Is Toilet Paper Signaling a Recovery?

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Sales of consumer staples tell us a lot about consumers' bottom lines. And these days, with Americans paying extra for quality tissue, a soft landing may be in sight.

Despite the government's best efforts to rebalance the economy toward exports and capital investment, our prosperity still overwhelmingly relies on consumer spending. And there are a lot of ways to measure the strength of shoppers: multiple confidence surveys, retail sales reports and various calculations of net worth.

When toilet paper was invented

Like toilet paper.

It's a surprisingly sensitive economic area. And the success of new premium bath tissue, along with an increase in demand, suggests that people are feeling confident enough to open their wallets and upgrade their bathroom experiences.Msn.Video.createWidget('PlayerAd1Container', 'PlayerAd', 304, 314, {"configCsid": "MSNmoney", "configName": "player-money-NIC-articles-inline", "player.vcq": "videoByUuids.aspx?uuids=a8a61a48-bbaf-4267-bfd1-ac411803cc8d,280b17be-0817-4026-b6cc-737ff0059464,93233b6c-b42b-4671-98c4-71e174c34703,84dfce2a-872c-4291-9597-974b06c9873b,24d8a9a4-0a10-4180-a412-f8590b02c1ac,f5cf965b-0c8f-445e-8e58-51a79c38bef7,9e277775-8eb1-4385-a2e4-c1e0f2885429,db452a76-88b8-494c-85f1-162e73334789,8b9285d9-98d7-435d-bf7c-6e07460ef9ae,5a9d374f-9e9c-40ca-9c13-7c1dd4f27cb7,eb9980cc-281c-4c39-bfae-6a8f6b8e7355,4ab1463e-2dad-44d3-8e67-f42d62d753c9,3de7f4ef-959c-4f44-a8b0-58298126d3ed", "player.fr": "iv2_en-us_money_article_NIC-toilet-paper-an-economic-indicator-inline"}, 'PlayerAd1');Msn.Video.createWidget('Gallery4Container', 'Gallery', 304, 150, {"configCsid": "MSNmoney", "configName": "gallery-money-articles", "gallery.linkbackLocation": "bottom_left", "gallery.numColsGrid": "3", "gallery.categoryRequests": "videoByUuids.aspx?uuids=a8a61a48-bbaf-4267-bfd1-ac411803cc8d,280b17be-0817-4026-b6cc-737ff0059464,93233b6c-b42b-4671-98c4-71e174c34703,84dfce2a-872c-4291-9597-974b06c9873b,24d8a9a4-0a10-4180-a412-f8590b02c1ac,f5cf965b-0c8f-445e-8e58-51a79c38bef7,9e277775-8eb1-4385-a2e4-c1e0f2885429,db452a76-88b8-494c-85f1-162e73334789,8b9285d9-98d7-435d-bf7c-6e07460ef9ae,5a9d374f-9e9c-40ca-9c13-7c1dd4f27cb7,eb9980cc-281c-4c39-bfae-6a8f6b8e7355,4ab1463e-2dad-44d3-8e67-f42d62d753c9,3de7f4ef-959c-4f44-a8b0-58298126d3ed;videoByTag.aspx%3Ftag%3Dmoney_dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3Dbest%2520of%2520money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1"}, 'Gallery4');No, we're not talking about a return to the free-spending housing bubble boom times, but this is another sign that normalcy is returning to the shopping aisles and that things are getting better.

A shift from one-ply to two-ply (and now three-ply) may not seem significant. But to ignore it is to miss an important point: Because people are literally flushing the money they spend on these products down the toilet, spending habits in this very personal area can reveal important clues about the financial health of shoppers. And that reflects on the growth potential for the economy and the stock market as a whole. It all depends on how the roll turns, and it's definitely turning. Off the low and on a roll According to RISI, an industry research provider, industrywide tissue production is up 13%, thanks to improvements in demand, after plunging in late 2008 and early 2009. Factory-capacity-utilization rates are also moving higher again.

Overall, bath tissue has been the fastest-growing paper sector in North America for the past 15 years, a distinction that looks set to continue. Click graphics to see interactive chartsProcter & GambleKimberly-Clark In Procter & Gamble's (PG, news, msgs) most recent earnings call, executives reported sales growth in the midteens for its ubiquitous Charmin brand. They also noted that people are moving back toward higher-priced discretionary items after a long focus on value. That recession-driven downshift was what spurred P&G to create the Charmin Basic product as a lower-cost option within its product portfolio to fend off less-expensive generics and store brands.

But now innovation is moving the other way. Thanks to this bounce-back in consumer interest, companies such as Procter & Gamble and Kimberly-Clark (KMB, news, msgs) are increasing their focus on new products and marketing to win the dollars of consumers moving up to higher-quality items like moist wipe tissues. Such small luxuries are the first steps up for people who are becoming more optimistic as they exit the dark recessionary mindset that has preoccupied so many of us over the past three years.

