal care market

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INDUSTRY REPORT OD4252
Cotton Personal-Care Product
Manufacturing in the US
Taking care: Low-cost imports have captured a rising share of domestic industry demand
Gavin Ross | November 2022

Cotton Personal-Care Product Manufacturing in the US November 2022
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Contents
ABOUT THIS INDUSTRY.................................. 4
Industry Definition................................................................4
Major Players...................................................................... 4
Main Activities..................................................................... 4
Supply Chain....................................................................... 5
INDUSTRY AT A GLANCE................................6
Executive Summary............................................................ 8
INDUSTRY PERFORMANCE............................9
Key External Drivers...........................................................9
Current Performance........................................................10
INDUSTRY OUTLOOK.................................... 12
Outlook.............................................................................. 12
Industry Life Cycle.............................................................14
PRODUCTS & MARKETS............................... 15
Supply Chain..................................................................... 15
Products & Services.......................................................... 15
Demand Determinants...................................................... 16
Major Markets....................................................................16
International Trade............................................................ 17
Business Locations........................................................... 19
COMPETITIVE LANDSCAPE..........................21
Market Share Concentration............................................. 21
Key Success Factors........................................................21
Cost Structure Benchmarks............................................. 22
Basis of Competition......................................................... 24
Barriers to Entry............................................................... 24
Industry Globalization........................................................25
MAJOR COMPANIES...................................... 26
Market Share Overview.....................................................26
Related Companies...........................................................26
Unilever N V...................................................................... 27
Johnson & Johnson...........................................................29
OPERATING CONDITIONS............................ 32
Capital Intensity.................................................................32
Technology & Systems......................................................32
Revenue Volatility..............................................................33
Regulation & Policy........................................................... 34
Industry Assistance........................................................... 35
KEY STATISTICS............................................ 36
Industry Data..................................................................... 36
Annual Change..................................................................36
Key Ratios......................................................................... 36
Industry Financial Statement.............................................37
ADDITIONAL RESOURCES............................39
Additional Resources........................................................ 39
Industry Jargon..................................................................39
Glossary............................................................................ 39
CALL PREPARATION QUESTIONS............... 41
Role Specific Questions.................................................... 41
External Impacts Questions.............................................. 42
Internal Issues Questions..................................................42

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About IBISWorld
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About This Industry
Industry Definition This industry comprises operators that manufacture personal-care and beauty products primarily made of cotton.
Products include but are not limited to cotton swabs, cotton balls and facial wipes. This industry also includes
surgical cotton products both sterile and nonsterile.
Major Players Unilever N V
Johnson & Johnson
Main Activities The primary activities of this industry are:
Manufacturing cotton balls, swabs and facial pads
Manufacturing cosmetic cotton products with added skin treatments
The major products and services in this industry are:
Cotton swabs
Facial wipes and pads
Cotton balls
Other cotton products

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Supply Chain
SIMILAR INDUSTRIES
Cotton Farming in the US Sanitary Paper Product
Cosmetic & Beauty Products
Pharmacies & Drug Stores in the
US
RELATED INTERNATIONAL INDUSTRIES
Global Cosmetics Manufacturing Perfume & Cosmetics
Manufacturing in the UK
Cosmetics, Perfume and
Toiletries Manufacturing in
Australia
Cosmetic & Personal Care Product
Manufacturing in China
Cosmetic & Beauty Product
Manufacturing in Canada

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Industry at a Glance
Key Statistics
$260.2m
Revenue
Annual Growth
2017–2022
3.0%
Annual Growth
2022–2027
2.2%
Annual Growth
2017–2027
$16.1m
Profit
Annual Growth
2017–2022
8.0%
Annual Growth
2017–2022
6.2%
Profit Margin
Annual Growth
2017–2022
1.3pp
Annual Growth
2017–2022
170
Businesses
Annual Growth
2017–2022
0.6%
Annual Growth
2022–2027
0.9%
Annual Growth
2017–2027
9,725
Employment
Annual Growth
2017–2022
2.3%
Annual Growth
2022–2027
1.9%
Annual Growth
2017–2027
$48.5m
Wages
Annual Growth
2017–2022
2.9%
Annual Growth
2022–2027
1.9%
Annual Growth
2017–2027
Key External Drivers % = 2017–22 Annual Growth
7.0%
World price of cotton
1.0%
Per capita disposable income
2.5%
Consumer spending
2.2%
Trade-weighted index
Industry Structure
POSITIVE IMPACT
Capital Intensity
Low
Concentration
Low
Barriers to Entry
High / Steady
MIXED IMPACT
Life Cycle
Mature
Revenue Volatility
Medium
Regulation & Policy
Medium / Steady
Technology Change
Medium
NEGATIVE IMPACT
Industry Assistance
Low / Steady
Industry Globalization
High / Increasing
Competition
High / Increasing
Key Trends
 Domestic producers struggle to compete with manufacturers
in low-cost countries
 Industry consolidation and low product differentiation have
pushed down operator numbers
 Volatile cotton prices have caused fluctuations in industry
revenue
 An anticipated decline in the trade-weighted index is
expected to lift exports
 The necessity of industry products in medical services will
sustain inelastic demand
 Consolidation will keep industry participation in slight decline
in the outlook
 Volatile cotton prices have caused major swings in industry
revenue

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Products & Services Segmentation
Major Players SWOT
STRENGTHS
High & Steady Barriers to Entry
High Profit vs. Sector Average
Low Product/Service Concentration
Low Capital Requirements
WEAKNESSES
Low & Steady Level of Assistance
High Competition
High Imports
High Customer Class Concentration
OPPORTUNITIES
High Revenue Growth (2017-2022)
High Revenue Growth (2022-2027)
THREATS
Low Revenue Growth (2005-2022)
Low Outlier Growth
Low Performance Drivers

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Executive Summary Taking care: Low-cost imports have captured a rising share of domestic
industry demand
The Cotton Personal-Care Product Manufacturing industry produces cotton gauze, balls, pads, swabs and
laparotomy sponges commonly used for medical and personal purposes. Sales of cotton personal-care products
have increased over the five years to 2022 on account of a rise in consumer spending on cosmetic and beauty
products. Pads, gauze and sponges used in medical, surgical, dental and veterinary applications are a significant
revenue stream and revenue earned from these major markets has grown during the current period. Despite global
trade having been severely affected by the COVID-19 pandemic midway through the period, demand for medical
equipment such as cotton swaps and wipes used for antigen and polymerase chain reaction testing and vaccination
administration. Industry revenue has grown an annualized 3.0% to $260.2 million over the five years to 2022,
including a 4.0% increase in 2022.
Industry profitability has been somewhat volatile during the current period due to fluctuating cotton prices and rising
import penetration into the manufacturing sector. The world price of cotton has increased an annualized 6.7% over
the five years to 2022 and imports have grown to account for 84.4% of domestic demand for the year. Industry profit
has historically been stable on account of cotton personal-care products being highly inelastic in numerous medical
and surgical fields. However, the world price of cotton, which is a key input, can be extremely volatile and affected
average industry profit in the short term.
Demand for cotton personal-care products is anticipated to continue growing over the five years to 2027 as
consumer spending on cosmetic products and purchases of gauze and sponges by the medical field continue to
rise. Demand from hospitals, surgeons, veterinary clinics and doctors' offices for cotton personal-care products is
expected to benefit from these customers restocking supplies that were difficult to obtain during the global health
pandemic. Additionally, more-steadily rising cotton prices and a depreciating US dollar, which makes domestic
products more competitive in the global market, are expected to benefit the industry. Industry revenue is anticipated
to grow an annualized 2.2% to $290.7 million over the five years to 2027.

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Industry Performance
Key External
Drivers
World price of cotton
The world price of cotton determines the majority of manufacturers' purchasing costs, because cotton is the primary
input for industry costs. As the price of cotton declines, profit grows. However, this suppresses product prices to
consumers, which lowers revenue for operators. The price of cotton is expected to increase in 2022.
Consumer spending
Consumer spending is representative of personal consumption expenditure on goods and services. In general,
personal-care products perform better when consumers are willing to spend on premium products. Consumer
spending is expected to increase in 2022.
When the amount of per capita disposable income increases, consumers are more willing to purchase premium
personal-care products. Per capita disposable income is expected to rise in 2022, representing an opportunity for
industry revenue to grow.
The trade-weighted index (TWI) measures the strength of the US dollar relative to the currencies of its major trading
partners. When the TWI increases, US exports become more expensive abroad and are less competitive, potentially
lowering revenue for an export-heavy industry. The TWI is expected to increase in 2022, posing a potential threat to
the industry.

