A mixture of domestic
and local companies
currently dominate
tissue products in Brazil, with three major manufacturers vying
for position across all categories. International company Kimberly-Clark
Brasil Indústria e Comércio de Produtos de
Higiene Ltda
and local players Santher - Fábrica de Papel Santa Terezinha SA and
Melhoramentos Papéis Ltda take the top three spots in all tissue
product
sectors except kitchen towels, in which Melhoramentos Papéis is pushed
into fourth place by local company Mili SA.
As a result of fierce competition from other local manufacturers at
the value and standard end of the spectrum, in 2008 all three major
manufacturers shared a similar focus across the tissue product categories,
concentrating on the premium end of their ranges and adding value to
their products, focusing on both performance and packaging.
TOILET LUXURY
As would be expected, toilet paper remains the largest tissue product
category, worth Rs3.3 billion (about $1.6 billion) in 2008, according
to
Euromonitor International figures. Toilet paper also showed the strongest
growth, with value sales up 18% on the previous year, driven largely
by
strong sales of luxury toilet paper, which rose by 24%. Rising disposable
incomes meant that many consumers traded up, driving growth in the
subsector, but this was not at the expense of standard and economy brands,
which grew as consumers lower down the income ladder entered the sector
for the first time.
Kimberly-Clark leads the way in the sector with a 24% value share
based on sales of its Neve luxury toilet paper and Scott standard brand.
However, domestic manufacturers have seen shares rise and are beginning
to threaten Kimberly-Clark's position. Second-placed Santher, in particular,
has significant sales across the standard and luxury segments with its
Personal brand. In light of the rising challenge, in 2008 Kimberly-Clark
invested in marketing its Neve brand for the first time in three years,
slightly gaining market share as a result.
handkerchiefs were also to blame.
Innovation from all of the major players largely centred around the
packaging of boxed tissues, which make up the bulk of sales. Manufacturers
invested in box design to position the products as decorative items for
the
home. Kimberly-Clark's Kleenex brand released boxes featuring horoscope
designs, flowers and Disney princesses, while Melhoramentos Papéis
launched Softy's with designs that celebrated the 50th anniversary of
Bossa Nova.Kimberly-Clark's designs, however, proved most popular
and the company increased its share by almost 2% as a result, although
Melhoramentos Papéis remains by far the leading player with a 51%
share.
Innovation in packaging is likely to continue to drive the sector, and
average annual growth of 3% is expected until 2013. Manufacturers must
also focus on gaining the consumers who currently use toilet paper as
a
replacement for facial tissues - a common trend in Brazil - and adding
to
the sector's consumer base. The three major manufacturers, which all
own
brands in both categories, may however be well-placed to launch a spinoff
facial tissue of an established toilet paper product to encourage
crossover, although this does run the risk of cannibalisation.
Sales of kitchen towels were slower in 2008 than the previous year, but
still performed well, with the category growing by 8% in value terms.
Again, the major manufacturers focused on packaging innovation,
while also emphasising their products' absorbency and durability as a
means of adding value.
Second-placed Kimberly-Clark gained share by segmenting Scott
kitchen towels into Scott Alimentos, focusing on absorbing excess oil
from fried food, and Scott Duramax, a stronger, reusable product. Despite
Kimberly-Clark's innovations, local manufacturer, Santher leads the way
with its Snob brand currently holding a 19% share. Snob also competes
on performance, claiming to be the most durable towel when wet. Kimberly-
Clark's products are, however, priced lower than the Snob brand, which
may stand the company in good stead to grow share further, especially
in turbulent economic times. Melhoramentos Papéis, meanwhile, launched
Kitchen Multi to stimulate usage outside the kitchen, with towels packaged
in decorative leather and wood-look cartons. However, problems with
distribution meant the product made little impact. Despite the major
players' investment in value-added products, these innovations had little
impact, with unit prices remaining fairly static, and the healthy average
annual sales growth of 7% that is predicted to 2013 will continue to
be
driven by standard products.
Paper tableware grew by 5% in value terms to reach Rs94 million in
2008, which is unusual in a sector that is generally marked by volume
Despite the economic downturn, toilet paper sales will continue to
show strong, albeit softer growth, with a CAGR of 8% predicted to 2013.
Manufacturers are expected to continue to focus on adding value to their
luxury products, which are expected to remain the strongest performers
in the sector.
Facial tissues showed the most sluggish sales growth in 2008, declining
by 13% in current value terms to stand at Rs41 million. The sector suffered
in part because of a warm winter, while consumers opting for cotton
growth. The sector performed much better than the previous year and
this
was again driven by value-added products from the major manufacturers.
All of the three major manufacturers focused on growing value sales
through decorative napkins targeting special occasions, birthdays
and
Christmas for example, and sold at a higher price point. Melhoramentos
Papéis released Lips Fiesta double-ply napkins in a rectangular
shape with
a different fold for added convenience, while Kimberly-Clark and
Santher
also included decorative napkins under the Scott Estilo and Snob
Gala
brands respectively.
Sales of paper tableware are expected to increase on average by 2.5%
a year, to reach Rs106 million in 2013, with value-added products
likely
to drive this modest performance. Increasing value sales through
premium
products in the long term will, however, be a challenge, as by nature
they
are only purchased for special occasions. However, occasions could
be
expanded to include barbecues and Carnival, for example. To grow
this
sector further, manufacturers need to target promotions and point-of-sale
activity at key times of the year. Besides the decorative products,
major
players must also emphasise the economy of double-ply compared to
single-ply.
SHAKE-UP?
In terms of per capita spend, Brazil is still extremely low, showing
there is plenty of room for growth. Since there are few differences
between
the actual products produced by the three major manufacturers or
their
recent innovations, the strength of the brand and how manufacturers
promote their products are the key factors in increasing future value
sales
and share in a fiercely competitive market.
However, 2009 may well bring a shake-up. Parent company Cia
Melhoramentos announced last year that it is looking to sell Melhoramentos
Papéis and the sale has attracted much interest from both
multinational
and domestic companies, including Procter & Gamble do Brasil
SA, which
does not currently have a paper products portfolio in the country,
and the
already-established Kimberly-Clark and Santher, as well as investment
banks and a Chilean paper products manufacturer, CMPC. The sale will
almost certainly have an impact on market shares and may well shape
the
direction of any innovation across the categories.
TW
| Magdalena Kondej is Head of
Research for Household Care, Euromonitor International |
|
