Consumers are driving change in the tissue industry. Well-established and emerging markets alike are pushing for new-and-different products, but they also remain sensitive to quality, performance, and price. As a result, recent trends in toilet tissue and paper toweling continue to skew toward product premiumization and private label expansion.
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What’s driving consumers?
The only constant is change is a universal truth. Not surprisingly, global consumers are heavily influenced by the dynamics1 of:
- Shifting economic power: The growth of the new middle class is fueling a desire to trade up from basic goods to more premium products. Likewise, a smaller segment of more concentrated wealth is developing sophisticated tastes for the next level — premiumization of their already-premium products.
- Technology: Social media platforms ratchet up pressure to be unique, and technology is a powerful tool in guiding purchasing decisions. Consumers will pay premium prices for products and services perceived as somehow setting them apart from others.
- Population change: Smaller households, aging consumers, and delayed marriage skew purchasing decisions toward higher spending on products that support better living, be that a time savings, consistent performance and quality, or specific health-related benefits.
- Environmental pressures: Products that are manufactured with an eye toward sustainability — less energy, water, and natural resource consumption — are ripe for premiumization. Higher-income consumers in particular see these purchases as a statement to their personal commitment to the environment.
- Evolving personal values: While premium purchases made to impress remain, conspicuous consumption is falling out of fashion. Consumers’ values are shifting toward spending more on products that demonstrate smart choices in support of healthier, simpler lives — including everyday items like toilet tissue.
Opportunities for tissue converters
The key consumer decision drivers are reflected in how people embrace change. In a recent poll, 66.6% of consumers reported that they “like to try new products and services”1. For tissue converters, this willingness translates to growth-driving opportunities in product premiumization and private label. Interestingly, the two are not mutually exclusive.
Premiumization is at the core of private label trends for a number of reasons2:
- To ensure competitiveness with leading branded products.
- To balance quality and price.
- To expand the reach of premium products beyond wealthy households by offering affordable, good quality products to a wider audience.
- To reinvigorate saturated markets with new options in tissue products.
Global growth is fueled by retailers investing in private label portfolios that encompass a range of price segments from value to super premium — a move that puts private label on pace with branded products.
To compete, premium brands must either choose to try and compete with private label on price by offering discounted promotions, or otherwise justify their premium prices through differentiation. The latter is a particular challenge since, in some countries, the tissue market is extremely conservative and creating value-added product benefits is difficult. Further, attempting to introduce these types of benefits could alienate customers and/or drive up manufacturing costs, both of which present significant risk to margins.
Tissue converters are at a crossroads. Current trends suggest opportunities abound in introducing innovative products that resonate with consumers, yet investing in the research and development of products with characteristics that reflect consumer preferences and also meet the manufacturer’s need for differentiation and market share is an expensive proposition.
How can a tissue converter test new products under real conditions, or sort out which papers or embossing solutions work best — without upending their business, production timeframes, or budgets?
PIVOT Solutions from Fabio Perini is the answer. The fully integrated center of excellence contains forward-thinking innovations like Pivot laboratory and Pilot line that allows tissue converters to test out new ideas and formulations in small-batch runs performed in a controlled environment.
The result? Actionable information at every stage of the tissue converting process. Using PIVOT Solutions, tissue converters can make informed decisions and develop capital equipment purchase strategies that address short-term opportunities and support long-term needs.
Trends continue to dictate and expand opportunities for tissue converters, and innovation like Pivot Solutions helps them keep pace. Contact Us for more information!
1Passport: Premiumisation Report, September 2017
2Passport: Private Label Premiumisation in Tissue and Hygiene: Balancing Quality and Price, January 2016
Written by Dario Giannini
Dario Giannini is Customer Product Innovation Manager at Körber where he oversees PIVOT, a center of excellence for tissue converting and packaging. During his more than 15 years with the company he has held product and business development roles related to embossing and tissue products that create long-term customer value.