Tissue and Hygiene in Saudi Arabia

EXECUTIVE SUMMARY

Economic development and population growth underpin positive market performance

Saudi Arabia’s tissue and hygiene market maintained its positive development in 2011. Growth in total market current value sales was up on 2010, and also faster than the CAGR for the entire review period. While total current value sales were bolstered by price hikes driven by inflationary pressures, economic improvements and rapid population growth ensured that most product categories also maintained robust growth in volume terms. Volume and current value sales were also boosted by new launches, improvements in distribution and marketing activities by leading players.

Urbanisation continues to bolster demand for tissue and hygiene products

During the review period, economic development and population growth in Saudi Arabia were accompanied by rapid urbanisation. By 2011, urban dwellers accounted for approximately 82% of the total population. Urbanisation has helped to bolster demand for tissue and hygiene products in a number of ways. At the most basic level, urban dwellers tend to have higher incomes than their rural counterparts, and are therefore better able to afford these products. At the same time, distribution of tissue and hygiene products is stronger in cities and towns than in rural areas. Most importantly, however, urbanisation has helped to make Saudi consumers more aware of the importance of maintaining proper personal hygiene standards, and heightened their appreciation for the convenience of different types of tissue and hygiene products. Accordingly, urbanisation remained a key driver of growth in volume and current value sales for several tissue and hygiene categories in 2011.

Multinationals lead hygiene while local and regional players are strongest in tissue

There was a marked disparity between the competitive environments of retail tissue and retail hygiene at the end of the review period. Hygiene current value sales were dominated by multinational brands, with consumers typically preferring the reassurance of strong global brand names like Luvs, Pampers, Always, Baby Joy, Kotex, Huggies etc. In the tissue category, however, domestic or regional brands offering reasonable quality at affordable prices accounted for the largest share of total current value sales. Prominent examples included Fine and Smile by Jordanian company Hygienic Paper Co Ltd (Fine), and Sanita and Select by Saudi producer National Paper Products Co.

Wide assortments and competitive prices benefit supermarkets and hypermarkets

Supermarkets remained the leading distribution channel for tissue and hygiene products in current value sales terms in 2011, followed by health and beauty retailers, hypermarkets and independent small grocers. During the review period, the strong lead of supermarkets was maintained by the expansion of leading chains, particularly in urban areas, as well the one-stop shopping trend, frequent discount promotions and growing consumer appreciation for the ability of supermarkets outlets to offer wider assortments and more competitive prices than most other retailers. The same factors ensured that hypermarkets made stronger value share gains within tissue and hygiene distribution than any other channel over 2006-2011.

Maturity will slow demand but outlook for 2011-2016 remains broadly positive

The outlook for the Saudi tissue and hygiene market over the forecast period is generally favourable. Growth in total market constant value sales is expected to exceed that recorded during the review period, while most product categories look set to maintain robust growth in volume terms. As was the case in 2011, the main drivers of demand for tissue and hygiene products be economic development and improvements in living standards, population growth and rapid urbanisation. New launches, improvements in distribution and marketing activities will also impact positively on the performance of the entire market. Due to increasing maturity, however, volume growth rates for most tissue and hygiene categories are expected to be slower than those witnessed over 2006-2011.

KEY TRENDS AND DEVELOPMENTS

Favourable economic conditions bolster spending on tissue and hygiene products

Despite the global downturn, the Saudi economy grew strongly during the review period. Economic growth, driven in large part by oil revenues, resulted in rising disposable incomes and improvements in living standards, especially in urban areas. Middle income earners were the main beneficiaries of these trends, which encouraged higher spending on all kinds of goods and services, including tissue and hygiene products.

Current impact

The Saudi economy continued to perform well in 2011. At 6.5%, real GDP growth was significantly faster than in any other year of the review period. The improvements in disposable income levels and living standards that accompanied strong growth in real GDP had positive implications for the entire tissue and hygiene market. Most notably, these trends helped to draw more low income consumers into ‘basic’ or essential categories like toilet paper, sanitary protection, nappies/diapers/pants etc, while also encouraging middle income consumers in these categories to trade up to higher quality brands with added value benefits. At the same time, favourable economic conditions led many middle income consumers to increase spending on non-essential but convenient products such as wipes, kitchen towels, paper tableware, tissues etc.

Outlook

The Saudi economy is expected to continue performing positively over the forecast period. In particular, high oil prices and elevated oil output should help to sustain healthy growth in real GDP and offset the worst effects of the global downturn. At the same time, economic growth will be driven by strengthening domestic demand and rising exports, as well as ongoing government investment in infrastructure.

Future impact

Economic development will continue to raise disposable income levels and improve living standards in Saudi Arabia over the medium term. This will make all kinds of tissue and hygiene products increasingly affordable, as well as more desirable, to consumers. As was the case in 2011, rising disposable incomes and higher living standards will bring more low income consumers into essential categories like toilet paper, sanitary protection nappies/diapers/pants etc. Domestic and regional producers offering cheaper products stand to benefit most from this trend. Economic improvements will also encourage middle and higher income consumers to trade up to more expensive products with added value benefits in essential or basic categories, and increase spending on non-essential products that offer greater convenience, such as wipes, kitchen towels and tissues. Multinational brands are likely to benefit most of all from these latter two trends.

Further growth in the Saudi economy should also strengthen demographic trends that have the potential to create medium to long term benefits for certain tissue and hygiene categories. For example, gradual economic improvements will help to maintain high birth rates, which will in turn sustain robust demand for nappies/diapers/pants. Similarly, increases in life expectancy arising from higher living standards will create additional demand for incontinence products.

Rapid urbanisation strengthens demand for tissue and hygiene products

Saudi Arabia experienced rapid urbanisation over 2006-2011. While this trend was partly due to economic development, it was also driven by strong population growth, with the total population increasing by 11% during the review period. By 2011, approximately 82% of the population lived in urban areas, many of them in increasingly crowded cities and towns.

Current Impact

Rapid urbanisation has impacted positively on the demand for tissue and hygiene products in a number of ways. At a basic level, it has made these products more affordable to greater numbers of Saudi consumers, as urban dwellers tend to have higher incomes than their rural counterparts. Similarly, it has made certain types of tissue and hygiene products more readily accessible to greater numbers of consumers, as distribution tends to be strongest in cities and large towns. At the same time, rapid urbanisation has led to overcrowding in many cities, which has made consumers more conscious of the need to maintain high standards of cleanliness in order to prevent the spread of germs and disease. By the same token, urbanisation and overcrowding have made many consumers more conscious of the need to maintain proper personal hygiene standards. In a related development, urbanisation has led to increasingly busy lifestyles, strengthening consumer appreciation for the convenience of different types of tissue and hygiene products.

While these trends continued to have a positive influence on the development of the entire tissue and hygiene market in 2011, some categories benefited more than others. Wipes, which showed volume growth of 3% and current value growth of 12%, was one of the biggest beneficiaries overall. Wipes are convenient, portable and can be used for a variety of purposes, from personal hygiene and baby care to everyday household cleaning tasks. These attributes have helped to make wipes increasingly popular among middle and higher income urban consumers with busy lifestyles. Urbanisation and on-the-go lifestyles were also major drivers of growth in volume sales of away-from-home (AFH) tissue and hygiene products in 2011.

Outlook

Economic development and population growth will continue to drive rapid urbanisation in Saudi Arabia over the forecast period. Urbanisation will also be fuelled as economic migrants flock to Saudi cities in search of employment, not only from rural areas within the kingdom but also from foreign countries. The government is expected to invest heavily in urban infrastructure and urban housing to accommodate these trends. Growth in Saudi Arabia’s urban population and overcrowding in big cities will continue to make consumers more conscious of the need to maintain higher standards of cleanliness and personal hygiene. This will in turn contribute to robust growth in volume and constant value sales for most tissue and hygiene categories. As was the case in 2011, urbanisation will be a key driver of demand for wipes and AFH products.

Future Impact

Over the medium term, more tissue and hygiene manufacturers are expected to introduce new antibacterial products aimed at consumers living in overcrowded cities who are highly conscious about germs and cleanliness. The launch of new products with antibacterial properties is most likely in wipes, particularly all purpose cleaning wipes, but similar launches should be witnessed in categories like pocket handkerchiefs, toilet paper etc. Manufacturers are also expected to introduce new products and packaging formats that offer greater portability and convenience to appeal to urban consumers with busy, on-the-go lifestyles.

Inflationary pressures push tissue and hygiene unit prices upwards

While strong economic growth helped to increase disposable incomes in Saudi Arabia during the review period, the positive impact that this trend had on consumer spending was constrained by high inflation. High inflation was attributable to a number of factors, most notably rising food and commodity prices on international markets, inflationary pressures experienced by Saudi Arabia’s main trading partners and increases in domestic rents. Rising oil prices and shipping costs also contributed to high inflation, since most fast moving consumer goods (fmcgs) sold in Saudi Arabia are imported.

