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Why the increase in the price of toilet paper is "inevitable"

2021-10-02T10:53:49.165Z


Very strong tensions in the paper sector with exploding production costs raise fears of significant price increases.


Like a feeling of déjà vu ... In the United States and Canada, the Costco sign announced Thursday to limit purchases to a few units on several products in tension, including toilet paper.

If we are not there yet in France, tensions over paper pose the risk of an increase in prices throughout the paper product sector, or even shortages in some.

Already a year of déjà-vu 📸 Sep 27, 2020 Costco Terrebonne and it's starting again 😭😭😭 pic.twitter.com/m3wuEZRD3a

- Henri 📸 🐦🐦🐦 🌺🌼🌻🥀 (@LavoieHenri) September 27, 2021

Leader in hygiene products in France, with its Lotus, Okay and Tena brands, Essity is sounding the alarm. For a year, the group "has suffered an increase in costs of 30%", notes the group to the Parisian. An increase which, despite "many measures to try to limit (its) impact", such as the reduction of packaging, can in the eyes of the group only be passed on, faced with a "sudden and sustained increase over time in the cost of raw materials, packaging, transport and energy ”.

"The wave is so strong that the large distribution must agree to reflect this impact, and share the effort with us, industrialists, by taking responsibility for part of the increase", reported Monday in Les Echos, Arnaud Lafleur, the vice -Chairman of Essity.

In other words: distributors must agree to pay more, even if it means increasing the price on the shelves.

An “inevitable” price increase

"An increase for paper-based products is inevitable: the price increase is so strong that a paper company cannot afford not to pass it on", explains to the Parisian Paul-Antoine Lacour, General Delegate of the French Confederation in the paper, cardboard and cellulose industry (Copacel). Copacel points to an explosion in prices in the space of eight months of + 44% for softwood pulp and + 47% for hardwood pulp… No one today wants to predict the expected increase in the roll.

How did we get here ?

The paper crisis is similar to the commodities crisis which affects all sectors.

The brakes given at the start of the epidemic, in March 2020, then the faster and stronger recovery than expected have shaken the markets.

Some countries like China, which have restarted faster than others, have in fact destabilized the geography of trade and containers, leading to an explosion in the cost of transport… and delivery times.

"We have a tension on the raw material which is pulp, produced mainly in South America and Scandinavia", explains Paul-Antoine Lacour.

Read alsoShortage of raw materials: will there be enough toys at Christmas?

And that's not all.

Popee, launched two years ago, aims to produce toilet paper made from recycled paper.

Problem: the vast majority of this paper comes from company waste.

“During the crisis, with confinement and teleworking, people came less to the company so there was less paper to recycle,” explains Audrey Destang, head of the company.

Worse: large groups, struggling with transport issues, took an interest in it, pushing the price of recycled paper up to unprecedented levels.

Ever more expensive energy

To these issues, we must also add the difficulties related to the cost of energy, which is also exploding. On Monday, the Energy Regulatory Commission (CRE) announced a further increase in the price of gas as of October 1, which will have an impact on the price of electricity. "On the wholesale energy markets, electricity prices rose by more than 200% in September 2021 compared to September 2020", notes Copacel, which also notes an increase in the price of gas of more than 300% since the start of the year and a “very marked increase in CO2 quotas”. These are all elements that boost production costs.

Should we fear a shortage of paper?

“Maybe not, notes Paul-Antoine Lacour.

But there may be tensions in certain sectors.

The press and the publishing community are particularly concerned, "with very serious difficulties for the printing of paper".

What about toilet paper and other hygiene products?

"It all depends on the way in which companies work commercially," explains the general delegate of Copacel, who mentions "tensions and longer deadlines".

In the first days of confinement, in March 2020, the shelves of toilet paper had been robbed by worried French people, creating a shortage, the logistics not being able to keep up despite an existing offer.

An increase in the price of toilet paper, and more generally of paper-based products, would be a further blow to French households.

According to an INSEE survey for the month of August, prices increased by 1.9% in one year, after an increase of 0.6% over the month.

Audrey Destang evokes an idea to prevent toilet paper from encroaching on the purses of the French: "Toilet paper has a VAT of 20% today, we could consider it as a basic necessity and therein. apply 5.5% VAT.

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Source: leparis

All business articles on 2021-10-02

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