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Tissue Agorà Blog

Agorà interviews ETS at Tissue World Milan 2017

Posted By:19/05/2017

During Tissue World Milan 2017, Angelo Bertini on behalf of Agorà, had the opportunity to meet Mr. Roberto Berardi, chairman of ETS, and Mr. Fanis Papakostas, vice president of ETS.

ETS - European Tissue Symposium is a trade association of the European tissue paper industry. Its members represent the majority of the tissue production throughout the EU.

AB: As first question, I would like to ask the meaning of ETS presence here in Milan. What is ETS main purpose and which are the targets of the presence at TW Milan?
FP: For ETS is an important event because of the messages the organization wants to communicate. For this main purpose, we manage to have an active presence at the conferences of the chairman Roberto Berardi and a booth where everybody can come and get information about our activities.
At this moment, we are focusing on two different areas: the first one is the demonstration of the advantages of tissue paper products use, in terms of hygiene; the second one is the communication of the sustainability systems as an industry, indeed the Tissue industry environmental footprint is compatible with human requirements. At the same time, this event is a good opportunity for networking with more companies and exchange opinion and learn from each other.
RB: I would like to add that tissue producers are not aware of the detailed reasons why tissue is better than other alternatives. They know that tissue is better by instinct, but I think it is important for them to know the scientific elements which are behind the tissue products superiority.
We are glad to find here visitors from Western Europe, but also from Easter Europe, Middle East or even from Asia, asking us to use our studies in their publications. Of course our answer is positive, because provided they quote ETS as source because there is a bigger opportunity to spread messages about the superiority of hygiene provided by the use of tissue products.

AB: ETS headquarter is in Brussels, same location of the European Parliament: which are the connections that you have or would have with the European community? Moreover, do you have the possibility to participate to committees or lobbies activities?
FP: Being based in Brussels facilitates the networking, despite the fact that there is not a continuous representation.
By the way, ETS is monitoring closely the developments there. In the some phases, the European community has been more active than in others. In any case, our networking is there and contacts increase substantially when required.
RB: I would like to add that for ETS being based in Brussels, is a virtual placement, because there are not people working continuously for the organization. ETS offices are placed in the premises of a high-level lawyers firm, where we normally meet.
Each associated company sends experts for a given field in periodic meetings organized in Brussels or via teleconference, during which topics of interest are discussed. The objective of the meetings is the reach of agreements or conclusions that could be used to communicate to the European authorities the position of the industry. The important fact is that the language used is the same of the companies acting in the sector.

AB: I would like to know your point of view as experts of the tissue sector and as representatives of your associates. How it has been the evolution of the sector in the last 10 years? In terms of setting of different industry regulations, technical development or eventually legislation, sustainability, which have been the key factors effecting the last past 10 years?
What could be in your opinion the key factor effecting the next 10 years?

