European tissue market developments

Europe is the second largest market for tissue products worldwide; only North America exceeds it in terms of both volume and market value.

The basic difference between North America and Europe is that while the market on the western side of the Atlantic Ocean is rather uniform from east to west and from north to south, there are 40 countries in Europe with varying structure and development phase of tissue consumption. In the following report, some of the main features and recent developments in Europe are discussed in more detail.

Esko Uutela, EU Consulting, Germania

European tissue consumption has shown continuous and relatively rapid growth since the mid-1990s.

European tissue consumption exceeded the benchmark of 6 million tons, and reached 6.3 million tons in 2002 – this is almost 1.7 million tons more than in 1995 and corresponds to an average growth rate of +4.5%/yr. Central Europe accounts for 45% of European tissue consumption, followed by Southern Europe (36%).

Eastern European demand has grown the fastest in the past few years, and the current market size is already double the size of Northern Europe (the Nordic countries), where market growth has been rather slow since 1995 (table 1). Growth rates for tissue consumption are encouraging particularly in Eastern Europe and Southern Europe, but Europe as a whole shows a gradually declining trend in terms of relative growth. But this is not very alerting, as long as the total European growth remains at a level of 4%/yr as it is currently – this means that European markets can absorb about 250,000 tons of new tissue capacity each year.

The importance of Eastern and Southern Europe is growing, contributing increasingly to the total growth. Additionally, it should be kept in mind that Central European economies (particularly Germany) have performed poorly in the past few years, which has had a negative influence on tissue consumption patterns. With improving economic prospects, a slightly faster growth can be expected also in Central Europe.


By country, Spain and Malta have shown the fastest relative growth since 1996, followed by Ireland, France, Greece, the UK and Portugal. Only limited growth has taken place in the Benelux countries, Sweden and Finland. The UK recorded the largest market volume growth, but also Germany, Spain, France and Italy experienced substantial volume increases. It is no surprise that most investments are concentrated in these countries. In Eastern Europe, tissue consumption has grown in some smaller countries with two-digit growth rates since the mid-1990s. But in terms of volume growth, Russia is above all others.

There has been no recent tissue machine investment in Russia, but production has increased based on machinery rebuilds and efficiency improvement projects. Imports have grown as well, partly from the Ukraine, but also from Western Europe. If Russian tissue consumption continues to grow fast, as expected, new capacity is soon needed. Poland has attracted many investments recently, but tissue demand has not (yet) exploded as many investors had probably expected. Purchasing power has improved only slowly, and low product penetration levels are the main hindrance for consumption growth. The retail sector is suffering from overcapacity (particularly too many hypermarkets), and the average quality level is still rather low.

Western tissue companies already operating in Poland (IC Tronchetti, Metsä Tissue, Kimberly-Clark and Sofidel in particular) have set their targets in the long term, while smaller local producers fight for short/medium term survival. In terms of per capita consumption, the range between European countries is very wide. Sweden continues to rank first with almost 20 kg/capita consumption, followed by Switzerland, Norway, the UK and Finland. At the other end of the range, less than 1 kg/capita are consumed in Georgia, Belarus, the Ukraine and Moldova. Among Eastern European countries, Slovenia reaches the lower end of the Western European per capita consumption level.


The key driving forces to be considered for forecasting future tissue demand in European conditions include:

- economic growth – but only a basic condition

- population growth and other demographic changes

- product penetration levels – major differences between East and West

- developments in product quality and specifications – a major driver

- substitution effects and AfH use traditions

- level of promotional efforts (advertising)

Tissue consumption does not show strong cyclical variations, though general economic development is seen in the magnitude of growth rates. Tissue products are necessities in developed economies andn their use is not strictly related to economic performance. Changes in purchasing power tend to have an effect on which tissue qualities consumers purchase. Population growth is marginal in Western Europe and even negative in many Eastern European countries, including Russia, and plays a minor role as demand driver. Other demographic factors, such as degree of urbanisation, are sometimes more important. For example, the still relatively high share of population living in the countryside has restricted tissue consumption growth in Poland.

In the AfH sector, squeezed public and company budgets which are typical in downturn periods, are reflected in AfH tissue consumption. Strengthened economic growth in the late 1990s substantially contributed to tissue consumption in Western Europe. It created favourable conditions for increased product penetration and accelerated quality upgrading.

The 2001-2003 economic downturn slowed down this trend to some extent. We firmly believe that there is still no end to be seen for the growth of European tissue consumption. As can be seen in the figure showing per capita consumption by country, there is still a lot of potential for increasing tissue consumption in Europe. In Western Europe, the growth is likely to slow down somewhat, while in Eastern Europe rapid growth (+7- 8%/yr) is expected to continue in most countries.


Private labels, or retailer labels as they are nowadays more often called, have continued on a fast growth track in a number of the most important European tissue markets. Starting from Central Europe, this trend has recently been strong also in Southern Europe (e.g. Spain). In many European markets, retailer labels account for 60-70% of the total consumer tissue market volume.

In Northern Europe their share is much weaker, and the same applies to Eastern Europe and part of Southern Europe (Italy, Greece). In Europe as a whole, retailer labels account for roughly half of the total sales volume of toilet paper and kitchen towels. This is very different compared with North America, where company brands still account for 75-80% of the total market (see Table 2).

The strength of retailer labels in Europe has been explained with many factors, including the degree of retail consolidation, higher retailer margins in retailer label than branded product sales, popularity of discounters selling low price-point products, price sensitivity of consumers, insufficient promotion of brands, image building by retailers through their own labels, fragmented national markets complicating pan-European branding, and the willingness of European (particularly Italian) mills to produce retailer labels.


The breakthrough of through-air-dried tissue has been much slower in Europe than in North America. After K-C’s TAD rebuild/replacement project in the UK recently, we can identify 11 TAD tissue PMs with a total capacity of some 540,000 t/yr in five countries in Europe. This is not more than 8% of the total European capacity of slightly more than 7 million t/yr.

The prospects for TAD tissue in towelling are probably somewhat brighter than in toilet paper. The absorbency characteristics of TAD towelling are difficult to achieve in conventional tissue manufacture, even if using an additional (third) ply, while there are many ways to improve the softness of a toilet paper sheet also in traditional production (four plies, use of a shoe press, soft embossing, chemicals etc.). The dominant position of retailer labels is another hindrance for TAD tissue, as TAD tissue-based retailer labels are hardly available outside the UK.

An interesting solution is the so-called “hybrid” product (one ply TAD, the other conventional tissue) developed by Georgia-Pacific.

Currently we cannot draw any final conclusion yet as to whether Europe will follow the US pattern which clearly goes towards TAD tissue products. Some companies believe this will be the direction, but there are also many opponents (Italian companies, for example). We will see. But it looks like the success of TAD products would remain much weaker in Europe than in the USA.

The UK market may be an exception in this respect.


The main new and second-hand tissue machine projects since the beginning of 2003 are listed in the attached tables. There are also many rebuild projects influencing European tissue capacity, but we will concentrate here only on the main new machine projects. There are also some confidential projects and several project plans at an early stage which we have excluded from the list. We have, to the best of our efforts, included the main projects currently known to us in the tables.

The number of new tissue projects was rather low in Western Europe in 2003, and effective capacity increase was at its lowest level since 1996 as no major project was starting up before mid-2003. But investment activity finally started to pick up in Eastern Europe in 2002-2003, which somewhat counterbalanced the situation in Europe as a whole. Europe must be increasingly seen as one unity only, as the distinction into Eastern and Western Europe was originally stemming from former political differences, which are gradually disappearing with 10 new (mainly Eastern) member countries soon joining the European Union.

Capacity utilisation in the European tissue industry slightly deteriorated in 2000-2001 because of an investment boom in the late 1990s, and slightly lower consumption growth rates. But 2002 recorded an improvement in capacity utilisation, mainly affected by declined tissue net imports from outside Europe. Relatively small effective capacity increase helped utilisation to remain at the 91.5-92% level during 2003. Several investments scheduled for 2004-2005 will stabilise the situation, but expected economic recovery should help tissue demand grow, and capacity utilisation is likely to remain at around 92%.

An upswing in economic conditions and accelerating tissue demand may encourage companies to new project commitments, some of which could be possible from late 2005 onwards without deteriorating the current market balance. Particularly the large multinationals have been quiet concerning their future investment plans, but we are sure that there are well considered investment proposals in their future, only waiting for the right moment of realisation. •

Login or Register to publish a comment