Why Battling Bugs Is a Booming Business, and May Be Getting Bigger

Harding Loevner’s Shali Zhu describes four factors that underpin rising demand for pest control services, and why the competitive landscape favors larger companies.






Key Takeaways

 

  • Demand for pest control services should continue to rise in coming years, especially in the developing world, due to urban population growth, expanding middle classes, stricter health regulations, and global warming.
  • Because many homeowners and most businesses afflicted by an infestation will not wait for an improved economy before calling an exterminator, demand does not ordinarily drop meaningfully during recessions.
  • With reputations on the line, commercial customers—particularly restaurants and hotels—tend to view pest control as an unavoidable cost of doing business. As a result, some pest control companies have been able to raise prices continually while retaining customers.
  • Pest control companies with a large network of service locations have advantages over smaller competitors, including the ability to serve customers more efficiently and an increased likelihood of winning lucrative contracts with large corporate customers.

Disclosures

 

The “Fundamental Thinking” series presents the perspectives of Harding Loevner’s analysts on a range of investment topics, highlighting our fundamental research and providing insight into how we approach quality growth investing. For more detailed information regarding particular investment strategies, please visit our website, www.hardingloevner.com. Any statements made by employees of Harding Loevner are solely their own and do not necessarily express or relate to the views or opinions of Harding Loevner.

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