Kim Calvert, Country Manager, Cottonsoft New Zealand

How was 2021 for Cottonsoft? What were the highlights and challenges?

In an economy that has again been at the mercy of the COVID-19 pandemic, the past 12 months have been challenging for Cottonsoft as it has for other businesses. Well-publicised supply-chain disruptions and an escalation of freight prices have had a direct impact on the costs of goods sold, leading to inevitable increases in tissue pricing.

At the same time, many companies in the cleaning industry have been unwilling to face higher costs for products due to difficulties in passing on those costs, which has considerably squeezed margins.

The average selling price for retail products in 2021 is up more than 30 per cent, but Away From Home (AFH) increases have been substantially lower than that, around 8 per cent. It could take several years for pricing to catch up to costs.

Is there an achievement that you’re particularly proud of from the past 12 months?

Amid the challenges, I have been proud of the way our leadership team and employees have responded. In most cases, we maintained supplies to critical industries and our team deserve recognition for that.

One critical action we took was the chartering of ships to facilitate the bulk shipment of tissue, which has allowed us to increase the allocation of scarce container capacity to our business-to-business (B2B) customers. The New Zealand division was the first within our global group to adopt this approach for our base paper.

We are confident that these increased B2B allocations ensure that we enter 2022 without restrictions and that we will be able to deliver supply security to our customers, despite Omicron looming.

What will be the immediate focus for Cottonsoft in 2022?

Bedding down our streamlined supply chains is the main task. We also want to convert more of our B2B paper and tissue products locally at one of our three New Zealand factories.

The purchase of new converting equipment will only enhance our ability to service our customers’ needs. Expansion of our recyclable paper packaging innovations in both B2B and retail will also be on the agenda.

What the opportunities and challenges you see for the industry in 2022?

Labour shortages continue to be an escalating issue for many industries, so automation of manual tasks must be a discussion point for management teams. We also expect supply-chain shortages to continue throughout 2022, meaning pricing pressure will continue across the industry.

Of course, there will be opportunities in this environment too.  Cottonsoft is well placed to meet the increasing demand for sustainable products and services, and our ability to utilise our global supply connections enables us to be more flexible in terms of sourcing.

Government purchasing is likely to remain high, and even ramp up with ongoing health related spend. Cottonsoft is always working to respond to such market trends with new products and services. We will be part of our customers solutions while they face these economic, operational and sustainability challenges.

What role will sustainability continue to play for Cottonsoft in 2022?

Sustainability is demonstrated in both economic and environmental facets. Cottonsoft and our customers need strong businesses to embrace the growing trend towards sustainable living.  With renewable raw material being used across our range of paper products, sustainability is at the core of our business operations.

Our strategic supplier APP is a signatory to the UN Climate Change Accord.  Each of our environmental targets are aligned to one of the SDGs, and over the past five years we have reduced our waste to landfill by 50 per cent, energy use per tonne by 50 per cent, and emissions per tonne by 30 per cent.  More than 95 per cent of our site waste is recycled.

We have proudly held certification through PEFC since 2009. In addition, we also have a growing number of tissue products licensed to proudly display the ECNZ ecolabel, giving our customers complete peace of mind and reassurance that we operate sustainably and responsibly.

As the first company to introduce paper packaging in the NZ retail, mainstream toilet tissue sector, and more recently B2B private-label products, Cottonsoft is taking an innovative approach that will make a difference to the environment. New products are sustainable by design, including plastic-free, plant-based wipes, focussing on 100 per cent paper or recyclable packaging and lighter plastic pallet wrap.

To truly be effective, sustainability needs to be recognised across all products and services – and that is our commitment at Cottonsoft. In short, we are putting our money where our mouth is in terms of sustainability investment.

What do you expect to be the big sustainability trends of 2022?

Product stewardship schemes are a growing area of importance as companies across all sectors seek new ways to deal with environmentally harmful products before they become waste, including plastics.

Moving away from single use products is a strong trend. Recycling is undergoing a huge new focus, with both industry and government attention on how to recover more from the waste stream and modify packaging and product components so that they can be reused after their first life.

This was why we developed our paper packaging without using PE options that were easier to use but generate more waste. Stewardship will drive more emphasis on reuse and recycling.

Other trends to watch in 2022 include the sustainability of an organisations human resource, as employers recognise the value of people in an organisation. Our team and their ability to respond has been a critical source of success for 2021.

What advice do you have for fellow industry leaders?

2022 will be about the people. After a very challenging year, helping them overcome their concerns, giving our team clear guidance of what we need from them, and also how we work to keep ourselves safe in our work from both COVID and workplace hazards.

Industry leaders will have to recognise that inflation and costs are rising for everyone. All parties will have to prepare for justifiable cost increases and ensure that they are able to pass those costs on to the market and end user.

Taking a longer-term view on automation of processes or tasks – and making an investment in that change – will ultimately help with the management of tight margins. Successful leaders are already looking to maximise sales and service opportunities within every client to improve efficiencies and grow with or without acquisition.

I encourage the industry to be flexible with their offerings for clients. Many companies value service as much as price, so don’t always offer the cheapest version of your products or services as the only option.

Instead, offer various service options covering your ‘good, ‘better’ and ‘best’ offers to give customers choice and a sense of buying power – happy clients don’t usually move.  Form partnerships if you need to do so to deliver a broader offering.

This first appeared in the February issue of INCLEAN NZ magazine. 

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