Indian Tissue scenario
- Tissues grows by 11% in value terms to reach sales of Rs 694 million in 2007.
- Modern retailing helps boost the visibility and sales of tissues.
- Boxed facial tissues registers the fastest growth, at 12% in 2007.
- Average unit prices are kept in check due to growing competition.
TRENDS
• An increase in the number of supermarkets/ hypermarkets and convenience stores carrying a range of brands of tissues, including private label, helped boost sales of tissues in India in 2007. A wide display area dedicated to tissue products helped consumers become more familiar with these products, and their wide visibility on retail shelves, coupled with frequent promotions, helped boost consumer trials. Moreover, evolving consumer lifestyles, leading to greater time spent travelling and outside of the home led busy consumers to opt for the convenience of disposable tissues over cloth versions which have to be washed.
• The growth rate of tissues in 2007 at 11% was able to keep pace with the review period current value growth rate. Tissues exhibited impressive double-digit growth during 2007, spurred by an increase in the number of modern retail stores, such as supermarkets/ hypermarkets and convenience stores, stocking tissues. A corresponding increase in car ownership and increased time spent outside of the home also helped sustain the high growth rate of tissues.
• Boxed facial tissues grew faster than pocket handkerchiefs in 2007, as growing disposable incomes and improving lifestyles led to a high ownership of cars in India. As people spend more time commuting and travelling outside of the home, they have started keeping boxed facial tissues in their cars. Boxed facial tissues serve as a convenient and economical option compared with carrying around pocket handkerchiefs whilst travelling, leading to the faster growth of boxed facial tissues in 2007.
• Average unit prices were kept in check during 2007, as the market for tissues is becoming more competitive, with the entry of new players in the form of Kimberly-Clark Lever Ltd with its Kleenex brand, as well as a host of regional players. Given the price conscious nature of consumers, manufacturers refrained from increasing prices in 2007, for fear of turning away consumers.
• The usage of boxed facial tissues in India is higher outside of the home than inside. The main reason for this is the growing trend of keeping boxed facial tissues in cars. As the climate in India tends to be hot and humid, with long summers, the usage of boxed facial tissues increases during the summer months when people commute. Packaging remains an important factor in the sale of boxed facial tissues, and vibrant colours are becoming an increasingly important factor in purchasing decisions as competition increases in the market, giving appearance more importance, as most boxes are kept on display in cars or homes.
• Pocket handkerchiefs are mainly marketed towards households and individuals for daily usage. Many consumers prefer to use cloth handkerchiefs in India out of habit, and consider the feel of cloth to be superior to paper. However, with growing mobility, long summers and a humid climate, urban female consumers are increasingly opting for disposable pocket handkerchiefs.
• The usage culture of tissues has recently emerged in India due to the increase of such products in the AFH channel and better lifestyles of consumers. The price barrier still remains a major deterrent for many consumers, and cloth handkerchiefs are the traditional option in lieu of tissues, as they are more affordable, reusable and handy.
However with modernisation and westernisation, the use of disposable tissues has increased.
PROPECTS:
• The key factor for growth in tissues will be rising disposable incomes and more time spent outside of the home. West and South India are expected to be the biggest regions for the consumption of tissues, due to the high influx of foreign tourists who are already existing users of tissues. Both the regions also have a relatively similar hot and humid climate which causes perspiration, making disposable tissues a basic requirement. Apart from this, both the regions have a higher number of cities and more corporate offices, which will not only boost institutional sales but also promote the culture of tissue usage.
• The growth rates of tissues are expected to rise in the coming period, as the current low penetration and usage of tissues provides much room for growth. A higher number of brands being carried in supermarkets/ hypermarkets, along with further innovation in terms of packaging and quality, are likely to help drive forecast growth.
• A potential threat to growth in tissues could be that consumers continue to use cloth handkerchiefs instead of disposable tissues. Price-conscious consumers are likely to stick with cloth handkerchiefs, as these are reusable and are a value-for-money proposition.
• Boxed facial tissues is expected to grow faster than pocket handkerchiefs, as increasing disposable incomes and improved standards of living lead more consumers to purchase cars. It is becoming almost standard to keep boxed facial tissues in cars, as consumers value the convenience of disposable tissues whilst travelling. On the other hand, consumers find it easy to substitute pocket handkerchiefs with cloth handkerchiefs, because of the latter’s reusability and economical advantage, restricting its growth rate to below that of boxed facial tissues.
• The unit prices of tissues are expected to fall in the, as current high prices of tissues pose as a hindrance to regular usage. As consumers can easily substitute tissues with cloth handkerchiefs, and the category is in its early stages of development, manufacturers are unlikely to increase prices. Moreover, with the entry of new players the market is expected to become even more competitive, and this is expected to prevent manufacturers from increasing prices.
• Manufacturers are expected to focus on below-the-line pricing and trade promotions in order to increase sales.
SECTOR DATA:
Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates