The Tissue Market in Australia

On the shelves of Australian supermarkets only one winner: brand quality!

Cristina Bernardini

Australia is comprised of almost 19 million people - 18.97 million to be exact- each of which every year consumes about 190 kilograms of paper products. Tissue represents 6.5% of this demand. That is, each Australian consumes on the average 12 kilograms of tissue products per year, more or less the same amount as the Italian or Belgian consumer. And like the Italian or Belgian consumer, the Australian consumer also makes his or her purchases in supermarkets, that in this country, like elsewhere, belong to a few large distribution chains. But when faced with the choice of purchasing a toilet roll or kitchen towel package, our hypothetical average Australian consumer behaves a bit differently. If in these last few years the most frequently purchased products have been those bearing the supermarket chain's label - the so-called private labels products - in Australia this primacy belongs to the brand names. And among the branded products, premium quality brands are the most successful.

Considering the toilet roll market in terms of volume, we note that the shares are thus divided:

25% Sorbent (Carter Holt Harvey Tissue),

19% Kleenex (Kimberly-Clark),

12% Purex (Carter Holt Harvey Tissue),

11% Wondersoft (Kimberly-Clark),

11% Private Labels,

the remaining 22% is comprised of the sum of the percentages of other branded products.

AT THE FIRST TWO POSITIONS IN OUR PLACE-LIST, THEN, WE FIND THE THROUGH-AIR-DRIED SORBENT TISSUE TOILET ROLL AND THE KLEENEX ROLL, both premium quality products located in the high segment of the market, with an average retail price of around US$ 0.40 per roll (against the 0.27 US$ for a low segment roll). On the kitchen towels front, the trend is similar, even if greater relative importance is given to the private labels. These shares clearly show that consumers in Australia are willing to spend a bit more in order to have the guarantee of greater quality. With a per capita annual income of over 23,000 Euro (5% higher with respect to Italy) Australians choose on the basis of features that go beyond the product's price, such as the product's aesthetic appeal. In the toilet roll segment, for example, the purchase share of printed products has gone from 12% in 1990 to the present 29%. Considerations based on convenience and savings are made instead when it comes to choosing the packaging, where a peaked preference for family packs is noted. With respect to traditional packs, their preference has gone from 12% to 34% in the last few years.

AS PREVIOUSLY MENTIONED, THE DISTRIBUTION STRUCTURE IN THIS PART OF THE WORLD IS NO DIFFERENT FROM THAT IN EUROPE OR IN THE USA: a few large chains located throughout the territory that supply products that go well beyond mere private label foodstuffs in competition with the most well-known brands. Three large chains share a piece of the private label pie: Woolworths (36% of the market), the Coles Myer group (33%) and Franklins (16%). The biggest novelty in this field is the entrance of Aldi, the most famous European discount chain, that is about to open six sales points in and around Sydney. It is probable that in Australia, too, Aldi's strategy will enhance the role and the importance of private labels. It comes as no surprise that the Woolworth group has announced the launch of several distribution-chain labeled products to contrast the "Aldi effect" on the market. What will be the repercussions on the demand structure of tissue products? They are all still to be ascertained, hut the major producers intend to focus on the quality of their brands to maintain the positions acquired. Regarding total consumption, in the next five years, an increase in the order of 3.5% is expected against the 4.3% increase registered for the period between 1993 and 1999. This means that, based on these forecasts in 2005, 286,000 tons of tissue will be demanded by the market. Today, Australia produces 217,000 tons per year with ten paper machines: three belong to the Garter Holt Harvey Tissue group (also owner of three tissue PMs in New Zealand), three to Kimberly Clark of Australia; two to Softex (also owner of one of the three de-inking plants presently in operation in Australia), one to Paper Converting Co. and one to Encore Tissue.

15% OF THE RAW MATERIAL UTILIZED IN THE TISSUE INDUSTRY IS COMPRISED OF RECOVERED FIBERS OBTAINED THROUGH WASTE PAPER RECYCLING, but this figure jumps to about 50% if we consider the paper industry in its entirety. Recycling is carried out both by private companies as well as by local administrations. The state of Australia promotes careful management of its forest heritage - about 41 million hectares in total, of which the state owns 74%. 17% of these 41 million hectares, that is, almost 7 million hectares, is dedicated to the production of wood and wood pulp. To promote management in the interest of the community and a sustainable exploitation of national resources, the Australian Forestry Council was created in 1964. In 1992 the Federal Government and the regional States signed an agreement to regulate access to the country's forest heritage. These initiatives were not met with opposition by the Australian tissue industry and the major pulp & paper companies have made strong efforts towards the preservation of this national wealth.

WE SPOKE ABOUT THIS AND ABOUT THE OVERALL HEALTH OF THE FIELD WITH RALPH COGHILL, EXECUTIVE DIRECTOR OF APPITA, the Technical Association of the Australian and New Zealand Pulp and Paper Industry Inc. Appita, which counts 1,317 members, 7 sustaining companies and 106 contributing members, is the main association which gathers together paper industry operators in this part of the world. Aimed essentially at technicians, Appita promotes an intense formation program, courses for technical updating and technical committees. Among its numerous activities, its Annual General Conference and Exhibition, the main appointment in the agenda of the events of the region's pulp & paper industry, holds particular importance.

The conference and seminar schedule of this trade show is impressive: in the past edition, about 100 technical reports were presented during the one week work session and almost every day practical updating and formation seminars and work sessions were proposed. The next edition - the 56th - will be held in Rotorua, New Zealand, starting on 18 March 2002. Besides the usual technical meetings, this upcoming edition of the Appita Annual General Conference and Exhibition will feature a seminar entitled The Fibre Trail" dedicated to commercial relations between Australia, New Zealand and Asian countries on the subject of cellulose. Appita is also editor of the Appita Journal, accredited bimonthly trade magazine containing a large section dedicated to technical articles and in-depth analyses of all aspects of paper production.

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