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Category Insights: Paper Products

Category Insight: Unique Private Label Paper

A focus on quality, innovative designs and national-brand-better performance helps private label paper products soar

June 30, 2014
Trans

Private label paper products have performed well over the past year, according to IRI, with dollar sales increases from last year in all categories but one—disposable cups—greater than the national brands. Private label’s greatest percentages of increase have come from toilet tissue (up 6.28) and facial tissue (up 5.22) for the latest 52 weeks ending April 20, 2014. All private label paper products—facial and toilet issue, and paper napkins and towels—are outpacing their overall categories.

All this points to private label’s increasing market share and a tremendous growth potential in the private label paper sector. Capturing consumers with new ideas and an emphasis on quality and performance appear key to growth in the paper products segment.

 

A Changing Market

In its Feb. 2014 report, “Household Paper Products—U.S.,” Mintel notes that “the household paper market holds opportunities for brands that emphasize quality and performance, and that explore ideas that make it easier for consumers to use paper products in a wider array of occasions.”

Consumer trends toward acceptance of—and even preference for—private label brands demonstrate an ongoing opportunity for both retailers and manufacturers. According to Paul Huckins, vice president of retail at Huhtamaki: “For several years, it has been fairly common for retailers to want to develop their private label programs in the image of a national brand. Now, many retailers have their own view of consumer needs and wants and are building unique brand propositions that offer superior product features and innovation beyond those of a national brand.”

With tissues, one challenge is keeping up with—and anticipating—the buying habits of consumers, which are constantly changing. “This market volatility is happening at the same time as a continuous commoditization of tissue products,” said Craig Nelson, executive vice president, consumer products, at Cascade Tissue Group. “As a result, tissue manufacturers need to remain attentive to their consumers’ demands in order to provide them with the products they want.”

Quality is top-of-mind for today’s shoppers, traditionally delivered via through-air-drying (TAD) techniques. Cascades Tissue Group notes that new ATMOS technology allows the production of high-end, TAD-equivalent paper with a significantly lower environmental impact. “The ATMOS machine releases between 77 and 81 percent less greenhouse gases than a regular U.S. TAD machine,” said Nelson.

 

Imitation Limitations

It’s clear that going for national-brand-equivalent (NBE) is no longer private label paper manufacturers and retailers’ primary purpose. Retailers need to employ various techniques throughout their paper sets in order to capture—and maintain—shopper attention.

“We seek to go further than just imitations,” said Huckins. “The goal is to be innovative through a unique product offering or an exclusive design option,driving the consumer specifically to that retailer.” The aim, he says, is to create preference and loyalty for a retail brand.

Differentiation from national brands means higher-quality paper, usage and hand-feel. “Retailers can’t keep competing as ‘me too’ brands,” said Daniel David, executive vice president of Global Tissue Group. “They must differentiate themselves—and consumers are always looking for quality and value.”

Antibacterial hand towels provide a simple and effective way to further reduce bacterial contamination and transmission. “Unlike ordinary paper towels, when the Cascades Antibacterial towel comes to contact with water, it releases an active ingredient that kills over 99.99 percent of harmful bacteria,” said Nelson.

Another way to differentiate is through how the actual product is dispensed. This year, Cascades has been working on a 188-count product, ServOne, packaged in a poly wrap and dispensing napkins one at a time, through an opening at the top. It resembles a facial tissue box, but displayed in a printed poly wrapping—offered in either solid or a print. Said Nelson: “ServOne offers a clear advantage—it keeps the napkins contained and easily dispensed. This product becomes handy during a picnic or in the car, as its packaging restrains spills.”

Custom design options also imbue products with better shelf prominence. “The most-successful innovations,” says Huckins, “are those that are jointly developed by the supplier and the retailer to best meet the needs of—or create new needs for—the consumer. This collaboration goes beyond developing new products. It is important that the retailer and manufacturer jointly manage the category by analyzing performance and actively selecting and monitoring the assortment.”

 

Front, Center … and End Cap

Basic merchandising tactics, such as use of floor displays or creative end caps, help capture shoppers’ attention.

