The middle class is credited as amongst the principal factors for growth in tissue and hygiene. However, not only are middle class households showing variations in incomes and spending across markets, but households are undergoing transformation, which will impact the industry in the short- and long-term. The report looks at rising diversity and adversity in the world of middle class consumers to assess industry strategies and the need to adapt to the changing conditions to ensure future growth.
While tissue and hygiene industry continues to see growth in retail, driving value is becoming increasingly challenging. Over 2009-2014, average global spending on retail tissue and hygiene grew by a 1% CAGR in constant terms. Middle class remains a factor in supporting growth. However, its composition and spending power are changing, calling for a more complex strategies for short-mid and long-term industry growth
The marketplace sees polarising tendencies, with households at the lower-end of the middle class income range adapting to reduced budgets. At the other end of the spectrum is a wealthier, typically 65+, middle class segment with significant purchasing power. Value and “value for money” are key to attracting younger and those on reduced budget, while value-added products fit in with the needs of wealthier elderly consumers.
The ethnic composition of the middle classes in the developed countries is changing. In the US, the Hispanic population is seeing significant growth, and close to half of Hispanics identify themselves as middle class, creating opportunities to drive consumption and brand loyalty through targeted marketing and product development, such as scented toilet paper which is popular among many Latino consumers
Products with natural and eco-friendly claims present an opportunity to support value growth in developed markets. However, the “green path” requires significant investment into product development, ingredient transparency and consumer relationship to ensure consumer trust and repeat purchases. Furthermore, developing cost-efficient shopping options can ensure wider consumer acceptance
China’s urban middle class continues to show strong preferences for premium and imported products. Reaching the country’s rural middle class is also on the agenda, through wider portfolio of products and local partnerships. On the other hand, Russia and Brazil are facing tough economic realities, with consumers turning to economy brands, domestic (i.e. cheaper) brands, and bulk purchases to save. The conditions are ripe for local players and private label to build brand loyalty in downturn as a platform for long term growth.
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