Current impact

Inflation remained quite high in 2011, reaching 5%. As manufacturers, importers and retailers moved to offset rising costs attributable to inflationary pressures, the vast majority of tissue and hygiene categories saw average unit prices increase moderately in current value terms. While price increases bolstered current value sales, they also contributed to a slowdown in volume sales growth in several categories. At the same time, increasing price sensitivity among consumers helped domestic and regional producers offering cheaper products to make modest gains in a number of categories. Similarly, price hikes across the market helped to strengthen consumer acceptance of private label tissue and hygiene products. Despite these trends, however, most Saudi consumers continued to prefer global brands, which are more expensive than domestic and regional alternatives but are perceived as offering higher quality and more added value benefits.

Outlook

Inflation in Saudi Arabia is expected to remain high over the medium term, particularly during the early years of the forecast period. This will be due to a number of factors, most notably a weakening US dollar, rising oil prices and fluctuations in the prices of food and other commodities on global markets. National economic reports predict that the rate of inflation in 2012 will reach 6% before levelling off at an average of 5% from 2013 onwards. Accordingly, it is expected that average unit prices in most tissue and hygiene categories will continue to increase steadily in constant value terms towards 2016.

Future impact

Together with increasing maturity, inflation and price increases are likely to cause volume growth rates in some tissue and hygiene categories to slow over the forecast period. This trend will be most evident in non-essential categories like wipes and paper tableware, though it could also affect ‘basic’ or necessity categories toilet paper as increasing price sensitivity leads Saudi households to try and reduce their consumption of tissue and hygiene products generally. Price hikes arising from high inflation are also likely to steer more consumers towards cheaper domestic and regional brands, as well as private label products. For the most part, however, the effects of inflation should be offset as disposable incomes continue to rise in line with economic development. As a result, multinational brands offering higher quality and added value benefits will remain affordable to most middle income consumers.

MARKET INDICATORS

MARKET DATA

DEFINITIONS

This report analyses the market for Tissue and Hygiene in Saudi Arabia. For the purposes of the study, the market has been defined as follows:

• Sanitary protection

• Nappies/diapers/pants

• Incontinence

• Wipes

• Cotton wool/buds/pads

• Retail Tissue, an aggregation of:

• Toilet paper

• Tissues

• Kitchen towels

• Paper tableware

• Away-from-home (AFH) products

SOURCES

Sources used during the research included the following:

STRATEGIC DIRECTION

• Over the forecast period, Hygienic Paper Co will attempt to strengthen its position in the Saudi tissue and hygiene market by developing new added value products, while also working to improve the quality of its established ranges. The company will also invest in expanding its production facilities and distribution network in Saudi Arabia, and step up advertising support for its brands on national and regional TV stations.

KEY FACTS

COMPANY BACKGROUND

• Owned by the Nuqul family, Hygienic Paper was founded in 1958. It is part of the Nuqul Group, which is based in Amman in Jordan but has a wide global reach with a presence in 45 countries worldwide. Nuqul Group encompasses over 30 companies with interests in several industries, including synthetic sponge/foam, stationery, packaging and raw and converted paper tissue.

• Hygienic Paper Co first entered Saudi Arabia in the mid-1980s in response to growing demand for tissue and hygiene products. Today, it not only produces a broad range of tissue and hygiene products at its Saudi facilities, but also medical pads and sheets, coasters, straws and various other items.

PRODUCTION

• Hygienic Paper Co supplies tissue and hygiene products for the Saudi market from its plants in Riyadh and Jeddah. Maintaining local facilities helps the company to keep production and distribution costs down, placing it on an equal footing with indigenous manufacturers and giving it an important price advantage over imported brands. The company invested heavily in increasing capacity at both of its Saudi plants towards the end of the review period.

• In addition to producing its own brands, the company also manufactures private label tissue and hygiene products at its Saudi facilities. These private label products are sold by leading retail chains across the GCC region.

COMPETITIVE POSITIONING

• Hygienic Paper Co was the fifth leading tissue and hygiene player in Saudi Arabia in 2011, claiming a market value share of 9%. The company’s market value share increased continuously throughout the review period thanks to new launches, improvements in distribution sustained investment in TV advertising for its Fine brand. The expansion of its Saudi facilities and a range of corporate social responsibility (CSR) initiatives also contributed to value share gains for the company.

• The company maintains a very wide portfolio that covers most major tissue and hygiene categories. While its flagship brand Fine has a mid-to-high price positioning, the company also offers economy brands Lido and Smile, enabling it to reach consumers of all income levels. All of the company’s brands have a reputation for offering good quality at affordable prices, and it continues to enjoy an early mover advantage in a number of tissue and hygiene categories.

STRATEGIC DIRECTION

• Over the forecast period, Masafi will focus on launching new products and expanding its distribution network in Saudi Arabia in order to gain a stronger foothold in the local tissue and hygiene market. In particular, the company is keen to move beyond boxed facial tissues and enter new and more dynamic categories. Masafi is also expected to step up advertising support for its eponymous brand towards 2016. Away from the Saudi market, the company will focus on strengthening its presence in the UAE tissue and hygiene market.

KEY FACTS

COMPANY BACKGROUND

• Masafi Mineral Water is a 100%-Emirati-owned company based in Dubai in the UAE. It was established in 1976.

• The company’s core business is the production of bottled water. The Masafi region of the UAE, from which it takes its name, is well known for its natural mineral water springs. The company also offers fruit/vegetable juice and snacks. It first entered the Saudi tissue and hygiene market in 2007 when it introduced boxed facial tissues under its Masafi brand.

• The company has a strong presence across the Middle East, most notably in the UAE, Saudi Arabia, Qatar and Bahrain.

PRODUCTION

• All of the products Masafi sells in Saudi Arabia are imported from the UAE. Bottled water accounts for the lion’s share of these imports. The company’s boxed facial tissues are manufactured by its wholly-owned subsidiary Masafi National Company for Tissue Manufacturing, which is based in the UAE. This company only manufactures products sold under the Masafi brand. It does not produce brands under licence for third parties, nor does it manufacture private label products.

COMPETITIVE POSITIONING

• Masafi was the sixth leading company in boxed facial tissues in Saudi Arabia in 2011, claiming a value share of 1% in the category. This share was down slightly on 2010 due to increasing competition from cheaper brands with well established reputations for quality, most notably Fine and Smile from Hygienic Paper Co. Nonetheless, it was still up substantially on 2007, the year the company first entered the Saudi market. Value share gains for the company over 2007-2010 were driven by the expansion of its distribution network and a variety of marketing activities designed to raise brand awareness among local consumers.

• The company maintains a very narrow portfolio in the Saudi tissue and hygiene market. As of 2011, it was only present in boxed facial tissues. However, it has plans to expand into other categories over the forecast period.

• Masafi boxed facial tissues have a premium positioning, retailing at higher price points than most rival brands in the category.

STRATEGIC DIRECTION

• National Medical Products is expected to focus on increasing AFH sales of its disposable medical/surgical products over the forecast period. However, it will also seek to strengthen its position in the retail tissue and hygiene market by expanding its distribution network, increasing in-store promotional activities and working to improve the quality of its cotton wool/buds/pads products. Away from Saudi Arabia, the company will attempt to strengthen its presence in a number of other Middle Eastern markets.

KEY FACTS

COMPANY BACKGROUND

• National Medical Products was established in Saudi Arabia in 1979 via a joint venture with German firm Paul Hartmann. The company’s core business is the production of disposable medical/surgical products for AFH clients, most notably hospitals and healthcare institutions. It also offers cotton wool/buds/pads in the retail tissue and hygiene market. The company has a nationwide distribution network in Saudi Arabia.

PRODUCTION

• All of the company’s products are manufactured at its plant in the Second Industrial City in Riyadh. This plant is equipped with state-of-the-art technology and meets several international and domestic quality standards. For example, all products manufactured at the facility carry the Saudi Standards Organisation’s Quality Mark.

• Most of the cotton wool/buds/pads produced by the company are for the domestic market. It exports a sizeable percentage of its medical/surgical disposables output, however, mainly to neighbouring and regional countries. This side of its business is heavily focused on contracts to supply health ministries in the GCC region.

COMPETITIVE POSITIONING

• National Medical Products ranked eleventh overall in the Saudi tissue and hygiene market in 2011, claiming a very small share of total current value sales. It was the second leading player in cotton wool/buds/pads. The company’s value share in this category declined by a total of six percentage points during the review period, mainly due to growing competition from economy brands and private label products.

• In 2011 the company was only active in cotton wool/buds/pads, where it offers the Blandina brand. This brand has a strong reputation for quality that is reflected in its mid-to-high price positioning.

STRATEGIC DIRECTION

• National Paper Products Co is expected to try and strengthen its position in the Saudi tissue and hygiene market over the forecast period by expanding its product range. In particular, the company will work to develop new added value variants in categories such as sanitary protection, incontinence products, nappies/diapers/pants and kitchen towels. The company is also expected to invest heavily in advertising activities and the expansion of its distribution network.

