Novonesis (NSISb.CO): Household Care Spotlight Session

Research evidence excerpt

Novonesis (NSISb.CO): Household Care Spotlight Session

Goldman Sachs Novonesis (NSISb.CO)

Key takeaways

1. Novonesis has decoupled growth from its end market, outpacing it by c.350bps.

Between 2021-25, Household Care grew c.5% against an underlying market of

c.1.5%, a notable acceleration from 2016-20 when both grew c.2%. Management

attributes this to four drivers: (1) a strengthened presence in Emerging Markets to

meet local needs (2) heavier investment in innovation and category expansion (3) a

shift from single ingredients toward holistic formulations capturing a larger

ingredient share and (4) pricing now contributing positively rather than devaluing

previously. These drivers are expected to continue to support above end market

growth.

2. Reformulation has evolved from a niche premium offering into a well-embedded

growth lever. Over 2010-20, it was largely viewed as a cost-plus, premium

proposition; through 2020-25, it broadened and gained acceptance as a

sustainability play; while today management sees it delivering higher value creation

alongside genuine cost optimisation for customers. Churn is perceived to be low,

with customers not cycling technology in and out, as structural levers (sustainability

commitments, innovation, and reduced input-cost volatility) anchor adoption. The

scope now extends beyond surfactants into areas such as optical brighteners,

encouraging customers to take a holistic view towards replacing a greater proportion

of the ingredient stack.

3. AI advantage underpinned by proprietary data. The company pairs AI/Machine

Learning models with three proprietary datasets: an application database on wash

performance, production data identifying which molecules perform at scale, and

sequence data from its strain library (>100,000 strains).