How will the epidemic affect paper products?
During the outbreak of the epidemic, in addition to consumer behaviour changes in the purchase of food and beverages, household and homecare products will also be significantly affected. Combining insights from the consumer behaviour impact of the 2003 SARS epidemic and recent data from the Covid-19 outbreak, Kantar Worldpanel makes the following analysis and predictions for the household paper category:
“The demand for household paper increased significantly during the SARS outbreak. Consumers were willing to choose higher quality, more expensive products."
According to the data during the SARS period in 2003, the increased time consumers spent at home would inevitably drive a significant increase in demand for household necessities. Household paper products also benefited from this. The growth rate of paper products in the 2nd quarter, the period most affected by SARS, was higher compared to the other quarters, especially for facial tissue.
Meanwhile, during the epidemic, consumers were willing to choose higher quality products at a higher price due to safety and health considerations. We found that the price index of facial tissue purchased by consumers during the epidemic outbreak was 15% higher than the average for the whole year.
“Impact of Covid-19 on the future household paper market in 2020”
Since 2003, the consumption of household paper products in China has seen significant development both in terms of quantity and quality. Furthermore, compared to 17 years ago, the consumer perceptions and the category structure was very different. We believed that the household paper category in the epidemic and post-epidemic era will usher in new opportunities.
In the short term, the Covid-19 epidemic in 2020 will result in a strong demand for paper products, especially for the wet tissue products with the functions of disinfection and speed clean sterilization. In addition, as consumers have spent more time on cooking and eating at home, kitchen towel and wet tissues will also perform well.
New usage occasions for the category have also arisen as a result of the epidemic; for example, placing a disposable tissue in the office/residential elevator to ensure the hygiene of the elevator buttons. In Hong Kong some savvy consumers also use tissue to make reusable masks (though this could not extend the lifespan of mask).
In the long term, we predict the following trends in the household paper category:
1. With the improvement of national health awareness, health, environmental protection and the pursuit of safety, food-grade paper products will become more and more popular and consumers are more willing to pay for better quality products. Antiseptic wet tissue will see rapid growth and unbleached tissue, with no bleach and free additive as the main selling points, will continue to perform well.
Brands can launch higher-quality products and communicate with the interest of health, environmental protection and safety to meet the upgraded needs of consumers.
2. As consumers’ lives become more refined and sophisticated, their demand for different scenarios of household paper will be higher and higher. They will use kitchen towel in the kitchen; use wet toilet tissue in the bathroom, take mini-tissue and antiseptic wipes to go out; use soft-pack tissue for office desk or home table, use cotton towels for beauty care or makeup.
Brand owners could communicate and interact with consumers by connecting with different usage scenarios and drive the rapid development of new market segments.
3. Consumers are more likely to choose comprehensive e-commerce and offline retail channels supported by O2O to purchase household paper. In 2019, before the epidemic, the new Omni-channel retail mode “Wu-Mart+Dmall” enabled Wu-Mart’s O2O delivery proportion to reach 13.8% value share of the business, far exceeding the 5.5% share for the overall modern trade channel, which also helped its household paper category to achieve a rapid growth of 8% under the stagnant environment of modern trade.
During this epidemic, driven by the convenience, consumers are more likely to choose shopping in community supermarkets/CVS, O2O platforms and integrated e-commerce platforms. It is believed that in the post-epidemic era, household paper will become a necessity on the O2O platforms, and increasing the investment on these mobile APPs to enhance brand exposure and offer more usage tips can gain a winning advantage.
4. Key players in the market will further differentiate their brands from the competition, and the concentration of top mega brands may be strengthened. In 2019, the top four groups (Vinda, Hengan, Gold Hongye, Guangdong Zhongshun Group) in household paper category, together account for about 51% of the market, and the other 49% was occupied by regional brands and local brands.
After this epidemic, the consumption tendency of some mass consumers may become more rational and they will consider to purchase lower cost products again. Meanwhile, middle-class consumers would be more willing to purchase products that can satisfy the requirements of healthy life quality, and the demand of some subcategories will develop rapidly, thus accelerating the premiumisation trend.
This change in behaviour may eliminate a number of weak small brands in the market if they are not quick enough to adapt to the changing consumer needs. Mega brands, however, which can rely on abundant production lines and superior marketing resources may see a greater benefit if they have a well-balanced portfolio which fits with well within the new environment.