Toilet Paper Industry In Algeria

TRENDS

• Toilet paper volume sales increased by over 5% in 2009 as a result of increased usage in urban areas, as more families started using toilet paper on a regular basis. Its use is not engrained in local habits as people generally use water, but with increasing Westernisation in urban areas, the adoption of toilet paper use is becoming more common. In rural areas, however, few are able to afford or consider using toilet paper.

• Volume growth in 2009 was similar to the average achieved over the review period, indicating that toilet paper use is growing at a steady rate, with consumption increasing year-on-year as more urban families become accustomed to using the product. Advertisements in French on television and experience of emigrants returning from Europe are influencing Algerians and fuelling the growth of toilet paper usage.

• The average unit price of toilet paper rose by 3% in current value terms in 2009. The increase was a result of a rise in the price of imported products, plus an increase in production costs for domestic companies.

• In Algeria, as in all Muslim countries, people traditionally use water rather than toilet paper for personal cleaning. The use of toilet paper is a recent development that came about as a result of the influence of Western countries, however it is still largely considered a complementary product and tends to be used after water. This has meant that toilet paper has faced difficulties in terms of gaining a firm foothold in Algeria, essentially because consumers do not feel the need to pay for a disposable product with which they are unfamiliar.

• The most common pack size for toilet paper in Algeria is four rolls, as consumers are generally unwilling to spend more and invest in a bigger pack, even if they might save money by purchasing a larger multipack.

• Lotus (Georgia-Pacific France) and Kleenex (Kimberly-Clark) are considered premium brands in Algeria. The images, associated with Western brands, as well as their price, position them as premium. Economy brands are generally the domestic offerings, such as Wafa (Wafa Faile SARL) and Maya (Maya SARL). These are not only bought by middle-income groups but also by upper-income groups, whose toilet paper consumption is the highest.

• Wet toilet paper is not sold in Algeria.

COMPETITIVE LANDSCAPE

• Wafa Faile SARL with its brand Wafa leads the Algerian toilet paper category with a 53% value share. This is because it is domestically produced and retails at an affordable price, while it is considered to be of acceptable quality.

• Wafa Faile SARL recorded the largest increase in value share 2009 with a three percentage point rise to reach 53%. This was primarily a consequence of its advantageous position as a result of new legislation that started to limit imports in the second half of 2009, being a domestic company; it did not have to worry about the rising import costs faced by its competitors. Tonic Emballage, on the other hand, recorded the largest decline in share, falling by almost four percentage points to 9% as a result of issues relating to corruption which led to the general manager being sent to prison in the summer of 2009. The negative publicity took a toll on sales of Tonic Emballage’s Tonic brand.

• International brands are all imported and have small shares because of their high price. Several domestic companies produce toilet paper despite its limited appeal in the country and benefit from advantageous legislation; thus domestic operators such as Wafa Faile SARL dominate category sales.

• Toilet paper is a product type that is largely limited to upper-income groups. However, it is not premium brands that lead sales but standard ones such as Wafa because demand remains small and consumers, even those on higher incomes, do not subscribe to the purchase of more expensive products when their consumption is not that frequent.

PROSPECTS

• Volume sales of toilet paper are expected to increase at a CAGR of almost 6% during the forecast period. Growth will be largely attributable to the sales within middle-income groups thanks to the increase in availability of domestic brands, a situation that will make toilet paper more accessible in terms of price and availability.

• Volume growth over the forecast period is expected to be at the same level as that achieved during the review period, whereas the anticipated constant value growth of almost 7% over the forecast period will be higher than that achieved during the review period. This is largely because domestic brands have kept their prices relatively low in order to attract consumers and stimulate consumption of toilet paper, however once toilet paper consumption becomes more widely accepted, at least in urban Algeria, they are likely to raise prices slightly, although not to the level of imported brands.

• If prices continue to increase at a higher rate over the forecast period, toilet paper sales may witness a degree of stagnation or at least slow down. This is because the product has already experienced difficulties in becoming widely accepted and used and higher prices could hinder sales growth as the product is not perceived to be essential.

• Domestic companies may seek to improve the quality of their products over the forecast period. Domestic production is not widely recognised for its good quality but is valued by consumers as it offers lower prices, which is generally more important to Algerians. However, the dominance of domestic products and their increasing sales could encourage operators to produce higher quality products in an effort to gain a foothold in the premium segment as well. This would also help to explain the higher constant value growth of toilet paper anticipated for the forecast period.

Source:   Euromonitor International