11_octnov_DEPARTMENTS FRONT ISSUES

Front Issues

Sweden: Model for the future – or a unique market?

At the heart of tissue making development and setting the environmental benchmark

It is not hard to make the case that Sweden, its tiny tissue manufacturing sector notwithstanding, represents some kind of future global business model for the tissue industry, in the same way that its economy is regarded as something of an aspirational model for much of the world.

Sweden’s headline economic statistics are impressive enough: annual growth of 6.4% in the first quarter, falling unemployment and public debt heading to below 40% of GDP.

The Organisation for Economic Co-operation and Development finds that Sweden’s financial sector has generally “coped well” as much of the rest of Europe struggles with its debt.

So how do paper and pulp, and particularly towel and tissue, perform against this generally rosy economic backdrop?

With more than half the country forested, and covering the third largest country in western Europe, Sweden is a major producer and exporter of P&P products with annual production of 16m metric tonnes.

‘There is one outstanding point: Swedish consumers want quality and are prepared to pay for it.’

However, T&T represents just 2% of that, ranking it 11th in annual production within the EU.

Tiny it may be, but T&T is resilient in business terms. Retail sales value growth was 3% in 2010 and is expected to be of a similar, steady rate over the course of 2011.

It is the fact that value growth is consistently increasing in a mature and saturated market that makes Swedish efforts so impressive. How Sweden is achieving this growth should provide vital business intelligence now and for the future.

There is one outstanding point: Swedish consumers want quality and are prepared to pay for it. That fact is borne out by our Euromonitor report, Sweden is at the fringe of Europe, but at the centre of tissue market development. It addresses the key issue of maintained retail sales value growth in an apparently typically western market, and part of the answer comes in the phrase – “tissue as a style icon.”

Wherever you go in Sweden quality and good design are on display. They are an essential sales weapon and a key part of what Scandinavian countries tend to do well. Combine this flare for design with the country’s longstanding and strong track record in effective environmental sustainability and you add another string to Sweden’s bow.

Visitors are impressed by just how much sustainability and the environment are ingrained in the Swedish way of life. On my recent visit to Gothenburg and Karlstad for TW’s country report, I was struck by the volume of multiple recycling bins at every home and office. I was told that children are actively encouraged to play recycling games at school in order to ensure that responsible attitudes to sustainability go with them into adulthood.

It all contributes toward creating a lasting consumer mindset: environmental sustainability equates to quality. Swedes seek out the first, and are prepared to pay for the latter on the back of fresh and up-to-date marketing.

That saw boxed facial tissues grow at a rapid 6% in value in 2010, partly on wider usage and partly on their quality as an alternative to facial cleansing wipes.

Leading designers re-brand kitchen towels, strangely under-represented in Swedish homes, with temporary launches.

A TV celebrity interior designer promotes SCA’s Torky brand with specific dispensers in several ‘designer’ options. An online outlet enforces the link between good design and modern lifestyle choice.

So is this much admired model soon to be replicated across the rest of Sweden’s nearest like markets in Europe? No, it isn’t.

European consumers are in the main unwilling to pay a premium for green or sustainable products. They generally put the right price ahead of ethos and quality.

The tough challenge facing manufacturers is to convince consumers outside of Scandinavia that it’s worth their while looking for quality and design rather than price, and all in a recession. Sweden, where green is mainstream, is where it is today thanks to a tradition of manufacturing and consuming going back many formative years, so there is a long way to travel for everyone else.

It might just be that the Swedes, and Scandinavians, will remain a unique case. We are all likely to move some way towards greener living, but in the meantime, enjoy our insight into the country where tissue has iconic design status.