Market-share battle brewing in US tissue products market between major consumer products companies and private-label manufacturers; national tissue brands in US have about 75% volume share

Nevin Barich

February 12, 2014 (Supermarket News) – Tissue paper products like toilet paper, paper towels and facial tissue are a giant business for retailers, worth about $80 billion worldwide each year and rising. According to Nielsen, this category is often retailers’ largest nonfood category and the 3rd largest of all categories.

Costco, the 6th largest retailer, declares that its Kirkland brand bathroom tissue is its top-selling single item, with yearly sales of $500 million. Tissue is also known as a big traffic driver with total basket size spending per trip doubled when it is purchased.

The national brand/private label market balance shows major regional differences. In the U.S., national brands of tissue have about 75% volume share, while in Germany and Belgium the private label volume share for all tissue products is well over 80%.

National brands have maintained their share-leading status in the U.S. by innovating at a faster rate than private labels and by offering incentives for retailers to stock all of their products.

But now there is a battle shaping up in the U.S. tissue market, and the market-share winner is hard to predict. On the one hand there are big consumer products companies who are going to do everything to defend their market share. And on the opposing side there are newcomers like private label manufacturers First Quality, Clearwater, Sofidel, who are doing everything to convince retailers to go over to private label.

Parallel with this fight is a general consumer preference trend in the U.S. for more ultra-quality products. Investments in ultra-quality capacity have been made by several private label tissue manufacturers. Meanwhile, the big brands have maintained share through innovation, promotions and brand loyalty.

Canada may offer some clues about the struggle for share in the U.S. Data from the latest World Tissue Business Monitor shows that private label share rose to as high as 39% volume in 2006, but steadily declined to 26% in 2012. The reason being that the brand producers, both Canadian and American, heavily promoted their products through temporary price reductions and successfully won back share.

The upcoming Tissue World Conference in Miami Beach on March 19-20 will feature a half day workshop titled "Brands vs Private Label – And the Winner Is . . ?" This session, and the interactive panel discussions, will give some clarity and actionable insight about the future direction of this clash.

The winner is actually very easy to predict: The consumer, who will likely get better quality at lower price. More than that it’s hard to say at this point, but get ready for the battle drums.

Hugh O'Brian is conference chairman of Tissue World Americas 2014 conference.

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