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Wednesday, 14 June 2017

Toilet tissue producers tap into Forex scarcity to regain market share

Perhaps the scarcity of foreign exchange (forex) is not all bad news for all businesses and the economy as companies in the toilet tissue business reclaim market shares lost to imported brands.
Vanguard Companies & Markets (C&M) investigations reveal that a few brands that came into Nigerian market a few years ago had dominated the premium segment of the market with obviously premium quality until last year when forex crises undermined their ability to supply the market while the prices skyrocketed.
Consequently, this development improved the fortune of local manufacturers as they resorted to recycled paper, a cheaper raw material as well as improved quality.
The Nigeria toilet tissue market premium range, C&M findings show, is now dominated by Hayat Kimya Nigeria Limited owned by Hayat Group of Turkey, makers of Papia and Familia brands of toilet rolls and serviette, Bel-Papyrus Nigeria Limited, producers of Rose range of toilet rolls and serviette, Saint Michelles & Joey, Seven Star Nigeria Limited, producers of Seven star tissues.
The investigations also show that Hayat, Bel-ImPapyrus and Seven Star are on neck-to-neck race for market share.
The battle stretch through transformation of production lines and expansion of output all aimed at reducing cost and improving quality as to get to the market at competitive price.
While Hayat is pumping about N100miillion to upgrade its manufacturing facilities and distribution network across the country, Bel-Papyrus invested $20million to consolidate its position in the industry.
Likewise, Bel-Impex, a sister company to Bel-Papyrus under the Boulous Group, is used by the Group as a backward integration to reduce cost and reach the market cheaper.
Market size
Nigeria is estimated to require over one billion units of toilet tissues annually, out of which local production drives about 105million units, according to Euromonitor International, a UK based research company. Toilet tissues in this respect include – Facial tissue, toilet roll, table napkin and kitchen towel.  The statistics is focusing on Nigeria’s population.
Toilet roll is a soft tissue paper used in millions of homes, offices, schools and hotels.
These items are distributed through the traditional channels of open markets, kiosks and local independent small grocers. The modern channels also tend to stock more niche product types, such as intimate wipes.
Non-store retailing channels, such as internet retailing and direct selling however remained relatively limited in Nigeria for retail tissue and hygiene products, although internet retailing grew through the activities of the big online retailers, like Jumia, Konga and Payporte, in particular.
Beside the premium brands manufacturers several more are operating at the low end and middle range of the product line as toilet tissues manufacturing in Nigeria is said to be one of the most profitable businesses today and the market is also said to be expanding into exportation to other African countries.
At times big organisations, schools and hotels often demand that toilet tissue producers brand their business names on the toilet paper to make it look unique, and this has created additional business opportunities for toilet tissue producers in Nigeria in the area of corporate branding.
A distributor, Justus Nwarisi of Emplux Enterprises, along Lagos Badagry Expressway, said: “The influx of foreign toilet rolls, serviette etc have reduced, because locals are doing optimally well.”
Another Distributor at Mambiz Plaza, Idimu, Lagos, Chief Okwudiri Ifedi, said, however, that ‘‘even though the locals are trying, they need to do more to close the gap in the industry.’’
In 2004, the federal government banned the importation of finished toilet roll, serviette and face tissue in order to encourage local production and create employment.
Investigation by Vanguard’s C&M also showed that much has been achieved in terms of local production, even though the market is still experiencing a deficit in supply.
Investigation also showed that consumers were undecided on which product is preferred, whether on affordability, design and tenderness (softness).
The Managing Director of Hayat, Hanan Misri, said the company established itself in the Nigeria tissue market with the formal launch of two of its products, Papia and Familia .
According to him, ” Papia offers the highest quality products in Nigeria, by adopting the latest technology, Visconip. Papia updates and improves herself and offers innovative products. We will continue to break new grounds in the industry. Unlike ordinary toilet tissues, the brand is produced from 100 percent natural cellulose, it is a three-layer toilet tissue with the logo embossed on the tissue sheets.”
On Familia , he said, ” Familia redefines tissues with wide range of high quality products, just like Papia, Familia is manufactured using a fully automated process without any human contact and in hygienic conditions.”
As part of its market and competition strategy
Familia is produced under the same condition like Papia, using the 100 percent natural cellulose, but is scented with the strawberry smell.
The company has deployed some marketing materials like point of sale materials which include branded tables, umbrellas and flyers to draw the attention of end users.
Bel-Papyrus, a subsidiary of Boulous Group had in 2011 signed a $20million loan facility to boost the company’s production capacity, especially in production of paper rolls and other related products in Nigeria. According to the Managing Director of Bel-Papyrus Nigeria Limited, Riad Baloukji, “this new mill will allow the company to treat waste more efficiently while simultaneously enhancing volumes.”
Harsh operating environment
C&M investigations show that companies like Bel-Papyrus resorted to cheaper means of manufacturing, such as recycled paper. Some multinationals which stayed in the lead in tissue and hygiene industry, lost shares to Hayat Kimya Nigeria Limited and other players were able to compete on pricing and distribution despite the harsh operating environment.
Urbanisation to boost demand
C&M also discovered that the growing population and fast pace of urbanisation in the country is driving demand for tissue and hygiene products, for which consumers substituted less hygienic alternatives.
Toilet paper and other retail tissue is expected to grow in both volume and value (at constant prices) terms over the years, while sanitary protection, wipes and nappies/diapers/pants are expected to benefit from the increasingly busy lifestyles of women and young mothers.

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