KEY FACTS

COMPANY BACKGROUND

• National Paper Products is a privately owned company with limited liability. Established in 1956 in Dammam, today it is part of Napco Group’s consumer products division. Napco Group is in turn part of Indevco Group, and has a wide reach across the Middle East and Eastern Mediterranean regions. Napco is primarily focused on tissue and hygiene, flexible packaging and paper and board products.

• In addition to manufacturing tissue and hygiene products, National Paper Products also produces medical/surgical disposables, cling film, paper cups and various other products. Within the tissue and hygiene market, the company is a major player in both retail and AFH channels. It counts a number of government institutions among its AFH clients, as well as hospitals and healthcare facilities, restaurants, hotels, private businesses etc.

PRODUCTION

• National Paper Products produces its entire tissue and hygiene range at its facility in Dammam, Saudi Arabia. While the bulk of this facility’s output is destined for the local market, the company also exports its products to countries across the GCC region.

COMPETITIVE POSITIONING

• National Paper Products was the fourth leading tissue and hygiene player in Saudi Arabia in 2011 with a market value share of 10%. The company’s market value share declined steadily throughout the review period, mainly due to increasing competition from cheaper economy brands and private label products.

• The company maintains a broad portfolio that covers most major tissue and hygiene categories. It has nationwide distribution coverage in Saudi Arabia, and provides continuous advertising support for its brands. While most of these brands have a mid-to-high price positioning, the company also offers cheaper economy brands to appeal to low income consumers.

STRATEGIC DIRECTION

• Over the forecast period, Paper Products Co will seek to strengthen its position in the Saudi tissue and hygiene market by investing in the development of new products and working to improve the quality of its established ranges. In particular, the company will focus on the development of new added value products that offer higher quality and efficacy, greater convenience etc. The company will also invest in the expansion of its distribution network to reach more consumers across the country..

KEY FACTS

COMPANY BACKGROUND

• Paper Products is part of Shamsan Group, which was founded in 1954. Paper Products meanwhile was founded in 1983, the year which marked Shamsan’s entry into manufacturing. Prior to this move, Shamsan focused solely on imports and exports.

• The company is mainly focused on manufacturing retail tissue and hygiene products. It also produces AFH tissue and hygiene products, and is a particularly strong player in AFH paper towels and maxi rolls. Beyond tissue and hygiene, the company produces aluminium foil and cling film. It has nationwide distribution coverage in Saudi Arabia.

PRODUCTION

• The company manufactures its entire tissue and hygiene range at two plants in Riyadh, Saudi Arabia, The Lucky Baby site is responsible for the production of its nappies/diapers, sanitary protection and incontinence products, while its Paper Products site produces all other tissue and hygiene products.

• The company exports its products to a number of neighbouring and regional countries, including the UAE, Kuwait, Qatar, Bahrain, Oman and Jordan.

• In addition to producing its own brands, the company also manufacturers global tissue and hygiene brands under licence in Saudi Arabia. Most notably, it produces Georgia-Pacific brands Lotus, Okay and Vania.

COMPETITIVE POSITIONING

• Paper Products Co was the fourth leading tissue and hygiene player in Saudi Arabia in 2011 with a market value share of 10%. During the review period, the company’s market value share declined continuously due to growing competition from economy brands and private label products.

• The company maintains a wide portfolio that covers most major tissue and hygiene categories. Most of the brands in this portfolio have a mid-to-high price positioning, but the company also offers economy brands targeted at lower income consumers.

HEADLINES

• Away-from-home (AFH) tissue volume sales grow by 3% in 2011 to reach 22,300 tonnes; AFH hygiene volume sales also grow by 3%, reaching 15.7 million units

• Economic development, urbanisation, busier lifestyles and growth in inbound tourism bolster demand for AFH tissue and hygiene products

• AFH napkins, paper towels, toilet paper and wipers develop fastest, with each category showing volume growth of 4%

• Local producers continue to dominate AFH tissue and hygiene in 2011

• AFH tissue volume sales are expected to grow at a CAGR of 4% over the forecast period to reach 26,600 tonnes in 2016; AFH hygiene volume sales are also expected to grow at a CAGR of 4% to reach 19 million units in the same year

TRENDS

• The positive development of the Saudi economy was the most important factor behind rising demand for AFH tissue and hygiene products in 2011. As disposable incomes rose, Saudi consumers were able to increase spending on away-from-home leisure activities such as eating out in restaurants. This boosted demand for all kinds of AFH tissue products among horeca outlets and other on-trade operators. Urbanisation and growth in inbound tourism, two other key trends linked to economic development, further strengthened demand for AFH tissue products, not only among horeca operators but also among corporate and institutional clients. At the same time, the AFH hygiene category, which was solely represented by incontinence products, benefited as economic improvements continued to improve life expectancy rates in Saudi Arabia and encouraged higher state investment in healthcare. Population growth was also an important driver of demand for AFH products in general.

• Despite a positive performance overall, volume growth rates for AFH tissue and AFH hygiene in 2011 were both down on 2010, and also slower than the CAGRs for the entire review period. This general slowdown was mainly due to increasing maturity.

• AFH napkins, paper towels, toilet paper and wipers were the most dynamic performers in 2011, with all showing growth of 4% in volume terms. These categories were best positioned to benefit from the increase in demand for AFH products among horeca operators that accompanied rapid urbanisation, growth in inbound tourism and higher spending on leisure activities outside the home by Saudi consumers. AFH paper towels and wipers also benefited as improvements in living standards and overcrowding in major cities led to a growing focus on hygiene, particularly in horeca outlets and healthcare institutions.

• Most AFH categories saw average unit prices increase moderately in current value terms in 2011. The upward trend was mainly due to rising production or import costs and other inflationary pressures. For the most part, however, manufacturers were reluctant to pass too high a percentage of rising costs on to clients for fear of losing competitiveness. This reflected the fact that brand loyalty in AFH categories is relatively weak, with price dictating purchasing decisions in the vast majority of cases.

COMPETITIVE LANDSCAPE

• Domestic and regional producers continued to lead AFH tissue and hygiene in 2011. This was mainly thanks to their clear cost advantage over multinational players and imported brands. Most domestic players also had an advantage over foreign competitors in the form of well-established nationwide distribution networks. Hygienic Paper and National Paper Products were the leading companies overall.

• Multinationals with production facilities in Saudi Arabia also featured prominently in AFH tissue and hygiene in 2011. Companies like Olayan Kimberly-Clark, for example, were important suppliers for more upmarket clients in the horeca, business/industry and hospitals/healthcare channels. The same was true of local companies producing global brands under licence. One of the best examples was Paper Products Co, which is licensed to produce Georgia-Pacific Corp’s Lotus range in the country.

PROSPECTS

• AFH tissue and AFH hygiene are both expected to see volume sales grow at a CAGR of 4% over the forecast period. As was the case in 2011, volume growth will be sustained as economic development fuels higher consumer spending on leisure activities outside the home, growth in inbound tourism, urbanisation and increased public and private investment in horeca, business/industry, education, healthcare etc. Due to increasing maturity, however, volume growth rates are expected to be slower than those recorded during the review period.

• Forecast period is anticipated to see a higher constant value CAGR than this recorded during the review period of 3%. As population growth continues encouraging growth of urbanisation trend which in return encourages consumer to spend more time away from home, demand on all different product category will rise noticeably. Despite the expected slowdown in volume terms, constant value growth rates for most AFH categories over 2011-2016 are likely to be slightly faster than those witnessed during the review period. This will be mainly due to price hikes arising from inflationary pressures.

• AFH paper towels looks set to show the fastest development, with volume sales expected to grow at a CAGR of 6%. Together with factors like urbanisation, population growth and growth in inbound tourism, demand in this category will be bolstered as improvements in living standards and overcrowding in big cities lead on-trade, business and institutional clients to focus more on hygiene standards. This trend will also support a strong performance by AFH wipers, which is expected to see volume sales grow at a CAGR of 5%. The introduction of new AFH wipers with antibacterial properties should prove a key driver of demand in the hospitals/healthcare channel.

CATEGORY DATA

HEADLINES

• Cotton wool/buds/pads volume sales grow by 4% in 2011 to reach 400 tonnes; current value sales grow by 6% to reach SR38 million

• Demand for cotton wool/buds/pads slows slightly due to limited investment in marketing activities and new product developments

• Cotton buds products continue to account for the largest share of total current value sales

• Average unit prices for cotton wool/buds/pads increase by 2% in current value terms due to rising production costs and other inflationary pressures

• Johnson & Johnson leads cotton wool/buds/pads in 2011 with a value share of 29%

• Cotton wool/buds/pads volume sales are expected to grow at a CAGR of 4% over the forecast period to reach 500 tonnes in 2016; constant value sales are expected to grow at a CAGR of 6% to reach SR50 million in the same year

TRENDS

• Volume and current value growth rates for cotton wool/buds/pads in 2011 were down on 2010, and also slower than the respective CAGRs for the entire review period. While this slowdown was partly due to increasing maturity, it also reflected a lack of investment in advertising and new product developments. Nonetheless, a number of factors ensured that the category continued to develop positively overall. These factors included population growth and high birth rates, rising disposable incomes and the increasing participation of women (the main consumers of cotton wool/buds/pads) in the Saudi workforce. Discount campaigns and in-store promotions also helped to sustain demand for these products.