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Current
Performance
The Cotton Personal-Care Product Manufacturing industry produces
cosmetic and medical cotton products such as cotton balls, cotton swabs,
facial pads and surgical dressings.
These goods are common household items used for personal care and cosmetics, but they are also widely used
throughout the medical field for dressing wounds and patient sampling. Over the five years to 2022, domestic
producers have struggled to compete with manufacturers located in low-cost countries, particularly those in Asia. As
a result, imports have continued to encroach on domestic demand, a trend supported by an appreciating US dollar,
which has made domestic products more expensive and less competitive on the global market. Overall, industry
revenue has grown an annualized 3.0% to $260.2 million over the five years to 2022, including a 4.0% increase in
2022.
A COMPETITIVE MARKET
The Cotton Personal-Care Product Manufacturing industry is dominated
by two major players: Johnson & Johnson and Unilever NV.
These companies have been behind the industry's historical leading brands, but over the past five years they have
slowly begun to lose market share to generic and store-owned brands, such as those of Walmart Inc., Walgreens
Co. and Target Corp. While rising disposable income and increased consumer spending indicate consumers have
the ability to pay slight premiums on their personal-care products, customers still cut costs when there is no
noticeable difference between branded and nonbranded products. Manufacturer US Cotton LLC produces cotton
products for a variety of different private labels, diversifying the company's revenue streams across multiple brands.
This industry is relatively small in terms of operator numbers, but the limited scope of product development for items
such as cotton balls and swabs has made it difficult for industry operators to stand out. In turn, market acceptance of
industry products has made it difficult for specialty producers of industry products to gain market share. Moreover,
specialty producers that begin to gain market share, such as boutique cosmetic start-ups, are typically acquired by
personal-care product conglomerates. For example, in 2015 alone, Unilever NV acquired four companies
specializing in skin-care products. External competitors that provide similar products using alternative materials,
such as rayon, have gradually cut into industry sales as new developments in the medical and cosmetic fields find
new ways to treat and clean skin. As a result of low product differentiation and industry consolidation, enterprise
numbers have increased during the five-year period at an annualized 0.6% to 170 companies in 2022. Similarly,
industry employment has grown at an annualized rate of 2.3% to 9,725 employees, also due in part to the gradual
automation of manufacturing facilities.
CHALLENGES SHAVE OFF REVENUE
Volatile cotton prices and greater foreign manufacturing capacity have

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affected industry revenue during the past five years.
As cotton prices have fluctuated, manufacturers have experienced diminished efficiencies in terms of managing
input costs. Ultimately, difficulties experienced by this industry's largest supplier, the Cotton Farming industry
(IBISWorld report 11192), has affected the Cotton Personal-Care Product Manufacturing industry. The world price of
cotton increased 40.4% in 2021 along with a litany of other commodities, and increased another 14.6% in 2022.
Such fluctuations are due to a variety of factors, including spikes in demand, weather conditions, volatile oil prices
and issues of undersupply. In 2022, IBISWorld anticipates average industry profit, measured as earnings before
interest and taxes, to comprise 6.2% of industry revenue, marking an increase from 4.9% in 2017.
The Cotton Personal-Care Products Manufacturing industry is involved in a high level of international trade. These
products are used for discretionary personal and beauty care and are also essential for nondiscretionary
applications such as surgical and medical procedures. The value of industry exports has grown an annualized 6.5%
to $124.9 million over the five years to 2022 with more consumer and commercial spending on cotton personal-care
products. The value of imports has increased an annualized 7.6% to $729.6 million over the past five years.
Competition from foreign manufacturers is a problem for the industry both domestically and abroad. IBISWorld
estimates that in 2022, 84.4% of domestic demand for cotton personal-care products will be satisfied by imports.
China, the United Kingdom, Mexico and Germany are among the largest importers of cotton personal-care products,
with China accounting for more than half of all imports. Low labor and operating costs in Southeast Asia entice
international manufacturers to establish production facilities in this region.
Historical Performance Data
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
World price
of cotton
(Cents)
2013 265 67.3 213 192 9,741 110 448 45.2 603 90.4
2014 243 64.6 206 186 9,606 111 476 45.0 608 83.1
2015 235 63.0 200 181 9,281 116 510 43.5 630 70.4
2016 239 63.3 202 182 9,170 95.6 491 43.0 634 74.2
2017 225 57.2 187 165 8,684 91.2 506 42.1 639 83.6
2018 230 61.1 184 165 8,969 88.6 518 43.9 659 91.4
2019 239 67.4 179 162 8,873 107 563 45.0 695 77.9
2020 237 69.6 185 167 9,163 110 596 47.2 723 71.9
2021 250 68.1 188 169 9,483 104 625 47.2 771 101
2022 260 69.6 189 170 9,725 125 730 48.5 865 116

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Industry Outlook
Outlook Over the five years to 2027, the Cotton Personal-Care Product
Manufacturing industry is expected to continue growing due to an
improving social and economic environment and rising demand from
medical services markets.
Apart from lingering global restrictions imposed to curb the spread of the coronavirus, the greatest threat to the
industry is likely to remain the trend of offshore manufacturing, as domestic operations continue to relocate to more
cost-effective countries such as Mexico and others in Asia. In terms of the industry's trade balance, the industry's
long-running trade deficit is expected to persist over the next five years, albeit at a slower pace than the previous
period. Although the industry is expected to continue experiencing headwinds, the influence on the industry's
performance is forecast to remain marginal given the relatively inelastic demand for a large portion of the industry's
products related to medical services. IBISWorld anticipates industry revenue to increase at an annualized rate of
2.2% to $290.7 million over the five years to 2027.
CONSUMER MARKET TRENDS
Consumer spending is expected to continue growing over the five years
to 2027, albeit at a greater rate than the previous five-year period.
Specifically, consumer spending is expected to increase an annualized 1.4% through 2027. Growth in consumer
spending is expected to increase in line with expansion in the unemployment rate, per capita disposable income and
gross domestic product. However, concerns surrounding the US-China trade war are expected to continue to
provoke economic uncertainty over the coming years, ultimately resulting in tepid economic growth. Moreover, the
balance between the consumer price index (a broad measure of inflation) and per capita disposable income is
expected to further pressure consumer spending levels. Over the next five years, the consumer price index is
forecast to increase an annualized 2.4%, effectively constraining per capita disposable income growth. Per capita
disposable income is forecast to increase at an annualized rate of 0.4%, slower than the previous period.
MEDICAL SERVICES
Medical services providers use a variety of industry products, including
gauze, bandages, cotton swabs and other miscellaneous cotton-based
products.
The necessity of such products among large swaths of the medical services industry cluster will continue to sustain
inelastic demand for industry products, somewhat insulating the industry from negative external factors.
Over the five years to 2027, demand from the Emergency and Other Outpatient Care Centers industry (IBISWorld
report 62149) is forecast to exhibit significantly greater growth relative to the previous period. This is largely due to
an increase in elective surgeries that had been postponed to accommodate inundated healthcare facilities amid the
coronavirus pandemic. However, a continuation of stagnating health insurance enrollment following the repeal of
certain programs offered under the Patient Protection & Affordable Care Act will likely temper growth in demand
from this industry. Lower rates of healthcare insurance coverage have the potential to reduce demand for
emergency and other outpatient care centers and related industries. Overall, IBISWorld expects demand from the

