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Kleenex pulling out of Canada, Kimberly-Clark says

CANADA (From news reports) -- Kleenex, the brand that became the generic term for facial tissues, is pulling out of Canada.

On Friday, Kleenex maker Kimberly-Clark Corp. confirmed in an e-mailed statement that it will cease selling the brand's consumer-focused facial tissues in Canada.

"The decision was incredibly difficult for us to make, and we appreciate consumers allowing us into their homes over the decades, and to our retail partners for their support," said Todd Fisher, Kimberly-Clark Canadian vice-president and general manager, in a statement.

"We have been operating in a highly constrained supply environment, and despite our best efforts we have been faced with some unique complexities on the Kleenex business."

The company did not respond to requests to elaborate.

The loss of Kleenex, whose name is used interchangeably with its product, may leave Canadians wondering what to call it. Kleenex has been a staple in Canadian households since its development in the 1920s.

Canadians will still be able to purchase Kleenex's professional line of facial products and consumer-hand-towel products, as well as other Kimberly-Clark brands such as Cottonelle, Viva, U by Kotex, Poise, Depend, Huggies, Pull-Ups and Goodnites, according to the company.

David Soberman, a professor of marketing at the Rotman School of Management, said Kimberly-Clark had been facing challenges in the facial-tissue market in Canada, which were aggravated by recent inflationary pressures.

The first issue, he said, is that facial tissues are "commodity-like," which means it's inherently harder to win over consumers by differentiating the product.

The second, he explained, is that although the company's market share is nothing to sneeze at, Kleenex is currently not the No. 1 facial tissue in Canada. Kimberly-Clark currently holds 16.2 per cent of market share in branded facial tissue in the country, behind Kruger Products Inc., which owns the Scotties brand, with 35.5 per cent. And it has just a paper-thin lead over Canadian company Irving, owner of the Royale brand, with 15.9 per cent.

Prof. Soberman said that Kruger Products, which is based in Mississauga, has been more active when it comes to corporate sponsorship initiatives in Canada, such as partnering with the Canadian National Women's Curling Championship, the Scotties Tournament of Hearts.

Finally, he cited the growth of private labels in Canada. Most major retailers such as Costco, Walmart and Loblaws will typically carry one national brand, such as Kleenex, as well as their own brand, which is generally cheaper.

"This has created a very difficult environment for the brand that is not the biggest national brand," he explained, adding that, when pressured by higher costs, consumers tend to quickly move to generic versions of commodity-like products.

"I think the real issue is that they've lost a lot of momentum. It has to do with the nature of the category. It has to do with the growth of private labels, and it has to do with the fact that they're not No. 1 any more," he said.

In a note to clients, analyst Zachary Evershed of National Bank of Canada said industry players have been aware of Kleenex's imminent exit from the market for a few months and Kimberly-Clark's customers have already been making inquiries to secure replacements. The brand's exit, he said, "will leave a large vacuum" into which Kruger Products and Irving "will eagerly step," while also creating opportunities for Cascades Inc., the Quebec packaging and tissue company and provider of private labels.

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