Tissue Paper Products

INDUSTRIAL CODES

NAICS: 32-2121 Paper (except Newsprint) Mills, 32-2291 Sanitary Paper Product Manufacturing

SIC: 2676 Sanitary Paper Product Manufacturing

NAICS-Based Product Codes: 32-2121N1 through 32-2121N7, 32-229151, 32-229153, 32-229156 and 32-229157

PRODUCT OVERVIEW

The primary tissue paper products are toilet tissues, paper towels, and facial tissues. Tissue products are soft, thin, pliable, and absorbent sheets of paper. They are disposable products designed for a single use. Toilet tissue and paper towels are long narrow strips perforated into sheets and rolled, while facial tissues are squares or rectangles folded and typically packed in a box. Toilet tissue is used in the toilet to clean oneself. Paper towels are used primarily in the kitchen to clean up spills and messes. Facial tissues are used in a variety of activities, including the removal of nasal mucus. There are no good substitutes for tissue products, save for cotton balls or a cloth washcloth, hand towel, or handkerchief, which can be washed and re-used.

Toilet Paper

Toilet tissue paper is a fairly modern invention. Early toilet tissue paper was sold in boxes of individual squares made of coarse paper. Toilet tissue on a roll was introduced to North America in 1890 by Scott Paper Company. It was the end of the Victorian era, and toilet tissue was a rarely mentioned medical item. Scott Paper Company began as a paper converter. It purchased large rolls of paper from mills and converted them to smaller rolls labeled with resellers' names, typically drugstores and pharmacies. By the turn of the century, Northern Paper Mills was established in Wisconsin, where trees were plentiful, and introduced Northern brand toilet tissue. Northern rolls were large. Each consisted of 1,000 4 × 10 inch sheets. Each roll had a wire so it could hang from a hook or a nail, for many users in an outdoor toilet. By 1910 Scott retrofitted a plant in Chester, Pennsylvania, where trees were plentiful. In Pennsylvania, Scott produced large 72-inch parent rolls of tissue to convert to smaller consumer rolls of 1,000 perforated sheets. One 1,000 sheet roll sold for 10 cents. By 1925 Scott was the leading toilet tissue company in the world.

In 1928 Charmin toilet tissue paper was introduced by Hoberg Paper (later renamed Charmin Paper Company), another Wisconsin-based mill, with a logo of a woman's head on a cameo pin designed to appeal to women. A 1935 advertisement in Ladies Home Journal boasted that Northern toilet tissue had no splinters. In the first decade of the 2000s, Scott, Northern, and Charmin were still top-selling brands, and Wisconsin was still the locus of toilet tissue manufacturing in the United States.

During the 1950s, toilet tissue became less of a medical product and was mentioned in mainstream marketing. The Charmin baby replaced the Charmin cameo pin and the "Charmin babies your skin" advertisement appeared. Northern Paper Mill introduced colored toilet tissue, and during this era scented toilet tissue was introduced. After Procter & Gamble acquired Charmin Paper Company in 1957 it introduced Mr. Whipple in 1964. He appeared for more than 20 years in advertisements saying, "Please don't squeeze the Charmin." In the 1980s toilet tissue makers developed a process to make tissue paper softer and more absorbent. Tissue paper is run over a perforated drum through which hot air is blown to fluff it up.

In the 1980s and 1990s the three long-established U.S. tissue paper manufacturers each rolled out premium toilet tissue, in part because of technological advances in the air drying processes. Procter & Gamble rolled out Charmin Ultra and Charmin Plus with Lotion and Aloe. After its merger with Scott Paper in 1995, Kimberly-Clark introduced Kleenex Cottonelle as its premium toilet tissue brand. Georgia-Pacific introduced Angel Soft and, after it acquired Ft. James Corp., another Wisconsin mill which had acquired Northern Paper Mill, it re-launched Northern Tissue as Quilted Northern in 2002.

Paper Towels

Scott Paper Company introduced paper towels during the period when they were still converters and not yet primary paper manufacturers. In 1907 Scott made paper towels in individual 13 × 18 inch sheets. They were called Sani-Towels and advertisements highlighted their disposability with the phrase, "For use once by one user." Allegedly, they were first used in Philadelphia schools to prevent the spread of common colds after a school teacher noted all children using the same cloth towel got the same cold. By 1931 Scott Paper Company made ScotTowels, the first paper towel roll. Northern paper towels were introduced in 1955 and renamed Brawny in 1972. While Brawny is made by Georgia-Pacific, Coronet was Georgia-Pacific's first tissue paper product. The brand was promoted by Rosemary Clooney throughout the 1960s. Procter & Gamble introduced Sparkle paper towels in 1979 and Bounty in 1985.