The trend isn't narrowly focused on toilet paper but includes many other personal-care paper products. You might have seen Kimberly-Clark's TV spots for its new Kleenex hand towels, which are designed as a more sanitary way to dry your hands in the bathroom. Huggies diapers now come in a denim-look material, while Pampers are thinner and more absorbent with the debut of its Dry Max technology -- which Kimberly-Clark calls its biggest innovation for the Pampers lineup in 25 years.

A brand of toilet paper, though, was the hottest new product of 2009, according to the Symphony IRI Group, a marketing research firm. The honor of best new nonfood consumer launch went to Georgia-Pacific's new Quilted Northern Ultra Plush bath tissue, the first three-ply product in the United States.

Over the past 15 years, less than one-quarter of all new consumer-product brands have exceeded the $7.5 million one-year sales hurdle IRI requires to earn "pacesetter" status. Georgia-Pacific's new toilet paper earned nearly $125 million in its first year, outpacing second-place Tide TotalCare detergent by $56 million. The latter's claim to fame is its ability to help keep clothes looking new for longer; Quilted Northern Ultra Plush is all about comfort.

A Georgia-Pacific vice president, Andrew Towle, acknowledges that "a lot of skeptics, both inside the company and out, question if it was the right to launch this ultrapremium product." But, he says, the traction it has gained indicates the strong desire for affordable indulgences in even the worst of times.

Continued: Loyal to their tissueMore from MSN Money

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Enter a term:Go to the New Investor Center Article IndexMsn.Flash.Build('http://blubedbuia01:83/i/BB/CA237289BFB4368EB4C4EA8225B66.swf', '9', 110, 159, 'button',{allowScriptAccess:'always'});Recent Articles by Anthony MirhaydariTime to be bold -- and buy into Europe 05/26/2010What 'Dr. Copper' says about the economy 05/19/2010Wal-Mart vs. Target: Who'll win the recovery? 05/14/2010Msn.Video.createWidget('Gallery8Container', 'Gallery', 500, 230, {"configCsid": "MSNmoney", "configName": "gallery-money-article-site-wide", "gallery.categoryNames": "New%20Investor%20Center;Top%20Picks;Market%20News;Most%20Watched%20Today", "gallery.categoryRequests": "videoByTag.aspx%3Ftag%3Dmoney-campaign_new-investor%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3DBest%2520of%2520Money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3DMoney_Dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Fmk%3Dus%26sf%3DDailyCount%26st%3D1%26ns%3DVC_Supplier%26tag%3DMSNmoney%26vs%3D0", "gallery.categoryTabs": "New%20Investor%20Center;Top%20Picks;Market%20News;Most%20Watched%20Today", "gallery.defaultTab": "New%20Investor%20Center", "gallery.fg": "gallery_site_wide_articles-NIC", "gallery.from": "en-us_msnmoney-site-wide-gallery-NIC", "gallery.linkback": "http://articles.moneycentral.msn.com/learn-how-to-invest/new-investor-center-video.aspx", "gallery.linkoverride": "http://articles.moneycentral.msn.com/learn-how-to-invest/new-investor-center-video.aspx?cp-documentid=", "gallery.permalink": "http://articles.moneycentral.msn.com/learn-how-to-invest/new-investor-center-video.aspx?cp-documentid="}, 'Gallery8');Fund data provided by Morningstar, Inc. © 2009. All rights reserved.StockScouter data provided by Gradient Analytics, Inc.Quotes supplied by Interactive Data.MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.msft.msn._ic.cid='m8keruecpnrr20ntcqdbnxiyxuh5tkhb';msft.msn._ic.pst=false;msft.msn._ic.pgn=1; Join the discussion!Add a commentShow commentsSort by:Newest firstOldest first_uc2f12('iucGo');1 - 3 of 3PreviousNextalinator #1Wednesday, June 09, 2010 10:46:21 PMAre you kidding me?ReplyReport AbuseNativeSunshine #2Wednesday, June 09, 2010 11:08:52 PM

Anthony Mirhaydari - I suggest discussing this topic with the people that make the household TP purchases, aka women.

 

Personally, I have been buying name-brand TP while unemployed because it is CHEAPER if you are a savy shopper.  Name-brand always distribute Sunday coupons and periodically go on sale at stores.  If you wait for the item to be on sale and buy it with the added coupon (even better for double coupon stores), you will end up paying less or the same as generic and get the bonus of avoiding the sandpaper experience to your rear end.

 

Just because I purchased name-brand TP, the economy is not doing any better, and I am not anymore confident in it.  I am just being a savy shopper and getting better quality for my purchase.

