17 April 2006 00:00 [Source: ICB Americas]
THE US market for household paper products inked a 5% increase in sales to $13.6 billion in 2005, driven by increased pricing initiatives and product innovation.
According to a new report from Packaged Facts, the market for toilet paper, facial tissues, paper towels, napkins and disposable cups and plates is expected to grow to $13.9 billion by 2010, bolstered by increased demand for upscale, ultra-hygienic and high-profile licensed products.
“This highly matured market rebounded after it reached a five-year low at $13.07 billion in 2004,” says Don Montuori, publisher of Packaged Facts. “Sales has grown, mostly due to higher pricing and more sophisticated product rather than increased sales and deeper market saturation.”
The toilet tissue category accounts for the biggest share of the market at 42% followed by paper towels at 27%. Montuori notes that innovations in the napkin, facial tissue and cups and plates sectors show the biggest promise for actual consumer growth and deeper household use.
“While toilet tissue and paper towels continue to lead the way in sales, the real challenge for marketers is to increase their customer base in other sectors where there is still significant room for growth,” adds Montuori. “Hypo-allergenic and antiviral products are clearly beginning to make a dent. The introduction of through-air-drying, which provides better softness and absorbency has also fared well for those who’ve introduced it into their products.”
In the toilet tissue category, sales increased 6% to $3.5 billion in 2005 although volume sales declined 5%, according to ACNielsen. The market data provider reports total sales for paper products (excluding Wal-Mart sales) consisting of toilet tissue, paper towels, facial tissue and paper napkins at $7.3 billion, up 5% from 2004 sales.
“Both Procter & Gamble and Kimberly-Clark, which respectively occupy 29% and 28% of the total paper products market, raised their paper products prices in 2005 because of higher pulp prices,” says Citigroup Investment Research analyst Wendy Nicholson. “Pulp prices remained under pressure this year, which led to further announcement of price hikes for paper products. P&G raised its toilet tissue and paper towels prices by 7% this January while Kimberly-Clark raised the price of its toilet tissue, paper towels and napkins by 6% in February.”
Pulp prices are expected to increase over the next several months but will come under pressure in late 2006 to 2007, reports Citigroup. Pulp prices already rose globally in February and some increases were also announced in March.
Like the toilet tissue category, sales of paper towels and facial tissue increased last year. Paper towels sales rose 4% to $2.3 billion while volume sales were flat. Dollar sales of facial tissue increased 7% to $1.1 billion, says ACNielsen. Volume sales fell 2%.
For paper napkins, sales declined 1.3% to $456 million in 2005. Volumes declined 5%. “Private-label continued to lead the category with a significant 35% share,” says Nicholson. “Koch Industries, which acquired Georgia-Pacific in December, holds 30% of the market, while P&G (9%), Kimberly-Clark (6%), Marcal (5%) and others (15%) occupy the rest of the market category.”
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