As disposable income recovers, consumers will buy higher-quality, pricier paper products
Los Angeles, California (PRWEB) March 01, 2012
Demand for products in the Sanitary Paper Product Manufacturing industry – which include staples such as toilet paper, paper towels, facial tissues, diapers, menstrual pads and tampons - typically remains stable in the face of cyclical change such as the recent recession. However, IBISWorld industry analyst Caitlyn Moldvay says the industry experienced a moderate revenue reduction as consumers purchased inexpensive paper products, reducing the value of sales. Since 2010, however, revenue has increased strongly, easily recovering from its recessionary losses. From 2007 to 2012, industry revenue is expected to increase at an average annual rate of 1.6% to $12.3 billion, having weathered the recession with minimal damage. In 2012 alone, industry revenue is expected to increase 3.1%, boosted by an improvement in domestic demand as well as increased demand in emerging overseas markets from a growing number of middle-class consumers in other countries. Domestic demands are changing with US demographics. A low birthrate during the recession and the aging baby boomer generation makes for a slight shift in the product mix, with consumers demanding fewer diapers and more incontinence products. Over the next five years, industry revenue is projected to rise, as the national unemployment rate falls and household income improves.
While industry exports are poised to grow in the coming five years, the United States is forecast to remain a net-importer of sanitary paper products. Domestic import penetration increased slightly over the past five years, despite depreciation of the US dollar in that period. From 2012 to 2017, this figure is expected to continue its rise. In particular, China and Mexico are expected to contribute to growth in the value of imports in industry products. Increased competition from imports will continue to hurt profitability in the Sanitary Paper Product Manufacturing industry. As a result, this already highly concentrated industry is expected to stay that way, with the three largest firms dominating it, Moldvay says. A relatively high degree of brand loyalty in this industry limits the potential success of new entrants, and thus limits the number of firms participating in the industry. While marketing and advertising are used aggressively to sway the customer base, these measures are often too costly for smaller producers.
The level of concentration differs among various product groups: within any given product segment, market concentration may be significantly higher than the industry average. The disposable diapers market effectively has a duopoly, with Kimberly-Clark Corporation and The Procter & Gamble Company both holding almost half of the segment’s market share. Similarly, Georgia-Pacific Corporation is estimated to hold nearly half the market share for away-from-home tissue products. Koch Industries, Inc. For more information, visit IBISWorld’s Sanitary Paper Product Manufacturing report in the US industry page.
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IBISWorld industry Report Key Topics
Industry operators convert sanitary paper stock or wadding, as well as pulp and paper, into sanitary paper products such as facial tissues and handkerchiefs, table napkins, towels, toilet paper, disposable diapers and tampons. Some operators may manufacture their own sanitary paper while others purchase it from mills. Final industry products are sold to wholesalers for distribution, straight to retailers or directly to large customers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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