Tissue industry struggles as prices rise, sales drop

The country's tissue industry is currently grappling with significant challenges as demand for tissue products has slumped due to rising prices. 

The surge in costs, primarily driven by higher raw material prices and increased utility expenses, has forced manufacturers to adjust their pricing, leading to a decline in consumer purchasing power.

Over the years, the industry has grown significantly as the use of tissue products expanded for personal hygiene, cleaning, and infection control in homes, schools, workplaces, hospitals, and public places. The Covid-19 pandemic in early 2020 significantly boosted demand for tissue products.

Major players in the tissue industry like Bashundhara Paper Mills, a concern of Bashundhara Group, Fresh Tissue, a brand under Meghna Group of Industries and Sonali Tissue Industries have reported the drop in sales lately.

Other players in the tissue market, including Partex Group, Bangla Tissue, Super Star and Bengal, echoed similar sentiments, citing a stagnant market amid current economic challenges.

"The tissue industry is grappling with numerous challenges, primarily due to escalating costs. As a result demand for tissue products declined primarily due to rising prices, which were adjusted to account for higher raw material costs and the increased cost of funds," Majedul Islam, general manager and company secretary of Bashundhara Paper Mills, told TBS.

Md Yeasin Mollah, general manager (sales) of Fresh Tissue, said tissue paper sales have remained stagnant this year, despite expectations of growth in line with the country's economic development.

"Soaring inflation has eroded purchasing power, forcing consumers to prioritise essential goods," Yeasin told TBS. However, he expressed optimism that the situation would gradually improve.

According to Bashundhara Paper Mills' annual report, at present market size of tissue products is around Tk1,500 crore, and 80% of people use tissue paper once a month. 

Raw materials, energy get costlier

The price of pulp, a fibrous material made from plant fibres that is the primary ingredient in papermaking, in the international market increased by over 40 to 50% in recent months, according to industry insiders.

A year ago, the per tonne pulp paper price was $550 to $600. This year, pulp prices increased to around $850 to $900.

In January last year, the government hiked gas prices for power, industries, and commercial (hotel and restaurant) sectors up to 179%. The government increased gas prices for large industries by 150%, from Tk11.98 to Tk30. For medium industries, the new price was set at Tk30 from Tk11.78. 

To adjust for the higher cost, some major tissue producers escalated the price for tissue products by over 10-20% on average. 

"As price escalated for products, the demand for tissue products declined," Majedul said.

Sales drop 

Bashundhara Paper Mills witnessed a fall of around 10% in sales of tissue products in terms of quantity.

Owing to the price hikes its total revenue slightly increased but higher costs dragged its profitability down almost half in fiscal year 2023-24.

According to its annual financials, it reported a total revenue of Tk1,315 crore, and a net profit of Tk19.15 crore, down from Tk45.50 crore a year ago. The tissue segment contributed Tk578 crore of its revenue. 

Bashundhara Paper Mills sold 34,840 tonnes of tissue products in FY24, which was 8% or 3,038 tonnes lower than in FY23.

"Over the years, the tissue industry had been growing, particularly during the pandemic when people largely chose these products for hygiene. However, usage of these products is now declining, also due to inflation," Majedul said.

Bashundhara Paper Mills saw its exports in FY24 decline by over 30% year-on-year from Tk125 crore to Tk87 crore.

An official of Younus Group, which produced Sonali Tissue, told TBS, "Demand for tissue products declined owing to increase in prices of products."

The company has to increase prices for finished products to adjust to the increasing production costs, he said. "As a result, annual sales of Sonali Tissue almost halved."