Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Away-from-home disposable paper products; Retail disposable paper products
Executive summary
Different market characteristics
The characteristics of the market for disposable paper products in the
Dominican Republic are twofold. The market for sanitary protection,
nappies/diapers/pants and toilet paper is relatively mature and shows high
penetration rates. Demand is connected to demographic developments. The market
for other disposable paper products has lower penetration rates, mainly due to
the income inequality among Dominicans. Demand in these categories is related
to economic development and depends on the eventual improvement of Dominican
incomes.
Price-oriented segmentation to reach price-sensitive consumers
In 2003 the Dominican economy fell into crisis, and the exchange rate of the
Dominican Peso to the US$ depreciated dramatically. As a result, prices for
disposable paper products rose dramatically, while the disposable incomes of
many Dominicans decreased. Volume sales of all disposable paper products
dropped in 2004, recovering only slightly in 2005 and 2006, suggesting that
consumers have been highly price sensitive ever since.
Producers relied on product segmentation by product and package innovation,
and introduced a variety of pack sizes in order to increase sales volumes.
This only appealed to higher income consumers. In order to reach lower income
consumers, and to increase sales volumes, economy brands were introduced.
Private label producers entered the market to profit from the demand for lower
priced products.
Distribution limits accessibility
All disposable paper products are available in the large
supermarkets/hypermarkets in urban areas. Supermarkets/hypermarkets target
middle and higher income consumers. Lower income consumers shop mostly in the
nearest independent food stores or convenience stores, where a very limited
assortment is available. Thus the lower income Dominicans do not have access
to all products and are not fully aware of the benefits of products such as
incontinence products.
Producers confronted with pressure on margins
Kimberly-Clark Republica Dominicana is dominant in all sectors of disposable
paper products, followed by several multinationals. Domestic producers have a
significant presence in some sectors. Domestic players have, in respect to
currency exposure, a cost advantage. On the other hand they lack the marketing
power of the multinationals. All producers are confronted by higher raw
material and energy costs, which are increasingly difficult to pass on to the
Dominican consumer.
Disposable paper products are convenience products
The economic outlook is improving. If this translates into substantially
improved incomes for Dominican consumers, the prospects for volume growth and
higher penetration in luxury products will increase. Companies will have to
communicate the fact that disposable paper products are not only hygienic but
also a convenient option amid busy and healthy lifestyles. Since the Dominican
consumer is expected to remain price sensitive, this will be a true challenge
for manufacturers.
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