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The fast pace of changing market strategies is shaping short and long term planning for tissue manufacturers… and retailers

By Helen Morris, Tissue World Editor

Welcome to Tissue World magazines’ retail special edition! In anticipation of our brand-new retail and distribution segment at Tissue World Miami in 2014, TW magazine is bringing you the latest retail trends from across the globe.

We spoke to tissue giant Cascades about how unprecedented private label growth, corporate social responsibility and sustainability are influencing the retail market; Poyry discusses how retail trends are helping shape the global tissue industry, and journalist Simon Creasey from the UK’s The Grocer magazine discusses what brand owners are doing to get sales back on track and drive volume and value growth.

Our retail special is in anticipation of Tissue World 2014 in Miami Beach, which will be the first trade show of its kind to host an event for the tissue industry and retailers. ‘Retail and distribution’ will become an integral part of the show and TW is calling this addition the Tissue Retailers and Distributors Insight Forum (TRIF). Read all about it in this issue’s Marketissues article.

 

COUNTRY REPORT: GLIMMERS OF HOPE GIVE CONFIDENCE TO A UK MARKET STARTING TO EMERGE FROM AUSTERITY

This issue’s regional focus is on the UK, a tissue market that over the past five years has dropped from the second largest producer in the EU to the fourth. While this is drastic, it’s not surprising, even for a market that is largely as recession-proof as tissue. The UK has been particularly hard hit by the global downturn; austerity measures have been put in place, and consumption, which makes up two thirds of spending, has been subdued. Such market conditions have led to tissue line rationalisations and a fall in operating capacity.

But despite harsh conditions across the country there are some signs of light at the end of the tunnel. Consumption of parent/mother reels of tissue in the four months to April 2013 was 375,400 tonnes, a modest 1.5% increase year on year, and even though total retail volume declined 1% in each year since 2010, consumption has grown 1.5% annually since the start of the crisis in 2008.

Interestingly, some 80% of the UK’s T&T business comprises international players and the presence of these multinational tissue brand owners has shaped the market to resemble that of the US, with a strong brand focus. Mill production in the UK is on the high side when compared to other EU countries at nearly 80,000 mt/yr, while production rates are split between 30,000mt/yr, and those producing 40,000 – 60,000mt/yr.

There has also been a string of high profile merger and acquisition activity in the region over the years. As one tissue manufacturer commented on the back of TW’s recent visit: “The way the tissue market has gone in terms of consolidation, it’s a very energetic environment to work in. There are always new ideas to improve on.” As for the rest of the economy… could it be third time lucky? Compared to the US and its core European peers, the UK has taken much of its medicine early. While the former avoided immediately addressing its huge debt mountain and continued to spend, and some European allies talked about how they would administer financial austerity, the UK got on with the painful business of cutting its debt. There are some small signs that the UK’s economic prospects are finally starting to look up; the housing market is on an upwards trend once again while the embattled consumer is starting to spend more, at least if car sales are anything to go by. Significantly, manufacturing is also showing signs of a far broader-based recovery than previously thought. As the mill manager said: “With all of our acquisition activity, it feels like we’re bringing some manufacturing ownership back into the UK.”