Kimberly-Clark Corporation (US)

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Core brands Kleenex and Scott make Kimberly-Clark the world's leading maker of tissues and paper towels, and it ranks just behind Procter & Gamble as the US's # 2 household and personal care manufacturer, though it keeps a significantly lower profile than its rival. It was one of the first companies in the world to develop commercial toilet paper, was the inventor of disposable paper tissues and went on to become a pioneer in feminine hygiene with the introduction of Kotex sanitary napkins. The original business doubled in size in 1995 with its acquisition of long-time rival, the Scott Paper Company. Much of the current group's attention is focused on its battle with P&G in the diaper, bathroom tissue, paper towel and feminine protection markets. K-C can console itself with the knowledge that it still outranks its much larger rival in paper products; while its Huggies brand takes a distant second place in the global nappy market. See also:

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 8th Mar 2018: Last week's management overhaul at J Walter Thompson may well have been inspired by advance knowledge of the news, announced a few days later, that major global client Kimberly-Clark is calling a review of its creative business. The account has been split between J Walter Thompson and Ogilvy. However, while Ogilvy is defending the account, JWT was reportedly eliminated from the pitch at an early stage. Media, held by Mindshare, is not up for review, but the pitch comes at a difficult time for WPP, just days after its worst set of financial results for several years.

Adbrands Weekly Update 20th Apr 2017: Kimberly-Clark raided Mars to fill the role of group president North America, vacant following Michael Hsu's promotion to global president & COO. The position will be taken by Larry Allgaier, former North America president for Mars Petcare. Before Mars, Allgaier headed the global OTC healthcare of Novartis, and spent 20 years at P&G.

Adbrands Weekly Update 17th Nov 2016: Kimberly-Clark elevated North American chief Michael Hsu to a new role as president & COO from Jan 2017, making him effective heir apparent to current group chairman & CEO Tom Falk. A new North America president will be announced in due course, but in his new role Hsu will add oversight of K-C's international operations. That development prompted the resignation of current president international Elane Stock.

Adbrands Weekly Update 16th Jun 2016: Kimberly-Clark named Scott Usitalo as global chief marketing officer, reporting to president of global brands Tony Palmer. Usitalo was previously president of North America family care.

Adbrands Weekly Update 25th Feb 2016: P&G continues to trim its portfolio ahead of the sale of much of its beauty portfolio to Coty. Its latest divestment is leading Latin American antibacterial bar soap Escudo, which has been acquired by Kimberly-Clark. Though best-known for its paper products, K-C has recently launched a push into the personal cleansing market. Its Kleenex brand was extended into workplace liquid soap dispensers in 2014, and a range of different Kleenex bar soaps were introduced in Mexico last year for the consumer market.


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Background

Free for all users | see full profile for current activities: Kimberly-Clark was founded in 1872 to manufacture high quality newsprint. But of the four founding partners, only John Kimberly and Charles Clark received billing in the company name. (Somehow a company named after silent partners Havilah Babcock and Frank Shattuck wouldn't have the same ring to it). Although three of the founders subsequently left the company, Kimberly went on to run the business until his death in 1928. 

A few years after the incorporation of Kimberly, Clark & Company, brothers Seymour and Irvin Scott set up their own business in Philadelphia, the Scott Paper Company. Both companies prospered, with the Scott Company quickly cornering the market in "bathroom tissue" - a product that no one wanted to talk about but every American household required. Their Waldorf toilet paper was launched in 1902, although Scott Paper had actually been making the product unbranded under private contract for merchants since 1890. It was enormously successful, generating almost two-thirds of the company's sales by 1920, and becoming the world's biggest-selling paper by 1940. Scott was also responsible for introducing the first disposable tissues in 1907, enlarging their toilet paper sheets to create what they called "Sani-Towels". These were marketed to prevent the spread of germs in public bathrooms, and also in schoolrooms against the spread of colds. 

Kimberly-Clark discovered another use for their paper-based products in the early years of the 20th Century. In 1915 they developed Cellucotton, a form of absorbent creped cellulose designed to replace more expensive cotton in military bandages during the First World War. However, the company's sales managers soon became aware that nurses serving in military hospitals had found another important use for Cellucotton: as a cheap disposable alternative to cloth-based sanitary napkins which had to be washed and re-used. As a result, Kimberly-Clark was persuaded to launch the first feminine towel using the same substance in 1920 under the brandname Kotex. But this new line did not fit comfortably with the company's principal operation of coated papers for magazine and newspapers. As a result, the Cellucotton business was run separately as the International Cellucotton Corporation. 

