When most people think of Australia and New Zealand, kangaroos
and kiwis spring to mind. No one thinks of tissue but perhaps
they should, writes Robert Ryan.
There
is much of interest in Australia and New Zealand for the tissue
business, for several reasons. The two nations make up a significant
market - Australia has population of 21.4 million, and there
are another 4.3 million in nearby New Zealand. Added to that,
Australasia is a comparatively middle-class region with plenty
of disposable income and consequently high levels of tissue
and household grades consumption (about 11 kg/person/yr in Australia
and 10.5 kg in New Zealand) - and toilet tissue sales in Australia
alone total an estimated A$750 million/yr (€380
million).
So Australasia is a worthwhile market for tissue makers. That
would explain why the region has attracted both global producers
with worldclass tissue machines and successful and expanding
privately-owned tissue producers. However tissue makers in this
part of the world face various challenges as well.
HOUSEHOLD NAMES
The US-based tissue giant Kimberly-Clark is one of the leading
producers in Australasia. Kimberly-Clark Australia (KCA) produces
and distributes a range of its household name brands in Australia
and New Zealand, including Cottonelle premium single-ply toilet
paper, Wondersoft two-ply and three-ply toilet tisssue, Kleenex
facial tissue and high wetstrength Viva kitchen towels. KCA's
brands also include such value-added lines as Huggies diapers,
Kotex female hygiene products and Depend adult incontinence
pads.
KCA's presence in this part of the world dates from import
beginnings
in the 1930s.
It started producing facial tissue at the Millicent mill in
South Australia in 1960, followed by nonwoven production at
Albury in New South Wales, and a diaper facility at Ingleburn,
near Sydney.
The company teamed up with local papermaker Amcor in the tissue
business in 1963, until KCA bought out its joint venture partner's
stake in the business for about A$700 million in 2002.
Kimberly-Clark Australia's Millicent mill now has four tissue
machines with a combined capacity of 100,000 tons/yr in operation,
which makes KCA the top Australian producer in capacity terms.
These tissue machines include a state-of-the-art machine that
came on stream in 2004. Altogether KCA has invested close to
A$1 billion in its Australasian operations in recent years,
given the partner buyout mentioned above plus the A$230 million
investment cost for the tissue machine project.
KCA's latest machine produces "Kleenex Cottonelle toilet
tissue, Viva paper towels as well as premium products for the
away-from-home market" says a KCA spokesman. The company's
brands enjoy strong market positions across Australia and New
Zealand. The widely recognized Labrador puppy features in advertising
for its Kleenex Cottonelle premium brand of toilet tissue, and
conveys an image of strength, softness and cleanliness.
It is hard to estimate KCA's precise share of each grade of
tissue. However a spokesman for the company confirms that it
has about a 35% share of the overall market for toilet tissue
and facial tissue in Australia. In New Zealand, the company
spokesman concedes that it has a smaller overall share than
in Australia. The KCA spokesman also notes that "shares
in individual categories frequently change".
SWEDES STEP IN
The other leading global name in tissue making down under
is SCA Hygiene Australasia, a subsidiary of Sweden's Svenska
Cellulosa AB. SCA Hygiene Australasia has a tissue mill in Kawerau,
in the North Island of New Zealand, and another at Box Hill,
in Melbourne, Australia.
The three machines at Kawerau have 68,000 tons/yr of capacity.
Added to that, SCA's Box Hill mill has two machines with a combined
capacity of 57,000 tons/yr, as confirmed by an SCA spokesman.
SCA is a relative newcomer, given that it only acquired its
tissue capacity in 2004 from New Zealand papermaker Carter Holt
Harvey (CHH). CHH had in turn bought the Kawerau mill from family-owned
tissuemaker Caxton Tissue in 1996, which started up the mill
in 1951. SCA's deal with CHH also included Box Hill, which had
been initially set up by Bowater-Scott in 1960.
So the tissue mills, brands and market share that SCA bought
have a long history. "What's the gentlest tissue in the
bathroom you can issue? Why it's Sorbent"- baby boomer
Australians know this jingle by heart, after a half a century
of repetition on TV ads. Sorbent toilet tissue has featured
on the shelves of Australian supermarkets for decades. At its
peak, the brand apparently held a 50% share of the toilet tissue
market in Australia.
But Sorbent has been more than just a jingle. It has been
an innovative brand as well. Sorbent was the first crepe toilet
tissue introduced in Australia, the first toilet tissue sold
in branded packaging, and the first two-ply grade. And promotion
of the brand successfully conveys its softness, thickness and
absorptive properties.
