Household Paper Products - UK - January 2004

SUMMARY

Mintel last reported on the Household Paper Products market in Market Intelligence, January 2002. The report examines trends and developments since that time for the market as a whole, together with individual sectors, identifying which sectors are performing best and the reasons for this. Usage of household paper products is also examined to establish whether or not consumer penetration has changed by sector over recent years. Companies and brands are also discussed to identify who are the most significant players within the market and any recent developments in strategy.

The market has been boosted since the entrance in the latter half of 1999 of Procter & Gamble (P&G), a company that has committed itself to advertising its major brands, Bounty kitchen roll, Charmin toilet tissue, and to a lesser extent, Tempo facial tissues. The market was worth an estimated 1,340 million in 2003, which represents real growth of 28% since 1998. The kitchen towel sector is showing the strongest growth due to it becoming more of a multi-purpose product. Kitchen towels equated to some 268 million in sales in 2003, with facial tissues amounting to 188 million and toilet tissue 884 million.

This report considers the hypothesis: "Heavy advertising and promotional support by the major manufacturers has served to establish and reinforce brand loyalty among consumers, as well as to fight back against retailer own-label brands."

Advertising investment on household paper products is closely related to how the industry performs, and, more specifically, how particular brands perform. Certainly the kitchen towel sector has seen its performance improve since the arrival of P&G's Bounty brand. Promotional discounting and extra rolls free have boosted toilet tissue sales in an almost saturated market. Other influential factors include consumer PDI levels and rates of consumer expenditure. Consumers are tending to trade up to premium products but are also seeking value for money.

TABLE OF CONTENTS

Introduction and Abbreviations

• Definitions
• Consumer research
• ACORN

Abbreviations

Executive Summary

• Steady rise in income encourages premium sales
• Market for household paper products continues to expand
• Kitchen towels outperform other paper product sectors
• Manufacturer brands continue to dominate the market
• Advertising continues to make significant impact on sales
• Co-ops and convenience stores hold their own
• Usage levels
• The future

Market Drivers

• Rises in PDI levels encourage trading up
• Figure 1: PDI and consumer expenditure, at current and constant 1998 prices, 1998-2007
• Pack sizes are becoming larger
• Figure 2: Number of households, by household size, 1998-2003
• Shifts in population demographics have positive impact
• Figure 3: Trends and projections in the UK population, by gender and age group, 1998-2007
• Socio-demographics may have a negative effect
• Figure 4: Trends and projections in the UK population, by socio-economic status, 1998-2007
• Growing employment generates need for convenience
• Figure 5: Workforce in employment in the UK, by gender and employment status, 1998-2007
• Seasonal complaints
• Figure 6: Incidence of complaints, 1998-2003
• Advertising and promotional campaigns significantly boost sales

Market Size and Trends

• Volume boost at expense of value
• Figure 7: UK retail sales of household paper products, 1998-2003
• Greater product segmentation available
• Kitchen towels outperforming toilet and facial tissue
• Figure 8: UK Retail sales of household paper products, by type, 1999, 2001 and 2003

Market Segmentation

Toilet tissue

• Little opportunity for further volume growth
• Sales boosted by advertising and promotion investment
• Figure 9: UK retail sales of toilet tissue, 1998-2003
• Figure 10: UK estimated retail sales of toilet tissue, by category, 2003

Kitchen towels

• Sales outperforming toilet and facial tissues
• Prices have been restrained
• Figure 11: UK retail sales of kitchen towels, 1998-2003
• Figure 12: Annual growth in UK retail volume and value sales of kitchen towels, 1999-2003

Facial tissues

• Suffering from lack of product innovation
• Figure 13: UK retail sales of facial tissues, 1998-2003
• Figure 14: UK estimated retail sales of facial tissues, by sector, 2003

The Supply Structure

Brand shares - toilet tissue

• Andrex holds on to top position
• Figure 15: Leading brand shares within the toilet tissue sector, 2001 and 2003
• Own-label losing share
• New product development provides mixed results

Kitchen towels

• Bounty boosted by advertising
• Premium brands and own-label driving sales
• Figure 16: Leading brand shares within the kitchen towel sector, 2001 and 2003

Facial tissues

• No real branded threat for Kleenex
• Lack of NPD holds sector back
• Figure 17: Leading brand shares within the facial tissue sector, 2001 and 2003

Company profiles

• Kimberly Clark Ltd
• SCA Hygiene Products (UK) Ltd
• Georgia Pacific GB Ltd
• Procter & Gamble

Other companies

• Cosuma Ltd
• LPC (UK) Ltd
• Kruger
• Others

New Product Trends

• January 2004
• November 2003
• October 2003
• May 2003
• April 2003
• March 2003
• January 2003

Advertising and Promotion

Above-the-line advertising

• Toilet tissues dominates spend on paper sector
• Figure 18: Main monitored media advertising expenditure on household paper products, 1998-2003
• Figure 19: Main monitored media advertising expenditure on household paper products, by brand, 2001 and 2002
• Kimberly Clark dominates expenditure

Below the line

• Toilet tissue
• Figure 20: Below-the-line promotional activity, July to October 2003
• Kitchen towels
• Figure 21: Below-the-line promotions of branded kitchen towels, August-October 2003
• Facial tissues
• Figure 22: Below-the-line promotions of branded and own-label facial tissues, August-October 2003
• Character merchandising

Distribution

• Grocery multiples continue to gather strength
• Figure 23: Retail distribution of household paper products, 1999-2003
• Toilet tissue
• Kitchen towels
• Facial tissues

The Consumer

Toilet tissue

• Slight shift towards light usage
• Figure 24: Weight of usage of toilet tissue, 2002-03
• Usage peaks among family age groups
• Figure 25: Weight of usage of toilet tissue, by gender, age and socio-economic status, 2003
• Presence of older children leads to heavier usage
• Figure 26: Weight of use of toilet tissue, by lifestage, children's age and Mintel's Special Groups, 2003
• Strong correlation with household size
• Figure 27: Weight of use of toilet tissue, by marital status, working status, household size and region, 2003

Facial tissues

• Reversal of downward trend apparent
• Figure 28: Weight of usage of facial tissues, 1998-2003
• Usage peaks among the oldest age group
• Figure 29: Weight of usage of facial tissues, by gender, age and socio-economic status, 2003
• Heavy usage highest among those with young children
• Figure 30: Weight of use of facial tissues, by lifestage, children's age and Mintel's Special Groups, 2003
• Heavy usage peaks in large households
• Figure 31: Weight of usage of facial tissues, by marital status, working status, household size and region, 2003

The Future

• Positive impact of PDI and consumer expenditure
• Population shifts may also be advantageous
• Kitchen towels set for fastest rate of growth
• Product differentiation is the way forward
• Advertising and promotional support remain vital
• Product innovation is a main way forward

Forecast

• Trading up still growing the market, but at a slower pace
• Figure 32: Forecast of the market for household paper products, 2003-07
• A challenge for toilet tissue manufacturers
• Product development for kitchen towels should ensure growth
• Facial tissue sales to remain static
• Input factors