Facial Tissue

This product was introduced under the Kleenex brand name in 1924 by Cellucotton, a Kimberly-Clark company. Like toilet tissue, it was marketed to women. Facial tissue was conceived as a disposable towel for removing cold cream. Disposability was introduced as a market concept in the 1910s and 1920s. By 1927 Kleenex advertisements used the phrase "for colds, never again use handkerchiefs." Kleenex in a pop-up dispenser box was introduced in 1929. In 1943 Scott Paper Company launched Scotties facial tissue to compete with Kimberly-Clark's Kleenex brand. Kimberly-Clark advertised Kleenex in the 1950s on the Perry Como TV show. In the 1960s Procter & Gamble introduced Puffs facial tissues as a replacement for Charmin facial tissues. It went national with Puffs Plus Lotion in 1987. Kleenex is an 83-year-old brand so commonplace it has become synonymous with facial tissue.

Tissue paper products are widely used. One study of European toilet tissue usage highlighted the British people as the heaviest users of toilet paper among European Union (EU) residents. The average British resident flushes 39 pounds of toilet paper each year, or 2.5 times the amount flushed by the average EU citizen. The average American has hygiene habits similar to the British, flushing an annual average of 35 pounds of toilet paper. Paper towels are used in over 90 percent of American households. Approximately 3,000 tons of paper towels are discarded every day in the United States, according to the Recycling Association of Minnesota. Consumption of facial tissue is increasing. In 1940 most U.S. households used less than one box per year. By 2007 it was not uncommon for people to tell pollsters that they have several boxes of facial tissue in the home at any one time. U.S. tissue paper product shipments over the period 1997 to 2002 show signs of increased usage. In fact, shipments of toilet and facial tissue increased 30 percent per year during this five-year period.

MARKET

Tissue paper product shipments account for almost $12.4 billion per year and are part of the $41.2 billion per year paper industry, according to a U.S. Census Bureau report titled "Paper, Except Newsprint Mills, Manufacturing: 2002," part of the 2002 Economic Census. Most tissue—$10.8 billion or 86 percent—is produced at plants that both manufacture the paper and convert it into consumer-sized products. The remaining tissue paper—valued at $1.6 billion—is made by converters who constitute 14 percent of the market as measured by product shipment values. Converters purchase large rolls of paper from paper manufacturers and cut and package them into smaller rolls for resale.

Within the $12.4 billion per year tissue paper products industry, toilet tissues represented the bulk of products shipped, as can be seen in Figure 209. Toilet tissue had a product shipment value of $4.7 billion in 2002. Toilet tissue is shipped as either a two-ply product or a one-ply product. In 2002 two-ply products represented 80 percent of product shipments. Product shipments of two-ply toilet tissue increased 160 percent between 1997 and 2002, from $1.5 billion to $3.9 billion.

Paper towels are classified as either retail or industrial. Industrial-use towels are also known as away-from-home products. Within the $12.4 billion per year tissue paper products industry, retail paper towels represented 23 percent of products shipped, or $2.8 billion in 2002. Industrial paper towels represented 21 percent of products shipped. Product shipments of industrial paper towels increased 139 percent between 1997 and 2002, from $1.1 billion to $2.6 billion. Facial tissue represented 18 percent of products shipped. Product shipments of facial tissues increased 168 percent between 1997 and 2002, from $831 million to $2.2 billion.

U.S. tissue paper product shipments experienced triple-digit growth between 1997 and 2002. Toilet tissue and facial tissue shipment values each increased more than 30 percent per year for five years. During the same period the U.S. population grew a total of 6 percent. This triple-digit growth rate in tissue paper product shipments is attributed in part to a tendency to use more product in more rooms of the home. Houses are larger and there is an ongoing trend toward having more bathrooms. Each roll of tissue in the Charmin supersize pack contains four times as many sheets as regular rolls. Paper towels are used in more rooms besides the kitchen, expanding to the garage and the basement. There is an increased tendency to put a box of facial tissue in more rooms, and larger houses have more rooms to put them in. The price of toilet tissue and facial tissue increased about 2 percent per year. According to The Tissue Monitor (which publishes U.S. tissue paper price indices based on 1992 as the base year, equal to 1.00), toilet tissue (standard 2-ply) increased from 1.212 in December 2005 to 1.244 in December 2006. During the same period, facial tissue increased from 1.145 to 1.175.