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Emergency and Other Outpatient Care Centers industry to expand an annualized 4.4% over the next five years.
TRADE
The industry is still expected to record a trade deficit in the outlook;
however, an anticipated decline in the trade-weighted index (TWI) is
expected to lift industry exports during the period.
IBISWorld forecasts the TWI to decline an annualized 3.7% over the five years to 2027, representing a weakening
US dollar and an advantageous shift for the industry's export markets. During the period, IBISWorld forecasts
industry exports to increase an annualized 3.3% to $147.0 million. Nevertheless, competition from low-cost foreign
goods is expected to continue representing the largest threat to this crucial market.
Cotton personal-care product imports will continue to command a substantial share of domestic demand considering
industry goods are relatively homogenous and domestic markets continue to purchase inexpensive products made
abroad. In 2027, imports are expected to account for 79.9% of domestic demand, slightly down from 84.4% in 2022.
Slowing demand for imported products is projected due in part to trade tensions between the United States and
China. Over the five years to 2027, IBISWorld expects industry imports to decline an annualized 4.7% to $572.7
million.
INDUSTRY STRUCTURE
Although the economy is expected to improve, the industry's production
capacity is expected to contract somewhat, keeping enterprise numbers
from growing at a significant rate.
The number of operators is forecast to increase at an annualized rate of 0.9% to 178 over the five years to 2027.
Such stability represents marginal adjustments to the industry's structure as a result of mergers and acquisitions and
discontinuation of industry-relevant product production. Similarly, industry employment is anticipated to increase an
annualized 1.9% to 10,666 individuals to accommodate greater research and development and marketing initiatives.
Lastly, the industry's average profit margin is expected to continue expanding slightly.
Performance Outlook Data
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
World price
of cotton
(Cents)
2022 260 69.6 189 170 9,725 125 730 48.5 865 116
2023 262 71.1 189 170 9,779 125 766 48.8 903 101
2024 272 74.0 191 171 10,029 135 595 50.1 732 96.5
2025 279 76.2 193 173 10,251 139 589 51.3 728 95.6
2026 285 78.5 195 175 10,447 143 581 52.3 722 89.8
2027 291 80.9 199 178 10,666 147 573 53.4 716 86.4
2028 296 82.9 201 180 10,857 151 563 54.4 708 83.3

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Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS
Industry product development is limited, and few new markets are being created
The industry is consolidating as large companies acquire smaller operators
Industry value-added is below US GDP over the next 10 years, lagging due to minimal product
innovation and market acceptance
The Cotton Personal-Care Product Manufacturing industry is in the mature state of its life cycle. Over the 10 years to
2027, industry value added (IVA), which measures the industry's contribution to the economy, is expected to
increase an annualized 3.5%. In comparison, US GDP is expected to expand an annualized 1.5% during the same
period. Although IBISWorld expects the industry to grow over the five years to 2027, product innovation is expected
to remain minimal. However, innovative products addressing health and environmental concerns have emerged with
changing demographics. For instance, the market for makeup removal pads is expanding, and industry companies
are delivering new kinds of products to address skin health.
Similarly, a newly emerging market for organic cotton products drove industry innovation as well. Moreover,
hospitals, clinics, wholesaler and retailers are also consolidating and expanding in size, increasing their negotiating
power with chosen industry suppliers. This is, in essence, shrinking the market, and leaving less power for new
companies with different products to change the industry. For these reasons, the Cotton Personal-Care Product
Manufacturing industry is in the mature phase of its life cycle.

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Products & Markets
Supply Chain Key Buying Industries
1st Tier
Medical Supplies Wholesaling in the US
Drug, Cosmetic & Toiletry Wholesaling in the US
Pharmacies & Drug Stores in the US
2nd Tier
Consumers in the US
Key Selling Industries
1st Tier
Cotton Farming in the US
Industrial Machinery & Equipment Wholesaling in the US
Gasoline & Petroleum Wholesaling in the US
2nd Tier
Crop Services in the US
Pesticide Manufacturing in the US
Products & Services
COTTON SWABS
Cotton swabs consist of a small amount of cotton wrapped around one or
both ends of a rod, usually made of wood, rolled paper or plastic.
Cotton swabs are most often used to clean the ear canal or remove makeup. Cotton swabs are also used by
medical professionals as a means of obtaining patient samples. Cotton swabs represent for 40.4% of industry
revenue in 2022 and have been in high demand over the past several years as they are essential to the COVID-19
testing process.
FACIAL WIPES AND PADS
Facial wipes and pads account for 38.6% of revenue in 2022 and have
grown as a proportion of revenue over the five years to 2022 as
manufacturers have released greater varieties of these cotton products to
be used for facial cleaning and makeup removal.
Marketing campaigns launched by industry players such as US Cotton LLC highlight the potential issues that can
arise from incomplete makeup removal and the various other applications Swisspers can be used in to maximize
cleanliness and promote good health. Cotton pads are also used in medical applications to aid in the stoppage or
prevention of minor bleeding from minor injuries such as cuts and injection sites.
Since a considerable portion of elective procedures have been postponed to alleviate overwhelmed healthcare
facilities amid the COVID-19 pandemic, this has contributed to lower demand from medical facilities for certain
procedures that use cotton products. However, the rollout of the coronavirus vaccine has supported demand for
pads, which are typical used after medical injections. Over the next five years, IBISWorld expects these products to
account for a larger percentage of revenue as companies continue to offer products targeted for specific uses.
COTTON BALLS
As one of the first products offered by this industry, cotton balls provided

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the base from which many other products were developed.
Still relatively popular, cotton balls are expected to account for 14.0% of industry revenue in 2022. Cotton balls are
relatively inexpensive, readily available and very useful. These products can be used for cleaning, makeup removal
and numerous other applications, including arts and crafts. Medical establishments use cotton balls extensively to
clean minor abrasions. Over the past five years, cotton balls have declined as a share of revenue as consumers
have shifted to more specialized types of pads and swabs.
OTHER COTTON PRODUCTS
Other cotton products are estimated to account for 7.0% of industry
revenue in 2022.
These products can include different types of applicators and wipes for personal or medical care. This segment has
increased in size over the past five years as companies introduced new products such as cotton sponges.
Demand
Determinants
Input price fluctuations
Demand is affected by fluctuations in the world price of cotton because the fiber is a key input in all industry goods.
A falling price of cotton typically leads to lower product prices for consumers, as producers pass on cost savings to
consumers to drive demand. However, rapid declines in the price of cotton can be detrimental to industry players.
While profit is likely to expand, total revenue may decrease. Conversely, rising cotton prices can hinder profit and
constrain demand, but lead to an increase in total revenue.
Consumer spending habits
The availability and spending habits of consumers also influence demand for industry products. Premium, branded
products command higher prices than private label, generic alternatives. When the overall economy is growing and
consumers have access to greater disposable income, this typically incites a greater willingness to spend on
industry goods and even trade up to higher-priced premium items. Conversely, when the economy struggles or per
capita disposable income declines, consumers may instead purchase lower-priced, generic products to increase
savings or even eliminate nonessential purchases altogether.
Since international trade plays such a crucial role in this industry, with exports expected to account for 48.0% of
industry revenue and imports anticipated to comprise 84.4% of domestic demand in 2022, the relative strength of
the US dollar relative to other currencies is important in determining demand for industry products. When the
strength of the dollar rises, measured as an increase in the trade-weighted index (TWI), domestically produced
cotton personal-care products become relatively more expensive to international buyers, constraining foreign
demand and restricting export revenue. Additionally, as imported goods become relatively less expensive for
domestic consumers, industry imports typically rise. The opposite effects occur during instances when the dollar
weakens.
Major Markets
EXPORTS
International buyers represent a vital revenue stream for cotton personal-
care product manufacturers.

