SCA set to expand UK tissue market share

Scandinavian paper giant SCA today (10 November) revealed that it had made a binding offer of 1.3 billion Euros to buy the tissue operations of American conglomerate Georgia-Pacific. The American firm has accepted the bid subject to talks with unions and regulators.

Georgia-Pacific’s European tissue operations have annual European sales of 1.25 billion Euros and the companyhas a well-established presence in Europe in both away from home and consumer tissue products. Its products in both segments include the Lotus brand.

Consumer

Consumer tissue acounts for some 60% of Georgia-Pacifics total sales and away from home tissue accounts for about 30% of sales. Personal care products such as cotton pads and facial cleansing wipes account for some 5%. In the consumer tissue business, close to 70% of sales are branded products and the remainder are private label products.

In terms of presence in the European market overall, it is estimated that should the SCA acquisition of Georgia-Pacific be approved by the competition authorities, SCA would increase its market share of consumer tissue products from 25% to 35%.

No details have been released yet about what the acquisition would mean for the UK. However, recovered paper sector specialists have told letsrecycle.com that the agreement might mean that smaller mills could benefit and that the future of the SCA Chesterfield might be open to question.

Tesco

Explaining why smaller tissue mills might benefit, one expert refered to Georgia-Pacific’s production of own brand products. He said: GP is a big producer of private labels for retailers such as Tesco. In the future, the retailers may wish to spread their buying more widely rather than face dealing too much with a very large operation.

On the recovered paper input side to UK mills, it is thought that in terms of usage of mid-grade material (typically from printers and office grades), that SCA uses up to 100,000 tonnes a year in the UK at present. It has a tissue mill at Prudhoe which has recently seen the installation of a new de-inking plant which will increase the capacity to use recycled tissue fibre. SCA also has an older mill at Chesterfield which has not seen so much investment and a pulp mill at Skelmersdale.

Georgia-Pacific has the Stubbins mill near Stockport which uses about 160,000 tonnes of material. Other major producers using recovered paper in the tissue sector include Kimberly-Clark in north Wales, Northern Board Mills and the Disley mill.

It is thought that currently Kimberly-Clark is the second largest tissue maker using recycled material, ahead of SCA but with the acquisition, SCA would become the leading player instead of Georgia-Pacific.

DS Smith

Elsewhere, DS Smith takes in some recovered office material to its site at Kemsley which serves the MReal plant at Alize in France which makes recycled office paper. However, there is uncertainty at future demand at Kemsley as the Alize mill is expected to close although DS Smith has developed alternative outlets for the material.

In terms of the potential for the market to become dominated by SCA, should the Georgia-Pacific deal be confirmed, one recycler commented that with international outlets both in Europe and deep sea, such as India and potentially China, as well as other domestic markets,there should be little effect in sales terms.