According to Market Share Reporter 2007, the top five toilet tissue brands were Scott and Kleenex Cottonelle (together capturing a 30% market share and made by Kimberly-Clark), Charmin (capturing 13% market share and made by Procter & Gamble), and Quilted Northern and Angel Soft (each capturing approximately 11% of the market and meach made by Georgia-Pacific).

According to Market Share Reporter 2007, the top paper towel brands are Bounty (the leader with 36% of the market and made by Procter & Gamble), Brawny (capturing 11% of the market, and made by Georgia-Pacific), Scott and Kleenex Viva (together capturing 17% of the market, made by Kimberly-Clark), and Sparkle (made by Procter & Gamble).

According to the December 2006 issue of Consumer Reports, "tons of tissues say they're soft on the schnozz." The consumer magazine tested six facial tissue brands. Panelists evaluated unidentified facial tissues for two days, feeling them with fingertips to assess fuzziness, smoothness, and graininess; gathering them in their palms to see if they felt stiff; and rubbing them under their noses. Strength was measured by recording the amount of force needed to pierce each tissue. Consumer Report's panel concluded that Puffs Ultra and Puffs Plus Lotion Aloe & Vitamin E (made by Procter & Gamble) were the best, being both soft and strong. Kleenex Anti-Viral (made by Kimberly-Clark) was also soft. Slightly less soft were Kleenex Ultra Soft and Kleenex Lotion Aloe & E. Least soft and weakest: Scotties Soft & Strong Hypo Allergenic (made by Irving Tissues). The magazine noted that, on average, Scotties cost less than the rest.

Tissue paper products are classic nondurable consumer goods. Nondurable goods are purchased for immediate or almost immediate consumption and have a life span ranging from minutes to three years. Nondurable goods are destroyed by their use so consumers need to repeatedly replenish their supply. For instance, it is estimated that the average U.S. consumer uses 41.6 rolls of toilet tissue each year. If purchased as standard 4-packs, this translates to ten packages per year. The average roll of toilet tissue contains 500 sheets and an average American uses about 57 sheets per day or 20,805 per year, according to Charmin. Based on these projections, one roll of toilet tissue lasts 8.7 days. It follows that in one year 41.6 rolls are consumed per person. In 2006 the Census Bureau estimated the U.S. population at 300 million. Based on Charmin's statistics, 12.48 billion rolls of toilet tissue are consumed in America each year.

The nondurable consumer goods market is characterized by a large variety of affordable products and frequent advertising to tempt consumers to buy one brand over another. In 2005 Kimberly-Clark spent $31.7 million in measured media behind all its toilet tissue brands, per Nielsen Monitor-Plus. The combination of a large variety of affordable products and heavy advertising expenditures sometimes results in fierce price competition among manufacturers to gain new customers who will become loyal repeat purchasers. Many consumers are very loyal to a toilet tissue, paper towel, or facial tissue brand, and will use the same brand throughout their lifetime, unthinkingly replenishing their supply on autopilot approximately ten times per year.

KEY PRODUCERS/MANUFACTURERS

The top U.S. manufacturers of tissue paper products do not leave much room for new entrants into the industry. The top three toilet tissue manufacturers in the United States are each long-established firms. Together, the big three capture more than 85 percent of toilet tissue market share. These are Kimberly-Clark (maker of the number one and number two best-selling Scott and Kleenex Cottonelle toilet tissue brands) with 31 percent of market share, Georgia-Pacific (maker of Quilted Northern and Angel Soft) with 28 percent of market share, and Procter & Gamble (maker of the third best-selling Charmin toilet tissue brand) with 26 percent of market share.

These three long-established U.S. firms also dominate the paper towel market, albeit in a slightly different lineup, the big three together capture 78 percent of market share. The paper towel lineup is led by Procter & Gamble (maker of the number-one bestseller Bounty) with a 41 percent market share, Georgia-Pacific (maker of the second-best seller Brawny) with a 19 percent market share, and Kimberly-Clark (maker of Scott and Kleenex Viva) with an 18 percent market share.

