Big Lots ObjectiveBig Lots would like to offer its customers a private label store brand offering on an (NBE) toCottonelle 48ct Flushable Pop-Up Plastic Tube and 84ct Flushable Zipper Lock Bag. The privatelabel program will start out as an In/Out Program and eventually transition to a Never/OutProgram when stores are reset. Big Lots expects to sell approximately 168,000 – 210,000 unitsof the 48ct Flushable Pop-Up Plastic Tub and 672,000 – 630,000 units of the 84ct FlushableZipper Lock Bag.

Situation AnalysisWhen we last spoke you mentioned that Big Lots is considering using a thicker grade substratethen the substrates received from us and the other suppliers, and that product performanceand finger penetration (i.e. Poke Through) were the drivers that prompted the change indirection. As it stands, Big Lots is waiting on 3rd party test results on the Flushable – Dispersibleclaims being made by the supplier of the proposed thicker substrate material. Fast forward,when we recently contacted our raw material supplier to inform them about the amount of rawmaterial needed should we win part of the bid or all of the bid, we were told they would not beable to supply us on since it would be in violation of the supplier agreement in place withRockline Industries.

(NBE) Point of Parity vs. Point of Difference ClaimsWhile it is important to establish a Point of Difference, it is equally important to nullify the competition (i.e. National Brand and Other Brands) by matching Point of Parity. The assessmentof customer desirability criteria for Points of Difference should be assessed against the following:

• Relevance

• Distinctiveness

• Believability

And, the assessment of the deliverability criteria for Points of Difference looks at the following:

• Feasibility

• Communicability

• Sustainability

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PCI’s Approach to Contract Manufacturing As a young emerging Wet Wipe manufacturer, we know first-hand about the need todifferentiate in order to survive and grow in today’s highly competitive business environment,and we understand the logic behind an (NBE) or Better Then (NBE) marketing strategy. However, as a contract manufacturer of private label store brands and other company ownbrands, it is up to us to perform the necessary due diligence before entering into a strategicpartnership. Being fully informed enables us to proactively recommend solutions that bestmeet each individual retailer’s needs.

PCI’s Position on Thicker Substrate ClaimWe strongly disagree with the other suppliers claim that a thicker grade substrate decreases thechance of (poke through), and therefore, is a better performing product. The grade, thickness,size and weight of a substrate are considered distinguishing technical factors and have norelevance whatsoever on (poke through) strength and product performance. Productperformance relative to (poke through) strength is directly associated with the way fibers,binders and other raw materials interact within the application process during manufacturing. More importantly, the thicker grade substrate claim doesn’t qualify as a legitimate Point ofDifference since it fails to meet the desirability and deliverability criteria outlined above. Finally,the concept of using a thicker grade substrate in a Flushable product is counter intuitive to theway moist toilet tissue is made since this type of product has the problem of Dispersibility beinginversely proportional to strength in-use; meaning if you make it stronger, it becomes lessDispersible.

PCI’s Position on Raw Material Supplier AgreementApparently, the supplier agreement in place with Rockline Industries prohibits the raw materialsupplier from selling us. Since Rockline Industries is the contract manufacturer for the WalmartEquate Brand, and since they use the same substrate that we intended to use in the Big LotsBrand, we SPECULATE that somehow, someone found out that Big Lots intended to go-to-market with their own (NBE) to Cottonelle Store Brand Label that would be priced lower thanthe Walmart Equate Brand Label at retail. Also, the sheer volume of raw material needed tomanufacture 840,000 units is significant enough to get people’s attention. (See below.) As aresult, they have decided not to supply us with the substrate material for this opportunity. Itseems like the course of action we outlined for Big Lots completely turned direction themoment the vendor that raised the thicker substrate claim became involved, and that’s thereason I asked you if Rockline Industries was the other vendor.

Raw Material Substrate Big Lots Raw Material Substrate Formula

48ct Plastic Tub with Pop-Up Lid = 1.555 sq yards per unit X 210,000 = 326,667 sq yards.

84ct Refill in Zipper Lock Bag = 2.722 sq yards per unit X 630,000 = 1,715,000 sq yards.

Total = 2,041,667 sq yards.