RB: Certainly, the mega trend of the past 10 years has been the consolidation of the market.
Initially the industry in Europe was fragmented and somewhere still is, but some major changes took place and now players have worldwide importance.
We have learned yesterday from the presentation of Mr. Esko Uutela that the n.1 producer is now a European company, which is a key member of ETS. If we consider Europe as the 25 countries, I can affirm that the growth is about 1% per year, so at the same time tissue producers companies are feeling more and more the importance of being efficient and effective, so the majority of the companies are reasonably modernizing the equipment although there is still more work to be done.
The consequence is that investors are rewarded by being the winner in the market; of course, the company with the most advanced equipment are the ones who can be competitive.
If efficiency is important for any business, in the case of private labels is absolutely paramount, because of the costumers’ demand, the margins reduction and the right level of profitability allow companies to invest further only with a suitable footprint for being first class producers.
Certainly, this phenomenon happened first in Europe and now is starting taking place in significant way in US.
Another aspect is the growing importance of the Away from home - AFH market. If in consumer retail products private label growth reduced the importance of some brands, in the AFH segment, private labels are less of a factor, so the companies are able to fully exploit their potential through the creation and the consolidation of their own brand.
We hope that our studies helped a little bit the success of the AFH market allowing the market growth.
FP: I think that some major trends followed in the last years will be followed also for the next 10 years, starting from the pressure of the private labels vs the branded products because in some countries this is at a different phase.
Some countries have 70% private labels and some others have 50%. It’s more likely that the 50 will become 70 and the 70 become 75 and not the other way around.
Secondly, in next years in Europe there will be a margin squeeze, due to the modern trade requirements. Consequently, it will be important for the producers and the supplier chain to find a way to develop, produce and deliver products with less fiber, using less energy and less water, being more efficient and digitalize all the machines.
These are the requirements for the next 10 years or until the improvement would be so high that there will be saturation and other progress will be necessary.
On the other hand, it is more and more important to find ways to make the world aware of the need of more tissue products that means expanding applications. For this reason, it is important that the concept of hygiene is clearly communicated in such a way that people are convinced about the multiple reasons why using paper for certain application is the most hygienic way to get things done.
Last but not list, is the concept and the communication about the industry sustainability. In the majority of the markets, when people hear about tissue products, more often than we would like the reaction is against the sector, as people believe that tissue paper manufacturers are causing deforestation. This is incorrect: manufacturers grow and cut trees on cycle base. There is a lot of work to do towards the correct communication about sustainability and environmental footprint of the industry. Moreover, there is the need to monitor on continuous basis this perception, maybe once a year or every 6 months. It is important to know what end-users think about the production and the use of tissue paper products. I am more than convinced that if we want the sector to grow, we should work in this direction too.
RB: Many people think that using other alternatives instead of tissue paper products will limit the deforestation. However, most of them are not aware that the point is not stopping the forest cut, but to grow forests as trees absorb CO² while growing.
In fact, trees while growing can absorb 10 times the amount of CO² absorbed by the matured ones, because CO² is needed to make the log wood. So the focus should be on growing trees, as they can help to the greenhouse effect reduction.

AB: What kind of support are you giving to your associated? Are you supporting them giving them guidelines or preparing some back office work? Which way do you think you can support companies, as Mr. Berardi was saying not everyone is aware about the potential they have and how to better communicate the issues.
FP: there are some undisputable facts. The first one is that, after an agreement with all members, some serious studies started and have been implemented with ETS supervision.
Now, we can say that we are approaching towards the end of this period that lasted for 6-7 years and it’s undisputable that paper is the best solution for hygiene. Our website is full of material about environment, sustainability and hygiene, developed for our members.
RB: In particular, with our members we are also discussing about other specific topics like the use of recycled fiber vs virgin fibers, the forest certification and now members of ETS adopted the position about that unanimously. Therefore, when European law was starting to force to have forest certification, ETS members already had it, as a voluntary decision.
FP: Now, the truth is that we have to convince everyone about the superiority of tissue products for hygiene. If we find a way to sell more tissue, the whole chain of the industry gets benefits, thus I think we should join forces on this direction.
We should promote a better understanding of those concepts and monitor the perception that consumers and customers have. For those purposes, ETS resources alone are not sufficient.

AB: You were mentioning to reinforce the meaning of hygienic use at a high level. Do you think the traceability of the production in order to grant the product and hygiene quality would be an opportunity for tissue industry?
RB: I do not think every certification is significant, now the major ones are FSC or PEFC, for forest certification. In ETS, there is a person who is charge to attend dedicated sessions to fully understand the value of certifications, valuating our endorsement.
Actually, ETS endorse FSC and PEFC certifications. Then, on the other hand, there are certifications that are not fully under our control, as the energy origins, so we are not particularly favorable of adding further information about something we cannot decide.
FP: This will become a need in the far future, beyond the period you asked earlier to forecast.
RB: Now, tissue manufacturers do not declare the bulk used, because usually good products come from mixture of different bulk, for example: some soft wood from Canada, some eucalyptus from Brazil, and so on. This is the reason why I think the bulk certification could be complicated.

