Hybrid Non-Woven Technology for the Manufacture of Cotton Personal Care Wipes Rick Jezzi A.D. Jezzi & Associates, LLC Consultants in Personal Care Absorbent Products, Non-Woven and Tissue and Towels

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 2 The Market Global Wipes Market Global Wipes Market $7.1 billion in 2006 in all categories$7.1 billion in 2006 in all categories Growing at 4-6% per yearGrowing at 4-6% per year Grew at 38% per year growth since 2001Grew at 38% per year growth since 2001 North American Market North American Market $2.1 Billion in sales$2.1 Billion in sales The pre-moistened baby wipe market in NA isThe pre-moistened baby wipe market in NA is ~$850 MM in 2006

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 3 Global Personal Wipes Phenomenon….. Source: Euromonitor Int’l

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 4 Outlook for Personal Care Wipes Source: Euromonitor Int’l

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 5 Baby Wipes Market In North America (U.S. and Canada) retail sales for baby wipes was $850 million in 2003 with a decline of near 6% in 2004 to $804 million. In North America (U.S. and Canada) retail sales for baby wipes was $850 million in 2003 with a decline of near 6% in 2004 to $804 million. Baby wipe volume continues to drop, however dollar sales appear to be increasing slightly due to higher selling pricesBaby wipe volume continues to drop, however dollar sales appear to be increasing slightly due to higher selling prices Increased popularity of specialty wipes for specific tasks has brought a decline in baby wipesIncreased popularity of specialty wipes for specific tasks has brought a decline in baby wipes Dropping birth rates contribute to this decline of baby wipe useDropping birth rates contribute to this decline of baby wipe use The market is nearly maturedThe market is nearly matured

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 6 Baby Wipes Product Innovation In response to lagging sales, baby wipes makers will turn to innovation: In response to lagging sales, baby wipes makers will turn to innovation: Offer products with advanced formulasOffer products with advanced formulas Target specific needs of its consumersTarget specific needs of its consumers Target specific demographicsTarget specific demographics

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 7 Baby Wipes Product Trends Consumer appealing packaging Consumer appealing packaging New fragrances New fragrances Different types of lotions Different types of lotions Cotton based substrates Cotton based substrates Spunlace based substrates Spunlace based substrates Flushability Flushability Source: Household & Personal Care Wipes/ Sept. 2005

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 8 Product Trends: Cotton Cotton does not process well in non-woven equipment. Cotton does not process well in non-woven equipment. The prices of polypropylene and viscose have been driven upwards due to the rising cost of petroleum, making the cost of cotton more comparable, but still slightly more expensive. The prices of polypropylene and viscose have been driven upwards due to the rising cost of petroleum, making the cost of cotton more comparable, but still slightly more expensive. Benefits of cotton wipes: Benefits of cotton wipes: BiodegradabilityBiodegradability Environmental friendlinessEnvironmental friendliness AbsorbencyAbsorbency Natural feelNatural feel Wet strengthWet strength SoftnessSoftness FlexibilityFlexibility Source: Household & Personal CareWipes/ Sept. 2005

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 9 Product Trends: Cotton Consumer studies indicate that the majority (80%) of consumers view cotton’s key attributes (soft, natural, absorbent and less irritating) as appealing in baby wipes products. Consumer studies indicate that the majority (80%) of consumers view cotton’s key attributes (soft, natural, absorbent and less irritating) as appealing in baby wipes products. At least one major wipes converter has benefited from cotton and is set to launch a baby wipe containing cotton. At least one major wipes converter has benefited from cotton and is set to launch a baby wipe containing cotton. Major brands are shy to move to cotton because its cost is still slightly higher than petroleum based materials. Major brands are shy to move to cotton because its cost is still slightly higher than petroleum based materials.

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 10 Product Trends: Flushability There is a need for a truly flushable wipe. There is a need for a truly flushable wipe. True flushability means behaving like toilet tissue in the sanitary waste disposal system, and biodegrading similarly in post treatment. True flushability means behaving like toilet tissue in the sanitary waste disposal system, and biodegrading similarly in post treatment. Some wipes that are flushable do not perform their task well. Some wipes that are flushable do not perform their task well. Wipes that perform well are sometimes not flushable based on size and thickness. Wipes that perform well are sometimes not flushable based on size and thickness.

