Tissue and Hygiene: Quarterly Statement Q4 2016

Tissue and disposable hygiene products retail market remains relatively stable

While the fourth quarter shows a degree of downgrade in expected performance, the extent of the downgrade remains minor, accounting for less than 1% of the total projected retail sales (in absolute value) of consumer tissue and disposable hygiene in 2020.

Much coveted and the largest product category –diapers-remains promising

Nappies/diapers/pants -the largest category in disposable hygiene -remain attractive, with healthy growth coming from developing markets. A forecast downgrade, chiefly due to still negative GDP projections in some markets, represents only a minor concern. Improved GDP expectations in the medium to long term will support further category performance.

Adult incontinence stays its course

The adult incontinence category remains the most dynamic of the disposable hygiene industry. Higher incomes, better consumer awareness and more product variety support growth in the developed countries. On the other hand, Brazil leads the downgrade in absolute value terms in the developing markets. The situation is expected to improve in the medium to long term as economic recovery takes hold.

Consumer tissue -a mixed impact of GDP and demographic trends

The Q4 update reflects the impact of GDP per capita and demographic trends on consumer tissue performance across categories. Kitchen towels sees a downgrade, and Brazil indicates the strongest downward revision in % CAGR terms led by still weak GDP performance. On the other hand, the United Arab Emirates sees an upgrade in expected performance of facial tissue which is supported by improved demographic projections.

China -the largest global market -remains attractive despite minor downgrade

While China sees a slight downgrade in 2016 and 2017 retail value projections, this will be more than offset by positive outlook from 2018 to 2020. The country is attractive due to a still significant unmet potential, strong impact of habit persistence and relatively healthy GDP trend, all providing a solid platform for future industry growth.