AB: Technological issue: do you think industry 4.0 will influence the tissue industry and how? Would it be an opportunity to improve the industry? Do you think that there could be a direct link from the production to the consumer chain, in order to have smaller storage, faster feedback about products and faster indication from markets?
RB: There are not only logistic optimization or mill optimization; there is also the prospective of a better understanding of the usages.
Now, new studies developed smart devices that can record the number of sheets used, this is very helpful towards product optimization. For example, today at midday the towel paper dispensers in the man toilets were empty, so I had to use the air drier. What 4.0 could do for that? Maybe a bell rings when the dispenser is 10% filled up, and then cleaners can fill it up.
There are many ways 4.0 can help the tissue industry, from production processes, to distribution processes and to final uses.

AB: What do you think your associated would need from their machines suppliers?
FP: I can answer only from my prospective as an ex-tissue producer. From machines manufactures I expect to help me cracking my challenges and have better margins and better products.
As I said before, I would be happy to be invited to assist to demonstration of improvements where it is proved that I can have better products at optimized costs such as lower energy consumption and less raw materials.
Concluding, as companies have different needs, I cannot answer completely to this question.
RB: I think it is very important for machines suppliers to sell machines able to have advantages on fiber and energy, and to reduce payback costs on the machine.
If this does not happen, it is just little quality improvement.
In addition, markets tend to polarize and be segmented, as the average level of products is lower, costumers buy low cost products asking for a good quality, so price becomes the key, or they buy differentiated products. Companies suffering from that situation are those in-between low cost and high quality products producers. Thus, I think that machines manufacturers need to note that if tissue producers want to compete with big numbers (as the 80% of the market), machines manufacturers need to provide solutions which allow for more efficiency and costs reduction.
FP: At the moment, if a company wants to improve its products, achieving results without increasing prices, is almost not an option, as nowadays market conditions do not allow this anymore.
If machine manufacturers can deliver products which are slightly better than the existing mainstream at lower costs, then I have a good reason to buy a new equipment.
RB: This is even more relevant in the European market, when the demand is already satisfied by the existing capacity, so tissue producers need good reasons to renew the equipment.
In developing countries when the capacity increases every day, the opportunities are different because tissue producers have the need to increase capacity volumes.

AB: The topic question at this point: M. Berardi is finishing this mandate as chairman in 2 months from now. Is Mr. Papakostas going to be the next chairman?
RB: The final decision will be taken in June, but the plan decided about 1 year ago, considered 1 year of transition time during which we would have worked together, thus at the end of that period Fanis would have the necessary background to became chairman.

AB: To Mr. Berardi, what heritage are you going to leave at the organization?
RB: When I became the chairman of ETS, the website had 4.000 visits per year, now we reached 200.000 visit per year, we have been able to generate a higher level of interest.
Reinhold Schadler, the one in charge before me, an excellent technician coming from SCA, who gained patents for innovative changes in paper machines, he did an excellent job introducing technical knowledge, technical committees and regulatory aspects within ETS, however, he was not marketing oriented.
Instead, my background is fully marketing and sales oriented, as I spent my working life as marketing and sales representative and commercial director.
I wanted to push towards the promotion of the category, giving to end-users and in general to decision makers, the elements necessary for their decision in favor of tissue products, when there are non-tissue alternatives.
This is the small heritage I will leave to the organization.

A: To Mr. Papakostas, what improvements will you going to bring at the organization?
FP: I am very glad to succeed Roberto in this position at this stage.
When you succeed a person who have done such a good job it is challenging.
I want to maintain the starting conditions as a basis to carrying on with the begun activities and build improvements on them.
When I look at the future sometimes, I think it would be very easy because it seems that I would simply step on it and move forward. Some other times, there could be unanticipated challenges that come on top, but I am confident this would not be our case.
We will carry on reaching the next level, which is the capitalization of what has been established and help our members to grow their business and profitability.
RB: I just would like to add that Fanis have already managed some data collection initiatives and researches, in charge as Vice President. I think he has already created the situation necessary to put the next gear.

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