Tissues Industry In Bolivia

TRENDS

• Tissues is a fairly mature category of tissue and hygiene with regard to penetration among high-income consumers in Bolivia. However, it has strong growth potential among low- and middle-income consumers, particularly in rural locations, as a result of which it registered retail volume growth of nearly 5% in 2009. Due to this potential, new competitors entered tissues in 2009, offering low-cost products in order to try and conquer the large and important base of low- and middle-income consumers in Bolivia. For example, Copelme SA launched new brand Excelsior. Existing players in tissues also focused their efforts on developing price competitive products for middle-income consumers and better quality/design products for high-income consumers.

• The retail value growth of tissues, of below 2%, in 2009 was significantly lower than the retail value CAGR over the review period, of nearly 15%, due mainly to the maturity of this category among high-income consumers. In addition, some players in tissues maintained their product pricing while others decreased their product pricing in 2009, due to the high level of price sensitivity among consumers regarding such products, especially those in pocket handkerchiefs.

• Pocket handkerchiefs was the best performing category in tissues in terms of retail value growth in 2009, with growth of nearly 5% due to the strong penetration of products in this category among consumers in Bolivia. The penetration of these products is almost 100%, especially in urban areas where consumers commonly carry a pack of pocket handkerchiefs in their pocket or bag. Small packs are also commonly used, even among low-income consumers.

• Boxed facial tissues was the most dynamic category in tissues in terms of retail volume growth in 2009 owing to its low sales base. Also products in this category are targeted at middle- and high-income consumers and their popularity increased over the review period due to factors such as practicality and attractive product presentation. In addition, product pricing in this category became more affordable over the review period. Products in this category tend to be popular among female consumers due to designs on the product packaging.

• Average unit prices in tissues decreased by almost 3% in 2009, due mainly to the importance of these products, particularly products in pocket handkerchiefs, to consumers. Companies in tissues were aware of this and some of them decided to sacrifice their profit margin in 2009 in order to maintain their retail value share.

COMPETITIVE LANDSCAPE

• Promotora de Eventos SA (PROESA) was the leading player in tissues in 2009 with a retail value share of nearly 61% due to the strong position of its Elite brand in pocket handkerchiefs. Even though Kimberly Bolivia SA has positioned its Kleenex brand as a generic brand of pocket handkerchiefs, Promotora de Eventos SA (PROESA) has maintained its leading position by offering affordable and high quality products that are available in almost all distribution outlets under its Elite brand.

• Familia Sancela Sucursal Bolivia SA registered the largest increase in retail value share of tissues in 2009, as its Familia brand gained important retail value share in boxed facial tissues, despite the strength of Kimberly Bolivia SA, because product pricing under the Familia brand was more competitive than under the Kleenex brand.

• International brands continued to dominate in tissues in 2009, as there were only two domestic brands present, namely Mentol Didie and Excelsior, the retail value shares of which remained low compared to those of international brands. Mentol Didie and Excelsior are both targeted at low-income consumers. Mentol Didie is manufactured and distributed by Industrias G&V SRL and it benefits from a moderate level of distribution due to its competitive pricing.

• In May 2009, Copelme SA introduced Excelsior in tissues, targeted at middle-income consumers and by the end of 2009 the company had achieved moderate distribution of this brand through the same channels in which it offers its brand of toilet paper, Nacional. However, with regard to the distribution of products in tissues, distribution through independent small grocers and kiosks is very important and the company had not developed such distribution at the end of 2009.

PROSPECTS

• Tissues is expected to register moderate growth by a retail volume CAGR of 4% and a retail value CAGR of 5% over the forecast period due to the maturity of pocket handkerchiefs especially among urban consumers. However, boxed facial tissues has strong growth potential, especially as players in tissues start to offer products at more competitive prices. The maturity of pocket handkerchiefs is expected to prompt players to develop new products at competitive prices, just as Promotora de Eventos SA (PROESA) did with its scented products and products in compact size formats. Tissues is also expected to benefit from continued stability of the Bolivian economy over the forecast period, which is expected to boost consumer confidence and to encourage the purchase of non-essential products such as those in tissues.

• The retail volume and constant retail value growth of tissues over the forecast period is expected to be substantially lower than it was over the review period due principally to the maturity of tissues.

• Demand for contraband products is expected to be the largest threat to the forecast period growth potential of tissues due to the very low pricing of such products. Over the review period, many very low cost contraband Chinese tissue products were introduced and these became very popular among low-income consumers.

• Boxed facial tissues is expected to be the most dynamic category in tissues in terms of constant retail value growth and retail volume growth over the forecast period, as this category possesses strong growth potential. On the other hand pocket handkerchiefs is expected to account for a stronger constant retail value share and retail volume share of tissues than boxed facial tissues due to the level of penetration of products in this category. Also, new product development in the form of compact size formats and interesting designs on product packaging combined with competitive product pricing are expected to boost demand for products in this category. Players in pocket handkerchiefs are also expected to increase their efforts in reaching low-income consumers.

• There is expected to be a negligible increase in average unit prices in tissues in constant value terms over the forecast period due to the importance of products in this category among consumers. Despite low profit margins on products in this category, players in tissues are not expected to risk losing retail value share by increasing their product pricing. Instead they are expected to focus on reducing their production costs and to potentially develop more profitable products targeted at high-income consumers as well as new products with more competitive prices, for example products with fewer items per unit, for example Elite Compacto which has seven items per unit.

Source:   Euromonitor International