• Average unit prices for cotton wool/buds/pads increased by 2% in current value terms in 2011. This increase was mainly due to inflationary pressures such as rising production and import costs. On the whole, however, companies were reluctant to pass to high a percentage of rising costs on to consumers for fear of losing competitiveness. Given the generic nature of the products in question and the fact that advertising in the category is negligible, price is the main platform for competition in cotton wool/buds/pads. Weak brand loyalty and the fact that most consumers do not consider these products to be essential items further underline the importance of maintaining competitive prices.

• Cotton buds remained the biggest contributor to total cotton wool/buds/pads current value sales in 2011 with a share of 43%, with cotton wool and cotton pads claiming shares of 35% and 22% respectively. The larger value share of cotton buds was partly due to the fact that these products are generally more expensive than cotton wool and cotton pads. However, the leading position of cotton buds also reflected strong consumer appreciation for their convenience and versatility. Commonly used for baby care and make-up removal, high birth rates and rising disposable incomes among younger Saudi women contributed to a value share gain of one percentage point for cotton buds within this category over 2010-2011.

COMPETITIVE LANDSCAPE

• Johnson & Johnson remained the clear leader in cotton wool/buds/pads in 2011 with a value share of 29%. The company’s leading position was built on its reputation for offering high quality products, as well as its extensive distribution network in Saudi Arabia. Additionally, while the company did not invest heavily in marketing activities within cotton wool/buds/pads, strong advertising support for its Johnson’s brand elsewhere in the tissue and hygiene market undoubtedly contributed to its success in this category. National Medical Products and National Paper Products Co, which offer the Blandina and Sanita Charm brands respectively, finished joint second overall, with each company claiming a value share of 13%. Other prominent competitors in cotton wool/buds/pads included Pigeon Corp, Sisma SpA, Stafford-Miller Inc, Classic Consumer Products Co and Ba Abdul Rahman Trading Est.

• Pigeon Corp, Classic Consumer Products Co and Ba Abdul Rahman Trading all made value share gains of one percentage point within cotton wool/buds/pads in 2011. Gains for these companies were partly due to improvements in distribution, but mainly reflected the success of their competitive pricing strategies. National Medical Products was worst affected by growing competition from cheaper rivals, with its overall value share declining by three percentage points. National Medical Products not only faced an increasing competitive threat from economy brands, but also from private label products. The value share of private label products increased by one percentage point in 2011 to reach almost 3%, with gains being driven by high inflation, urbanisation and the expansion of major retail chains.

• The two leading brands Johnson and Blandina by National Medical Products, acquire together almost 42% of the value market share are international brands. This is followed by the local brand Sanita which holds the same value share like Blandina. Other local brands represented in smaller brands and private label brands which during 2011 gained further market share growing by one percentage point making 2.5% value share for others and 11% share for private label giving private label 4th rank in the market. Multinational brands continued to account for the largest share of total cotton wool/buds/pads current value sales in 2011. This was partly due to their higher prices, but also reflected the fact that they tended to benefit from wider distributon and a reputation for offering higher quality than their domestic counterparts.

PROSPECTS

• Cotton wool/buds/pads will continue to develop positively over the forecast period, with volume and constant value sales expected to grow at CAGRs of 4% and 6% respectively. Given that there is limited room for innovation in the category and that these products are generally not perceived as essential items, population increases and rising disposable incomes will be among the primary drivers of demand. Relatively high birth rates and growth in the number of Saudi women working outside the home will also fuel volume and constant value sales growth, as baby care and make-up removal are among the tasks for which cotton wool/buds/pads are most commonly used.

• Growth in cotton wool/buds/pads volume sales over the forecast period is expected to be slightly slower than that recorded during the review period. This will be mainly due to increasing maturity, though price hikes resulting from inflationary pressures may also lead some households to try and reduce their consumption of these products. Conversely, inflation and price increases mean that growth in constant value sales is expected to exceed that witnessed over 2006-2011.

• Average unit prices for cotton wool/buds/pads are expected to grow at a CAGR of 2% in constant value terms over the forecast period. Price increases will be mainly due to rising production or import costs and other inflationary pressures. However, most companies will seek to keep price increases to a minimum to avoid losing competitiveness. Given the generic nature of cotton wool/buds/pads, price is one of the key points of differentiation for individual brands in this category.

CATEGORY DATA

HEADLINES

• Volume sales of incontinence products grow by 14% in 2011 to reach 13 million units; current value sales grow by 16% to reach SR27.8 billion

• Lessening of taboos surrounding incontinence and improvements in retail distribution help to sustain strong growth in volume and current value sales

• Moderate/heavy incontinence products remain the only type available in Saudi Arabia in 2011

• Average unit prices for incontinence products increase by 2% in current value terms due to rising production costs and other inflationary pressures

• National Paper Products Co leads incontinence products in 2011 with a value share of 32%, followed by Hygienic Paper Co Ltd (Fine) with a 29% share

• Volume sales of incontinence products are expected to grow at a CAGR of 18% over the forecast period to reach 31 million units in 2016; constant value sales are expected to grow at a CAGR of 21% to reach SR71.6 billion in the same year

TRENDS

• Due to increasing maturity, volume and current value growth rates for incontinence products in 2011 were down slightly on 2010, and also slower than the respective CAGRs for the review period. However, a number of factors ensured that the category’s performance remained very positive overall. Chief among these was the continued lessening of the taboos surrounding incontinence. This meant that many incontinence sufferers were less likely to be embarrassed about buying these products. In a related trend, the lessening of taboos ensured that distribution of incontinence products continued to improve in mainstream retail channels like supermarkets and hypermarkets, health and beauty retailers and convenience stores. Demand was further strengthened by the fact that life expectancy rates in Saudi Arabia have risen consistently in recent decades, with the result that the number of incontinence sufferers in the country has steadily increased.

• Moderate/heavy incontinence products were the only type available in Saudi Arabia in 2011. This was partly due to the fact that the incontinence products category is still at a relatively early stage of development in the country, and thus has yet to experience significant diversification in terms of product types and formats. At the same time, while the numbers of Saudis who suffer from incontinence have increased steadily in recent years thanks to improvements in life expectancy, in 2011 people over 65 years old accounted for just 3% of the total population. As a result, the core consumer base for this category remained comparatively small, which further discouraged manufacturers and importers from investing in the launch of new product types and formats.

• Average unit prices for incontinence products increased by 2% in current value terms in 2011. This increase was mainly due to inflationary pressures, particularly rising production and import costs. The fact that most domestic players in this category are still relatively new to the manufacturing of incontinence products tends to push up their research and development costs.

• Incontinence products are not subsidised in Saudi Arabia. They are sometimes prescribed by doctors, but can be purchased without a prescription.

COMPETITIVE LANDSCAPE

• National Paper Products Co continued to lead incontinence products in 2011 with a value share of 32%. The company’s leading position was built on its early mover advantage in the category, but also reflected the strength of its nationwide distribution network and the high quality reputation of its Sanita Elegance brand. Similar factors benefited Hygienic Paper Co, producer of the Fine Life brand, which ranked second overall with a value share of 29%. Other prominent competitors in incontinence products included Paper Products Co, SCA Molnlycke Ltd and Lucky Baby Co.

• The top five companies within incontinence products all experienced value share declines in 2011. Overall leaders National Paper Products Co and Hygienic Paper Co each recorded value share declines of around four percentage points. This was mainly due to the growing availability of cheaper Chinese imports in Saudi Arabia. This latter trend caused the value share held by ‘others’ in incontinence products to increase by more than eight percentage points over 2010-2011.

• There was very little advertising of incontinence products in Saudi Arabia during the review period. This was partly due to the taboo (albeit one that is on the decline) that still surrounds incontinence, but also attributable to the fact that the core consumer base for this category – people over 65 years old – is quite small.

PROSPECTS

• Incontinence products will continue to develop positively over the forecast period, with volume and constant value sales expected to grow at CAGRs of 18% and 21% respectively. The gradual lessening of the taboos surrounding incontinence will continue to reduce the embarrassment that sufferers often feel about buying these products, while also paving the way for wider distribution in mainstream retail outlets. At the same time, population ageing means that the numbers of incontinence sufferers in Saudi Arabia should continue to rise steadily towards 2016.

• Due to increasing maturity, growth in volume sales of incontinence products over 2011-2016 is expected to be slightly slower than that recorded during the review period. Conversely, growth in constant value sales is expected to be slightly stronger than growth during the review period. This will be mainly due to price increases arising from inflationary pressures.

