Country Report

SWEDEN, growth, and emerging markets: Metso Paper’s Sweden-based president Anders Björn answers TW’s questions

TW: Are there any distinguishing features to the Swedish tissue market?

AB: “Sweden has an extensive history of pulp and paper. This and its proximity to raw materials is what differentiates the Swedish tissue sector, and that gives companies based here or selling out from Sweden a competitive edge.

“There is also a long history of machinery manufacturing. Consumption in the tissue and hygiene industries is growing, and there has also been a big increase in customer demand for green products. If businesses employ green ways of making products it is a cost saver in the long term.

“The Swedish government has set tough legislation for water. Many pulp mills have diversified and are now producing and selling energy in addition to their main product.”

TW: How has tissue demand faired following the worldwide economic crisis?

AB: “Tissue consumption is growing everywhere: total world consumption is about 30m tonnes. Tissue is the paper grade that grows the most and has grown consecutively between 3-4% over the past few years.

“What is evident is that even when times are bad, people will continue to consume tissue. It’s a good product, despite competition being very tough. Tissue is less sensitive to economic situations compared to other paper grades.”

TW: What trends are you seeing in the private label and branded products sectors?

AB: “There is continuing debate between private labels and branded products. Over time, private labels have raised the bar when it comes to quality, while also keeping prices low. There are certainly trends for demands for higher quality in the private label segment.”

TW: How have the currency fluctuations affected Swedish companies?

AB: “The currency fluctuations continue to be a hassle. But on a delivery to Asia for example, it doesn’t have a huge impact.”

TW: Is the main growth for the Swedish tissue sector eastwards from here?

AB: “Yes, absolutely. There are 3,300 tissue machines in the world, of which 1,700 are in China. The Chinese are closing mills to build new ones that have the best and newest technology. Tissue is a fast moving consumer goods market and this is no more the case than in China. More and more people are moving into cities and becoming more urbanised, and then adopting the behavior of using tissue. The rate of urbanisation in China has never happened to this extent before.”

TW: Is there still growth in the “old markets” or has it stagnated?

AB: “There is still growth in Europe and the US. But of course, the main mainly growth is in areas such as Asia. However, this doesn’t mean companies are ruling out the old markets. There will continue to be steady demand here.”

TW: Do you believe the Chinese market will move into overcapacity?

AB: “No. Even over time, I don’t believe that the Chinese tissue market will move into overcapacity. Growth there has been very fast. It’s a very different market, it’s a lot faster moving.

“Also, it was previously a given that you couldn’t ship paper that is very light, and that products like tissue don’t travel well. This meant it had to be produced by a local regional producer. However, now Asian manufacturers are making products so cheaply that they can then afford to ship them.”

TW: Where else are you seeing tissue growth?

AB: “There is growing consumption in the Middle East, and Turkey is also a very big market. Doing business with different cultures is challenging and there are obvious cultural differences in tissue use. For example, North America uses 8.2m tonnes equivalent to per 24kg per person, and the market uses lots of kitchen tissue. This is different compared to how products are used in India or Asia. Asia has almost the same tonnage as Europe at 7.7m tonnes to Europe’s 7.4m, but only 2kg per person compared to 15kg per person in Europe. And facial tissue, for example, is big in the Middle East.”