ReplyReport Abusedharmabum1 #3Wednesday, June 09, 2010 11:34:08 PMI can afford the 12 ply (it's like flushing a blanket.)  I still buy the cheap stuff, maybe it's a guy thing?  Maybe it keeps me humble?  Maybe I like sandpaper?I just can't see myself wasting money, on human waste, especially if it'smy own? ReplyReport Abuse1 - 3 of 3PreviousNext_ucf13('0'); _iuc2Om1('MSNPortalInlineComments','Initial_Load_Comment_View','http://articles.moneycentral.msn.com/learn-how-to-invest/your-toilet-paper-and-the-recovery.aspx?','en-us');Are you sure you want to delete this comment?Report AbusePlease help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease notify us using the Report abuse form below. We will investigate your report and take appropriate action against offenders. We report all illegal activity to authorities.CategoriesSpam or advertisingChild pornography or exploitationProfanity, vulgarity or obscenityCopyright infringementHarassment or threatOtherAdditional comments(optional)100 character limit To add a comment, pleasesign inMSN privacyLegalAdvertiseRSSHelpFeedbackSite mapAbout our ads© 2010 Microsoft

A shift from one-ply to two-ply (and now three-ply) may not seem significant. But to ignore it is to miss an important point: Because people are literally flushing the money they spend on these products down the toilet, spending habits in this very personal area can reveal important clues about the financial health of shoppers. And that reflects on the growth potential for the economy and the stock market as a whole. It all depends on how the roll turns, and it's definitely turning. Off the low and on a roll According to RISI, an industry research provider, industrywide tissue production is up 13%, thanks to improvements in demand, after plunging in late 2008 and early 2009. Factory-capacity-utilization rates are also moving higher again.

Overall, bath tissue has been the fastest-growing paper sector in North America for the past 15 years, a distinction that looks set to continue. Click graphics to see interactive chartsProcter & GambleKimberly-Clark In Procter & Gamble's (PG, news, msgs) most recent earnings call, executives reported sales growth in the midteens for its ubiquitous Charmin brand. They also noted that people are moving back toward higher-priced discretionary items after a long focus on value. That recession-driven downshift was what spurred P&G to create the Charmin Basic product as a lower-cost option within its product portfolio to fend off less-expensive generics and store brands.

But now innovation is moving the other way. Thanks to this bounce-back in consumer interest, companies such as Procter & Gamble and Kimberly-Clark (KMB, news, msgs) are increasing their focus on new products and marketing to win the dollars of consumers moving up to higher-quality items like moist wipe tissues. Such small luxuries are the first steps up for people who are becoming more optimistic as they exit the dark recessionary mindset that has preoccupied so many of us over the past three years.

The trend isn't narrowly focused on toilet paper but includes many other personal-care paper products. You might have seen Kimberly-Clark's TV spots for its new Kleenex hand towels, which are designed as a more sanitary way to dry your hands in the bathroom. Huggies diapers now come in a denim-look material, while Pampers are thinner and more absorbent with the debut of its Dry Max technology -- which Kimberly-Clark calls its biggest innovation for the Pampers lineup in 25 years.

A brand of toilet paper, though, was the hottest new product of 2009, according to the Symphony IRI Group, a marketing research firm. The honor of best new nonfood consumer launch went to Georgia-Pacific's new Quilted Northern Ultra Plush bath tissue, the first three-ply product in the United States.

Over the past 15 years, less than one-quarter of all new consumer-product brands have exceeded the $7.5 million one-year sales hurdle IRI requires to earn "pacesetter" status. Georgia-Pacific's new toilet paper earned nearly $125 million in its first year, outpacing second-place Tide TotalCare detergent by $56 million. The latter's claim to fame is its ability to help keep clothes looking new for longer; Quilted Northern Ultra Plush is all about comfort.

A Georgia-Pacific vice president, Andrew Towle, acknowledges that "a lot of skeptics, both inside the company and out, question if it was the right to launch this ultrapremium product." But, he says, the traction it has gained indicates the strong desire for affordable indulgences in even the worst of times.

Continued: Loyal to their tissueMore from MSN Money

 1 | 2 | next >

Need answers fast? Find definitions for investing or financial terms.

Anthony Mirhaydari - I suggest discussing this topic with the people that make the household TP purchases, aka women.

 

Personally, I have been buying name-brand TP while unemployed because it is CHEAPER if you are a savy shopper.  Name-brand always distribute Sunday coupons and periodically go on sale at stores.  If you wait for the item to be on sale and buy it with the added coupon (even better for double coupon stores), you will end up paying less or the same as generic and get the bonus of avoiding the sandpaper experience to your rear end.

 

Just because I purchased name-brand TP, the economy is not doing any better, and I am not anymore confident in it.  I am just being a savy shopper and getting better quality for my purchase.

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