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Foreign wholesalers are the predominant buyer of cotton products from the United States to distribute abroad.
Despite manufacturers benefiting from booming demand for certain cotton personal-care products, particularly
cotton swabs used for COVID-19 testing, supply chains were severely disrupted during the pandemic and producers
experienced much longer lead times. Exports comprise 48.0% of industry revenue in 2022.
WHOLESALERS
These companies purchase cotton personal-care products from
manufacturers or another wholesaler for distribution to downstream
markets.
Most personal case cotton products are sold in finished form by the manufacturer and do not need any
transformation, making wholesalers a convenient and effective way of expanding market reach. Wholesalers
account for 26.4% of industry revenue in 2023 and have consistently represented the largest market for cotton
product manufacturers.
RETAILERS
Technological developments and globalization have made it easier for
manufacturers to improve cost effectiveness by dealing directly with
customers through online ordering.
As a result, large supermarket chains and discount retailers, such as Walmart Inc., with enough purchasing power
have increasingly managed to supply stores directly from manufacturers' sales branches and offices. Private-label
products have also grown in popularity over the past several years and led retailers to account for a rising share of
revenue. Retailers will account for 13.0% of revenue in 2023.
OTHER
The purchasing power of other industries has grown over the past five
years.
Manufacturers are increasingly making connections with other processing industries, bypassing the wholesaler.
Other industries include hotels and direct sales. Consumers are able to purchase products directly from
manufacturers such as Johnson & Johnson and Unilever NV. Additionally, some hotels provide industry products to
guests. Large hotel chains have the purchasing power necessary to purchase directly from manufacturers, avoiding
the markup associated with wholesalers.
International Trade Exports in this industry are High and Increasing
Imports in this industry are High and Increasing

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Exports
Exports of cotton personal-care products have grown an annualized 6.5% to $124.9 million over the five years to
2022. Despite manufacturers having encountered longer lead times and disrupted trade flows on account of the
macroeconomic disruptions caused throughout the COVID-19 pandemic, the value of cotton personal-care products
exports increased for several reasons. First, the world price of cotton increased over the past five years and
especially in 2021 amid supply shortfalls. Second, foreign demand for sterile gauze and sponges used in medical
and surgical applications continues to rise with the growth of underdeveloped economies. Exports are expected to
continue rising over the next five years alongside a depreciation of the US dollar and the macroeconomy as the US
dollar is projected to depreciate and global economic growth returns.
Imports
Over the five years to 2022, the total value of imports of cotton personal-care products is expected to increase an
annualized 7.6% to $729.6 million, thus widening the industry's trade deficit. Imports are anticipated to increase due
to several factors, including a strong US dollar and the rising shift of manufacturing operations to more cost-effective
locations such as China and Mexico. China has historically accounted for more than one-half of total imports given
its comparative advantage in manufacturing low-cost goods. Mexico is also well positioned to serve as one of the
leading importers of cotton personal-care products given its participation in the United States-Mexico-Canada-
Agreement.

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Business
Locations
Industry establishments are concentrated in the Southeast and West, comprising 23.1% and 21.9% of all locations in 2022,
respectively. Most businesses, especially those manufacturing goods under a licensing agreement for other companies, are
located near distribution or sales outlets for respective brands. Additionally, international trade plays a significant role in this
industry, with exports anticipated to account for nearly one-half of industry revenue in 2022; therefore, many facilities are located
close to ports and major highways to minimize transportation costs. The Great Lakes and Mid-Atlantic regions account for 14.1%
and 13.7% of industry establishments, respectively, since these regions contain large metropolitan areas such as Chicago and
New York City (the state of New York itself is estimated to host 6.0% of industry establishments), and international trade routes.
California has the greatest concentration of establishments, with 15.3% located in the state, due to the large proportion of
population and easy access to the Pacific trade routes for trade with Asia and Australia. Florida accounts for an estimated 7.6% of
all industry manufacturing facilities, mostly because of its proximity to both international and interstate trade routes. Companies
located in Florida can easily reach European, African and South American countries via waterway, in addition to the estimated
25.8% of the US population residing in the Southeast region, from a single facility.

20 IBISWorld.com

21 IBISWorld.com
Competitive Landscape
Market Share
Concentration
Concentration in this industry is Low
The Cotton Personal-Care Product Manufacturing industry exhibits a low level of market share concentration. The
three largest players account for less than one-quarter of total industry revenue in 2022. The largest industry
participant, Unilever NV, accounts for 11.0% of revenue in 2022.
Market share concentration has remained relatively stable over the five years to 2022, with no significant mergers or
acquisitions occurring during the period. Competition in the industry is expected to remain sufficient to ensure that
no single operator has the ability to take a large share of the market. Accordingly, market share concentration is
expected to remain close to its current level over the next five years.
Key Success
Factors
IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Guaranteed supply of key inputs:
A close relationship with companies that can supply large volumes of quality cotton and other materials is crucial to
success in this industry.
Having a large supply contract:
Having consistent customers with bulk orders ensures that manufacturing plants produce at near maximum capacity.
Economies of scale:
Economies of scale ensure that the cost per unit of output decreases as scale increases, boosting a company's
profitability.
Having a cost effective distribution system:
Manufacturers supply products to several locations throughout the world, and therefore, containing costs of
distribution is key to maintaining profitability.

22 IBISWorld.com
Cost Structure
Benchmarks
Profit
Average profit, measured as earnings before interest and taxes,
accounts for 6.2% of revenue in 2022, up from 4.9% in 2017. Industry
profit has historically been stable on account of cotton personal-care
products being highly inelastic in numerous medical and surgical fields.
However, the world price of cotton, which is a key input, can be
extremely volatile and affected average industry profit in the short term.
Profit also varies across manufacturers, depending on size and product
lineup, and given the low differentiation of industry products, industry
operators are often caught in a race to the bottom in which economies
of scale are used to produce products at the lowest per-unit costs.
Smaller companies that produce mainly commodity instruments tend to
earn lower profit, while larger companies that make large volumes of
specialized products often have operating margin in excess of 10.0%.
Wages
Wages account for 18.6% of revenue in 2022, down slightly from 2017.
Although personal-care product manufacturing has increasingly relied
on automation in recent years, labor is still necessary to monitor
assembly lines, inspect components and oversee the product
packaging and distribution processes. In addition, some operators
invest in research and development, which requires a certain degree of
skilled labor. These staff members drive up wage costs, but only
slightly, given the limited variation among products.

23 IBISWorld.com
Purchases
Purchases of inputs and supplies represent the industry's single-largest
expense, averaging 33.6% of revenue in 2022. Basic products such as
cotton balls and cotton pads without added chemicals are simple in
compound and structure, putting more weight on the cost of the
materials themselves rather than other costs of the manufacturing
process. The prices of paper, wood and chemicals have fluctuated over
the past five years but, overall, purchasing costs in this industry are
most dependent on cotton.
Marketing
Marketing costs account for 0.7% in 2022. Overall, marketing costs
have accounted for a negligible share of revenue given the business-to-
business nature of the manufacturing industry.
Depreciation
Depreciation expenses account for 1.9% of revenue in 2022, marking a
slight increase from 2017. Rising depreciation expense is often
correlated with growing investment in long-lived assets.
Rent
Rent accounts for 0.9% of industry revenue in 2022 and has remained
relatively unchanged over the five years to 2022. Most manufacturers
own their facilities and equipment, keeping rental costs relatively low.

24 IBISWorld.com
Utilities
Utilities are estimated to comprise 0.5% of industry revenue in 2022.
Overall, utilities costs have historically represented a negligible cost
account for industry operators.
Other Costs
Other costs are representative of one-time costs and advisory fees.
Overall, other costs are estimated to account for 37.6% of industry
revenue in 2022.
Basis of
Competition
Competition in this industry is High and the trend is Increasing
INTERNAL COMPETITION
Given the low degree of differentiation among industry products,
companies compete primarily on price, quality and brand awareness.
Some brands, such as Swisspers and Q-tips, have developed a strong brand name, synonymous with quality and
available in many local retailers throughout the world. These brands may be able to command price premiums since
they are produced by well-known manufacturers that have a reputation for quality. Consumers are also prone to
exhibiting brand loyalty for certain personal-care items.
However, many cotton personal-care products are sold as private labels for specific retail establishments or chains.
Often, different private labels may be manufactured by the same company, making the products identical. Private
label manufacturers largely compete based on cost-effectiveness and functionality.
EXTERNAL COMPETITION
Similar to other manufacturing industries in the United States,
competition from imported cotton personal-care products has intensified
over the five years to 2022.
Currently, imports account for more than three-quarters of domestic demand. Advancements in manufacturing in
developing countries has increased the quality of imported goods while maintaining low prices. This has attracted
consumers away from domestically produced products.
Barriers to
Entry
Barriers to Entry in this industry are High and the trend is Steady

25 IBISWorld.com
Barriers to entry in the Cotton Personal-Care Product
Manufacturing industry are high and steady. Established
manufacturers can pose a barrier to potential entrants
because of the cost savings associated with economies of
scale. These companies can also negotiate large
promotional contracts with retailers, enabling them to
obtain prime shelf placement. Additionally, well-
established brand names, such as US Cotton LLC's
Swisspers and Unilever NV's Q-tips, pose another barrier
to entry for new companies.
Generally, new entrants compete for licensing or private-
label contracts to manufacture goods for large retailers.
For new entrants, obtaining such a contract is of the
utmost importance. Opening and operating a
manufacturing facility requires a significant amount of
capital. Automation enables uniform product quality and
lower per-unit operating costs; however, such equipment
requires large initial investment and reoccurring
maintenance costs. Additionally, manufacturers must
have access to a distribution network to move finished
products to wholesale or retail locations.
Barriers to Entry Checklist
Competition High
Concentration Low
Life Cycle Stage Mature
Technology Change Medium
Regulation & Policy Medium
Industry Assistance Low
Industry
Globalization
Globalization in this industry is High and the trend is Increasing
The Cotton Personal-Care Product Manufacturing industry exhibits a high level of globalization. In addition to the
industry's substantial engagement in international trade, many industry participants also operate manufacturing
facilities overseas. For example, more than two-thirds of Johnson & Johnson's manufacturing facilities are located
overseas and more than two-thirds of Unilever NV's non-current assets are outside of the United States.
Manufacturers continue to invest in international plants to take advantage of the comparatively lower operating and
compliance costs which exist outside of the United States. This has historically led a substantial share of domestic
demand to be fulfilled by international products.