While Sorbent has a strong position in Australia, Purex -
another leading brand that SCA acquired as part of its 2004
takeover - has long been long been a household name in New Zealand.
Purex has a 60-year history, and it is well known among consumers
for its image of Rolly the puppy, which conveys the strength
and softness attributes of this two-ply toilet tissue product.
SCA has a strong market presence in Australasia. A spokeman
confirms that the company has about a 30% share of the overall
market for toilet tissue and facial tissue in Australia. In
New Zealand, where SCA is the sole producer with local capacity,
the company holds about 45% of the market.
NOVEL NEW BRAND
Instead of puppies and jingles, ABC Tissue opted for a novel
campaign featuring the slogan "loves your bum" for
its Quilton toilet tissue. The concept worked. Shoppers moved
the premium grade product into top spot in Australia, according
to national scan data for supermarket chains. Even though market
shares wax and wane regularly, this is noteworthy, because privately-owned
tissue maker ABC Tissue is a David facing Goliaths armed with
TAD technology and deep pockets for advertising spending.
ABC Tissue started out as an importer two decades ago. Since
then, the company has moved into tissue production by acquisition
- it bought up Softex Industries in Queensland in 2002 (renamed
Queensland Tissue Products) - and investment in new capacity.
In 2007, ABC started up a new 25,000 ton/year tissue machine
from A Celli in Sydney.
ABC Tissue also makes Quilton premium facial tissue, Symphony
facial tissue,
kitchen towel,
and 100% recovered fibre-based Naturale toilet tissue. And the
group is planning a major expansion.
LOST SHEEP SAVED
Australia's oldest tissue producer - Merino Tissue - went
into receivership at the end of 2007. Fortunately another independently-owned
tissue maker, Encore Tissue, stepped up and bought up Merino,
thereby saving the tissue mill in Crestmead, Queensland, from
closure. The deal gave Encore 15,000 tons/yr of capacity on
a Recard tissue machine.
Encore has another 20,000 tons of capacity on a used 2.75
m machine at its Laverton North mill in Melbourne. The company
bought the Over Meccanica machine from Velcarta in Italy and
started it up in 2003. Prior to that, Encore had operated a
smaller and narrower tissue machine in Albury, New South Wales,
that has now been closed and dismantled.
Encore's brands include a three-ply Envirosoft toilet tissue
produced from 100% pre-consumer and post-consumer wastepaper.
As a result of the Merino takeover, it acquired several brands
- Merino, Bouquets, Elite and Safe. Although Safe toilet tissue
is unbleached and produced from 100% recovered fibre, the grade
has good whiteness.
IMPORTS AND CARBON TRADING
Australasian tissue makers face plenty of competition. Apart
from domestic rivals, there is intense competition for space
on supermarket shelves from imports. Australia imports about
50,000 tons/yr of tissue, while New Zealand's imports total
about 15,000 tons.
The rising import tide is a cause for concern for Australian
producers. Fortunately for them, if not necessarily for consumers,
Australian tissue makers recently scored a win when an Australian
Customs Service investigation ruled that some imports sourced
from China and Indonesia were being dumped in the local market
at prices up to 40% below "normal". The hard-pressed
local industry expects that the ruling will put a stop to such
dumping. However Tissue World understands that no action will
be taken by Customs until the Attorney-General's Department
completes a review of the Customs ruling.
Meanwhile in 2007, the Construction, Forestry, Mining and
Energy Union began a campaign against the retailer Woolworths
over a private label tissue brand imported from Indonesia. The
union alleged that, contrary to wording on its packaging, the
product is not produced from sustainable plantation fibre.
Finally the Carbon Pollution Reduction Scheme introduced by
the Australian government will impose a price on carbon emissions
and push up production costs for domestic tissuemakers. For
example, the scheme will drive up the cost of gas by 30-40%,
says one tissue company. The cost of electricity will rise as
well. A similar scheme is being introduced in New Zealand.
Imposition of higher costs in Australasia at a time when world
economies
and markets
are sliding into recession and when competitors in neighbouring
Asian countries are free from such government-initiated measures
is considered
a particularly heavy burden for the industry to bear. The implications
of the carbon scheme will be a major challenge in coming years
for tissue makers down under. TW
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Rob Ryan is a freelance
editor covering the pulp and paper industry in the Asia
Pacific region. He has visited papermakers throughout Australia,
New Zealand, China, Korea and South-East Asia, and he is
a regular contributor for industry magazines. He was formerly
editor of Asia Pacific Papermaker. |
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