As Kleenex leaves, Kruger moves quick to say it will ‘stay’

The surprise news that Kleenex brand facial tissues will soon disappear from shelves across Canada will mean a hole in the market, and Kruger Products showed it is moving quickly to fill it over the weekend.

Kimberly-Clark announced the move late last week citing difficulties of “operating in a highly constrained supply environment,” and facing “some unique complexities,” in a statement supplied to media.

While Kleenex is so well-known it’s often used as the generic term for facial tissues, it is the second most popular brand in Canada, with 16.2% of the market compared to Kruger’s Scotties which has about 35.5%, reports The Globe and Mail. Irving brand Royale is just behind Kleenex at 15.9%.

And while it is #1, Kruger will be eager to significantly increase its market share with such a large competitor withdrawing.

The first proof of that came over the weekend, when Scotties published a simple post to Instagram of its Scottie dog brand mascot and the headline: “We know how to ‘stay’”. (And “Nous sommes ici pour ‘rester’” in French.)

“We’re made right here and here to stay,” read the caption. “With eight plants across Canada, we are committed to providing high-quality tissues that will get you through the soft and tough stuff.”

A Monday press released also emphasized Kruger is made-in-Canada with a reminder that as part of “$1 billion asset investment, Kruger Products has a new high-quality facial tissue line starting up in Quebec in December 2023.”

Kruger’s CMO Susan Irving declined an interview request with The Message, but answered some questions via email.

“Given recent announcements in the facial tissue category, we have an opportunity to demonstrate our commitment to consumers, customers and communities across the country,” she said. “Our message on Scotties’ social channels is a reminder to Canadians that we’re ‘here to stay’, and we look forward to sharing further updates soon.”

While Irving wouldn’t say if Kruger knew Kimberly-Clark was going to pull Kleenex from Canada, Kruger vice-president Michael Manseau told CBC that there “were rumours recently that they [Kimberly-Clark] were thinking of exiting the market so we just wanted to make sure that we were ready to service more demand in Canada, which we are.”

And National Bank analyst Zachary Evershed said “industry players have been aware of the impending exit for a few months now, as [Kimberly-Clark’s] customers have been making inquiries to secure replacement supply.”

Evershed also suggested that, aside from cost pressures pushing consumers to choose more private label options, Kimberly-Clark’s lack of Canadian production was likely a key factor behind the decision.

“With one manufacturing facility in Canada, they are definitely shipping from south of the border into Canada [and] the farther you move it the less profitable those products,” he said. “It’s most likely a profitability play.”

David Brown