• Average unit prices for incontinence products are expected to grow at a CAGR of 2% in constant value terms over the forecast period. The upward trend will be mainly due to inflationary pressures. On the whole, however, growth in average unit prices will be restricted by increasing competition, particularly as cheaper imports from China and other countries become more widely available in Saudi Arabia.

CATEGORY DATA

HEADLINES

• Nappies/diapers/pants volume sales grow by 5% in 2011 to reach 3.08 billion units; current value sales grow by 10% to reach SR2.31 billion

• Population growth and economic development help to sustain strong demand for nappies/diapers/pants

• Newborn nappies/diapers shows the fastest growth in volume terms with an increase of 6%; junior nappies/diapers is the most dynamic performer in current value terms with growth of 13%

• Average unit prices for nappies/diapers/pants as a whole increase by 5% in current value terms due to inflationary pressures and rising demand for more sophisticated products

• Modern Products Co continues to dominate nappies/diapers/pants in 2011 with a value share of 66%

• Nappies/diapers/pants volume sales are expected to grow at a CAGR of 4% over the forecast period to reach 3.74 billion units in 2016; constant value sales are expected to grow at a CAGR of 6% to reach SR3.16 billion in the same year

TRENDS

• Nappies/diapers/pants showed an improved performance in 2011. Volume and current value growth rates for the entire category were up substantially on 2010, and also slightly faster than the respective CAGRs for the 5-year review period. This improvement was primarily due to strong population growth, but also reflected rising disposable incomes, rapid urbanisation and the growing desire for convenience in Saudi households. New launches, improvements in distribution and advertising campaigns also bolstered growth in nappies/diapers/pants volume and current value sales.

• Newborn nappies/diapers was the most dynamic category in volume growth terms in 2011, showing an increase of 6%. Aside from the high birth rates maintained in Saudi Arabia towards the end of the review period, this performance reflected rising disposable incomes, improvements in distribution, frequent price promotions and growing awareness among parents of the specific benefits that these products can have for newborn babies. Similar factors supported a strong performance by junior nappies/diapers, the fastest developing category in current value growth terms with an increase of 13%. Demand for junior nappies/diapers was also bolstered by busier lifestyles and growth in the numbers of Saudi women working outside the home. These trends meant that many mothers had less time to spend on toilet training toddlers, and so allowed them to wear junior nappies/diapers for longer.

• Average unit prices for nappies/diapers/pants as a whole increased by 5% in current value terms in 2011. This increase was mainly due to inflationary pressures, but also reflected growth in demand for higher quality products with added value benefits. These trends were most evident in disposable pants, junior nappies/diapers and standard nappies/diapers, with each category showing growth of around 9% in average unit prices. Newborn nappies/diapers meanwhile saw average unit prices decline slightly as manufacturers ran frequent discount promotions in an effort to bolster volume sales and strengthen their competitive positions.

• Disposable pants continued to perform well in 2011, showing volume growth of 2% and current value growth of 12%. While volume and current value growth rates were bolstered as sales continued to emerge from a comparatively low base, the category also benefited as busier lifestyles resulted in many parents developing a greater appreciation for the convenience of disposable pants, particularly for away-from-home usage and during the toilet training period (typically between the ages of three and four years old). Due to their high prices, however, demand for disposable pants was mainly limited to a relatively small base of more affluent urban households.

• Household penetration of nappies/diapers/pants remained very high in 2011, with these products being used in over 90% of Saudi homes with babies, infants or toddlers. During the review period, household penetration rose steadily as various factors encouraged parents to abandon traditional cloth nappies, which can be washed and used repeatedly. Most notably, rising incomes made disposable nappies/diapers/pants more affordable to consumers, while improvements in education and marketing activities made parents more aware of the specific advantages that these products have over traditional cloth nappies. In particular, advertising campaigns focused on how the superior absorbency of disposable nappies/diapers/pants can keep children dry for longer and reduce the occurrence of nappy rash. Marketing campaigns also highlighted how certain types of nappies/diapers/pants can make it easier for babies to move and shorten the toilet training period. At the same time, busier lifestyles and the growing desire for convenience also encouraged many consumers to make the switch from traditional cloth nappies to disposable nappies/diapers/pants.

COMPETITIVE LANDSCAPE

• Thanks to the global reputation for quality and innovation enjoyed by the Pampers brand, Modern Products Co continued to dominate nappies/diapers/pants in 2011 with a value share of 66%. Together with this reputation, an extensive distribution network and continuously strong TV advertising support ensured that Pampers remained the leading nappies/diapers/pants brand in Saudi Arabia by a huge margin throughout the review period. Unicharm was the second leading player overall in 2011, claiming a value share of 18% thanks to the popularity of its affordably priced Baby Joy and Moony brands. Olayan Kimberly-Clark, which offers the Huggies brand, rounded out the top three with a 6% value share. Other prominent competitors included Hygienic Paper Co and National Paper Products Co.

• Modern Products Co increased its share of total nappies/diapers/pants current value sales by almost three percentage points in 2011. This gain was underpinned by sustained investment in high profile marketing activities, most notably TV campaigns, as well as by the success of new products launched towards the end of the review period. Additionally, given the commanding lead and trusted reputation of its Pampers brand, the company was ideally positioned to benefit as rising disposable incomes encouraged more parents to trade up to higher quality nappies/diapers/pants products with added value benefits.

• Multinational brands continued to dominate nappies/diapers/pants in 2011, with domestic brands holding a very small share of total current value sales. The general preference for multinational brands evident across the tissue and hygiene market was especially strong in this category, as quality rather than price is the primary concern for most Saudi parents when buying products for their children.

• Modern Products Co continued to invest heavily in advertising support for its Pampers brands in 2011. Most notably, the company ran TV campaigns throughout the year on national and regional TV stations. TV advertisements focused on the comfort and superior protection from wetness offered by Pampers products, suggesting that they help to keep babies happier and healthier (by reducing the occurrence of nappy rash).

PROSPECTS

• Nappies/diapers/pants will continue to perform well over 2011-2016, with volume and constant value growth rates for the entire category expected to be slightly faster than those recorded during the review period. This improvement will be underpinned by high birth rates, though it will also be driven by rising disposable incomes, new launches, improvements in distribution and sustained investment in high profile advertising support for leading brands like Pampers. Moreover, with more and more women entering the Saudi workforce, increasingly busy lifestyles and the growing desire for convenience among mothers will also fuel demand for nappies/diapers/pants.

• Junior nappies/diapers and standard nappies/diapers looks set to be the most dynamic categories over the forecast period, with both expected to see volume and constant value sales grow at CAGRs of 4% and 7% respectively. These two categories will be the main beneficiaries of high birth rates, as well as of the trend that is seeing parents delay the toilet training period due to busier lifestyles, particularly in urban areas. Additionally, junior nappies/diapers and standard nappies/diapers are likely to be focal points for investment in advertising and the launch of new products with added value benefits.

• Average unit prices for nappies/diapers/pants as a whole are expected to grow at a constant value CAGR of 2% over the forecast period. The upward trend will be mainly due to rising production or import costs and other inflationary pressures. However, average unit prices will also increase as economic improvements and the growing desire for convenience among parents with busy lifestyles encourage trading up to higher quality and more expensive products that offer added value benefits.

• Increasing competition will fuel higher investment in advertising and innovation within nappies/diapers/pants over the forecast period. Manufacturers will continue to use TV advertisements to highlight the specific benefits that different product types have for children of different ages, focusing in particular on factors like comfort and movement, absorbency strength, nappy rash prevention and convenience for parents. Achieving improvements in these areas will also be a key concern for manufacturers when it comes to developing new products. Multinational brands like Pampers will continue to lead the way in terms of added value innovations of this kind.

CATEGORY DATA

HEADLINES

• Retail tissue volume sales grow by 4% in 2011 to reach 39,400 tonnes; current value sales grow by 9% to reach SR685 million

• Economic improvements, population growth and urbanisation help to sustain strong demand for retail tissue products

• Pocket handkerchiefs and toilet paper are the fastest developing categories, with both showing volume growth of 4% and current value growth of 13%

• Average unit prices for the entire retail tissue category increase by 6% in current value terms due to inflationary pressures and rising demand for higher quality products

• Hygienic Paper Co leads retail tissue in 2011 with a value share of 31%, followed by National Paper Products with a 26% share

• Retail tissue volume sales are expected to grow at a CAGR of 5% over the forecast period to reach 49,600 tonnes in 2016; constant value sales are expected to grow at a CAGR of 9% to reach SR1.03 billion in the same year

TRENDS

• Retail tissue maintained its positive development in 2011, with total volume and current value sales growing by 4% and 9% respectively. Robust demand was sustained by a number of key factors, most notably rising disposable incomes, population growth, urbanisation and the increasing desire for convenience among Saudi consumers, particularly those living in big cities. New launches, improvements in distribution, price promotions and other marketing activities also helped to sustain the development of the entire category.

