SCA (Svenska Cellulosa Aktiebolaget), headquartered in Gottenberg, Sweden; annual sales in 2004 - 10 billion Euros ($12.5 billion), is foraying into the Indian market with its hygiene products. It has partnered with JohnsonDiversey India Pvt Ltd for the distribution of its tissues.
SCA is a leading international paper company that produces and sells absorbent hygiene products, packaging solutions and publication papers. JohnsonDiversey India Pvt Ltd is a 100 per cent subsidiary of JohnsonDiversey Inc SC Johnson and Sons. SC Johnson holds 67 per cent and Unilever holds 33 per cent stake in the global JohnsonDiversey organisation.
To firm up the launch plans of their Tork away-from-home (AFH) branded tissues, Reine Hagman, commercial director of SCA, was in Mumbai. He manages the overseas tissue business in 35 countries around the world. Hagman spoke to Shubha Madhukar on SCA's business plans in India.
What are SCA's business plans in India?
We are going to launch two categories from the SCA company. We are launching Tork, our 'away-from-home' (AFH) tissues soon. The AFH market comprises hotels, restaurants, caterers, hospitals and commercial health care centres. Tena, our incontinence care (adult diapers) brand will be launched in the next quarter.
As far as tissues are concerned, the Indian market is still in the nascent stage, how do you see your business growing?
We see that the economy is growing very fast. That means that the tissue market in India will be upgraded, that will also upgrade the hygiene level.
What is the per capita consumption of tissues in India and what is it in US and Europe?
The consumption per capita, in India, is a fraction of what you see in Europe or the States. In the US, total per capita annual tissue consumption is 27 kg per person. In Sweden, it is 22 kg per person. In Germany, it is 15 kg per person. But in India, it is only 15g per person (even China has a per capita consumption of 2.5kg per person!)
So how important is India in the company's scheme of business?
We strongly believe in this area and it is in this area where we can see the biggest scope at the moment for this kind of product. That is why we have started our brand shop here in Mumbai and also newly opened an office in Shanghai in China, to take care of the entire Asia-Pacific region.
Why the foray into India now; why not five years ago or two years ago?
We believe, after looking at a long third-party survey done during the last 10 years, that this would be the right time to come into India, owing to the fact that the economy here is moving very fast at the moment. Also, positively for the product categories which we are launching, it is right time as attitudes towards hygiene products are changing.
What is the size of the Indian tissue market in value and volume?
For the AFH market, in terms of value, it is Rs70 crore and the approx volume is 24,000 tonnes.
Who are your closest competitors?
In India too, as it is globally, our closest competitors are Kimberly Clark. Then, of course, there are quite a few local companies in India.
As we understand, SCA would be importing and marketing the products in India. From which locations will tissues be imported to India and how will the logistics work?
The tissues would be imported from various locations in Europe. The logistics are simple; it will be container loads from Europe direct to India.
Tell us about your partnership with JohnsonDiversey for distribution.
The reason why we have chosen JohnsonDiversey is very simple. It is the largest privately held company with a turnover of $3 billion in the cleaning solutions space for the institutional segment. We have great experience working together with JohnsonDiversey for the last 25 years in different countries in the world. And we are working together with JohnsonDiversey in all regions around the globe - in South America, Africa, Asia, the Middle-East and Europe. They are one of our key partners. The partnership in India would be only for AFH Tork products.
Do you plan to launch other hygiene products in India?
The plans are currently only for Tork, the AFH tissue brand and the Tena incontinence products (adult diapers) brand. But it is only for Tork that we have tied up with JohnsonDiversey.
What market share does SCA hope to capture in the first year and over a period of five years?
As much as possible. We believe that we should be able to grab a substantial part of the market, of course. We are the market leader in Europe and number three in the world. We will target the number one or two position in India as well, but not in the first year. It will be a long-term effort.
When would you break-even?
also see : Svenska Cellulosa Aktiebolaget:
a look at SCA
Both for Tork and Tena, we are looking at substantial monies in terms of market development. Breaking even, I would say, would be in the medium term. The SCA concept is to try to reach break-even as soon as possible and we believe that we should be able to do that within this budget year.