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
Growth favoured by economic growth, lifestyle changes and advertising
Disposable paper products in Mexico performed well in 2006, favoured by
economic stability and rising disposable incomes of Mexican families,
particularly in lower-income groups. Changes in lifestyle reinforced better
personal hygiene practices, while the introduction of convenient formats
favoured growing consumption. The influence of global trends in the mass
media, especially from the US, highlighted the use of disposable paper
products and stimulated volume and value sales. New presentations and versions
of disposable paper products presented strong advertising campaigns to
encourage consumption and increase penetration among lower-income consumers.
Low-income consumers represent an attractive opportunity for producers
Low-income consumers represent a good business opportunity in Mexico.
Historically, this consumer group was poorly served but intense competition is
forcing large producers to see lower-income groups as a means of increasing
volume and value sales. During 2006 and early 2007, companies developed
products that took into account the particular needs of price and packaging
for low-income consumers. However, the prevailing need for purchasing small
quantities, even single units, has not been met completely. The typical budget
of low-income consumers allows them to purchase only three nappies/diapers per
day instead of a standard package of 20.
Unit prices rise after several years of marginal growth
Unit prices were not determined by competition in 2006. Instead, an increase
in the production costs of paper, resulting from higher energy prices, was
transferred to retail prices. As long as energy prices continue to rise, it is
difficult for producers to balance production costs and offer affordable
prices. In some cases, producers have even made slight reductions on the size
of the product to offset the rise in production costs and thus avoid large
increases in retail prices.
Major players expand their distribution
The expansion of Georgia Pacific Tissue de México SA de CV into retail
disposable paper products and the entry of SCA Consumidor México SA de CV into
AFH disposable paper products will pose a challenge to other major producers
such as Kimberly-Clark de México SA de CV and Procter & Gamble de México SA de
CV. In the AFH channel, a high percentage of consumers is loyal to certain
brands and distributors. This serves as an entry barrier for strong retail
disposable paper products producers such as SCA Consumidor México SA de CV.
The robust positioning of Kimberly-Clark de México SA de CV in the AFH channel
could make it difficult for SCA Consumidor México SA de CV to earn large AFH
value sales during the forecast period. By contrast, the retail channel
exhibits a lesser degree of brand loyalty among consumers. Consequently,
Georgia Pacific Tissue de México SA de CV is unlikely to face strong barriers
to sell its products, allowing it to generate higher value sales and to gain
greater presence.
Government institutions reduce their purchase of disposable paper products
Budget constraints in government entities weakened institutional volume and
value sales in 2006. Public hospitals reduced their purchase of medicines and
disposable paper products for patient care. Consumers now have to resort to
the retail channel to acquire the products. This phenomenon has become more
evident in the case of incontinence products, nappies/diapers/pants and wipes.
The new government administration announced changes to reduce bureaucratic
procedures in 2007, aimed at cutting costs. This is likely to lead to even
more budget reductions for institutional purchases in 2007 and 2008.
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