The top U.S. facial tissue manufacturers are the long-established firms Georgia-Pacific, Kimberly-Clark, and Procter & Gamble, who together capture more than 75 percent of market share. One new entrant, Irving Tissue, captures an additional 7 percent of market share.

Georgia-Pacific

Established in 1927 as a lumber wholesaler, Georgia-Pacific is a long-established company. Headquartered in Atlanta, Georgia, Georgia-Pacific employs 75,000 people at more than 600 locations in North America, South America, and Europe. Georgia-Pacific was acquired by Koch Industries, Inc., a private company based in Wichita, Kansas, in 2005. Georgia-Pacific entered the tissue paper business primarily through acquisitions. In 1963 it acquired Puget Sound Pulp and Timber Co. in Washington and Vanity Fair Paper Mills in New York. In 1979 it acquired Hudson Pulp and Paper Corp. in Florida and introduced Sparkle brand paper towels. In 1986 Georgia-Pacific moved into the premium bath tissue market with Angel Soft. In 2002 it acquired Fort James Corp., a Wisconsin-based company, and its consumer brands Brawny and Quilted Northern, both market leaders. While Georgia-Pacific is not one of the top three makers of facial tissue, its brands include Green Forest. Green Forest brand toilet tissue, paper towels, and facial tissue products are recommended by the Natural Resources Defense Council for their 100 percent recycled content.

Irving Tissue

Irving Tissue is a relatively recent entry into the facial tissue market. It is a part of the J.D. Irving Ltd. family of companies based in Dieppe, New Bruswick, Canada, which owns lumber and pulp and paper businesses and employs approximately 8,400 people in North America. Irving Tissue began in 1988 with the purchase of a tissue paper mill in New Brunswick, Canada. In 1990 it constructed a second plant in New Brunswick to produce private label tissue paper products. Due to the intervention of the U.S. Department of Justice—which required Kimberly-Clark to divest its Scotties facial tissue brand when it acquired Scott Paper Company in 1996—Irving acquired a paper tissue plant in Fort Edward, New York, along with the right to market Scotties facial tissue. Scotties is the brand of facial tissue introduced in 1943 to compete with Kleenex. The Justice decision was based upon the recognition that entry into the facial tissue market is difficult, requiring a significant investment in plant equipment and brand building, and that a new entrant was necessary to restore the competition lost when Kimberly-Clark and Scott Paper merged.

In 2001 Irving Tissue acquired a third tissue mill in Toronto. In 2003 Irving Tissue spent $18.5 million to expand its New York plant to add a production line for its SoftWeve paper towel brand. Scotties facial tissue is available in several formats, including Ultra 3-ply for extra thickness, Aloe 3-ply to soothe, and a refillable Car Tissue dispenser that fits into a car cup holder. For home use, Scotties offers over 25 box designs to fit within any home décor. Scotties oeuvre of facial tissue products include the regular box size in decorative patterns, and the larger reach-in family box with ornamental patterns. Square cubes are marketed as a more decorative box shape appropriate for all rooms of the home. Scotties has 7 percent of the facial tissue market.

Kimberly-Clark

Established in 1872 in Neenah, Wisconsin, Kimberly-Clark is a long-established paper manufacturing company. Headquartered in Dallas, Texas, Kimberly-Clark employs more than 55,000 people in 37 countries. Kimberly-Clark's global brands are sold in more than 150 countries. It introduced Kleenex brand facial tissue in 1924 and grew organically until its 1995 merger with Scott Paper Company. Its major tissue paper brands are Kleenex and Scott. In 2004 Kimberly-Clark divested itself of all forestland holdings in the world.

Procter & Gamble

Headquartered in Cincinnati, Ohio, Procter & Gamble (P&G) was founded in 1837 as a soap and candle company. Like Georgia-Pacific, it entered the tissue paper market through acquisition. In the 1960s it acquired the Wisconsin-based Charmin Paper Company. It is number three in toilet tissue with Charmin. The brand is almost 90 years old and supports five Charmin lines: Ultra, Plus with Lotion, Scents, Basic, and Fresh Mates. Charmin Ultra is sold in ten different package sizes. Its four different roll sizes are regular (100 sheets), big (200 sheets), giant (250 sheets), and mega (400 sheets). The Procter & Gamble Bounty paper towel brand is a best seller, with more than one-third of the paper towel market (36%). Bounty is a relatively new product, introduced in the 1980s after Procter & Gamble developed a structured papermaking process to produce absorbent and strong paper. Bounty is made on a conveyor belt of woven patterned fabric that forms a template for molded tissue products. Such molded paper towels are more absorbent per gram of paper fiber. P&G also makes Bounty Basic shop towels, a value priced product. Another important brand for P&G is Puffs. Introduced in the 1960s, the Puffs brand consists of four lines: Plus, Ultra, Basic, and To Go. Seven Puffs Pals promote the brand by saying "a nose in need deserves Puffs indeed."

