Starting as a small family company more than 50 years ago, Marutomi has built a growing nationwide business by focusing smartly on niches such as recycled fiber and coreless toilet rolls.
Hugh O’Brian
In the shadow of the famous Mount Fuji, which has been dormant for the last 300 years, the mid-sized Japanese tissue producer Marutomi has been anything but inactive. Growing recently at a rapid pace through acquisitions, output at the company has jumped to 140,000 tons for FY 2007-08 and it is expected to rise further to about 165,000 in the coming year.
Focusing mainly on bath tissue, Marutomi has now grown into one of Japan’s largest producers of toilet rolls with a market share that it estimates to be around 14%. For raw material, it uses only 100% recycled fiber (RCF), with about 95% of its production being toilet tissue and the remaining 5% facial tissue.
PRODUCTION NOW ON 13 PMS. Founded in 1955 as a small mill with one 1.2-m wide tissue machine and nine employees, Marutomi now has 13 PMs in total. These measure between 3.2 m wide, down to 1.4 m wide, and all are from Japanese suppliers such as MHI, Kawanoe, Tajima and Hitachi.
The company took a major step in its growth plan in 2006 when it acquired three other much smaller tissue makers in the Fuji area, Nihuji Paper, Ijikawa Paper and Ono Paper. With these three now part of Marutomi the firm today has production at seven plants in the Fuji area, which is located about 130 km Southwest of Tokyo.
Takei Sano, Marutomi’s President, has an extensive background in the paper industry. He is the grandson of the founder of Marutomi, Mr. Tomio Sano, and has been president since 2004. Before joining Marutomi, he studied in the USA and obtained a degree in Paper Technology from the University of Miami in Ohio.
ECOLOGICAL PREMIUM BASED ON RCF. “Our niche,” explains Sano, “can be described as high quality products with a distinctive identity that are all based on 100% recycled fiber. We are clearly the market leader in the RCF-based tissue sector in Japan. In addition to this distinction, we are continuing to move up the quality ladder with products such as 3-ply toilet tissue, as well as printed and embossed product that can differentiate us from the rest.”
Marutomi’s ability to use recycled fiber has been beneficial both in terms of lower cost raw material and also due to the fact that recycled products can sometimes command an eco-premium. “Customers in Japan are sometimes willing to pay a premium for the RCF products, due to the concern for the environment. For example, we have some products that are higher priced than our competitors similar products based on virgin pulp,” says Sano.
The split between Private Label and Marutomi’s own brands is today about 50/50. Among its brands are names such as Fruit Basket, Hanataba, Penguin and Megalo and it continues to invest in its brands to help it prosper further in the coming years.
CHALLENGE TO COVER THE WHOLE COUNTRY. For the future, says Sano, the challenge is to grow at the right pace and in the right place to serve all of its customers. “Today we are totally concentrated in Fuji while many of our customers, for example Seven-Eleven, are nationwide chains. We are also supplying many other nationwide supermarkets and operations such as highway rest areas. To serve them presently we sometimes need to outsource production to various subcontractors. To grow in the future, we may need to establish more production facilities around the country.”
Marutomi is also in the preliminary planning phase of a project to try to combine some of the Fuji operations in a bigger plant there to get better efficiencies and economies of scale, although the plans are at a very early stage.
CORELESS IMPORTANT PART OF PROGRAM. Marutomi has also built a good part of it business, amounting to about 20% of its total output, on coreless toilet rolls. While the rolls have a hole like a normal toilet roll, there is no core. Instead, using a start/stop winding process that involves a heated mandrel on which water has been sprayed, the operators are able to make holed, coreless rolls that contain up to 130 meters of paper, versus the normal Japanese length of 60 meters.
The toilet tissue market in Japan is estimated about 1 million tons per year, with the entire tissue market 1.7 million tons. Coreless product, says Marutomi’s R&D Manager Eiichi Yagi, makes up about 5% of the toilet paper market or 50,000 tons per year.
MILK CARTONS MAKE QUALITY TISSUE. Marutomi has become an expert in using RCF for tissue products. It has been able to use recycled liquid packaging such as milk cartons not only for the papermaking fibers but also has been very successful at utilizing the plastic film as a fuel for its energy needs. In one of the plants, says Sano, it has been able to replace oil 100% with the fuel value coming from the plastic liquid container coating.
Facial tissue is a special sector in Japan, with per capita consumption amounting to twice the level of the USA, says Sano. This fact has made it difficult to grow the kitchen towel sector since facial tissue is used for may tasks that kitchen towel is used for in other developed countries.
“We would also like to grow in the kitchen towel sector,” declares Sano, “but it is a real challenge here as facial tissue is used as an all-purpose wipe here in kitchens, living rooms, cars, offices and numerous other places. It is also very cheap as there has been a price war going on for quite some time between the producers. So it is not easy to displace facial tissue to allow us grow kitchen towel but we are working on it. We do see growth of perhaps 5-6% per year, from a very small base level.”
The Marutomi company logo, explains Sano, signifies harmony, collaboration and... money. By being in harmony with nature through the use of recycled fiber, Marutomi has also been able to build a good business, which is where the money comes in. “Profitability could be better,” concludes Sano, “but we are happy with the way we have been able to grow the company. The challenge as we get bigger will be to compete with the major suppliers.”