26 IBISWorld.com
Major Companies
Market Share Overview
Related Companies
Competitors Company Type Employee Segment Revenue ($m) Market Share (%) Profit ($m)
Unilever N V Incumbent 500+ Employees 20.8 9.48 3.5
Johnson & Johnson Laggard 500+ Employees 17.7 8.07 2.2

27 IBISWorld.com
Companies with 5.0% industry market share are displayed in the PDF version of this report. You can view insights for all companies associated
with this industry on my.ibisworld.com
Unilever N V
Company Overview
Description Unilever N V is a public company headquartered in New Jersey with an estimated 148,000 employees. In the US,
the company has a notable market share in at least eight industries: Ice Cream Production, Tea Production, Soap &
Cleaning Compound Manufacturing, Cosmetic & Beauty Products Manufacturing, Herbal Tea Production, Cotton
Personal-Care Product Manufacturing, RTD Tea Production, Mayonnaise Production and Soap & Cleaning
Compound Manufacturing. Their largest market share is in the Mayonnaise Production industry, where they
account for an estimated 40.8% of total industry revenue and are considered an Incumbent because they display
strong market share, but lower profit and revenue growth than some of their peers.
COMPANY TYPE Public Company
TOTAL COMPANY
REVENUE
$20.8m
EMPLOYEES 148,000
Other Industries Ice Cream Production in the US
Tea Production in the US
Cosmetic & Beauty Products Manufacturing in the US
RTD Tea Production in the US
Mayonnaise Production in the US
Financial
Performance
Unilever N V - financial performance *
Year
Revenue
$m
Growth
% change
Operating Income
$m
Growth
% change
2015 16.8 -6.7 3.8 -7.3
2016 18.9 12.5 3.5 -7.9
2017 20.2 6.9 4 14.3
2018 21.1 4.5 4.3 7.5
2019 22.6 7.1 4.7 9.3
2020 20.8 -8 3.5 -25.5
Source: IBISWorld
Note: * Estimates

28 IBISWorld.com
Unilever N V
Company Overview
Industry Market
Share, Revenue
and Profit
Market Share
9.48% 0.3%
Current Year
(2020)
Annual Growth
(2016–20)
Industry Revenue
$20.8m 2.4%
Current Year
(2020)
Annual Growth
(2016–20)
Profit Margin
16.83% -1.7%
Current Year
(2020)
Annual Growth
(2016–20)

29 IBISWorld.com
Johnson & Johnson
Company Overview
Brands & Trading
Names
Pepcid Johnson's Zarbee's Naturals Ethicon Benadryl Clean &
Clear Listerine Stayfree Nicorette Neutrogena Sudafed Neosporin Motrin Acuvue Tylenol OGX Z
yrtec Carefree Aveeno Band-Aid
Description Johnson & Johnson is a public company headquartered in New Jersey with an estimated 144,300 employees. In
the US, the company has a notable market share in at least 19 industries: Manufacturing, Brand Name
Pharmaceutical Manufacturing, Medical Device Manufacturing, Medical Instrument & Supply Manufacturing,
Glasses & Contact Lens Manufacturing, Medical Adhesives & Sealants Manufacturing, Orthopedic Products
Manufacturing, Surgical Instrument Manufacturing, Cough & Cold Medicine Manufacturing OTC, Allergy Medicine
Manufacturing OTC, Acne Treatment Manufacturing OTC, Hair Loss Treatment Manufacturing, Rheumatoid
Arthritis Medication Manufacturing, Epilepsy Medication Manufacturing, Contact Lens Manufacturing, Sunscreen
Manufacturing, Cotton Personal-Care Product Manufacturing, Ophthalmic Instrument Manufacturing, Mouthwash
Manufacturing and Manufacturing. Their largest market share is in the Acne Treatment Manufacturing OTC
industry, where they account for an estimated 42.9% of total industry revenue.
COMPANY TYPE Public Company
TOTAL COMPANY
REVENUE
$17.7m
EMPLOYEES 144,300
Other Industries Brand Name Pharmaceutical Manufacturing in the US
Medical Device Manufacturing in the US
Medical Instrument & Supply Manufacturing in the US
Glasses & Contact Lens Manufacturing in the US
Medical Adhesives & Sealants Manufacturing in the US
Orthopedic Products Manufacturing in the US
Surgical Instrument Manufacturing in the US
Cough & Cold Medicine Manufacturing OTC in the US
Allergy Medicine Manufacturing OTC in the US
Acne Treatment Manufacturing OTC in the US
Hair Loss Treatment Manufacturing in the US
Rheumatoid Arthritis Medication Manufacturing in the US
Epilepsy Medication Manufacturing in the US
Contact Lens Manufacturing in the US
Sunscreen Manufacturing in the US
Ophthalmic Instrument Manufacturing in the US
Mouthwash Manufacturing in the US
Analyst Insights Company completes the acquisition of Momenta Pharmaceuticals Inc.
On October 1, 2020, Johnson & Johnson announced the completion of its acquisition of Momenta Pharmaceuticals
Inc (Momenta) in a $6.5 billion deal. The deal will see Momenta become integrated with J&J's operations as the
company will work on developing treatment and care for those with autoantibody diseases. J&J buying the
company aligns with the company's business operations primarily in providing medical treatments and
pharametucals to consumers as Momenta joining the company will seek to help the company realize its goal of
maximizing its business operations further.
M&A
Strong financial performance and growth in Q4 2021 earnings
On January 25, 2022, Johnson & Johnson released its full-year and fourth-quarter earnings report that shows the
company has seen growth in nearly all of its divisions from its pharmaceutical division to its medical device
division. In 2021, Johnson & Johnson made $52.1 billion in its pharmaceutical sales, which is a 14.3% increase
from last year's performance, while the company has reported that it has made $14.6 billion in consumer health
(band-aids, Neutrogena, Tylenol) sales. In total, the company has generated $93.8 billion in total sales for the year,
which is a 13.6% increase from last year.
Discontinued Activity M&A Structural
Johnson & Johnson to split and create two separate companies
On November 12, 2021, Johnson & Johnson (J&J) announced that it will be separating the companies consumer
products business and its pharmaceutical business into two separate businesses. The move, which will be
completed within the next year, will see the consumer products division function mainly in producing bathroom
products such as Listerine and bandages, while the pharmaceutical division will be producing medical-specific

30 IBISWorld.com
Johnson & Johnson
Company Overview
products such as prescription drugs and vaccines. The reason for this recent change in the structure of the
company is to allow each section to focus on its own operations.
M&A Structural

31 IBISWorld.com
Johnson & Johnson
Company Overview
Industry Market
Share, Revenue
and Profit
Market Share
8.07% -2.8%
Current Year
(2020)
Annual Growth
(2016–20)
Industry Revenue
$17.7m -5.7%
Current Year
(2020)
Annual Growth
(2016–20)
Profit Margin
12.43% -5.9%
Current Year
(2020)
Annual Growth
(2016–20)

32 IBISWorld.com
Operating Conditions
Capital
Intensity
The level of capital intensity is Low
Industry manufacturers have low fixed capital expenses
and low wage costs in comparison with the averages
among manufacturing industries. For every dollar spent on
wages, IBISWorld estimates the average operators to
spend $0.10 on capital equipment. The industry produces
an assorted range of products with different manufacturing
processes associated with each one. Most products can be
manufactured on an automated production line and skilled
specialists are not needed to create products. Even so, the
machinery does not need to be highly advanced given the
low technology behind most of the industry's products such
as cotton balls and cotton swabs.
Technology &
Systems
Potential Disruptive Innovation: Factors Driving Threat of Change