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 11 Hybrid Non-Woven Process Hybrid: Combination of two existing processes to deliver new non-woven materials (examples) Hybrid: Combination of two existing processes to deliver new non-woven materials (examples) Spunbond and Spunlace (Hydraulic Needling)Spunbond and Spunlace (Hydraulic Needling) Spunbond and Meltblown (SMS)Spunbond and Meltblown (SMS) Meltblown and Air FormingMeltblown and Air Forming Tissue(Paper Making) and SpunlaceTissue(Paper Making) and Spunlace (Hydraulic Needling)

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 12 Meltblown and Air-Forming “Old Process” “Old Process” Patents issued in 1976Patents issued in 1976 Long since expired Long since expired Captive to two companies Captive to two companies Entrepreneurial innovation lacking Entrepreneurial innovation lacking Flexible process that allows combination: Flexible process that allows combination: Different short or staple fibersDifferent short or staple fibers Different melt-spin-able fibersDifferent melt-spin-able fibers

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 13 Meltblown and Air-Forming

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 14 Meltblown and Air-Forming Originally designed for short wood pulp fibers Originally designed for short wood pulp fibers Roll pulpRoll pulp Defibrator (lickerin type unit)Defibrator (lickerin type unit) Air Formed into Meltblown Fiber StreamAir Formed into Meltblown Fiber Stream Meltblown produces very small diameter fibers Meltblown produces very small diameter fibers Intertwine the shorter fibers to form substrateIntertwine the shorter fibers to form substrate Mechanical Mechanical Electrostatic forces Electrostatic forces Melt spinning system allows for use of other polymers which can be biodegradable or flushable Melt spinning system allows for use of other polymers which can be biodegradable or flushable

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 15 Meltblown and Air-Forming Polymer system Polymer system Typically PolypropyleneTypically Polypropylene It can be any melt spinnable fiberIt can be any melt spinnable fiber PET, PA, PE etc.. PET, PA, PE etc.. New Biodegradable or Flushable Polymers can be used New Biodegradable or Flushable Polymers can be used PLA, PHA, aliphatic-co-Poyesters, PEO, PVOH etc..PLA, PHA, aliphatic-co-Poyesters, PEO, PVOH etc..

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 16 Meltblown and Air-Forming New air forming device developed New air forming device developed Uniformly distributes fibers into the meltblown fiber matrixUniformly distributes fibers into the meltblown fiber matrix Uses conventional hammermill as defibratorUses conventional hammermill as defibrator Simplifies the process and reduces capital cost Simplifies the process and reduces capital cost System allows for use of “cotton linters” in lap form as the fiber source System allows for use of “cotton linters” in lap form as the fiber source

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 17 Meltblown and Air-Forming Cotton linters are not too expensive and can allow for some of the benefits of cotton fibers in the non-woven. Cotton linters are not too expensive and can allow for some of the benefits of cotton fibers in the non-woven. Blends of meltblown fiber (Polypropylene) and cotton are in the range of 40/60 to 60/40 for wipes Blends of meltblown fiber (Polypropylene) and cotton are in the range of 40/60 to 60/40 for wipes If more of the “cotton fiber” benefits are desired process a forming system is available to handle staple fiber If more of the “cotton fiber” benefits are desired process a forming system is available to handle staple fiber Modification of fiber prep process and air forming process will be requiredModification of fiber prep process and air forming process will be required

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 18 Meltblown and Air-Forming

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 19 Meltblown and Air-Forming

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 20 Meltblown and Air-Forming

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 21 Cost Structure Capital: $6-9MM Capital: $6-9MM Throughput: Throughput: 1,800 to 3,750MT/yr1,800 to 3,750MT/yr Efficiency: 85% Efficiency: 85% Waste: 8% Waste: 8% Raw material Cost: Raw material Cost: Cotton: $ /MT Polypropylene: $1.58/kg Ratio 50/50 Ratio 50/50 Materials: $1.60/kg Materials: $1.60/kg Converting: $0.44/kg Converting: $0.44/kg SG&A: $0.07/kg SG&A: $0.07/kg Depreciation: $0.27/kg Depreciation: $0.27/kg COGS: COGS: $2.30-$2.50 per kg $0.15 to $0.18 per 65 gsm sqm

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 22 Opportunities The modification of the forming system for an “old” process allows for: The modification of the forming system for an “old” process allows for: New non-woven substrate with unique properties imparted by the incorporation of cotton fibersNew non-woven substrate with unique properties imparted by the incorporation of cotton fibers Provides the possibility of truly “flushable” substratesProvides the possibility of truly “flushable” substrates Allows for participation in the large growing market of personal care wipes with new a new product Allows for participation in the large growing market of personal care wipes with new a new product

Jan. 10, 2007 A.D. Jezzi & Associates, LLC 23 THANK-YOU FOR YOUR ATTENTION THANK-YOU FOR YOUR ATTENTION ANY QUESTIONS?