• Growth in total retail tissue volume sales in 2011 was down marginally on 2010, and also slower than the CAGR for the review period. This slowdown was mainly due to increasing maturity. Conversely, growth in total current value sales was up substantially on 2010, and stronger than the 5-year average. This improvement was partly due to price hikes arising from high inflation. However, it also reflected rising disposable incomes and the growing desire for convenience, which encouraged some Saudi consumers to trade up to higher quality brands with added value benefits.

• Toilet paper and pocket handkerchiefs were the fastest developing categories in 2011, with both registering growth of 4% in volume terms and growth of 13% in current value terms. The performance of toilet paper was underpinned by population growth and increasing urbanisation, though new launches, price promotions and advertising campaigns for leading brands also contributed to strong volume and current value sales growth. Together with increasingly busy lifestyles, urbanisation was also a major driver of demand for pocket handkerchiefs. In particular, more consumers began to purchase these products as overcrowding in big cities led to growing concerns about the spread of germs and an increased focus on maintaining high personal hygiene standards. New launches, marketing activities and improvements in distribution also bolstered demand for pocket handkerchiefs.

• Average unit prices for retail tissue as a whole increased by 6% in current value terms in 2011. This increase was mainly due to inflationary pressures such as rising production and import costs. However, it was also driven by growth in demand for added value products as economic conditions improved and busier lifestyles led consumers to attach more importance to convenience. Together, these trends ensured that most retail tissue categories saw current value sales grow at significantly faster rates than volume sales.

• While pocket handkerchiefs was one of the fastest developing categories, boxed facial tissues remained the biggest contributor to total retail tissue volume and current value sales in 2011. The popularity of boxed facial tissues was mainly due to their affordability, versatility and convenience. These attributes ensured that the category continued to show healthy growth in volume and current value terms in 2011, despite its maturity. Price promotions and new product and packaging developments also helped to sustain the positive development of boxed facial tissues. In particular, consumers responded positively to new and more convenient packaging formats for use at home and in the car.

• Toilet paper products are sold in a wide variety of pack sizes in Saudi Arabia. Packs containing more than four rolls are the most popular, as larger pack sizes offer better value for money and reduce the risk that the user will run out before their next grocery shopping trip. Dry toilet paper remained dominant in 2011, as wet products were not available in the country. Demand for recycled toilet paper meanwhile remained negligible. Price and quality were the biggest concerns for most Saudis, with very few giving significant though to the environmental impact of their purchasing decisions.

• Kitchen towels was the second largest retail tissue category in volume and current value terms in 2011. Similar to boxed facial tissues, it continued to perform well despite increasing maturity, showing volume growth of 3% and current value growth of 12%. This performance was underpinned by rising disposable incomes, which made kitchen towels affordable to greater numbers of Saudi households, as well as busier lifestyles, which strengthened consumer appreciation for their convenience. Improvements in the distribution of more economical multipacks and ‘giant’ kitchen roll products with superior absorbency capabilities also bolstered demand in the category. However, kitchen roll usage was still largely confined to middle and higher income households, particularly in urban areas. In lower income households and rural areas, kitchen towels were widely perceived as luxury products, with dishcloths being favoured for mopping up spills, drying hands etc.

• Napkins continued to dominate paper tableware in 2011, as distribution of paper tablecloths remained negligible in Saudi Arabia. Growth in napkins volume and current value sales was mainly driven by the convenience trend and rising disposable incomes, though the launch of products with new colour schemes and patterns also had a positive impact on the development of the category. However, similar to the case with kitchen towels, demand for napkins was mainly confined to middle and higher income urban households. Moreover, in these households, napkins were generally only used for special occasions such as dinner parties, birthday celebrations etc.

COMPETITIVE LANDSCAPE

• Hygienic Paper Co remained the leading retail tissue player in Saudi Arabia in 2011, claiming a value share of 31%. The company’s leadership was mainly due to the high quality reputation and competitive price of its Fine brand. Thanks to its early mover advantage and strong consumer loyalty towards the Fine brand, Hygienic Paper Co ranked first in boxed facial tissues, pocket handkerchiefs and toilet paper, and finished second in napkins and kitchen towels. The company also offered the Smile and Lido brands. Smile was present in tissues and toilet paper, while Lido only competed in the latter category. National Paper Products Co was the second leading retail tissue player overall, claiming a value share of 26%. With a broad portfolio that includes trusted and competitively priced brands such as Sanita, Select, Club and New Dreams, the company ranked first in napkins and claimed second place in kitchen towels, tissues and toilet paper. Olayan Kimberly-Clark rounded out the top three retail tissue players with a value share of 22%. Thanks mainly to the quality reputation of its global brand Kleenex, Kimberly-Clark held the leading position in kitchen towels, and finished third in napkins, tissues and toilet paper. Other prominent competitors included Paper Products Co, Unicharm, Duni GmbH & Co KG and Masafi Mineral Water Co.

• Hygienic Paper Co made the biggest gain of any retail tissue player in 2011, increasing its overall value share by two percentage points. This gain was underpinned by the company’s competitive pricing strategy, but it also reflected improvements in distribution, marketing activities and the positive consumer response to new products launched earlier in the review period. These factors supported particularly strong performances by the company’s Fine brand in kitchen towels, tissues and toilet paper.

• Domestic brands performed better than international brands. Retail tissue is led by regional brand Fine which enjoys a competitive advantage of being good quality, affordable prices and wide availability. In addition, multinational brands are relatively more expensive, thus, consumers are not willing to buy them as they consider retail tissue a non-essential product. In contrast to most retail hygiene categories, domestic brands accounted for the largest share of total retail tissue current value sales in 2011. This was mainly due to the lower prices of domestic brands. With the exception of toilet paper, retail tissue products are generally not considered to be essential items. As a result, price is usually the most important factor in purchasing decisions, which favours domestic producers.

• Premium products represented in international brands such as Kleenex from Kimberly-Clark, which has a strong brand image and high price. Economy products are associated with domestic brands like Fine from Nuqul, and Sanita from National Paper Products Co. Fine brand has the biggest value share in the market followed by Kleenex for instance.

• Local and private label products are positioned in the economy segment. Both are gaining relatively higher market share year on year as consumers are price-sensitive in this product category due to wide availability and price competition between all different brands. Most domestic retail tissue brands compete in the mid-priced and economy segments. The premium price segment meanwhile is mainly populated by leading global brands like Kleenex. Private label products accounted for 1% of total retail tissue current value sales in 2011. Weak demand for private label products was partly due to persistent consumer concerns about their quality, but also reflective of the fact that most domestic brands are very competitively priced.

PROSPECTS

• The outlook for retail tissue over the forecast period is positive, with total volume and constant value sales growth rates expected to surpass those recorded over 2006-2011. A significant improvement in constant value sales growth will be mainly due to price hikes arising from high inflation. A more modest acceleration in total volume sales growth meanwhile will be underpinned by population increases, urbanisation, rising disposable incomes and the growing desire for convenience among Saudi consumers. New launches, improvements in distribution, price promotions and other marketing activities will also fuel the further development of the entire retail tissue category.

• Toilet paper is expected to be the most dynamic category in volume growth terms, with a CAGR of 6% predicted. Given the essential nature of toilet paper, strong population growth in Saudi Arabia will be a major driver of demand. Increasing price competition will also support robust growth in volume sales, but restrict growth in constant value sales. Boxed facial tissues is expected to show the strongest performance in constant value growth terms, with a CAGR of 11% predicted. While this will be mainly due to price increases, constant value sales will also be bolstered as economic improvements and other factors encourage some consumers to trade up to more sophisticated variants, eg products infused with moisturising or antibacterial ingredients.

• Average unit prices for retail tissue as a whole are expected to grow at a CAGR of 4% in constant value terms over the forecast period. While the upward trend will be partly due to stronger demand for added value products, it will mainly be due to price hikes arising from inflationary pressures such as rising production and import costs. In general, however, companies will seek to keep price increases to a minimum to avoid losing competitiveness. Price competition is likely to be most intense in toilet paper, where average unit prices are only expected to grow at a CAGR of 1%.

• Rising disposable incomes, urbanisation and the convenience trend will continue to drive the development of kitchen towels, with volume and constant value sales in the category expected to grow at CAGRs of 5% and 7% respectively. These factors will also support a positive performance by napkins, which is expected to see volume and constant value sales grow at CAGRs of 4% and 7% respectively. The growing influence of Western consumption trends in Saudi households will also help to sustain robust demand in both categories. However, the use of kitchen towels and napkins will continue to be largely restricted to middle and higher income urban homes.

