Americans So Frugal, They're Cutting Back On Toilet Paper

There are consumer staples and then there are consumer staples. Coca-Cola is sometimes called a consumer staple, but come on, nobody really needs to drink a coke. Toilet paper and paper towel, on the other hand, are about as staple as staple gets. You need toilet paper. But maybe we don’t need as much of it as we’ve been buying.

In its earnings report today, Kimberly Clark (KMB) says volumes for these basic products significantly tailed off in the quarter:

In North America, sales of consumer tissue products increased more than 3 per cent in the fourth quarter, as an increase in net selling prices of almost 13 per cent and improved product mix of about 1 per cent were partially offset by a 10 per cent decline in sales volumes and currency effects of 1 per cent. The improvement in net selling prices reflects price increases implemented across the bathroom tissue, paper towel and facial tissue categories during the course of 2008. This focus on improving revenue realisation, along with slower category growth and consumer trade-down, particularly in paper towels, contributed to the lower sales volumes. For the quarter, shipments were down more than 10 per cent for Viva and Scott paper towels, approximately 7 per cent for Cottonelle and Scott bathroom tissue and about 3 per cent for Kleenex facial tissue. A portion of the overall volume decline also was due to the company’s decision in late 2007 to shed certain low-margin private label business.

We suspect that people aren’t necessarily using less toilet paper, so much as they’re buying white-label 1-ply, sandpaper-textured toilet paper. Maybe Kimberly-Clark shouldn’t have shed that low-margin business.

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