South Africa’s mixed economy sees many consumers moving down market, but growing urbanisation means the pool of consumers able to buy tissue products is growing. Universal Paper & Plastics Managing Director Jonathan Sher spoke to TWM Senior Editor Helen Morris.
It has been almost a decade since TWM first met family-owned Universal Paper & Plastics’ (UPP) Managing Director Jonathan Sher at the company’s mill in Ga-Rankuwa, Gauteng province, South Africa.
Back in 2015, at Ga-Rankuwa Sher discussed how UPP’s focus was on being “creatively self-sufficient”, as the South African tissue market dealt with rising energy costs, a struggling economy, and fast-changing consumer habits. The historic, family-owned company – having been established almost 75 years ago by Sher’s great grandfather Hymie and grandfather Sam Phillip, then steered from the mid 80’s by his father Barry, and now run by brothers Jonathan and David – used consumer-led innovation to stay ahead of the game.
Now in 2024, Sher says there has been “a lot” of activity in the South African tissue market, with some paper mills putting in new machines that mostly came online towards the end of 2023. Has it resulted in overcapacity in the marketplace? “There currently is overcapacity, and it is creating a challenging environment,” he says. “However, we are coping well as we have a wide network of customers, and our products are in demand from all our clients.”
He expects to see further oversupply in the local market during 2024, and one of the company’s main strategies is to continue to innovate: “Last year alone we introduced two new products to the market that have never been made before. The first, a 3ply household towel product, and the second a 4ply bathroom tissue product. We are foreseeing double digit growth in the retail market, and we continue to aim to increase our market share.”
Investment and modernisation also remain key. In 2017, Universal Paper Manufacturers (UPM) – owned by Universal Paper and the sister company to UPP – successfully started up its PMP-supplied Intelli-Tissue Advanced 1600 tissue making line at the Ga-Rankuwa mill. TM5 now has a total capacity of 25,000tpy, and the investment boosted the company’s production “to the next level” as part of its aim to become the preferred tissue supplier in the Southern African region, offering a range of ultra-premium, 100% virgin fibre tissue paper products to a growing customer base.
The business is now ISO 9001-certified and continues to keep its FSC-certification, which it has held since 2012: “We are particularly proud of the fact that we have also invested in renewable energy and currently our solar panel systems are providing us with 20% of our total energy requirements,” he adds. “That amounts to 3MW of energy that we can generate from solar, hence reducing our requirement on the grid by 20%. We have also made some improvements on our coal fired boilers to improve our efficiency, and this has reduced our consumption of coal considerably over the past year. We are also currently busy with a new project for water saving that should reduce our water usage per ton of paper produced.”
The past few years have also seen further efficiency refinement: “This has encompassed better proactive maintenance and small upgrades on our tissue machine to ensure we squeeze out every additional ton of paper we can from it.”
The business has also improved its outputs and reliability on converting. Future investment plans include investing in new equipment in the company’s converting plants, which Sher says will come online in March 2025: “This will allow us to further grow our footprint in the retail stores and improve our outputs on consumer roll products. We are also looking for further investment in our business to allow us to make the next step change, which would increase our capacity dramatically, allowing us to gain further share in the local market.”
In terms of its growth strategy in the local market, Sher says the business is always strengthening its position as a preferred supplier in the retail market: “We have seen an increase in supply of finished products and parent rolls here in South Africa, and this has created a challenging environment where there is a lot more competition and a lot of discounted price wars going on between suppliers.”
The company’s leading brand is Dinu, a premium, FSC-certified household tissue brand. In the Professional division, UPP focuses on AfH products under the Dinu Professional brand and the business also exports some products to neighbouring countries, something Sher says it will continue to increase its market share in the future: “We continue to bring out new products for different markets and have recently introduced products to cater for the lower LSM’s and informal markets. This is an area we would like to grow and expand our presence. Our plans are also to expand our market presence in various other channels in the future.”
Across South Africa, he says the trends are very much the status quo, with retail still “growing well”, allowing UPP to increase its footprint across the retail chains. “Retailers still have a lot of options in terms of brands, but they are also doing a lot of investment into their own brands. Sustainability is not a big driving force as consumers are cash strapped and looking for the best deal they can get. This is driving a lot of cost cutting and manufacturers need to focus on producing simple products in large volumes.”
How has tissue buying changed in the past few years following Covid-19? “Consumers habits haven’t really changed much. During Covid, we saw a lot more consumption on towel products, but this has since slowed down as people are not sanitising much or washing their hands as much as they did during Covid. So, I would say the consumption has gone back to the same levels pre-Covid.”
In terms of the energy crisis, Sher says this has been “a challenge for all manufacturers, and made UPP focus on its strengths and deep dive into its operations to become as efficient as possible.”
“We have done this well and continue to focus on what we have control of versus what we don’t have control over. Consumers are struggling now as there have been big price increases in the past year on all FMCG products, leading consumers to either bulk buy when there are deals or cut out the unnecessary luxuries and just purchase the basics.”
And yet for tissue, Sher forecasts that the toilet and towel markets will continue to grow, as more and more consumers are shifting to better quality tissue products. “We anticipate growth for the foreseeable future, as the population is becoming more urbanised and the pool of consumers that are able to buy tissue products is also growing.”
