Mind Officially Blown

I just came across this analysis of the toilet paper shortage, and it makes a very strong argument that it is not primarily hoarding.

It turns out that there are two highly distinct toilet paper markets, the home market and the commercial market, and the products are different. Typically, they aren’t even made in the same paper mills.

Because people are staying home, the consumption of home toilet paper is up by as much as 40% because they are not using restaurant and workplace bathrooms and toilet paper.

The mills cannot retool quickly, so there is a shortage.

There’s another, entirely logical explanation for why stores have run out of toilet paper — one that has gone oddly overlooked in the vast majority of media coverage. It has nothing to do with psychology and everything to do with supply chains. It helps to explain why stores are still having trouble keeping it in stock, weeks after they started limiting how many a customer could purchase.

In short, the toilet paper industry is split into two, largely separate markets: commercial and consumer. The pandemic has shifted the lion’s share of demand to the latter. People actually do need to buy significantly more toilet paper during the pandemic — not because they’re making more trips to the bathroom, but because they’re making more of them at home. With some 75% of the U.S. population under stay-at-home orders, Americans are no longer using the restrooms at their workplace, in schools, at restaurants, at hotels, or in airports.

Georgia-Pacific, a leading toilet paper manufacturer based in Atlanta, estimates that the average household will use 40% more toilet paper than usual if all of its members are staying home around the clock. That’s a huge leap in demand for a product whose supply chain is predicated on the assumption that demand is essentially constant. It’s one that won’t fully subside even when people stop hoarding or panic-buying.


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