Delta-paper-two-Tema

From tissues to toilet paper – industrialist taps into FMCG opportunities-Tema

Marc Skaf has been a businessman involved in manufacturing for 45 years, mainly in West Africa. After relocating his businesses from Côte d’Ivoire to Ghana in 2005, he narrowed his interests to focus on two primary endeavours: manufacturing tissue paper products through the company Delta Paper Mill as well as chocolate under the brand Top Choco. Jeanette Clark speaks to him about expanding Delta Paper Mill and the region’s fast-moving consumer goods (FMCG) opportunities.

Growth potential
In 1982, Marc Skaf, originally from France, started Delta Paper Mill in Côte d’Ivoire. At the time, he had been a businessman with interests in the FMCG industry for a few years and for him, the opportunity was obvious.

“We realised the availability of the product was inadequate,” he says. “Most tissue paper was imported at a very high cost.”

The company invested in the manufacturing of two products – facial tissue paper and toilet paper – and achieved significant growth. Then, in 2005, a deteriorating political situation in the country, along with planned expansion, led to the relocation of Mr Skaf and his family, and eventually the business, to Ghana, where it now operates from a 5,700m2 factory in Tema.

It manufactures toilet paper, napkins, facial tissues, pocket tissues and washing powder under various brand names: Flora, Papyrus, Tango Prime, Tradition and Magix (the washing powder).

“In Ghana, the consumption of tissue paper is only 700g per year per citizen. If you compare this to Europe, where it is about 14kg per year, or the US at around 20kg, the potential is there,” says Mr Skaf.

Market education and the impact of the pandemic
Mr Skaf reveals Delta Paper Mill does much work to increase awareness in its markets on the hygiene benefits of its products. “We have to educate people and would visit schools and show them the product and how to use it.”

Gradually, the company saw consumption increase and a definite uptick when the pandemic hit. Ghanaians started to favour the more hygienic disposable tissue over the traditional cloth handkerchief. “Covid-19 helped us grow faster. People realised the cost of using a tissue paper hand towel is not necessarily more expensive than using a cloth, because with the latter, you have to wash it regularly,” he explains. This heightened hygiene awareness assisted the growth, along with the convenience factor.

Naturally, this increase was accompanied by additional competition. “When we started, there were only two producers in the area; now there are more than 15.”

Local production
When the factory opened its doors in Ghana, it started from scratch, with machinery sourced from Italy, Serbia and other parts of Europe.

“We had already built a network of contacts for suppliers of the machinery we needed when we operated in Côte d’Ivoire and upgraded the facility with new equipment last year,” notes Mr Skaf. It imports jumbo paper roll and processes it into the required products; however, plans are on the table to produce this raw material locally.

This means Delta Paper Mill will source the pulp from international suppliers, and with the help of additional equipment, process the pulp into the jumbo rolls. “Our capacity will be substantial once we commission production. We will only use half but companies in both Côte d’Ivoire and Ghana are ready to buy the excess.”

Producing the jumbo roll locally will assist with one of their significant challenges: securing the supply of raw materials. “The needs of consumers can change quickly. We must have all the raw materials on hand to adapt production quickly along with fluctuating demand. When it comes to FMCG, you need a lot of stock, a big storage space and significant cash flow,” he adds.

Local production will also assist in curbing costs. The cost of the raw material for tissue paper production has more than doubled in the last two years. “The transport costs to get it to Ghana has gone up about 500%, so the price impact is very high.”

Currency woes
Delta Paper Mill has two markets: a domestic market priced in Ghanaian cedi, and an export market to countries such as Togo, Benin, Burkina Faso and Côte d’Ivoire priced in US dollars.

The rate at which the cedi has devalued against the US dollar brought its own headaches. The cedi has lost almost 50% of its value against the dollar since January 2022. This pace of devaluation makes it difficult to accurately price the products. Lengthy payment terms with supermarkets mean once money is received, the cedi has devalued and no longer accurately reflects the negotiated dollar value.

In-house distribution and sales channels
Delta Paper Mill has a distribution fleet of 65 trucks. It sells to consumers in various ways, including via the large traditional open markets in each big town. “We have a salesperson in each city and the trucks deliver every day from Accra to cities such as Obuasi, Tamale and Takoradi.”

The complement of 400 staff members includes a separate team to support retail sales and another for export. The company did not struggle to get its products listed in supermarkets as previous relationships built up in the FMCG industry assisted with opening doors.

Delta Paper Mill highlights and celebrates every possible distribution and sales channel; a recent social media campaign for its brand Flora Joy championed traffic light vendors.

Looking ahead
Mr Skaf believes the company could start on its jumbo paper project to produce locally within the next two months. “We would still need about two years before we can commission production, though.”

He is upbeat about the sharp increase in tissue consumption in the country and other markets. “Most of our tissue paper products are showing continuous growth, and we will persist with our awareness drives, specifically around the use of hand towels.”

Source: How we made it Africa

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