Huckins noted that it is particularly important “to provide a reminder at the point of decision in the grocery channel,” given that many household staples are now purchased at such stores. Placing the private label brand in a specific, highlighted area, rather than with all the other national brands, lends it a certain cachet—and helps drive up sales.

“The mere placement of private label store shelves vs. putting them in with national brands has definitely helped increase private labels’ sales,” said David.

It is also helpful to take advantage of items that are typically purchased together, or seasonal needs, when considering opportunities to cross-merchandise. “A smart promotion in summer months is to place disposable tableware next to charcoal, as a one-stop grilling solution,” said Huckins.

 

The Whole Package

Packaging is a huge selling point, and also one of the key areas of opportunity for private label paper products. One of the main drivers behind private label paper product growth in the past five years has been due to packaging design. The national brands have always been good at presenting eye-catching designs, with private label offerings looking more “generic.” According to Nelson, “Nowadays, retailers are getting more sophisticated in their artwork and brand design.”

That innovation in design can come in various forms. Glow-in-the-dark features and packaging with holographic elements can catch shoppers’ eyes with their “sparkle” and brightness. Sports and other logos can entice other demographics.

“Packaging can position a product as unique,” said Huckins. “It can add value and communicate features and benefits. Most importantly, for private label, it can help validate the offering vs. national brand products.” To this end, private label manufacturers and retailers need to work in tandem to create custom, high-quality package designs that help strategically position the product for maximum shelf impact.

 

Make it Sustainable

The paper category has seen increased interest for sustainable products over the past few years—an area that offers many unique opportunities for manufacturers willing to make the investment.

Some companies have been making “green” products for decades—they just need to continue to publicize that fact through store brand product marketing while continually working to forge into new environmentally friendly territory. “Even though reinventing paper products isn’t an easy task, we successfully launched many truly innovative products on the market in the last years and intend to pursue this mission in the future,” Nelson asserted.

Making sustainability more relevant certainly is top-of-mind in many private label manufacturers’ minds. One approach is through “reduced” packaging. Many shoppers buy in bulk for their own homes, rather than sharing the product with other households. Making a large-count bundle of toilet paper or paper towels without extra “internal packaging” for each roll drastically cuts down on packaging, and a similar approach is seen with “naked” toilet tissue rolls.

 

Fast Forward

Meeting consumer demands for both high quality and low price continues to dominate forecasts for private label paper products’ future. As national brands evolve, so will private label—in price, quality and product configurations. But, said, Nelson, “the challenge is to shorten the development time in order to match or surpass the brands’ specifications as fast as possible.”

Mintel echoes a similar sentiment. Its report notes that category shoppers are as value-conscious as ever, but “some brands are having success at advancing the idea that better-quality paper products can be a better value.”

As with many product categories, this is a never-ending pursuit. “There is no substitute for knowing your shopper and thinking of new ways to exceed his or her expectations every day,” opined Huckins. “Retailers need to have an optimized assortment of products. This means providing a balanced portfolio of choices—without making the shelf confusing.” He also stressed the importance of the need to “generate preference by offering a product, design or signature promotion that no one else has.”

With the goal of luring consumers to a specific venue for a private label product, the relationship between supplier and retailer is especially important. “With a collaborative partnership,” Huckins advises, “the supplier can help the retailer to create preference and loyalty for their brand by offering something the competition doesn’t possess, resulting in increased sales for both and a better shopping experience for consumers.”


The Bottom Line

  • Tactics to fuel growth
  • Techniques for differentiation
  • Better approaches to merchandising

EYE ON THE NATIONAL BRANDS

 Kimberly-Clark’s Kleenex brand recently released box designs by noted American fashion designer, Isaac Mizrahi, building on the concept of tissue box as home fashion accessory. Kleenex is seeking to spur sales after a rather flat 2013 (with a reportedly 1 percent increase). In July 2013, Georgia-Pacific broadened its Angel Soft brand, expanding into facial tissue, positioning the products as “affordable premium.” 

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