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Kimberly-Clark, Booshoot Ink Deal

KMB PG

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The world’s leading tissue manufacturer Kimberly-Clark Corporation (KMB - Analyst Report) inked a deal with the biotechnology company Booshoot, by virtue of which the former will get access to the high-yield fiber alternatives from Booshoot's proprietary bamboo propagation technology for manufacturing tissue products.

Booshoot has promised to deliver huge quantity of bamboo starts to Kimberly-Clark for testing. Initially, several species of giant bamboos will be tested if they are scalable and sustainable tree fiber alternative.

If the bamboo’s are proved viable then Kimberly-Clark can save several years that goes into growing trees before they become ready for the manufacturing of tissue products.

Booshoot scientists claim that while the Northern Softwood trees take more than 60 years to reach harvestable maturity, the new breeds of bamboo starts become harvestable in less than a decade. It is also capable of producing several times the fiber of traditional timber. These bamboos consume more carbon dioxide than normal trees, making them more eco-friendly

This technology will help Kimberly-Clark increase its productivity as well as boost sales in the near future. It will also shield the company from volatile price fluctuations in the world fiber market.

With this initiative, Kimberly-Clark will be able to save huge amount of primary wood fiber, which it sources from natural forests. This agreement will also help Kimberly-Clark to cut down usage of natural forest wood and will help it to go forward with its commitment of substituting about 50% of wood fiber taken from natural forests to alternate fiber sources by 2025.

Kimberly-Clark competes with Procter & Gamble Co. (PG - Analyst Report) and currently holds a Zacks #2 Rank (a short-term Buy rating). Over the long term, we provide a Neutral recommendation on the stock.

We are encouraged by the company’s leadership in several consumer products categories including diapers, paper goods, health care products and female personal care. Moreover, Kimberly-Clark focuses on improving its products through innovation in order to remain competitive and drive growth. These innovations are expected to help in improving brand position and market share in the consumer categories, going forward.

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