33 IBISWorld.com
The Cotton Personal-Care Product Manufacturing industry does not
experience technological disruption due to the straightforward nature of
industry products.
Industry operators have developed efficient processes that are well-established, thus leaving little room for disruption.
However, the industry's processes have benefited from the increased integration of automation systems for product control
and manufacturing efficiency. Overall, the industry is not at risk of being disrupted by external technological factors.
The level of technology change is Medium
Over the five years to 2022, the Cotton Personal-Care Product Manufacturing
industry has experienced a moderate level of technological change.
Similar to many manufacturing industries, technological innovation plays an important role in manufacturing process
improvement. For example, computerized processes contributed to greater manufacturing cost synergies for producers.
These include fully automated production and packaging lines which reduces labor requirements while simultaneously
improving efficiency.
Some product innovation has occurred during the period, including the introduction of products made using organic inputs.
Additionally, companies have developed pads and cloths for specialized uses, such as those impregnated with chemicals to
aid in the removal of makeup or for use on the sensitive skin of young children. Moreover, industry companies US Cotton
LLC and Unilever NV have introduced cotton swabs with tips shaped to aid with nail care. In general, however, the main
product offerings have not changed form over the past five years.
Since the core product offerings tend to stay constant, companies have also focused on packaging options for different
applications. Travel-sized containers of cotton swabs are available from many manufacturers in addition to traditional
packages. Over the next five years, IBISWorld expects companies to continue to develop new packaging, including options
using environmentally friendly materials, meeting evolving consumer preferences.
Revenue
Volatility
The level of volatility is Medium
The Cotton Personal-Care Product Manufacturing industry demonstrates a
moderate level of revenue volatility.
Demand for medical and cosmetic cotton products has long been considered constant and relatively immune to economic
downturns, due to the necessity of products in hospitals, clinics and the medicine cabinets of consumers. Consistently
rising disposable income and consumer spending levels over the five years to 2022 have fueled the market for premium
personal-care products and contributed to steady rises in industry revenue over the latter half of the five-year period.
Although demand for cotton personal-care products is generally insular from economic turbulence, the COVID-19 pandemic
hampered demand from certain end markets and affected international trade flows.

34 IBISWorld.com
Regulation &
Policy
The level of regulation is Medium and the trend is Steady
The major regulating body governing the Cotton Personal-Care Product
Manufacturing industry is the US Food and Drug Administration (FDA).
The FDA enforces the laws and regulations relating to the manufacturing, labeling and marketing of many personal-care
products. The basic regulatory requirements that manufacturers of cosmetic and personal-care products distributed in the
United States must comply with are the Food, Drug and Cosmetic (FD&C) Act and the Fair Packaging and Labeling (FP&L)
Act.
LABELING REQUIREMENTS
Products distributed in the United States must comply with the labeling
regulations published by the FDA under the authority of the FD&C and FP&L
Acts.
Labeling refers to all labels and other written, printed or graphic matter on or accompanying a product. The label statements
required under the FD&C Act must appear on the inside and on any outside container or wrapper. FP&L Act requirements,
such as ingredient labeling and statement of the net quantity of contents on the main display panel, only apply to the label
of the outer container. This is important for goods impregnated with chemicals such as some wipes and pads.
LABEL WARNINGS
Products that may be hazardous to consumers when misused must bear
appropriate label warnings and adequate directions for safe use.
According to the FDA, the statements must be prominent and conspicuous. For example, cotton swabs require a warning
that informs users of the potential injuries that can occur from misuse.
The FD&C Act does not require that cosmetic manufacturers or marketers test their products for safety. However, the FDA
strongly urges cosmetic manufacturers to conduct appropriate tests to substantiate the safety of their cosmetics. If the
safety of a product is not adequately substantiated, it may be considered misbranded and be subject to regulatory action.
MANUFACTURING REGULATIONS
Other governmental agencies shape policies that may affect the industry
including: the Environmental Protection Agency (which is responsible for
infectious and hazardous waste laws), the US Department of Agriculture
(which is responsible for animal welfare compliance laws) and the
Occupational Safety and Health Administration (which evaluates potential
chemical hazards to employees).
Moreover, employing industry companies are subject to federal and state employment regulation (such as the Fair Labor
Standards Act), and all industry manufacturers contend with the same environmental protection regulations to which all
manufacturers are subject, such as the Clean Air Act.
COVID-19
In response to the ongoing COVID-19 (coronavirus) pandemic, federal, state
and local policymakers have imposed regulations on certain public and
business activities.
These mandates are aimed at slowing the spread of the global disease, but have been enacted at the expense of economic
activity. State policymakers have classified industry functions as essential activities, enabling operators to continue
production throughout the pandemic. Nevertheless, industry operators may have had to scale back or modify certain
business practices to accommodate new health and safety regulations at production facilities, or to meet lower end demand
resulting from falling consumer spending and a significantly lower volume of nonessential procedures. Some operators
have even shifted efforts to manufacture critical devices and personal protective equipment used to help fight the global
crisis.

35 IBISWorld.com
Industry
Assistance
The level of industry assistance is Low and the trend is Steady
Assistance for the Cotton Personal-Care Product Manufacturing industry is at a low level. Industry assistance is
characterized by import tariffs and the industry assistance supplied to this industry's key supplier, the Cotton Farming
industry (IBISWorld report 11192). Domestic cotton personal-care product manufacturers receive federal protection in the
form of import tariffs. While countries with trade agreements, such as Canada and Mexico via the North American Free
Trade Agreement (NAFTA), and those with normal trade relations with the United States are not subject to such tariffs,
those with non-normal relations are subject to a 40.0% tariff on products imported for medical use. In addition, direct
subsidy programs enacted under recent Farm Bills assist in keeping cotton prices stable. In this way, industry assistance
for the Cotton Farming industry trickles down to the Cotton Personal-Care Product Manufacturing industry.
Industry companies are also represented by trade associations such as Cotton Incorporated, a group funded by US
growers and importers of cotton and cotton textile products. This organization promotes knowledge and benefits of cotton
products, in addition to providing advocacy on behalf of cotton-related industries. Additionally, the US Department of
Agriculture (USDA) operates the Biopreferred program with the goal of increasing the purchase and use of products derived
from plants and other renewable sources. Numerous cotton products have been awarded this label. Companies benefit as
federal agencies are required to purchase minimum quantities of goods carrying this designation.
COVID-19
In light of the economic disaster stemming from the COVID-19 (coronavirus) outbreak, Congress has implemented many
programs to help cushion the blow companies, and its related workforce, have continued to experience throughout the
coronavirus outbreak and accompanying economic turndown. In March 2020, the Trump administration passed the
Coronavirus Aid, Relief and Economic Security (CARES) Act which provided small businesses with up to eight weeks of
funds designated for payroll costs and benefits. Within the CARES act, the Small Business Administration (SBA)
implemented the Paycheck Protection Program (PPP), which provided small businesses with up to eight weeks of funds
designated for payroll costs and benefits. According to size standards set by the SBA, surgical supplies manufacturers can
employ a maximum of 750 workers while still being considered a small business. Funds granted by the PP may also be
used to pay interest on mortgages, rent and utilities. Loans may be forgiven under certain circumstances, including if the
funds are used to retain or rehire employees. Certain provision of the CARES Act also enable operators to defer certain
payroll taxes until 2022. These policies enable companies to preserve cash to service more near-term obligations and
commitments. Additional stimulus has the potential to support industry participants during the unfortunate economic and
social environment.
The Family First Coronavirus Response Act (FFCRA) was also implemented as part of the CARES Act and required certain
employers to provide workers with paid sick leave and extended family and medical leave for reasons related to
coronavirus. Small businesses that employ fewer than 50 workers, which comprise over 95.0% of all industry
establishments according to data from the US Census, may qualify for certain exemptions. The FFCRA and PPP will
provide support to many small operators and related workforces amid the unfortunate global situation.

