Just when it seemed like the toilet paper crisis was finally under control, Kimberly Clark is making headlines again.
The second largest toilet paper manufacturer in the U.S. is planning hikes to its list prices beginning in June 2021. This time, the primary disruptor is commodity prices rather than the pandemic hoarding that stripped shelves bare this time last year.
- Toilet Paper Prices Set To Rise, Again (Apr 1, 2021, Today)
This post is based on the NBC News article, Toilet paper, diapers, and other consumer products are latest to see price hikes, by Ben Popken, April 1, 2021; the CBS News article, Coronavirus pandemic forces sharp price hike on consumer goods, by Carter Evans, May 4, 2021; and the YouTube video in the Spotlight. Image source: eldar nurkovic/Shutterstock
1. What products are slated for price hikes?
Guidance: Kimberly Clark reports that prices will increase for baby products such as diapers, adult care products, and Scott bathroom tissue. The company’s product lines include Cottenelle, Viva, Kleenex, Kotex, and Huggies.
2. How do the new issues faced by Kimberly Clark differ from those which occurred in 2020?
Guidance: In 2020, the main problems involved the sudden nationwide demand which quickly depleted the already lean supply chain. Few stockpiles existed to cushion the sudden uptick in purchases, and raw material and packaging shortages made it hard to keep up with demand. Logistical issues related to higher demand for shipping and fewer truck drivers also slowed shipments and increased costs.
In spring and summer 2021, the main issue is that Chinese speculators bid up commodity prices for wood pulp, a key ingredient, by almost 50 percent. Some pulp suppliers in North America sent product there to capitalize on the price increases, which meant less was available for Kimberly Clark. Because the price of its key raw material jumped, Kimberly-Clark will have to raise its list prices. In addition, the blockage of the Suez Canal for a week in late March highlighted the interconnectedness of global supply chains and the logistics issues that affect companies around the world.
3. How much of an impact will the price increases have on final consumers?
Guidance: Price increases for the distributors to whom Kimberly-Clark sells finished goods such as toilet paper and diapers are expected to range from five to ten percent. It is then up to retail stores to decide to what extent they will pass those increases to the final consumers.
4. How might these planned price increases affect forecasting and the supply chain in the meantime?
Guidance: To the extent that consumers hear about the planned price increases and remember the challenges they faced in getting reasonably priced toilet paper (or any price toilet paper) last year, they may start trying to hedge the price increase by stocking up before it takes effect. This could once again cause shortages and make it hard for retailers to order quantities sufficient to keep the shelves stocked. It may also make it hard for Kimberly-Clark to keep up with another spike in demand.