Kleenex Exits Canada Citing Unusual Challenges in Market Dynamics

26 Aug, 2023

Kimberly-Clark, the parent company of Kleenex, has announced its departure from the Canadian market, attributing the decision to "unique complexities." The renowned manufacturer of products such as Huggies and Cottonelle has confirmed that its other offerings will continue to be available on Canadian store shelves.

Expressing the challenge of this resolution, Kimberly-Clark stated, "The decision was incredibly difficult for us to make." This development comes as a shock in a country where the Kleenex brand holds substantial recognition and familiarity. David Soberman, a marketing professor at the University of Toronto's Rotman School of Management, highlighted the strong association between the term "Kleenex" and facial tissues within Canada.

However, experts, including Mr. Soberman, believe the primary driving force behind this move was economic viability. Mr. Soberman stated, "No company pulls out of a market if they're making money." He emphasized that even though alternative explanations were provided, the underlying issue likely revolves around profitability.

Factors contributing to Kleenex's challenges in Canada include the competitive presence of Scotties, a facial tissue brand from Canadian company Kruger. Scotties' popularity is boosted by major Canadian sponsorship deals and its involvement in women's curling.

Notably, Kleenex's departure isn't an isolated occurrence. Other prominent American brands like Bugles, Bagel Bites, and Little Debbie products have similarly exited the Canadian market recently. Economists suggest that Canada's business environment may be less accommodating to foreign entities due to issues like inefficient government bureaucracy and high taxes, especially in comparison to the United States.

Economics professor Walid Hejazi from the Rotman School highlights several factors that make the US market more attractive, including its larger population, enhanced access to credit, fewer regulatory constraints, and greater investment in research and development. Moreover, Canada's protective policies in key sectors such as airlines, telecom, and finance may inadvertently discourage foreign involvement.

Consequently, Canadians will soon need to adapt to alternative facial tissue brands, as Kleenex prepares to withdraw its presence from the market.

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