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Raw Material Supplier Reduction in Nonwoven Substrate Weight Nonwoven raw material suppliers are focused on delivering innovative products that deliverbetter performance with reduced resource use and reduced environmental impact–all at anaffordable price. An increase in thickness of an MTT substrate for any reason is contradictory tothe industry’s movement towards sustainability and point of concentration of nonwoven rawmaterial substrates environmental impact throughout its entire life cycle from cradle to grave. Research is currently being done on the following:

• Lighter-weight materials that use less polymer

• Polymers made from renewable materials

• Biodegradable polymers for use in Flushable products that provide more flexibledisposal options

• Use of recycled polymers

Valid (NBE) Claim to the National Brand Cottonelle In order to make a valid (NBE) Claim to Cottonelle the product offering must first meet all of thecompetitive Points of Parity of the national brand outlined below:

• Flushable

• Breaks Apart When Flushed

• Sewer-and Septic-System Safe

• Alcohol Free

INDA/EDANA Technical Assessment for Flushability The industry guidelines for testing Flushability is a straight-line technical assessment using 7core tests, all of which must be passed to support a Flushable claim. (See below.)

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INDA/EDANA Definition of Flushable • Flushable products are tested in accordance with trade association guidelines. When

used as directed, the wipes clear properly maintained toilets, drain lines, sewers andpumps, and are compatible with on-site septic and municipal wastewater treatmentsystems.

INDA/EDANA Definition of Dispersible • Dispersible products are tested in accordance with trade association guidelines. When

used as directed, the wipes do not clog service lateral pipes, and when passing throughservice laterals do not get hung up on closely-spaced cross bars that serve to filter outsolid waste entering the facilities.

(NBE) Use of Safe Flush IconThe Safe Flush icon on the Cottonelle brand label acts as a visual reminder to the customer thatCottonelle Wipes are Flushable and Sewer-and Septic-System Safe. The icon can only be usedon (NBE) product offerings that receive a favorable (NBE) comparison rating to Cottonelle FreshFlushable Moist Wipes from a recognizable and approved third party regulatory agency.

NSF International CertificationNSF International’s Flushable Consumer Products Program utilizes the INDA/EDANA FlushabilityGuidelines as a basis for testing under this program. Although, the INDA/EDANA Guidelinesdetermine which tests should be conducted, all products must generally undergo the followingtests. These tests encompass all of the various U.S. size pathways that a Flushable product mayfollow in the wastewater system. It’s the responsibility of the raw material supplier to testclaims they are espousing prior to commercializing their product.

• Toilet Bowl and Drain Line Test

• Dispersibility Test

• Column Settling Test

• Aerobic and Anaerobic Disintegration Test

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Nonwoven Substrates that Demonstrate POTENTIAL to meet all of the current INDA/EDANA Requirements for FlushabilityThe (3) commercial nonwoven substrates that demonstrate POTENTIAL to meet all of thecurrent INDA/EDANA requirements for Flushability are as follows below:

• Kimberly Clark’s – Ion Triggered Latex Bonded Airlaid

• Suominen’s – Hydraspun Spunlaced Wetlaid Base Web

• Buckeye’s – Airspun Non Triggered Airlaid

Overview of Kimberly-Clark’s Nonwoven Flushable Substrate• Substrate Name – Ion Triggered Latex Bonded Airlaid

• Brands Using Kimberly-Clark Airlaid – Cottonelle Brand Label, Pull Ups Just For KidsBrand Label, Other Kimberly-Clark Brand Labels

• Advantages – Market leader in N.A. with Ion Triggered Latex Bonded Airlaid, highest “in-use” wet strength of any commercial nonwoven

• Disadvantages – Only available to Kimberly-Clark, produced at one site globally, slow todisperse.

Overview of Suominen’s Nonwoven Flushable Substrate• Substrate Name – Hydraspun Spunlaced Wetlaid Base Web

• Approved N.A. Suppliers – Proctor & Gamble, Rockline Industries

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• Brands Using Suominen Hydaspun – Kimberly-Clark’s (EU) Cottonelle Brand Label, Target’s Up & Up Brand Label , Walmart’s Equate Brand Label

• Advantages – Cost, limited exclusivity, multiple production sites

• Disadvantages – Product is acceptable for current flushable wipe products, but wet strength “in use” is much lower than Kimberly-Clark’s Ion Triggered Latex Bonded Airlaid

Overview of Buckeye Technologies Nonwoven Flushable Substrate• Substrate Name – AIRspun Flushable

• Approved N.A. Suppliers – Nice-Pak Products, Inc.

