Euromonitor International recently presented at Tissue World New Orleans, a global event that brought together industry players from all sides of the supply chain to review current and future industry challenges and opportunities for growth. The key theme of the event, “Beyond Sustainability – Leading a Culture of Innovation and Responsible Production”, opened the floor to a wide range of topics that addressed the issues of cost efficiencies and technological advancement in machinery, supply of raw materials, product innovation, and consumer demand.
Cost efficiencies rule supreme on the industry agenda
The question of sustainability in the context of consumer tissue usually brings to mind the issues of virgin fibre and forest management, chemicals, water management, energy consumption and other environment-related subjects. A number of presentations certainly looked at “green” manufacturing practices and the evolving approach to environmentally responsible production.
The issue of sustainability, however, runs deeper and brings into the spotlight cost efficiencies, which not only help to deal with improved practices in sustainable manufacturing but also highlight the need to reduce costs in a highly competitive and low-margin marketplace. The industry sustainability resides in continuous advancement in technologies that enable tissue product manufacturers to reduce costs on the one hand (along with reduction in environmental impact) and at the same time improve the quality of consumer tissue to meet consumer demand for quality in all its expressions, from softness to durability to absorption to custom designs and textures.
For instance, in his presentation titled “A Disruptive Technology Marking a New Industrial Revolution in Tissue Converting”, Pete Augustine, President of Fabio Perini North America, indicated that incremental changes in production methods are no longer sufficient to meet the challenges of the dynamic and highly competitive marketplace. Instead, the market needs a significant step change, a disruption, with focus on product quality and cost controls. These needs can be met, according to the presentation, by Fabio Perini’s Constellation 4 roll winding technology. The latter promises a number of benefits. These include more product customisation, as Constellation enables the produce of a wide variety of paper designs. Furthermore, the technology allows manufacturers to maintain the same diameter in a tissue roll while using less tissue, which can then improve profit margins for the manufacturers. Constellation technology can also help reduce raw material costs through the use of more economical sheets without jeopardising the desired product quality. All in all, the technology enables increases in operating efficiencies.
Additionally, the presentation “Ultra-Premium Products Changing the North America Competitive Landscape: How Entry Producers Can Succeed in the Ultra-Premium Market” by Soren Eriksson of Valmet discussed the efficiency and success of TAD technology in producing high-quality super-premium consumer tissue to drive brand performance and the overall value sales in the consumer tissue categories in retail. Focus on super premium is also set to translate into higher margins for the manufacturers and retailers, given pricing of super premium products in retail. Other presentations looked at quality control through cameras to reduce product damage, the evolution of steel yankee driers and other aspects of tissue manufacturing that can help reduce production costs, improve product quality, and improve profit margins.
Sustainability and consumer demand for green products
As mentioned above, green manufacturing practices and the consumer approach to sustainable products were the subjects of a number of presentations that highlighted producers’ efforts to reduce environmental impact as well as addressed the issue of a gap between consumers’ attitude towards green vs actual purchases in retail.
The conference’s Senior Management Session opened up with the keynote address by Don Lewis, President of SCA AFH Professional Hygiene, titled New Directions at Which Companies are Looking at Sustainability Across their Operations, with the review of sustainability practices and the future industry agenda and target goals with respect to eco-friendly practices.
As a part of the Senior Management Session, the Euromonitor International presentation looked at the retail marketplace for consumer tissue products. It discussed recycled tissue as the mainstay of consumer tissue with eco-friendly credentials and highlighted a number of issues with the demand for recycled products globally and in some of the key markets. A case study of CVS’s Green Essentials brand and its rebranding under Just The Basics to highlight value over recycled content was analysed in the context of private label evolution. The CVS case was contrasted with the ZeroTubo line of private label tissue in Italy and the brand’s marketing and positioning on the platform of value, convenience and eco-credentials. The presentation also looked at the developments in alternative fibres. The review of the retail tissue marketplace was complemented by the analysis of consumer attitudes towards green products, utilising the results of the Euromonitor International global consumer surveys across a number of markets. The survey highlighted the gap between consumer appreciation of eco-friendly products and their willingness to pay more for such products.
The gap between intent and actual purchases of environmentally friendly products was also demonstrated in the presentation by Carolina Gomes, Director of Category Solutions at Daymon.
A number of presentations also addressed the subject of eco-labelling and certification to improve consumer understanding and purchases, such as the Green Seal certification and its evolution and future applications reviewed by Mark Stanland, VP Client Services at Green Seal.
Marketplace challenges – overcapacity and raw material supplies
Esko Uutela of RISI presented at the Senior Management Session, discussing the dynamics in the US market, with a focus on the role of private label in the US and Canada, pricing of products in retail, growth of AFH demand in the US, tissue production and capacity utilisation as well as upcoming projects that are looking to increase production capacities in the US. The growth in production capacities and new facilities planned in the next two years, however, raise the potential issue of oversupply if no closures occur at the same time, according to Esko Uutela.
Raw material supply encompasses all aspects of the industry, from cost efficiencies and technology to product quality and environment. In the context of sustainability, a presentation by Bill Moore of Moore & Associates discussed trends in supply and availability of recycled fibre in tissue production. The presentation indicated that recycled fibre growth has peaked and is now in decline, mainly due to the decline in printing/writing papers that led to a shortage of Deinking High Grades (DHG) used in tissue manufacturing. The presentation further stated that the decline in available DHG will see the industry focus on the use of wood pulp, alternative fibres (eg bamboo and wheat straw) and, to some extent, poly coated post-consumer packaging.