Much of the business won was within the baby diaper market, which saw sales grow 21% during the quarter, according to CEO John Williams, thanks largely to the company’s strong private label strategy. “Our pitch in private label is we will run our brand as if it was your brand,” he says. “We are now seeing a number of retailers say to us, our story on brand partnership—as opposed to (offering) national brand equivalent in a different colored bag— is very compelling and where that has been implemented for some time it has been very successful.”
Traditionally a pulp and paper specialist, Domtar began its journey in the personal care segment in 2011 when it purchased the Attend adult incontinence business and has since used acquisition to expand this business, purchasing diaper maker Associated Hygiene Products and Laboratorias Indas, a Spanish hygiene products manufacturer in 2013.
Last month, the company added Butterfly Health, a maker of body liners for sufferers of accidental bowel leakage to its product portfolio. This niche product already uses Domtar EAM absorbent core technology, which it purchased in 2012. This airlaid core technology, in fact, has allowed Domtar to boost its innovation profile in the private label market, where it does most of its business. A recent example of this was the relaunched of Indasec Domtar's Italian light incontinence brand, with the addition EAM core technology..
“More and more we can find great technology from EAM and incorporate it into the product where we get a consumer benefit, a usage benefit and we can then build product technology that deserves a premium," Williams says. "Indasec is the first move in this direction and so far the consumer reaction has been strong.”
Having a technology engine within personal care has been a powerful tool in allowing the company to build product innovation. To fuel the Indasec restage, Domtar added EAM capabilities to its plant in Toledo, Spain, and moving forward all of its lines will be able to accommodate the EAM technology where necessary.
Meanwhile, in the U.S. private label market, where price has traditionally trumped quality and innovation, offerings turkey design and a value brand strategy has helped Domtar customers achieve double digit growth for its partners. Domtar partners with U.S. retailers who are under pressure for all kinds of channels, to help them achieve volumes as well as margins.
“Our strategy is working. Our new customers wins are proof of the strength of our partner brand model which offers alignment with the needs of our customers.”
Whether or not these new customers—and the sales boost that will come with them—will lead to machinery investment is unclear. Williams would say that current assets are capable of making servicing roughly $1.4-$1.5 billion in hygiene sales—Domtar’s annual hygiene sales are about $1 billion—meaning that new lines oculd be a ways off. However, he also said that there are some discrepancies between the capabilities of lines in North America and Europe and he’d like to see those businesses become self sufficient.