• Brands Using Buckeye Airspun – Costco Kirkland Signature Brand Label, CVS P/L AdultIncontinent Wipes Store Brand Label

• Advantages – The product is new and needs some fine tuning, but functional for thecurrent flushable wipes markets

• Disadvantages – Products potential for higher strength wipe markets is uncertain; hasissue of dispersibility being inversely proportional to strength in use; if made stronger, itis less dispersible

Retailers Need to Ask the Question?Wipes such as moist toilet wipes, baby wipes and personal care wipes are a growing categorysince they meet the consumer’s need for personal hygiene, convenience and a clean healthyenvironment. Flushable wipes are a great example, but how do you know, as a retailer, if theFlushable claim made by the manufacturer is substantiated? How can you continue to performyour role as good stewards of the environment and supporters of the local community?

We encourage you to ask your suppliers “Do you use the INDA/EDANA Flushability Guidelines toassess Flushability?” and “Have you adopted the accompanying Code of Practice and follow thelabeling guidelines for products that should not be flushed?” If the answers are yes, then as aretailer, you have confidence in knowing the wipe is indeed flushable and will not harm thewastewater stream or the environment.

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Summary of MTT Category TodayIn summary, the Nonwoven Industry continues to struggle with defining an industry-widestandard (or at least "guideline") for Flushability. Industry experts describe the dispersibleproducts currently available on the market as not optimal, with either slow Dispersibility, lowwet strength or high cost; however, they are adequate for the current moist toilet tissuesegment of the market not because they are Dispersible, but because they fit through theplumbing fixtures, and will probably make it through unencumbered sewer mains to the wastetreatment plant.

The consensus is that of the dozen or so products on the market today, they all are basicallystandard wipes in smaller sizes that don’t disperse in water in any real time-frame (other thanperhaps geological), have varying biodegradability, and essentially maintain their structurethroughout their entire lifetime in the waste water system.

Despite all of this, flushable sells! Consumers rave about the convenience. Consumers love to"flush" germs rather than store them in in-home waste receptacles. Even the size is welcomedfor its toddler friendliness and waste minimization. Amazingly, these flushable wipes seem justas strong as their larger non-flushable counterparts (amazing to the consumer; obvious to thenonwoven raw material suppliers who know the difference is a few inches trimmed off of eachside.)

PCI’s Suggestions to Big LotsSince there are no hard and fast standards today for Flushability, let alone Dispersibility, andbecause there are no government or regulatory agency imposed standards in place, Big Lotsneeds to ask themselves the following questions in order to gain a true perspective of the MTTopportunity in front of them.

• Why worry about regulations or restrictions until they exist?

• Why react to pressures that may never come?

• Why pay today for tomorrow's potential problems?

• Until an agreed to definition of Flushability can be reached by the Nonwoven Industry;why not go-to-market with an offering that meets the informal Flushability standardsuch as Kimberly-Clark has done with Cottonelle, Walmart has done with Equate andCostco has done with Kirkland Signature?

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True Flushability

Flushable Dispersible BiodegradableAlways yes no 75%Cottonelle yes no 85%Pampers Tidy Tikes yes no 75%Kid Fresh yes no 75%Pull Ups Just For Kids yes no 85%

Rodman PublishingNo portion of this article can be reproduced without the express written permission from the copyright holder.

PCI’s Recommendation to Big LotsThere are two solid materials today that by all definitions are truly flushable, they are solidhuman waste and toilet tissue. Toilet Tissue wetlaid wood pulp is the most conservative modelfor a truly flushable wipe. The physical characteristics of the PCI nonwoven substrate tested byBureau Veritas and that compared FAVORABLY as an (NBE) to Cottonelle is white, translucent,embossed airlaid; perforated at the ends. The airlaid we tested is a thermally bonded non-woven substrate material consisting of natural wood pulp and additives which is the same basecomposition found in toilet tissue. That said, we strongly believe we have met all of Big Lots(NBE) requirements, and we recommend MOVING FORWARD on the basis that we can deliveran (NBE) or Better Than (NBE) to Cottonelle 48ct Adult Flushable Wipe in Tub with Pop-Up Lid(With Safe Flush Icon) and an 84ct Adult Flushable Wipe in Zipper Lock Bag (With Safe FlushIcon.)

PCI’s Contingency Plan Recommendations to Big Lots• Create a brand name that is exclusive to Big Lots Stores

• Introduce Big Lots customers to Premier Care’s (NBE) Control Label to Cottonelle testedby Bureau Veritas

• Continue to offer industry closeouts to Big Lots customers

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