Tissue and Hygiene Quarterly Statement Q2 2018

Strategy Briefing

About This Report

May 2018

The industry forecast update for retail consumer tissue and disposable hygiene reaffirms the positive growth trajectory ahead and signals further opportunities for manufacturers of branded and private label products. The report outlines the extent of the upgrade to the industry growth projections, opportunities in select categories, and strategies to improve retail pricing trends in the context of continuing rises in raw material costs that are putting pressure on industry margins.

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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.

Introduction

Scope

Q2 Macroeconomic Update

Executive summary
GDP forecasts : revisions over last quarter
Global risk scenarios
Major macro risks for tissue and hygiene industry

Q2 Tissue and Hygiene Industry Update

Key findings
Updated quarterly forecast: rise in projected g rowth
Economic recovery aids positive view of industry projections
South Africa continues to struggle
Trump policies and impact on NAFTA countries
Opportunities in disposable pants
Opportunities in value-added tissue
Essity prioritises profitability and seeks better pricing in retail tissue
Understanding drivers of growth: impact of pricing on demand
What consumers are willing to pay for: higher price for the right features
Takeaways

About Our Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models