36 IBISWorld.com
Key Statistics
Industry Data
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
World price
of cotton
(Cents)
2013 265 67.3 213 192 9,741 110 448 45.2 603 90.4
2014 243 64.6 206 186 9,606 111 476 45.0 608 83.1
2015 235 63.0 200 181 9,281 116 510 43.5 630 70.4
2016 239 63.3 202 182 9,170 95.6 491 43.0 634 74.2
2017 225 57.2 187 165 8,684 91.2 506 42.1 639 83.6
2018 230 61.1 184 165 8,969 88.6 518 43.9 659 91.4
2019 239 67.4 179 162 8,873 107 563 45.0 695 77.9
2020 237 69.6 185 167 9,163 110 596 47.2 723 71.9
2021 250 68.1 188 169 9,483 104 625 47.2 771 101
2022 260 69.6 189 170 9,725 125 730 48.5 865 116
2023 262 71.1 189 170 9,779 125 766 48.8 903 101
2024 272 74.0 191 171 10,029 135 595 50.1 732 96.5
2025 279 76.2 193 173 10,251 139 589 51.3 728 95.6
2026 285 78.5 195 175 10,447 143 581 52.3 722 89.8
2027 291 80.9 199 178 10,666 147 573 53.4 716 86.4
Annual Change
Year
Revenue
(%)
IVA
(%)
Establishments
(%)
Enterprises
(%)
Employment
(%)
Exports
(%)
Imports
(%)
Wages
(%)
Domestic
Demand
(%)
World price
of cotton
(%)
2013 5.19 -2.75 2.40 3.22 -0.88 -3.68 0.71 4.62 3.52 1.29
2014 -8.60 -4.02 -3.29 -3.13 -1.39 0.90 6.34 -0.45 0.76 -8.08
2015 -3.18 -2.48 -2.92 -2.69 -3.39 4.23 7.16 -3.34 3.57 -15.3
2016 1.66 0.47 1.00 0.55 -1.20 -17.4 -3.79 -1.15 0.75 5.39
2017 -5.99 -9.64 -7.43 -9.35 -5.30 -4.61 3.03 -2.10 0.79 12.6
2018 2.36 6.81 -1.61 0.00 3.28 -2.86 2.41 4.27 3.14 9.30
2019 3.82 10.3 -2.72 -1.82 -1.08 20.9 8.72 2.50 5.38 -14.8
2020 -0.84 3.26 3.35 3.08 3.26 2.98 5.84 4.88 3.99 -7.63
2021 5.70 -2.16 1.62 1.19 3.49 -5.81 4.78 0.00 6.70 40.4
2022 4.03 2.20 0.53 0.59 2.55 20.2 16.8 2.75 12.2 14.6
2023 0.73 2.15 0.00 0.00 0.55 0.16 4.97 0.61 4.39 -12.6
2024 3.62 4.07 1.05 0.58 2.55 7.91 -22.3 2.66 -19.0 -4.65
2025 2.57 2.97 1.04 1.16 2.21 3.18 -0.98 2.39 -0.42 -0.89
2026 2.11 3.01 1.03 1.15 1.91 2.72 -1.43 1.94 -0.87 -6.06
2027 2.17 3.05 2.05 1.71 2.09 2.72 -1.38 2.10 -0.79 -3.86
Key Ratios
Year
IVA/Revenue
(%)
Imports/
Demand
(%)
Exports/
Revenue
(%)
Revenue per
Employee
($'000)
Wages/
Revenue
(%)
Employees per
estab.
(Units) Average Wage ($)
2013 25.4 74.2 41.4 27.3 17.0 45.7 4,640
2014 26.6 78.3 45.8 25.3 18.5 46.6 4,685
2015 26.8 81.1 49.3 25.3 18.5 46.4 4,687
2016 26.5 77.4 40.0 26.0 18.0 45.4 4,689
2017 25.5 79.1 40.6 25.9 18.8 46.4 4,848
2018 26.6 78.6 38.6 25.6 19.1 48.7 4,895
2019 28.2 81.1 44.9 26.9 18.9 49.6 5,072
2020 29.4 82.5 46.6 25.8 19.9 49.5 5,151
2021 27.2 81.0 41.5 26.4 18.9 50.4 4,977
2022 26.7 84.4 48.0 26.8 18.6 51.5 4,987
2023 27.1 84.8 47.7 26.8 18.6 51.7 4,990
2024 27.2 81.3 49.7 27.1 18.4 52.5 4,996
2025 27.4 80.9 50.0 27.2 18.4 53.1 5,004
2026 27.6 80.4 50.3 27.2 18.4 53.6 5,006
2027 27.8 79.9 50.6 27.3 18.4 53.6 5,007
Figures are inflation adjusted to 2022

37 IBISWorld.com
Industry Financial Statement
Historical Average
Industry Multiples 2018 2019 2020 2021 3-Year 5-Year 10-Year
EBIT/Revenue 2.9 3.8 6.4 8.5 6.2 4.9 5.2
EBITDA/Revenue 6.4 6.6 9.1 10.9 8.8 7.8 8.1
Leverage Ratio 12.6 11.7 8.4 7.3 9.1 10.3 10.0
Industry Tax Structure 2018 2019 2020 2021 3-Year 5-Year 10-Year
Taxes Paid/Revenue 1.3 1.1 1.8 1.8 1.6 1.4 1.4
Income Statement 2018 2019 2020 2021 3-Year 5-Year 10-Year
Total Revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Business receipts 99.6 98.1 98.3 98.1 98.2 98.7 98.7
Cost of goods 74.8 74.2 70.3 68.7 71.1 72.5 72.2
Gross Profit 25.2 25.8 29.7 31.3 28.9 27.5 27.8
Expenses
Salaries and wages 7.3 6.9 6.0 6.1 6.3 6.6 6.5
Advertising 0.4 0.5 0.8 0.9 0.8 0.7 0.7
Depreciation 3.3 2.5 2.4 2.0 2.3 2.7 2.6
Depletion 0.0 0.0 0.1 0.1 0.0 0.0 0.0
Amortization 0.2 0.3 0.2 0.4 0.3 0.3 0.3
Rent paid 1.4 1.5 1.2 1.0 1.2 1.3 1.3
Repairs 0.6 0.7 0.3 0.4 0.4 0.5 0.5
Bad debts 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Employee benefit programs 1.5 1.5 0.6 0.7 0.9 1.1 1.3
Compensation of officers 1.2 1.2 1.0 1.6 1.2 1.3 1.4
Taxes paid 1.3 1.1 1.8 1.8 1.6 1.4 1.4
Interest Income 0.1 0.1 0.6 0.6 0.4 0.3 0.2
Other Income
Royalties 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Rent Income 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Income 0.6 1.5 3.6 5.5 3.5 2.3 2.3
Balance Sheet 2018 2019 2020 2021 3-Year 5-Year 10-Year
Assets
Cash and Equivalents 5.3 7.2 7.9 7.3 7.5 6.8 5.8
Notes and accounts receivable 18.9 15.6 21.4 19.5 18.8 18.5 17.6
Allowance for bad debts 0.2 0.2 1.2 1.2 0.9 0.6 0.5
Inventories 20.0 20.2 22.2 21.7 21.3 21.0 19.6
Other current assets 3.6 3.7 4.9 4.7 4.4 4.0 4.5
Other investments 20.7 20.6 28.0 29.5 26.0 24.4 21.6
Property, Plant and Equipment 69.0 70.8 58.3 53.0 60.7 64.6 67.3
Accumulated depreciation 45.2 47.3 39.7 35.5 40.8 42.9 45.5
Intangible assets (Amortizable) 6.7 8.3 3.4 5.4 5.7 5.9 5.8
Accumulated amortization 1.5 1.5 2.1 2.3 1.9 1.8 1.7
Other assets 1.3 1.7 6.5 6.9 5.0 7.7 8.6
Total assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Accounts payable 13.2 12.9 15.7 14.3 14.3 13.9 12.5
Liabilities and Net Worth
Mort, notes, and bonds under 1 yr 15.0 9.0 12.1 11.9 11.0 11.3 8.5
Other current liabilities 5.1 7.2 7.3 7.1 7.2 6.7 6.6
Loans from shareholders 4.2 5.8 10.3 10.1 8.7 6.7 4.5
Mort, notes, bonds, 1 yr or more 20.6 17.0 23.0 24.1 21.4 21.6 26.1
Other liabilities 0.8 4.4 7.0 7.2 6.2 3.9 4.8
Total liabilities 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Capital stock 11.8 18.1 8.3 8.0 11.5 11.5 9.8
Additional paid-in capital 14.8 15.4 31.2 33.0 26.5 22.3 19.7
Retained earnings, appropriated 0.0 0.0 1.0 1.0 0.7 0.4 0.2
Retained earnings-unappropriated 5.4 5.4 13.0 12.5 10.3 8.3 7.9
Cost of treasury stock 1.3 1.3 2.2 3.0 2.2 1.9 1.5
Net worth 41.1 43.7 35.6 36.5 38.6 40.4 39.3

