SF
Special Feature: Retail SF
AS AT-HOME TISSUE REACHED A DECADE HIGH, AFH PLUMMETED
O
MI
Olivia Ying Senior Consultant, AFRY
MI
Navodya Denuwara Analyst, AFRY
ver the past decade, North America’s AfH tissue market has been leading the tissue demand growth at 2% per year compared to the annual growth rate of about 1% per year in the retail tissue market. This all changed when the Covid-19 pandemic shut down the AfH tissue market due to stay-at-home orders. AfH tissue consumption hit a decadelow in 2020 at 2.6 million tonnes after an estimated 15% decline in consumption from 2019. While the AfH tissue market suffered from terrible demand in major end-use markets, the consumer tissue retail market thrived from customers who went on tissue hoarding sprees and panic buying hygiene products during the pandemic. Leading North American tissue producers saw plummeting AfH tissue segment revenue and a decade-high At-Home tissue segment revenue in 2020 due to consumption shifts created by the stay-athome orders. Tissue companies reported drastic sales declines for their AfH tissue segments. Kimberly-Clark, for instance, reported a 10% volume decline in its AfH category in 2020, which continued with an even higher reduction rate in Q1 2021 at -18%. Essity, another AfH tissue producer in North America, faced more than 20% decline in 2020 in its professional hygiene
Education & Government
business mainly due to lockdowns and restrictions on outdoor activities and indoor dining. Some smaller market players witnessed drastic sales decline with a 15% decrease in AfH revenue in 2020, followed by a 30-40% decline in Q1 2021. Short term consumption effects in both retail and tissue markets were very visible. However, the long-term effects of the pandemic are less known and discussed due to the various factors involved in growth outlook in the different market segments. Overall, the North American AfH tissue market can be divided into five key end-use markets including food service, lodgings (airline, hotels, and cruises), healthcare, office building, and education and government [Figure 1]. We examined the past performance of each of these enduse sectors as well as compared current issues in each sector to determine what the recovery will look like for the AfH tissue market [Figure 2].
RECOVERY WITHIN THE LODGINGS INDUSTRY VARIES AMONG THE THREE MAJOR MARKETS Among the main end-use markets, lodgings got hit the most by the pandemic as the major markets (airline, cruise line
10%
Office Buildings
12%
Healthcare
15%
23%
Lodging
40%
Food Service 0%
10%
20%
30%
40%
Figure 1: AfH tissue demand by end-use market
Tissue World Magazine | May/June 2021
27
Special Feature: Retail
The broad contrast between tissue sectors during the pandemic is well established, with AfH decline into Q1 2021 touching 20% for leading producers, with smaller players registering 30-40%. Here, AFRY Management Consulting Senior Consultant Olivia Ying and Analyst Navodya Denuwara look in detail at the five key end-use markets including food service, lodgings, healthcare, office building, and education and government to assess how, where and when the predicted recovery will occur.