CATEGORY DATA

HEADLINES

• Sanitary protection volume sales grow by 3% in 2011 to reach 15,500 tonnes; current value sales grow by 9% to reach SR857 million

• Urbanisation, improvements in distribution and better education about personal hygiene issues among Saudi women help to sustain robust growth in demand for sanitary protection products

• Intimate wipes is the most dynamic category, with volume and current value sales growing by 10% and 19% respectively

• All sanitary protection categories see average unit prices increase moderately in current value terms due to inflationary pressures and growth in demand for more expensive products

• Modern Products Co remains the clear leader in sanitary protection in 2011 with a value share of 48%, followed by Olayan Kimberly-Clark Arabia Co with a 29% share

• Sanitary protection volume sales are expected to grow at a CAGR of 3% over the forecast period to reach 18,100 tonnes in 2016; constant value sales are expected to grow at a CAGR of 4% to reach SR1.05 billion in the same year

TRENDS

• Sanitary protection maintained its positive development in 2011, with factors like population growth, rising disposable incomes, improvements in distribution and new product launches helping to sustain healthy growth in volume and current value terms. Urbanisation, busier lifestyles and rising awareness of the importance of maintaining proper personal hygiene standards among Saudi women also drove demand for sanitary protection products. Growth in total current value sales was up on 2010, and also faster than the CAGR for the entire review period. This increase was partly due to price hikes resulting from inflationary pressures, but also reflected rising demand for more sophisticated products with added value benefits. Conversely, growth in total volume sales was slightly slower than in 2010, and also fell below the 5-year average. This slowdown was mainly due to increasing maturity, particularly in the largest category of standard towels with wings.

• Intimate wipes showed the fastest development in 2011, with volume and current value sales growing by 10% and 19% respectively. While volume and current value growth rates were bolstered as sales continued to emerge from a relatively low base, the category also benefited from trends like urbanisation and busier lifestyles. These trends helped to increase appreciation for the on-the-go freshness offered by intimate wipes among many Saudi women, particularly younger female consumers. Improvements in distribution, marketing activities and new launches also contributed to the dynamic performance of intimate wipes.

• Ultra-thin towels was the second most dynamic category overall in 2011, showing volume growth of 4% and current value growth of 14%. This strong performance was underpinned by growing consumer appreciation for the convenience and comfort of these products, which can be used during the day or at night. Similar to the case with intimate wipes, the increasing popularity of ultra-thin towels among younger Saudi women (a growing demographic) was a key driver of growth in volume and current value sales. Other factors that contributed to the positive performance of this category included urbanisation and busier lifestyles, new product developments, targeted advertising campaigns and improvements in distribution.

• Average unit prices increased moderately in current value terms in all sanitary protection categories in 2011. The upward trend was partly due to inflationary pressures, but was also driven by rising demand for higher priced products that offered added value benefits such as greater convenience or comfort.

• Tampons remained a niche category in 2011, with volume sales reaching just 1.7 million units. As is the case in many Muslim countries, Saudi women are generally reluctant to use tampons for religious and cultural reasons. As a result, demand for these products in Saudi Arabia is largely confined to Western expatriates, while distribution is limited and marketing activities are negligible. Digital tampons continued to dominate the category in 2011, claiming a value share of 70%. This dominance was partly due to their lower prices, but also reflected the fact that digital brands like Johnson & Johnson Inc’s o b were more widely distributed than applicator tampons brands like Tampax from Procter & Gamble Arabia.

COMPETITIVE LANDSCAPE

• Modern Products Co maintained its commanding lead in sanitary protection in 2011 with a value share of 48%. The company was the clear leader in standard and ultra-thin towels thanks to the success of its Always brand. Always has a high quality reputation, is affordable to most Saudi women and is widely distributed across the country. It is also continuously advertised on national TV stations. Modern Products Co was also the number one player in pantyliners, where it offers the Always Alldays brand. Olayan Kimberly-Clark Arabia Co, which offers the Kotex range, was the second leading sanitary protection player in 2011 with a value share of 29%. National Paper Products Co finished third with a value share of 11% thanks to the combined strength of its Private, Fam, Relax and Freshdays brands. Other prominent competitors included Paper Products Co, Hygienic Paper Co Ltd (Fine), Unicharm Gulf Hygienic Industries Ltd, Johnson & Johnson and Procter & Gamble.

• Company value shares within sanitary protection remained fairly stable in 2011, with no players registering major gains or losses. Among the leading companies, Olayan Kimberly-Clark and National Paper Products Co both recorded modest gains in their overall value shares. Olayan Kimberly-Clark’s gain reflected increased advertising support for and improvements in the distribution of its Kotex brand. The company also benefited as rising disposable incomes encouraged some Saudi women to trade up to higher quality and more reputable multinational brands. Conversely, the value share gain for National Paper Products Co was mainly due to rising demand for more affordable domestic products like those in its Private and Fam ranges as high inflation made consumers increasingly price sensitive. Together with aggressive discount promotions for its Always brand, competition from cheaper domestic brands was one of the main reasons why leading sanitary protection player Modern Products Co saw its overall value share decline by almost one percentage point in 2011.

• Multinational brands continued to dominate sanitary protection in 2011. Always and Kotex, the top two brands overall, together accounted for almost 75% of total current value sales. The general preference for multinational brands was mainly due to their strong global reputations for quality and efficacy, reliability, comfort etc. Such attributes are especially important in sanitary protection due to the intimate nature of the products in question. The dominance of multinational brands also reflected the fact that many enjoyed early mover advantages in key sanitary protection categories, and generally benefited from stronger advertising support than their domestic counterparts.

• Always from Modern Products Co remained one of the most heavily advertised sanitary protection brands in Saudi Arabia in 2011. Most notably, the brand was continuously advertised on national and regional TV stations throughout the year. TV advertisements highlighted the comfort and superior protection offered by Always products.

• The value share of private label products within sanitary protection remained marginal in 2011. This share was up on 2010, however, partly due to the expansion of retail chains offering private label products but also because high inflation made some consumers more price sensitive. Nonetheless, demand remained very weak overall, as most consumers were not convinced that private label products could provide the same levels of comfort, protection and absorbency as branded alternatives. These concerns discouraged many consumers from even buying private label products on a trial basis.

PROSPECTS

• The outlook for sanitary protection over the forecast period remains favourable, with healthy growth in total volume and constant value sales predicted. Together with population growth, the main factors driving demand for sanitary protection products will be economic development and improvements in living standards, urbanisation, busier lifestyles and rising awareness among Saudi women of the importance of maintaining proper personal hygiene standards. New launches, advertising activities and improvements in the distribution of sanitary protection products will also drive volume and constant value sales growth.

• Growth in total sanitary protection constant value sales over the forecast period is expected to be stronger than that recorded over 2006-2011. While this will be mainly due to price hikes arising from inflationary pressures, constant value growth will also be bolstered by rising demand for more sophisticated added value products as economic conditions improve and Western consumption trends exert an increasing influence on the purchasing habits of Saudi women. Conversely, growth in total sanitary protection volume sales over 2011-2016 is expected to be slower than that witnessed during the review period. This slowdown in volume sales growth will be mainly due to increasing maturity.

• Intimate wipes looks set to remain the fastest developing category, with volume and constant value sales expected to grow at CAGRs of 8% and 9% respectively. While this is partly because it is still emerging from a low base, the category will continue to benefit from busier lifestyles and the growing desire for convenience among Saudi women, as well as rising disposable incomes and improvements in living standards. New launches, improvements in distribution and marketing activities will also drive demand for intimate wipes. The same factors should support robust growth in volume and constant value sales for ultra-thin towels, which is expected to be the second most dynamic category overall.

• Intimate wipes, tampons, standard towels without wings and ultra-thin towels are all expected to see average unit prices increase slightly in constant value terms over the forecast period. The upward trend will be largely due to inflationary pressures, but will also be driven by rising demand for higher quality products with added value benefits. For the most part, however, companies in these categories will seek to keep price hikes to a minimum in order to avoid losing competitiveness. Pantyliners and standard towels with wings meanwhile are both expected to see average unit prices decline slightly in constant value terms. This will be mainly due to price promotions by manufacturers seeking to improve their positions within these categories and resist growing competition from other product types, particularly ultra-thin towels.

• Increasing maturity coupled with inflationary pressures will lead to more intense competition in sanitary protection over the forecast period. This is likely to result in more aggressive discount promotions, as well as increased investment in in-store promotions and the introduction of larger pack sizes that offer better value for money. Domestic and regional producers will be best positioned to benefit from increasing price consciousness among consumers, though this advantage will be mitigated by the general perception that their products cannot match global brands in terms of quality. Multinational companies meanwhile will attempt to justify the higher prices of their brands by investing in innovations that offer greater comfort, protection, convenience etc. Multinationals will also respond to more intense competition by stepping up mass media advertising support for their brands.