MATERIALS & SUPPLY CHAIN LOGISTICS

The Census Bureau reported that in 2002 the paper manufacturing industry used $15.1 billion worth of materials to produce $41.2 billion worth of products. The value of materials used declined by 14 percent between 1997 and 2002, from $17.6 billion to $15.1 billion. The majority of the materials used to produce paper are organic and inorganic chemicals, woodpulp purchased from paper mills, and pulpwood bolts and logs.

Paper tissue products require these same materials. To make the soft, thin, pliable, and absorbent sheets of paper needed for tissue paper products, pure, fluffy, white pulp is needed. This higher grade tissue paper pulp is commonly made by a combination of mechanical, thermal, and chemical pulping processes. Typically, steam is used to soften wood particles before mechanically pulping them. For tissue paper, the wood particles are also chemically treated before entering the pulper. As a result, the pulp is very soft and fluffy, properties suited to tissue manufacture.

Industry-wide spending for organic and inorganic chemicals decreased 20 percent between 1997 and 2002, from $3.9 billion to $3.1 billion. The industry decreased its spending in every chemical class purchased, with the exception of chalk. Chalk is an inorganic chemical also known as calcium carbonate, used in papermaking as a filler and a pigment. Spending for it increased 6 percent from $262 million to $278 million. The top three chemicals purchased, in order of 2002 expenditures, are starch, clay, and chalk, which are inorganic chemicals used primarily to improve paper strength. Starch is used at both the wet end of the papermaking process to improve strength and at the dry end as a sizing. Clay is added during the pulping stage to fill in pores of wood fiber to create strong paper. Among all chemicals needed, the industry decreased spending the most for chlorine, caustic soda, and titanium dioxide.

Chlorine purchases decreased 73 percent from $82 million in 1997 to $23 million in 2002. Chlorine is used primarily to make pulp white. Caustic soda purchases decreased 54 percent from $248 million in 1997 to $113 million in 2002. Caustic soda is known by scientists as sodium hydroxide and by laypeople as lye; it is used to hasten pulp cooking and to make pulp white by removing impurities known as lignin. Titanium dioxide is a lustrous, lightweight, pure white pigment. Industry-wide purchases for it decreased 39 percent from $366 million in 1997 to $200 million in 2002. It is used to boost whiteness. Sodium chlorate is also used to facilitate chemical pulping. It results in high-quality fluffy pulp and also provides a key reactive, chlorine dioxide, that removes lignin impurities, making very white paper. Like all chemicals, its use is carefully controlled so it does not damage wood fibers and result in weak paper.

Industry-wide spending for purchased woodpulp fell between 1997 and 2002, from $4.1 billion to $2.8 billion, a decrease of 32 percent. Manufacturers purchase woodpulp from two sources. The largest expenditure is for woodpulp obtained at the market rate from other paper mills. The other source is woodpulp produced at affiliated mills. Expenditures for woodpulp purchased at the market rate decreased 50 percent, from $3.3 billion in 1997 to $1.7 billion by 2002. Expenditures for woodpulp produced at affiliated mills increased 30 percent from $890 million to $1.1 billion.

Industry-wide spending for pulpwood bolts and logs decreased 11 percent between 1997 and 2002, from $3.0 billion to $2.6 billion. Pulpwood bolts and logs are generally classified as either softwood or hardwood. Softwoods are integral for making tissue paper products. In order of expenditure value, softwoods are classed as southern pine; chips, slabs, cores, and other mill residues; softwoods such as Douglas Fir and Jack Pine; spruce and true fir; and hemlock. Expenditures for softwoods were $1.5 billion in 2002. Spending in all softwood categories decreased, except for Douglas Fir and Jack Pine, whose spending more than doubled, from $123 million to $259 million, an increase of 111 percent. Softwoods are known by laypeople as conifers. Conifers such as spruce, fir, pine, balsam, and hemlock are preferred because they are plentiful, they are easy to grind into pulp, and they produce the long fibers favored in papermaking. Long fibers are the most suitable raw material for chemical pulp that is bleached to high brightness and whiteness, qualities valued in tissue paper products.

