By Martin Bayliss
Our
Marketissues this month calls for the industry to take
seriously the theme of the latest Nice Tissue World conference:
innovation. Modern man is used to a flow of technological
innovation that helps make things better, cheaper, more
attractive. Things that not only satisfy perceived needs
but create new must-haves. More or less all the tissue
business seems to offer is more softness, strength and
absorption.
Speaker after speaker on the first day of the
conference, which was devoted to management issues, called
for a broadening of horizons, a focus on branding, a willingness
to renounce the catch-up mentality. For me, returning to
the industry after a spell away, there was a surprising
sense of déjà vu about it
all.
When I first started in the paper business, a similar message
was widespread. Management gurus and analysts exhorted
the industry to break out of the commodity cycle, describing
with admiration the benefits accruing to companies that
succeeded in finding a profitable new niche.
Back then
the tissue business was held up as a model of good marketing
by a paper business in general that saw salvation in escaping
from the commodity mentality through, guess what – marketing-led
innovation. And – guess what – the same message
was being repeated in every other sphere of life, from
politics through industry.
It seems surprising that the
business should need reminding. Particularly when you consider
how far we have come in some other respects since those
dim and distant days. For when I first entered the paper
industry, several European countries still favored MG toilet
tissue (railway sandpaper), kitchen towel was an American
extravagance and Asian consumption was almost nonexistent.
Just to give you an idea of a few world events in that
first year of mine –when no doubt many of my readers
were not even born – they included: the conviction
of Mitchell, Ehrlichman and Haldeman for the Watergate
cover-up, the election of Margaret Thatcher as leader of
the UK’s Conservative party,
and the creation of the Democratic Republic of Kampuchea.
The Vietnam War ended, Bill Clinton married Hillary Rodham,
and King Carlos replaced Francisco Franco as head of state
of Spain.
It seems an eternity ago. So long ago, indeed,
that some modern miracles of innovation were not even thought
of. The PC, to take the most obvious example, was no more
than a twinkle in the eye of a teenage Bill Gates. There
were no mobile phones and even fax was a high-end application.
Post-it notes and ink-jet printers had just been invented.
Clearly, innovation can reap rewards for the successful
few. For the majority of tissue producers and converters,
though, coming up with the ‘killer’ concept
that takes the market by storm is about as likely as breaking
the bank at Monte Carlo. Black tissue seems the biggest
idea of the last few years. Hmm.
This is in no way to challenge
the message put forward in the Nice conference by Alberto
Cappellini (KC) and Peter Irish (SCA), who both called
for a new approach. For those who do hit the jackpot through
innovation, the rewards are great. But for many in the
business, the cost of seeking that winning number is never
repaid. Fortunately, you don’t have to win
the lottery to earn a good living. The margins are certainly
greater on premium products but so are the costs.
The killer concept is about as
likely as breaking
the bank
at Monte Carlo |
A paper from Pöyry at the Nice conference offered
a different perspective. According to Pöyry's
Pirko Petäjä, producers can be categorized
in three segments: elephants, large and diversified but
not as mobile as; sharks, fast-moving, focused on the
soft spots and with modern, efficient operations, and;
small fish, local players with a grocery store business
model, old machinery but generally low costs. In principle,
innovation is an option for companies of any size. According
to Petäjä, though, it
is overvalued as a concept. “Technology is easily
accessible and in the hands of equipment suppliers. Tissue
product innovation is about image and ability to brand.
That is important but there are few life-saving innovations.”
Ironically, the United Nations declared 1975 (my starting
year) to be International Women’s Year.
These days, as I learned from the Nice conference, women
are still, in ‘progressive’ Europe, responsible
for 70% of tissue purchases. Perhaps one innovation might
be to introduce a few women to the industry. In total,
they accounted for just over 20 of the 300 plus delegates
to the Nice conference. And most of those work for suppliers
or journals. TW
