Is US tissue usage startingto decline?
Not just starting. It has been declining, notably insome AfH grades, for more than a decade

By Andrew Battista

The relatively high per capita consumption of tissue products in the United States is of course well documented, but the amazing fact is that this measure of demand continues to grow. The rate of growth in the usage rate (kg/person per year) seems to be edging down from around 2% per year in the mid-1980s to just over 1% per year more recently. But the compounded gains amount to something quite remarkable for a market in which product penetration has been close to 100% for years. Since 1970, we estimate a 46% rise in volume demand per person, from 15.8 kg/person to 23.3 kg/person (including industrial applications)in 2006. Tissue consumption growth in the United States comes primarily through quality upgrades and population growth – and the latter of thes etwo drivers works against the usage rate.

However, we live in an era in which escalating fiber costs force tissue producers to consider downsizing product dimensions. Ideally, we would also analyze consumer behavior with respect to area (sheet surface area and count), not only mass, but such data is elusive. New technology (eg TAD, ATMOS) appears to give mills more freedom to experiment with the

furnish and perhaps use less fiber per square meter of finished product. Furthermore, some high-profile speakers at Tissue World seemed toquestion the value (ROI) of physical product enhancements. Perhaps, then,the US tissue market is reaching a point at which per capita consumption(kg/person/year) may start to fall even if sheets/person/year hold steady. We already are seeing a downward trend for specific grades.The usage rate for the away-from-home (AfH) sector has been trending down for years. The losses have been small – we observe a cumulative loss of only 4% since 1995 – but the trend is unambiguous. Still, we must take care to note that AfH toweling usage has been flat over this period. And although the facial grades enjoyed a 28% rise over the last decade,consumption remains a bit short of 0.3 kg/person per year. Growing popularity of facial tissue packs (even as advertising vehicles) should lead to even greater gains in the future. And if anti-hand-dryer campaigns payoff, toweling grades could get a small lift.

However, the small growth in these AfH grades is completely overwhelmed by losses in AfH toilet and napkin markets. Part of the problem may be classification error. Some of the tonnage classified as ‘consumer tissue’ by the mill actually may show up in AfH distribution channels, such as office supply stores. In this case, the observed 5% drop in AfH toilet tissue usage since 1995 may be overstated. However, to theextent that the small office markets are growing in importance and exhibit a preference for higher-quality tissue, producers of economy-grade AfH tissue should take heed.

For AfH napkins, however, there can be no such definitional vagueness. The 15% decline over the last dozen years is too great to ignore. We surmise that the culprit, in this case, is the rapid improvement in dispensing technology that more efficiently rations out napkins to customers in quick-service restaurants (QSRs). For example, SCA’s website currently feature sits RollNap system, which purportedly reduces napkin consumption byan average of 25%. Kimberly-Clark Professional advertises a potential30% reduction in napkin usage with its MegaCartridge system. Georgia-Pacific cites independent research that shows napkin usage is reduced by 56.6% when switching from smaller, tall-fold style and by 30% whenswitching from larger, standard MorNap style to EasyNap® in a QSRenvironment. The push for conservation is understandable because, according to a 2001 study published by QSR Magazine, napkins ranked 16th in importance of 17 criteria used by consumers to judge quick-service restaurants. (Napkins barely topped “serves alcohol” in importance – butwere less a concern than whether the restaurant offered waiter service.) Per capita consumption of AfH napkins may continue to trend down as the new dispensing systems populate the industry, but should then stabilize. On the other hand, in contrast to AfH grades, consumer (or retail) tissue usage is on the rise. Although it is tempting to make a sweeping generalization that quality improvements are driving such gains and will continue to do so, we must dig deeper into the data to try and draw more meaningful conclusions.



For example, even though demand per person continues to climb inthe face of marginal cuts to sheet size, US mill shipments of consumer toilet tissue – on a per capita basis – have actually been falling, slightly,since 2001. The difference, of course, is attributable to the growing importance of international trade. US imports of tissue products jumped from just over 400,000 tons in 2001 to 650,000 tons in 2006. And while we did see rising imports of converted toilet tissue from the traditional trading partners, Canada and Mexico, we observed even greater gains from China and Brazil – from essentially 0 to 45,000 tonnes and 11,000 tonnes, respectively, in 2006.

Although we are unable to draw any conclusions about the product characteristics of these imports that would directly impact the usage rate(ie do they have a lesser mass per sheet than domestically-produced paper?), we know that the unit value of Chinese imports (US$815/tonne in 2006) remains well below that of the USA’s other major trading partners (US$1496-1634/tonne). Consider as well APP’s aggressive expansionplans, and we could see imports continue to rise such that, even if US per capita consumption of retail toilet tissue rises, North American mills should see per capita shipments of retail toilet tissue continue theirdownward trend.