Maroc - TIMBERBIZ.COM.AU - A La Une - 27/Feb 23:48

Challenges for Germany’s tissue industry

Germany’s tissue industry is at a crossroads. While technological advancements have driven capacity growth at a compound annual growth rate (CAGR) of 11% since 2007, the sector is grappling with a volatile economic and energy landscape. Unlike other German manufacturing sectors that dominate headlines such as the auto industry tissue production faces its own unique challenges. Source: ResourceWise With higher energy costs, inflation-driven labour demands, and the costly transition to green energy, German tissue manufacturers are redefining their approach to production, trade, and market positioning. But where does the industry stand today? And what does the future hold? The German tissue market is shaped by an evolving consumer base. While there is a growing preference for high-quality, soft, and hygienic tissue products, economic uncertainty has led many consumers to shift towards private labels and value-driven purchasing. This results in a contradictory demand for both high-end and budget-friendly products, complicating demand forecasting. At the same time, Germany’s population growth is slowing, with a projected decline of 0.12% in 2024, raising long-term concerns about sustained domestic consumption. However, GDP per capita is on the rise, signalling increased spending power at least for some segments of the market. Despite the challenges, Germany’s tissue trade has remained stable over the past 17 years. Poland has emerged as the largest source of tissue imports, with key suppliers located near Germany’s borders, including Austria, France, Italy, the Netherlands, and Sweden. On the export side, many of these same countries are also key destinations for German tissue products. Germany’s tissue industry maintains a near-balanced import-to-export ratio, with trade volumes making up about 40% of the sector’s total capacity. Yet, with rising operational costs, this balance could shift in the coming years as neighbouring producers gain competitive advantages. Unlike some of its European counterparts, Germany has taken a cautious approach to tissue production expansion. Instead of rapid capacity increases, the industry has focused on incremental machine upgrades and optimization of existing mills. By 2027, only two net new machines are expected to be added, with no new mills on the horizon. While Germany benefits from a high proportion of fibre integration, its energy-intensive production model and carbon emission challenges put it at a competitive disadvantage. Sweden, for example, enjoys lower production costs due to its reliance on biomass energy, while Germany continues to face high electricity costs and emissions penalties. In a competitive European landscape, German manufacturers must balance cost pressures with sustainability goals. The industry is already exploring alternative energy sources such as hydrogen, but without improvements in electric grid costs and carbon efficiency, Germany risks losing ground to lower-cost producers. For a deeper dive into Germany’s evolving tissue market, its competitive positioning, and what’s next for the industry, download our report, “Understanding Trends and Challenges in German Tissue Production.”