Hardwood pulpwood bolts and logs, along with chips, slabs, cores, and other mill residues, are also consumed. Industry-wide spending for hardwood products decreased 20 percent between 1997 and 2002, from $1.5 billion to $1.2 billion.

After using chemicals, woodpulp, and pulpwood bolts and logs to make tissue paper products such as toilet tissue, paper towels, and facial tissues, packaging materials are used to prepare the final product for shipment through the distribution channel. Industry-wide spending for packing material was $1.2 billion in 2002. The types of packaging products used include paperboard containers, boxes, and corrugated paperboard; packaging paper and plastics film; and glues and adhesives.

DISTRIBUTION CHANNEL

Tissue paper products are distributed in corrugated paperboard boxes that contain cases of rolls of toilet tissue or paper towels wrapped in plastics film, or in cases of boxes of facial tissues. Many of these products—including most of the 12.48 billion rolls of Charmin toilet tissue consumed in North America annually—originate in Wisconsin, the locus of U.S. toilet tissue manufacturing. The top three makers of toilet paper each have significant operations in Wisconsin. Kimberly-Clark has a tissue mill in Marinette; Procter & Gamble has a tissue mill in Green Bay where it makes Charmin; and Georgia-Pacific runs two mills in Green Bay, where it produces Quilted Northern.

Tissue paper products are nondurable consumer goods. They are available at a throng of outlets including drugs stores such as CVS, Rite Aid, and Walgreens; food stores including Whole Foods and health food stores; mass merchandisers including Kmart, Target, and Wal-Mart; and nontraditional retailers and warehouse club stores such as Costco and Sam's Club. For instance, Irving Tissue distributes its Scotties brand facial tissues in the Midwest at such stores as City Market, Coburn's, Cub, Dierberg's, Eckerd, Family Dollar, Family Fare, Food City, Fresh Brands, Glen's, HyVee, Jewel, Kohl's, Marsh, Military Commissaries, Pack 'N Save, Pic N' Save, Prevo's, Rainbow, and Shop-n-Save.

Part of the tissue market represents away-from-home products used in commercial and industrial settings. Tissue used in office and government buildings, hotels, schools, airports, amusement parks, hospitals, highway rest stops, and other away-from-home locations are bought by building owners, institutions, and janitorial services directly from distributors. Commercial and industrial tissue paper product distributors are often the same as printing and writing paper distributors. The products are usually bulk-packaged and tied to specialized dispensers that encourage brand loyalty.

KEY USERS

All people use tissue paper of one kind or another. While cultural norms influence patterns of tissue paper use, consumption also fluctuates with income level, increasing with increased income. For instance, while the average citizen in Western Europe uses approximately 27 pounds of toilet tissue per year, citizens of the European Union's newer and less developed countries use less, with a 9-pound average.

Toilet tissue use differs between the sexes. Generally women are seen to be more concerned about protecting their hands so are assumed to gather more toilet tissue per tear. Ten years ago, equal proportions of users folded or crumpled toilet tissue. Since then, according to a study on toilet tissue usage discussed in a UPI News Track article, those who fold their toilet tissue took a 10 percentage point lead over crumplers. A decided minority wraps the tissue around the hand. The proper use of toilet tissue provokes intense feelings among Americans. After Ann Landers published a letter from a woman who went to visit her cousin Louise in Cincinnati and informed Louise that she hung her toilet paper wrong, more than 15,000 readers wrote to contribute to a national debate about the right way to hang toilet paper rolls. Writers were about evenly split between those who favored hanging the roll so that the paper comes over the top of the roll and those who favored having the paper down and under the roll.

It is estimated that facial tissues have penetrated approximately 70 percent of U.S. households. Facial tissues are assumed to be used by 7 in 10 adults. Women are generally medium to heavy users of facial tissue. Households with children account for above-average usage, probably because children often have runny noses. Men also use facial tissues. Kleenex for Men celebrated its 50th anniversary in 2006.