CATEGORY DATA

HEADLINES

• Wipes volume sales grow by 3% in 2011 to reach 133,000 tonnes; current value sales grow by 12% to reach SR85 million

• Economic development, urbanisation and improvements in retail distribution continue to bolster demand for wipes

• Intimate wipes is the most dynamic category, showing volume growth of 10% and current value growth of 19%

• Average unit prices in all wipes categories increase moderately in current value terms due to inflationary pressures and rising demand for more sophisticated products

• Johnson & Johnson Inc leads wipes in 2011 with a value share of 25%, followed by Playtex Products Inc with a 12% share

• Wipes volume sales are expected to grow at a CAGR of 4% over the forecast period to reach 159,000 tonnes in 2016; constant value sales are expected to grow at a CAGR of 6% to reach SR116 million in the same year

TRENDS

• Wipes continued to show healthy growth in volume and current value terms in 2011. Economic development was one of the main factors behind the category’s positive performance, with rising disposable incomes helping to make wipes more affordable to greater numbers of consumers. The related trend of rapid urbanisation was also a major driver of demand. Overcrowding in big cities made consumers more conscious of the need to maintain high standards of cleanliness and personal hygiene, while busier lifestyles ensured that more and more urban dwellers came to appreciate the convenience and versatility of wipes. New launches, improvements in distribution, price promotions and other marketing activities also helped to sustain robust growth in total volume and current values.

• Growth in total wipes volume sales in 2011 was down slightly on 2010, and also below the CAGR for the entire review period. This slowdown was largely due to increasing maturity, though it is also likely that price increases hampered volume growth to some extent. Conversely, price hikes resulting from inflationary pressures ensured that growth in total current value sales surpassed that for 2010 and the CAGR for the review period as a whole. Current value sales were also bolstered as economic improvements, new launches and marketing activities encouraged some consumers to trade up to more sophisticated products with added value benefits.

• Intimate wipes showed the fastest development in 2011, with volume and current value sales growing by 10% and 19% respectively. While this was partly due to its ongoing emergence from a relatively low base, the category also benefited from growing appreciation for the convenience of intimate wipes among female consumers with busy lifestyles in urban areas. Growth in the numbers of young Saudi women working outside the home was a key driver of demand in this regard. New launches, improvements in distribution and advertising campaigns for leading intimate wipes brands also fuelled growth in volume and current value sales.

• Average unit prices in all wipes categories increased moderately in current value terms in 2011. The upward trend was mainly due to inflationary pressures such as rising production and import costs, but also reflected growth in demand for higher quality products with added value benefits. This latter trend was supported by rising disposable incomes and the growing desire for convenience among Saudi consumers.

• Baby wipes remained the single largest category in 2011, accounting for 48% of total wipes current value sales. Despite its maturity, baby wipes continued to perform well, showing volume growth of 5% and current value growth of 14%. This positive performance was partly due to the high birth rates witnessed in Saudi Arabia towards the end of the review period, but also reflected the fact that baby wipes are commonly used by adults for personal hygiene purposes and everyday cleaning tasks.

• Starter kits/sweepers/sticks (dry electro-static) showed slightly faster growth in volume and current value terms than wipes and refills (dry electro-static) products within the home care wipes and floor cleaning systems category in 2011. This was partly due to improvements in the distribution of starter kits/sweepers/sticks, but also reflected the positive consumer response to price promotions and attractive retail displays for these products, which are often purchased on impulse.

COMPETITIVE LANDSCAPE

• Johnson & Johnson remained the clear leader in wipes in 2011, claiming a value share of 25%. The company held the leading position in baby wipes, the largest category overall, thanks to the high quality reputation of its Johnson’s Baby brand. It also ranked first in facial cleansing wipes thanks to the combined strength of its Johnson’s and Clean & Clear brands, as well as in intimate wipes, where it offers the Carefree brand. Aside from an early mover advantage in these categories, Johnson & Johnson’s overall lead in wipes was also attributable to its extensive distribution network, consistently strong marketing support for its brands and frequent introduction of new added value products. Playtex Products Inc, which offers the Chups, Wet Ones and Diaparene brands, was the second leading wipes player overall with a value share of 12%. The company finished second in general purpose wipes and third in baby wipes. Pigeon Corp rounded out the top three with a value share of 11%. It ranked second in baby wipes, where it offers products under the Pigeon brand. Other prominent competitors in wipes included Reckitt Benckiser Arabia FZE, Modern Products Co, Beiersdorf AG, Olayan Kimberly-Clark, Velida Inc and Procter & Gamble.

• Johnson & Johnson made the biggest gain of any company within wipes in 2011, increasing its overall value share by almost one percentage point. Thanks to its early mover advantage and leading position in a number of key categories, the company was ideally positioned to benefit as rising disposable incomes encouraged trading up to higher quality multinational brands, and busier lifestyles strengthened consumer appreciation for the convenience of wipes in general. Continuous advertising support for its brands in the form of TV campaigns and in-store promotions also contributed to the company’s value share gain, as did the positive consumer response to new products launched towards the end of the review period. Similar factors supported more modest gains for a number of other leading players, including Pigeon Corp, Reckitt Benckiser, Modern Products Co, Beiersdorf and Olayan Kimberly-Clark.

• Multinationals continued to dominate wipes in Saudi Arabia in 2011, with the share of total current value sales help by domestic brands remaining very low. The dominance of multinational brands was partly due to their early mover status and high profile advertising support. Additionally, most Saudi consumers perceive multinational brands as superior to domestic competitors when it comes to quality and added value benefits.

• 2011 saw Abu Dawood Industrial Co add a new product to its Clorox all purpose cleaning wipes range. The new variant claims to attack cold and flu viruses, which should appeal to people living in overcrowded cities and families with young children.

PROSPECTS

• The outlook for wipes remains favourable, with robust growth in total volume and constant value sales predicted for the forecast period. As was the case in 2011, rising disposable incomes and improvements in distribution will make wipes products affordable and accessible to more and more consumers. At the same time, urbanisation, busier lifestyles and rising awareness of the importance of maintaining high standards of cleanliness and personal hygiene will strengthen consumer appreciation for the convenience and benefits of wipes in general. New launches and sustained investment in advertising support for leading brands will also drive growth in total volume and constant value sales.

• Growth in total wipes constant value sales over 2011-2016 is expected to surpass that recorded during the review period. This improvement will be partly due to growth in demand for more sophisticated products with added value benefits, but will mainly reflect price increases arising from inflationary pressures. Together with price hikes, increasing maturity means that growth in total wipes volume sales is expected to be considerably slower than that witnessed over 2006-2011.

• Intimate wipes will remain the fastest developing category overall, with volume and constant value sales expected to grow at CAGRs of 8% and 9% respectively. Aside from the fact that sales in this category are still emerging from a relatively low base, volume and constant value growth rates will continue to be bolstered by improvements in distribution and growing consumer appreciation for the convenience of intimate wipes among Saudi women with busy lifestyles. As was the case in 2011, growth in the numbers of younger urban women working outside the home will be a key driver of demand for intimate wipes. New added value launches, word-of-mouth recommendations among target consumers and strong marketing support for Johnson & Johnson’s dominant Carefree brand will also help to sustain the dynamic performance of this category.

• Average unit prices in most wipes categories are expected to increase moderately in constant value terms over the forecast period. The upward trend will be partly due to growth in demand for more sophisticated variants with added value benefits, but will be largely driven by inflationary pressures such as rising production and import costs. On the whole, however, growth in average unit prices will be limited by increasing competition, which will result in more frequent and aggressive discount promotions. In facial cleansing wipes, for example, average unit prices are expected to decline slightly as companies use discount promotions to try and strengthen their positions within the category and reduce the competitive threat from baby wipes, which are commonly used for the same purpose.

• As competition in wipes intensifies, multinationals and domestic players alike are expected to step up investment in the development of new added value products, as well as in providing advertising support for their existing ranges. Thanks to their superior financial resources and international experience, global players like Johnson & Johnson will have an obvious advantage in this regard. With high inflation making many consumers more price sensitive, however, there are also opportunities for domestic companies to make gains, provided they can improve the quality of their products without significantly weakening their historical price advantage.

CATEGORY DATA

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Overview

Discover the latest market trends and uncover sources of future market growth for the Tissue and Hygiene industry in Saudi Arabia with research from Euromonitor's team of in-country analysts.

Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.

If you're in the Tissue and Hygiene industry in Saudi Arabia, our research will save you time and money while empowering you to make informed, profitable decisions.

When you purchase this report, you also get the data and the content from these category reports in Saudi Arabia for free:

• Away-from-home tissue and hygiene
• Cotton wool, buds, and pads
• Incontinence
• Kitchen towels
• Nappies, diapers, and pants
• Paper tableware
• Sanitary protection
• Tissues
• Toilet paper
• Wipes

The Tissue and Hygiene in Saudi Arabia market research report includes:

• Analysis of key supply-side and demand trends
• Historic volumes and values, company and brand market shares
• Five year forecasts of market trends and market growth
• Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

• What is the market size of Tissue and Hygiene in Saudi Arabia?
• What are the major brands in Saudi Arabia?
• What are the most dynamic tissue and hygiene categories?
• What are the major markets for tissue products sales?
• What are the major markets for hygiene products sales?

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This industry report originates from Passport, our Tissue and Hygiene market research database.