Q&A: Marcal Paper

Tissue producers are being squeezed by the consolidation of the retail channels in the United States to a few large entities with tremendous bargaining power. As private label and warehouse club brands approach 40% of the consumer tissue market, there is less attention and less room for branded tissue products.

A typical club store will display two branded tissue products with its private brand. These are always ultra-premium and advanced technology products. The American consumer has shown an overwhelming preference for ultra-premium performance that did not waver during the Great Recession. The power has shifted to the retailers. Amazon has gotten into the act with its Presto brand of TAD bath tissue and consumer kitchen roll towel.

The decline of communication paper grades resulted in a shakeout of suppliers of both capital and consumables used in tissue making. Again, the power has shifted away from tissue producers and to their suppliers.

The availability of turnkey technology has allowed many new suppliers to jump into and dominate the private label market. The result is a significant intensification of rivalry or competition between American tissue producers. It’s reasonable to expect another shakeout will come as some producers achieve better cost structures or higher performance products from similar inputs.

North American tissue making has a poor reputation for tissue converting efficiency versus Europe. High converting waste rates can also drive high carbon emissions as the waste is remade on the tissue machine with additional energy input. Not all advanced tissue technologies are equivalent in quality and productivity. So far, the TAD alternatives have not been able to create a consistent price/performance niche recognised by the major retail outlets.

Sustainability factors such as carbon emissions, fibre sourcing, and product design can be expected to play a more significant part in the future. The American tissue consumer could become much

more discriminating about sustainability and drive winners and losers among the tissue producers.

Could the growth of tissue consumption per capita in the United States finally peak and start to decrease with increased consumer concern about sustainability?

This is an area that producers and investors need to watch closely. All the data presented in this report represent averages of a considerable fleet of tissue producers in the United States. Analysis of competitive position requires specifics on tissue producers and individual machines.

This article presents a static picture summary of the current American tissue industry. Fibre prices, exchange rates and environmental regulations will change, providing some participants with advantages and others with new challenges. American tissue mills will continue to change hands and perhaps consolidate; neighbouring countries may invest in tissue-making capacity, thus affecting America’s imports and exports.

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Source: FisherSolve Next ©2020 Fisher International, Inc.

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Source: FisherSolve Next ©2020 Fisher International, Inc.

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Source: FisherSolve Next ©2020 Fisher International, Inc.

Source: FisherSolve Next ©2020 Fisher International, Inc.