38 IBISWorld.com
Liquidity Ratios 2018 2019 2020 2021 3-Year 5-Year 10-Year
Current Ratio 1.4 1.6 1.8 1.8 1.7 1.6 1.8
Quick Ratio 0.8 0.9 1.1 1.1 1.1 1.0 1.1
Sales/Receivables 6.5 8.4 6.1 6.5 7.0 7.1 7.4
Days' Receivables 56.1 43.7 59.4 56.4 53.2 51.9 50.5
Days' Inventory 79.4 76.3 87.4 91.5 85.1 81.6 77.9
Inventory Turnover 4.6 4.8 4.2 4.0 4.3 4.5 4.8
Payables Turnover 7.0 7.5 5.9 6.1 6.5 6.8 7.5
Days' Payables 52.4 48.8 61.7 60.3 56.9 54.2 49.7
Sales/Working Capital 4.7 5.5 4.4 4.4 4.8 4.9 5.1
Coverage Ratios 2018 2019 2020 2021 3-Year 5-Year 10-Year
Debt Service Coverage Ratio 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Leverage Ratios 2018 2019 2020 2021 3-Year 5-Year 10-Year
Fixed Assets/Net Worth 3.0 2.9 3.3 3.0 3.1 3.0 3.2
Debt/Net Worth 2.4 2.3 2.8 2.7 2.6 2.5 2.6
Tangible Net Worth 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Operating Ratios 2018 2019 2020 2021 3-Year 5-Year 10-Year
Return on Net Worth, % 8.7 11.2 23.7 29.2 21.4 16.4 17.5
Return on Assets, % 3.6 4.9 8.5 10.7 8.0 6.3 6.6
Sales/Total Assets 1.2 1.3 1.3 1.3 1.3 1.3 1.3
EBITDA/Revenue 6.4 6.6 9.1 10.9 8.8 7.8 8.1
EBIT/Revenue 2.9 3.8 6.4 8.5 6.2 4.9 5.2
Cash Flow & Debt
Service Ratios (% of
sales)
2018 2019 2020 2021 3-Year 5-Year 10-Year
Cash from Trading 26.0 23.7 30.5 29.9 28.0 26.7 26.9
Cash after Operations 13.8 14.5 20.4 19.9 18.3 16.4 16.6
Net Cash after Operations 13.9 12.9 18.9 18.3 16.7 15.5 16.0
Debt Service P&I Coverage 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Interest Coverage (Operating
Cash)
0.0 0.0 0.0 0.0 0.0 0.0 0.0
Source: IRS SOI Tax Stats; US Census Bureau; IBISWorld

39 IBISWorld.com
Additional Resources
Additional
Resources
Cotton Incorporated
http://www.cottoninc.com
National Cotton Council of America
http://www.cotton.org
US Food and Drug Administration
http://www.fda.gov
Industry Jargon COTTON SWAB
A small wad of cotton wrapped around one or both ends of a short rod, usually made of wood, rolled paper or
plastic.
ORGANIC
An accreditation given to producers of agricultural goods free of chemical fertilizers, pesticides and other chemical
inputs.
RAYON
A manufactured regenerated cellulose fiber used as an alternative to natural fibers such as cotton.
Glossary BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for
new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than
$0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of
capital for every $1 of labor.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e.
year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving
only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using
the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived
by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers
and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations are performed. Multiple establishments under
common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top
players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less
than 40%.

40 IBISWorld.com
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other
operating income from outside the firm (such as commission income, repair and service income, and rent, leasing
and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale
of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)
The market value of goods and services produced by the industry minus the cost of goods and services used in
production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For
exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand:
low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by
considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments;
the amount of change the industry's products are undergoing; the rate of technological change; and the level of
customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-
employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as
revenue minus expenses, excluding interest and tax.
REGIONS
West | CA, NV, OR, WA, HI, AK
Great Lakes | OH, IN, IL, WI, MI
Mid-Atlantic | NY, NJ, PA, DE, MD
New England | ME, NH, VT, MA, CT, RI
Plains | MN, IA, MO, KS, NE, SD, ND
Rocky Mountains | CO, UT, WY, ID, MT
Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC
Southwest | OK, TX, NM, AZ
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%;
and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.

IBISWORLD.COM 41
Call Preparation Questions
Role Specific
Questions
Sales & Marketing
How is your company affected by rising imports?
Imports represent a source of competition for the industry.
China is the leading importer of industry products.
Have exports offered an opportunity for your company?
Slightly less than half of industry revenue is derived from exports
Mexico is the largest export destination.
Strategy & Operations
Has your company been exposed to volatile input prices over the past few years?
The price of cotton increased 40.4% in 2021 and another 14.6% in 2022.
Agricultural difficulties can result in volatile prices.
Has your company explored acquisition opportunities in areas with well-established infrastructure?
Large consumer goods conglomerates engage in acquisitions
Acquisitions typically involve similar companies such as skincare companies.
Technology
Have you been able to reduce wage costs through automation over the past five years?
Automation is important to this industry.
There is little change in employment within this industry.
What steps do you take to safeguard your company's proprietary information?
Proprietary information is not a major factor for this industry.
Compliance
How does your company ensure all health and safety requirements are met?
Strict procedures are used in manufacturing facilities.
Increasing automation improves safety in certain facilities.
Is your company adequately prepared to comply with new environmental standards?
Environmental standards apply mostly to growers of cotton.
Therefore, agricultural standards can affect this industry.
Finance
How has input price volatility affected profit margins over the past 12 months?
Volatility in the price of cotton creates uncertainty for companies regarding cost budgeting.
However, volatile cotton prices are typically short-lived.
How often does your company purchase new equipment?
Given the straightforward nature of industry products, equipment and machinery is not replaced often.
Companies will typically purchase new equipment in a low interest rate environment.

IBISWORLD.COM 42
External Impacts
Questions
Impact: World price of cotton
How does a change in the world price of cotton affect your company's top- and bottom-line financials?
Cotton is a key input for manufacturers and a change in its price can have a considerable affect on revenue and
profit if not hedged properly.
Revenue will increase if a manufacturer can pass off higher cost of goods sold onto customers. However, profit may
suffer if revenue does not increase enough to offset the higher cost.
Impact: Trade-weighted index
How much of your revenue comes from exports? How do you promote your brand internationally?
When the TWI increases, US exports become more expensive abroad and are less competitive, potentially lowering
revenue for an export-heavy industry.
Impact: Per capita disposable income
Do you expect major demand shifts due to rising disposable income? In such a price-competitive industry, can you
offer any premium products?
When the amount of per capita disposable income increases, consumers are more willing to purchase premium
personal-care products.
Internal Issues
Questions
Issue: Having a large supply contract
Do you have large contracts in comparison to your competitors? What do you do to attract and maintain sizable
orders?
Having consistent customers with bulk orders ensures that manufacturing plants produce at near maximum capacity.
Issue: Economies of scale
Are you able to leverage economies of scale? What is your budget for expanding operations?
Economies of scale ensure that the cost per unit of output decreases as scale increases, boosting a company's
profitability.
Issue: Having a cost effective distribution system
What delivery system do you use? How do you ensure that it is cost-effective?
Manufacturers supply products to a number of locations throughout the world, and therefore, containing costs of
distribution is key to maintaining profitability.

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information you need – fast.
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DISCLAIMER
This product has been supplied by IBISWorld Inc. (‘IBISWorld’) solely for use by its authorized licenses strictly in
accordance with their license agreements with IBISWorld. IBISWorld makes no representation to any other person
with regard to the completeness or accuracy of the data or information contained herein, and it accepts no
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Copyright 2022 IBISWorld Inc.

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