Tissue and Hygiene Quarterly Statement Q2 2018

Forecast upgrade signals ongoing opportunities for growth

The second quarter update indicates positive upgrade across the majority of markets and categories, reaffirming the positive growth trajectory for retail tissue and hygiene. Improved macro-economic indicators in markets like Egypt are among the factors behind the upgrade. However, persistent concerns and significant pricing pressures continue to affect industry revenues in certain markets, such as South Africa, which shows a downgrade in projections.

Trump policies and NAFTA markets –significant negative impact if policies come into full effect

Ongoing uncertainties about policy changes by the US administration continue to raise concerns over their potential impact on the industry. Euromonitor International’s forecast scenario points to a potentially sizeable negative impact of such policies, especially in US and Mexico. The probability of the full implementation of such policies, however, remains low for now.

Creating platform for better pricing trend –Essity prioritises profitability

As costs of pulp and other materials continue to rise, pricing pressures are becoming increasingly problematic for the industry’s margins, leading some of the players to raise prices in certain markets and regions. Price increases are typically also backed by value-added innovation. Essity has been particularly focused on prioritising profitability, and has succeeded in increasing prices of tissue in Asia Pacific, and is putting up prices in Western Europe.

Higher price for the right features –differences in consumer preferences to position products correctly

Essity’s efforts to improve pricing trends might create a positive environment for the industry to implement similar strategies. It is important, however, to consider market-specific consumer preferences when it comes to features consumers are willing to pay for, such as a preference for environmentally friendly features in China but more emphasis on high quality and performance in the UK.