Brenntag to sell chemicals through LANXESS’ digital platform

LONDON (ICIS)–Brenntag will start selling paints, coatings, adhesives and sealants in Germany through sales platform CheMondis, a subsidiary of chemicals producer LANXESS, the distribution major said on Thursday.

Brenntag said the offering would be made available “gradually” in the German market but did not provide specific dates.

The deal with CheMondis comes after Brenntag has spent two years building its own online chemicals sales platform, Brenntag Connect.

“We see a strong upward trend in online business and with this complementary cooperation we extend our digital channels further,” said Maarten Stramrood, chief digital officer.

“Our collaboration with CheMondis will provide our current and potential customers [with] an even broader choice.”

CheMondis is a spinoff from LANXESS founded in 2018. It  says that more than 3,200 companies are listed on its online sales channel, which offers around 50,000 products.

Earlier this week, Brenntag said it would reduce its workforce by more than 7% and close 100 sites around the world as it embarks on a cost cutting programme.

CHEMICALS DISTRIBUTION FUTURE
The trend towards digitalisation in the chemicals industry is unstoppable, said a chemicals analyst at Germany’s investment bank Baader Bank.

It can save costs as well as speed up processes, said Markus Mayer, although it could also cause the exit from the market of small players.

“The large chemical distribution companies might, bottom line, profit from digitalisation whereas smaller competitors might suffer and consequently digitalisation (together with stricter regulations) might trigger further consolidation among distribution companies,” the analyst said.

“Potential threats [to distributors] arise through upstream producers, who can make use of the new technologies to take back former distribution accounts and making it more profitable to handle smaller accounts by themselves. Chemical distributors must begin to invest in digitization to avoid losses of volume and to strengthen their competitive advantage.”

Baader added that digitalisation in chemicals distribution could prompt moves towards a “monopoly digital platform like Amazon” which provides chemicals and services.

However, due to the health and safety complexity in the chemicals industry, as well as heavy logistical requirements, digitalisation could be less disruptive in chemicals distribution than in other industries.

“Nevertheless, customers expect an online-offline solution. Brenntag has recognised the changing technical and competitive environment and is investing heavily in this area,” concluded the bank, referring to Brenntag’s DigiB, a subsidiary based in Amsterdam.