SCA entered the Mexican tissue market in 2005 with the acquisition of the former Mexican company Copamex. Mexico is a highly competitive market with significant players such as Kimberly-Clark and Procter & Gamble established in the region. Two years ago Georgia-Pacific made its entrance and recently CMPC began competing. This range of competition makes Mexico one of the most competitive tissue markets worldwide. The tissue business is highly consolidated with the top three competitors accounting for 90% of total market.

The Mexican tissue market is large, with an annual consumption of around 900,000 tons. This translates to one of the biggest consumptions per capita among developing countries (8.4 kg/capita). The Mexican population consists of 107 million people that cover a broad geography. The distance from one end of Mexico to the other is greater than that from Paris to Moscow. This has resulted in wide consumer preferences based on geography. For instance, Mexicans in the north don't like the same beer as those in the south, or of those in the east or west; the same happens with toilet tissue products.

SCA has three tissue plants in Mexico: in the México City suburbs, in Nuevo León State and Michoacán State. SCA's current installed capacity is 162,000 tons annually which represents 15% of total capacity in the country.

SCA sells consumer and AFH tissue products. On the consumer side, the SCA brands are Regio, Lovly, Sottis and Flen. SCA also sells the global Tork away-from-home brand in Mexico.

Mexico, like much of Latin America, has two primary channels for consumer sales: the modern trade; and the traditional trade. The modern trade includes large supermarkets and retailers similar to what are seen in Europe and the US. SCA México is one of the most important commercial partners of leading retailers such as Wal-Mart or Comercial Mexicana, among others. The traditional trade, sometimes referred to as 'Mom and Pop stores', accounts for about half of consumer sales and is an important channel that SCA has developed. There are an estimated 500,000- 800,000 traditional trade outlets in Mexico. SCA approaches this channel strategically S and has had success in developing tissue products specific to the channel such as Rinde Mas.

A recent example can be seen with SCA's Regio R3, the only three-ply bath tissue on the market in Mexico. Through research, SCA learned that consumers do not like the lint residues from some toilet papers. Its research shows that Mexicans are extremely concerned with hygiene and as such focus on the hygienic nature of products (SCA Hygiene Matters Report). Based on this consumer input, the company worked to reduce the lint residue in its product. The result, it says, is a more hygienic product in Regio R3.

It supported this product launch with what it terms a "highly successful" advertising campaign called "hygiene toilet paper or lint" in which a well-known Mexican actress demonstrated the problem with lint and how Regio R3 was different. This campaign recently won the Mexican Effie Award, which recognizes the most creative and effective ad campaigns.

"This is a triumph that makes us feel very proud. We have been consistently working to develop and improve our relationships with Mexican and Central American consumers, building stronger brands," said Costa in relation to the achievement.

This also reflects the fact that, even though Regio R3 is a local brand, it has been able to strongly increase its competitiveness and gain market share against some of the most important global brands.

The focus on consumer insight has driven the development of a wide range of tissue products to meet the needs of various consumer segments. SCA has licensing agreements that allows it to produce facial tissue featuring well-known and well-loved characters. It also produces seasonal and holiday packages, which are very popular with consumers.

"Mexican consumers are very meticulous, always looking for the best deal, good quality products with attributes such as softness, resistance and absorption. They are very eager to try new products that can give them real benefits," SCA comments . "The brand is very important. A high percentage of consumers already know the brand they are going to buy before they get into the store. As buying power increases we have seen an 'uptrading' effect, consumers migrating to premium brands." Retail brands in Mexico account for around 12% of total market, a much smaller percentage than in developed countries.