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GLOBAL AVERAGE PER CAPITA TISSUE CONSUMPTION STANDS AT ABOVE 5KG – BUT 10KG IS POSSIBLE

While the US – currently 25kg per person – is likely to remain unmatched, untapped potential growth in other regions of the world is still huge.

Esko Uutela, principal, tissue, at Fastmarkets RISI, reports.

Esko Uutela
Principal, tissue, Fastmarket RISI

World tissue consumption has grown continuously year after year for at least as long as I have followed this business development, which is now more than 30 years.

Even in 2009, which was a very negative year for most other paper and board grades in the cross swells of the 2008/2009 Great Recession, the global tissue market continued to expand, albeit by only 1.2% compared to the average annual growth rate of 3.7% recorded in the previous 25 years (since 1993).

In 2018, global tissue consumption reached 38.7m tonnes and is approaching the benchmark of 40m tonnes this year; in 1993, the market was a tiny 15.5 million tonnes.

Tissue has passed newsprint in market size, something that would have been hard to believe 20 years ago.

But despite the favourable developments in the past couple of decades, several questions arise.

Will this robust growth continue and for how long?

What forces are driving market growth?

Will there be any factors changing the outlook, such as competing products or systems, for tissue in the longer term?

In which parts of the world will the best expansion opportunities be? How much tissue is needed by each person?

Will the use-intensity continue to grow or are we gradually closing in on the absolute limits?

Per capita consumption is the common way to compare how advanced regions are using a commodity.

Globally, average per capita consumption is not more than 5.2kg (2018), but there are huge differences between regions, from almost 26kg per head in North America to less than 1.0kg in Africa and Asia Far East (Figure 1).

Figure 1: Per capita consumption of tissue by world region, 2018

This situation can be interpreted in many ways.

Optimistically, with many regions lagging so far behind the leaders, there is huge potential for growth and it is only a question of time before the take off in tissue consumption in the less developed regions begins.

The opposite of this outlook is to believe that tissue will never become popular in all regions, but instead remain a necessity in industrialised countries but a niche or even unpopular product in emerging countries with different cultures, religions and habits.

The midway view is to say that tissue will gradually penetrate new regions but never reach the same use intensity or per capita consumption as in the most advanced regions because of regional differences in lifestyle.

Having followed market developments for a couple of decades, it appears the most likely outcome is somewhere between the two extremes.

There are several factors driving tissue consumption.

Population growth and economic developments are the two main factors.

GDP growth does not have a very close relationship to tissue consumption in advanced economies, but is a barrier in the poorest countries.

Demographic changes have a rather direct relationship with tissue consumption, provided economic development has reached a certain
level – typically this threshold is around US$3,000-4,000 of annual income per capita before tissue starts its penetration as a consumer product.

For this reason, the share of nonconsumers of tissue is still relatively high in the poorest nations in Africa and Asia.

Religion, in Muslem countries in particular, and traditional hygiene habits, such as the use of water in India, are restricting tissue use as well.

Tissue is one of the few global products with relatively limited competition from other products or materials in its basic use as toilet paper.

In Japan, high-tech toilets based on water and/or air jetting with several additional functions, including automatic lid opening, music, ozone deodorant systems and urinalysis, seem to have had some negative impact on toilet tissue consumption.

In towelling, airblowing dryers and textile wiping systems are clear competitors to paper towels.

In napkins, air-laid tissue and textile napkins compete with paper napkins.

And perhaps the most important effect has been in baby diapers, where new designs with super-absorbents have effectively replaced the traditional tissue carrier sheet in diaper constructions, although tissue has again made some inroads in high-quality products due to its ability to give more stiffness and stability to the product.

But with average per capita consumption of tissue at just above 5kg per person now, there is still a lot of potential in many regions.

While it is hard to believe that any other region would reach the level of North America at 25kg or more of tissue use per person, 10kg on average would double global tissue consumption, putting it close to 80m tonnes.

This is fully possible, but will take so long that I personally will most likely not see it during my lifetime.

Increases in the global population, if it continues to grow at almost 1.0% per year, will raise tissue consumption in the most advanced regions, such as North America, as well.

Per region, we see the most interesting potential in Asia (excluding Japan), Latin America and parts of Africa.

China has recently been the main driver for global tissue consumption, and with its average per capita consumption at 6.3kg, there is still a lot of untapped potential there.

In several countries in Asia Far East, tissue has started to pick up, even in India, but the starting level is so low that it will take time before consumption in this region will have more global importance.

Latin America seems to be following western consumption patterns and its growth prospects are good.

Even in Africa, we have seen tissue consumption expand in a few countries in recent years.

I am rather confident that global tissue consumption will continue on its sound growth track, but the average annual growth rate will likely see a gradual slowing from its present 3.5-3.7% annual pace.

Our current ten-year forecast ends at a level of 50m tonnes of tissue consumption, and there is no reason to think this will not take place.

It can be concluded that the future outlook for tissue is good if demand prospects continue to be good.

However, this does not mean tissue is an easy business to enter.

Many companies have seen the attractiveness of the segment and investments have followed, resulting in a keen competition between suppliers in nearly every corner of the globe.

Figure 2: Development of world tissue consumption with forecast until 2027