The problems facing this new product were immense. Because of the taboos associated with menstruation, International Cellucotton faced an uphill struggle making its huge potential audience aware even of the product's existence. Even if they were aware, most women were too shy to ask for it in shops. Advertising for Kotex was equally shy about explaining what the product was for. Early ads depicted a nurse comforting a wounded solider, while the accompanying copy explained timidly that she used a kind of bandage too, without offering any further explanation. The product soon came to the attention of Albert Lasker, the legendary advertising tycoon who owned Lord & Thomas (later Foote Cone & Belding). He took it upon himself to attend Kimberly-Clark's offices in person while his salesmen pitched for the account. When asked why he was so interested by Kimberly's product, he explained with a grin that "The products I like to advertise most are those that are only used once!"

Lord & Thomas won the account and quickly set about breaking down the taboos associated with sanitary napkins. Lasker set Kimberly-Clark the task of securing retailers' assistance in a new method of distribution which was then widely advertised in newspapers and magazines with a female readership. Instead of having to ask for Kotex by name, women could pick up discreetly marked packages from displays in-store and simply deposit the requisite 50 cents in a specially designed box. Magazines such as Ladies Home Journal were persuade to support the advertising with educational articles about menstruation. (In addition, Lasker was so convinced that he could make Kotex work that he persuaded Kimberly-Clark to sell him $1.5m of stock in International Cellucotton Products, which he later sold for an enormous profit).

Gradually sales began to take off, and in 1924, Lord & Thomas was rewarded with another of Kimberly-Clark's "difficult" products, Kleenex ‘Kerchiefs. These had been introduced by Kimberly-Clark as a disposable makeup remover for women. However,Lasker instead devised a campaign which depicted cloth handkerchiefs as a germ-ridden menace to society and championed instead this "handkerchief you can throw away". Sales rocketed. 

During the 1930s and 1940s, K-C experimented widely with other paper or crepe-based substances, launching a series of new products, although few lasted the course. Each bore the familiar company K in its brand - for example, home insulation wadding Kimsul; a synthetic leather made from crepe and latex named Kimflex; packaging crepe Kimpak; Kacetex for making bags to store and carry gasoline; and Kimpreg plastic surfacing for kitchens and worktops. During WWII, K-C turned its hand to munitions, making fuses and even anti-aircraft housings. 

After establishing manufacturing plants in Europe and Latin America in the 1960s, the company committed itself to a new direction in 1971, pulling out of coated papers and pulp to concentrate on more profitable consumer products. The company took a huge gamble on launching a disposable diaper against Procter & Gamble, whose Pampers brand had effectively invented that market. K-C's first diapers, Kimbies, were launched in 1968, but were withdrawn after consumers complained of excessive leaking. (This disastrous exercise also cured the company of its obsession with K-brands). A new version, Huggies, appeared a decade later, and quickly decimated P&G's hold on the sector, reducing Pampers' US share from 70% to 40%. In 1980 K-C tackled another taboo with their Depend adult incontinence pads. Pull-Ups training pants - a K-C invention - were first marketed in 1989. The group also briefly dabbled in other areas, including a small domestic airline, later sold.

Despite the global dominance of Kleenex, Kimberly-Clark's share of the entire tissue market was still limited. Scott Paper had also expanded successfully during the early 20th century, establishing a string of joint ventures around the world, including Bowater-Scott in Australia and the UK, Sanyo Scott in Japan, and others. By mid-century, the company was by far the world's leading toilet tissue manufacturer. But during the 1960s, the company's domestic market came under intense pressure from Procter & Gamble's newly launched Charmin bathroom tissue, which had toppled Scott to become US market leader by the following decade. Other problems followed for Scott, including an enormously expense upgrade of the company's various production facilities around the world. By 1994, when Scott announced 8,300 job cuts, the company was a prime acquisition target. K-C agreed a $9.4bn bid, allowing the two companies to combine forces against their joint enemy. To appease the regulators, the group was obliged to sell its Baby Fresh Wipes brand. Ironically the buyer was arch rival P&G, which paid $220m.

Also in 1994, Huggies launched in Europe, starting a fierce price war with Procter & Gamble. This conflict left European manufacturers struggling to compete, and K-C rescued failing French diaper company Peaudouce in 1996. In 1999 K-C expanded its European business with the $365m acquisition of Attisholz, a Swiss-based company making a range of commercial and consumer tissue brands including Hakle and Tela. As a result of steady and relentless aggressive marketing, K-C gradually wrested away P&G's leadership of the diaper sector, first in the US, and then elsewhere. Late in the decade the group agreed an anti-P&G alliance with Unilever, who assisted with the roll-out of the Huggies brand in Latin America and India. Following the acquisition of local Brazilian nappy manufacturer Kenko, K-C took top slot in that territory in 1998. [See Pampers profile for more].

In 2001 the group strengthened its position in Europe, buying Linostar, a leading Italian diaper manufacturer that produces and markets Lines, Italy's second largest diaper brand, with 21% share. Also that year, the group took control of its Australian distributor, formerly a joint venture. In 2003 it also bought out its joint venture partners in its Peruvian and Brazilian subsidiaries. However, revived aggressive marketing by Procter & Gamble re-established that company's position in the diaper sector in most international markets from 2003 onwards. See full profile for current activities


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