Is washroom paper the latest price crisis?
I'm sure you'd be horribly aware that paper washroom consumables have been steadily rising over the last few months. While a few months ago we hoped that pulp prices levelling out would let prices stabilise, there have been a few more supply chain shocks that have hit paper since the invasion of Ukraine.
In a nutshell, here's what they are;
- Wholesale gas and energy prices are inflating massively as Europe tries to move away from buying Russian oil and gas.
- Price for lumber and wood pulp remain high.
- Paper mills are under pressure and closing down due to staff shortages and huge energy cost increases.
Let me explain in a little more detail how each of those factors has an impact on the paper market.
As is becoming apparent across the world, wholesale energy and gas prices are inflating at a rate we've never seen before. This is because of the global gas shortage as Europe and the West seeks to reduce dependency on Russian gas supplies. Even though we're all trying to reduce energy consumptions, many of the things we buy and use all the time depend on it in manufacturing. Yes, it’s those same gas and energy prices that have been going up crazily last year in the UK. But, in European factories, energy bills are as much as 5-8 times what they were.
Energy is one of the main overheads of producing paper, so this has a big impact on all factories. Did you know that making one tonne of toilet paper (that's about 5,000 rolls) uses approximately 6,500 KWh of energy to produce? In comparison, the average UK household would use between 8 and 10 KWh.
All manufacturers have had to put their prices up, just to cover their costs. That cost increase is going to be forced all the way through the supply chain, unfortunately.
The second and most recent problem is paper mill closures across Europe. Many paper mills in Poland and Italy (estimates are currently 20-30) have been forced to close their doors, as a combination of Ukrainian workers returning home to fight and the spike in energy costs made it unviable for them to continue operating. This has cut supply at a crucial time and left converting plants competing for increasingly scarce parent reels, and therefore paying a premium to get their materials.
Another factor in play here, is the fact that the price for its key ingredient rose significantly in 2020-2021. And it's not only affecting the price for paper disposable washroom consumables. It was widely reported in the construction industry at the time, and prices have stayed high - anything and anyone that relies on wood and wood pulp is starting to feel the pinch; right from lumber to toilet paper.
Did you know it takes 24 trees to make 1 tonne of toilet paper? And, with the aftermath of limited lumber production in 2020-21 while demand was high, prices have risen to an average of 230% for lumber and wood pulp since before the pandemic! So, paper mills are falling under tremendous pressure; battling their running costs, competing to get and give the best prices they can and/or just trying to stay afloat.
Altogether, the price of your paper washroom consumables are likely to see a spike over the next few months as prices rise for everyone, but we’d urge you to resist the temptation of switching to hand dryers, as a cheaper alternative. Quite simply because, right now, they aren’t a cheaper alternative at all. The cost of running hand dryers is already over 650% of the price per user in comparison to using paper hand towels, where that figure is likely to increase further with the current energy cost climate.
As more people become aware of the spike in paper washroom consumables, vendors are likely to see that you’re looking for alternatives, put their prices higher, and then you would have a larger initial cost on top of inflating running costs. If price for your electricity costs are already climbing up a steep slope, don’t make it climb Everest by adding hand dryers to your energy costs.
Our advice to you is to be open and explain to your clients why the cost of paper consumables are increasing so rapidly and work with them to introduce more efficient dispensing systems where possible. If you'd like any support in explaining the current paper consumable price crisis or suggesting new products to your clients, please get in touch.