ADJACENT MARKETS

There are no good substitutes for tissue products, save for a washcloth, hand towel, or handkerchief, which could be re-washed in order to be re-used. For some consumers, sponges, towels, or rags are a good substitute for paper towels. One market closely adjacent to toilet tissue—the largest segment of tissue products, comprising 38 percent of the market—is air fresheners. Americans spent $543 million on home air fresheners in 2005. S.C. Johnson, maker of Glade, had 47 percent of the market, not counting sales from Wal-Mart, according to Information Resources. Over 100 million cans of Glade brand air freshener are sold each year. Most air freshener is used in the bathroom, more than likely immediately after toilet tissue is used.

RESEARCH & DEVELOPMENT

Paper scientists continually tweak the blends of chemicals, wood pulp, pulpwood bolts and logs, and machine specifications to perfect tissue paper. Researchers probe for intimate consumer insights; Charmin reported it initially developed thicker toilet tissue to give consumers the requisite "hand feel." Tissue paper products are valued when they are soft, absorbent, strong, and affordable. Tissue paper products require a properly prepared, chemically treated, fluffy white pulp. Production of these products also requires additional equipment used in the air-drying process. The additional equipment is needed for the drying phase in the staging area and involves a perforated drum through which hot air is blown. To increase fluffiness, R&D efforts resulted in ways to emboss, crepe, ripple, and mold tissue paper to give it a cushiony texture.

Machines with up-to-date specifications are important to tissue paper makers. During 2003 and 2004, tissue paper makers reduced capacity. Twelve machines were shut down for a total capacity reduction of 293,000 tons, according to the American Forest & Paper Association. More than likely, these represented old machines without up-to-date air drying equipment. During 2004 and 2005, tissue paper makers added 480,000 tons of capacity in the form of new tissue paper machines. Georgia-Pacific built new tissue machines in Port Hudson, Louisiana, and Clatskanie, Oregon, that created new capacity of 160,000 tons solely dedicated to tissue. Procter & Gamble built a new machine in Missouri that created new capacity of 80,000 tons dedicated to tissue. Triple-digit growth warrants such investments. Between 1997 and 2002, the value of toilet tissue and facial tissue shipments increased more than 30 percent each year.

Research and development resulted in the 2005 launch by Kimberly-Clark of Kleenex Anti-Viral facial tissues. Priced about 40 percent more than most tissues, Kimberly-Clark says the 3-ply Anti-Viral product has 4 percent of the U.S. market. Kimberly-Clark's research supported anti-viral tissue development. It revealed that 74 percent of consumers stash used tissues in places such as purses, pockets, drawers, and countertops with the intent to re-use them. Kleenex Anti-Viral tissues contain two active ingredients, citric acid and sodium lauryl sulfate, that target the most prevalent causes of flu and colds: rhinoviruses type 1A and 2. Active ingredients constitute a pesticide that destroys the virus wall to deactivate it.

At its research facility in Neenah, Wisconsin, Kimberly-Clark found a way to manufacture Kleenex Anti-Viral tissue while adding extra softness. The three tissue layers are disassembled, the mixture of citric acid and sodium lauryl sulfate is applied, layers are reassembled, and chemicals are added to outer layers to give a soft silky feel. To distinguish anti-viral tissues from regular ones, Kleenex printed tiny blue dots on the middle layer that contains the active ingredients.

Kimberly-Clark claims its new product destroys 99.9 percent of cold and flu viruses in tissues. In order to make such claims Kimberly-Clark had to get approval from the Environmental Protection Agency (EPA). The EPA approved the product in 2003, with certain caveats. The agency required that the label state the product has not been tested against bacteria, fungi, or other viruses. EPA also placed restrictions on box design, forbidding appeals to children and the portrayal of anything edible or found in nature, including flowers. As noted in the manufacturer profiles, flowers, fruit, and herbs are ubiquitous on most facial tissue boxes.

CURRENT TRENDS

Industry financial analysts predict that in 2008, growth among smaller tissue paper players, more than likely converters, could threaten long-standing established tissue paper product manufacturers. One opportunity for growth is for smaller players to meet the emerging demand for recycled tissue paper products. In 2006 Greenpeace and the Natural Resources Defense Council teamed up for a campaign to encourage use of recycled tissue paper products. Activists advocated brands from smaller tissue paper players, like Cascades and Seventh Generation, who produce tissues with 100 percent recycled paper content.

