Competition is at a premium in the U.S. retail tissue market. Amid product saturation, declining prices, slow population growth and the battle between national brands and private labels, demand for consumer and away-from-home tissue is expected to rise by less than 1% per year now through 2021, according to a 2018 report by Tissue World. As such, innovation is key in driving value growth.
Consumer preference for better-for-you and higher-quality products has driven the trend of “premiumization” across all grocery categories, and paper goods are no exception. Retailers and manufacturers are striving to remain competitive by offering soft, premium, bulk-size products, yet at the most affordable price.
“For our larger private label customers, offering value-priced alternatives to national brands in premium-quality tiers really boosts their margins,” says Steve Saraf, VP of sales for U.S. Alliance Paper Inc., Edgewood, N.Y.
Private label remains strong in the paper goods category compared to national brands. For instance, while dollar sales of the paper towels category as a whole grew just 0.2% in the 52 weeks ending Sept. 9, 2018, that of private label paper towels rose 4.1% in the same period, according to Chicago-based market research firm IRI. U.S. Alliance manufactures private label household paper products for retail customers from coast to coast, offering custom paper programs, products and bundles, as well as prepackaged “control brands” for retailers that may not have the volume for their own private label program.
The company’s offerings include its Earth First line of products that are 100% recycled with 80% post-consumer material and no chlorine bleaching; the Daisy line of kitchen towels, bath tissue, napkins and facial tissues; the Delicate Touch line with consumer-tested packaging; and its latest Azure Ultra-Premium towels and bath tissue, featuring ready-to-shelf packaging, designed to provide retailers without the volume for a private label program the opportunity to offer high-margin products in the premium-quality tier.
Photograph courtesy of U.S. Alliance
Specialize in Supersize
Premiumization in the paper goods category encompasses everything from items made with recycled materials to soft, “fluffier”-feeling products to bulk packages. “The ultra category as a whole continues to grow, as does the preference for larger roll sizes for both bath tissue and towels,” says Jeff Kuenn, director of marketing and category management for Resolute Tissue, Miami. The company plans to launch its newest line, Harmony, in 2019, featuring both bath tissue and kitchen roll towels including bulk sizes that offer enhanced product performance for the midtier segment.
British consumer goods company Better All Around also offers an innovative, high-quality products that satisfies consumer demand for supersize items. “There is a big move to adding more sheets on a roll or creating mega rolls,” says Vicky Mitchell, SVP of marketing. “Although this offers value for money for the consumer, it does come with its own challenges in terms of design.”
The company recently launched its Ora Napkins line in the U.S. through Wegmans Food Markets. The line features a compact, cone-shaped stacking system with a modern design that allows consumers to lift a round napkin from the top of the stack. “Our design offers consumers more sheets without the bulk,” Mitchell says. Each Ora stack contains 50 napkins and will be available in seasonal colors, including orange and black for the fall and red, green and blue for the holidays.
Photograph courtesy of Better All Around
New Technology Fuels Innovation
The introduction of new technology has largely helped to drive innovation in the retail paper category. New Tissue Technology (NTT), for instance, has contributed to the improvement of paper quality in midtier paper grades, Kuenn says. Featuring a flexible machine that can produce a flat sheet or a structured sheet with a simple belt change, NTT allows production in Dry Crepe Technology mode or premium structured grades. “As a result, many customer brands are in a position to offer a step-change product in this segment,” Kuenn says.
U.S. Alliance also uses new Through Air-Dried (TAD) technology to enhance the quality of its products. Targeting the premium end of the product spectrum, TAD dries virgin fiber with super-heated air to develop a soft, airy structure compared to drying the fiber through pressing and flattening.