Activists targeted Kimberly-Clark, maker of the market-leading Scott toilet tissues and Kleenex facial tissues, by alleging that it destroys virgin timber, particularly in Canada, to make disposable tissue paper products. For instance, in March 2007 Greenpeace protested in Times Square during the filming of Kleenex commercials. Kimberly-Clark unwittingly garnered the attention of Greenpeace because of the way it markets Kleenex. Its Web site boasts that Kleenex "is made from nearly 100 percent virgin fiber. Virgin fiber is used in our tissue because it provides the superior softness consumers expect from a premium facial tissue product." The word virgin means one thing to tissue paper product makers and another thing to environmental activists.

In the industry, virgin means new wood. New wood includes pulpwood bolts and logs along with chips, slabs, cores, and other lumber mill residues. Among activists, the word virgin evokes images of a forest that has never been harvested. Most tissue paper makers have access to tree plantations where fast-growing trees are planted specifically to be harvested, since new wood is one of the materials needed to make the product. Kimberly-Clark says it adheres to industry standards followed by other leading brands such as Puffs (made by Procter & Gamble). "Part of why Kleenex and all the leading brands use virgin fibers is because of the strength and softness of the tissue," Kimberly-Clark spokesman Dave Dickson told the San Francisco Chronicle in 2006. He added that the company has conducted numerous nose-blowing tests to prove the point. The public also wants softness in tissue paper products that recycled tissue cannot deliver.

Recycled tissue paper products are less available than premium brands like Charmin, Northern, Kleenex, and Puffs. Cascade Tissues Group and Seventh Generation represent two of the smaller players in the industry who make recycled tissue paper products. The Natural Resources Defense Council recommends their brands for their 100 percent recycled content.

Cascades Tissue Group has five plants in Canada and ten in the United States. It makes Cascades' 100 percent recycled brand tissue paper products that are marketed with the phrase, "save 48,000 trees with just one roll." The entire line of fully recycled Cascades toilet tissue products and paper towels sport the Process Chlorine Free certification for its paper-bleaching process. Established in 1964, Cascades Tissue Group has a different focus than the long-established industry leaders. Cascades strives to protect forests by increasing the amount of recycled materials used, maximize energy efficiency to cut greenhouse gas emissions, and reuse manufacturing residues as soil fertilizer.

Seventh Generation started in Burlington, Vermont, in 1988 with a mail order catalog selling energy-saving light bulbs, water conservation items, and non-toxic cleaning products. As its distribution network expanded to include natural food stores and co-ops, in 1995 it sold the catalog to Gaiam, a Boulder, Colorado, based company. The name Seventh Generation was suggested in 1988 by a Native American employee. It is inspired by the Six Nations Iroquois Confederacy maxim that "in our every deliberation we must consider the impact of our decisions on the next seven generations." Most of Seventh Generation's tissue paper products are made from 100 percent recycled paper, with 80 percent post-consumer materials. Its facial tissue has 20 percent post-consumer materials.

TARGET MARKETS & SEGMENTATION

Makers target consumers who like luxury in the bathroom. During 2005 manufacturers continued to push the boundaries of softness, thickness, absorbency, and strength to offer premium tissue products. Premium products can be quilted, embossed, creped, rippled, fragranced, colored, and molded. They often contain aloe vera or other lotions. The January 2007 edition of Grocer reported that ACNielsen says the premium tissue paper sector is growing at 25 percent. Procter & Gamble pushed the boundaries of the premium market with Bounty brand paper towel, relaunched in 2007 as Bounty with Duraquilts. It was thicker, more absorbent, and marketed as the most durable conventional paper towel available, requiring only one sheet to do the cleanup job.

Manufacturers target consumers who will pay more for added value. In 1987 Procter & Gamble launched Puffs Plus with Lotion, the first tissue treated with lotion. Kimberly-Clark responded with its own lotion-treated tissue as well as a menthol-scented one. These added-value products proved popular, demonstrating that consumers pay more for facial tissue products they believe have added benefits.

Manufacturers also design products for and market to children. In 2006 Kimberly-Clark launched Cottonelle for Kids. Different than the adult version, it has paws printed across a path of four sheets that lead to a picture of a puppy on sheet five, keying the young user to the recommended number of sheets. The product is aimed at four- to six-year-olds who are in the post-potty training stage.

RELATED ASSOCIATIONS & ORGANIZATIONS

American Forest and Paper Association, http://www.afandpa.org

National Paper Trade Association Alliance, http://www.gonpta.com

National Resources Defense Council, http://www.nrdc.org

Wisconsin Paper Council, http://www.wipapercouncil.org

BIBLIOGRAPHY

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