With ambitious plans for growth, Duni is striving to become the number one in the high quality food service sector

by Mark Payne

Duni tops the table

T he papermaking activities of the Duni group date back as far as 1800. Since then it has grown up to become the world's largest supplier of high-quality tabletop products. But not content with this title it is pushing its business forward around a central ambition to become the world's market leader in high-quality disposable food-service products.

Duni aims to double sales every five years
In its long history, company structure has changed many times, but today Duni divides its operations into two business areas - meal service products and packaging. Total group sales totaled some SEK 5,269 million ($663.9 million) in 1997 and of these, the meal service business accounted for about 86% of the total.

Consequently the company has a strong position in the global market for these products, where it focuses specifically on paper napkins, tablecloths and candles, but also on paper plates, cups, glasses, plastic cutlery, paper doilies and baking cups as well as wet wipes and special wrapping paper.

The secret of the company's successes, to date, can be attributed to its vigorous program of new product development and releases, marketing, distribution, merchandising and acquisitions. Significantly, the company claims to invest a larger proportion of its earnings in R&D than its international competitors.

In 1990, Duni practically managed to double its level of sales and considerably strengthen its market position following the acquisition of Finess from Stora. This purchase also appreciably extended Duni's product lineup to include gift wrapping paper, storage products, shopping bags and bakery accessories.

The group's plans for the future are just as ambitious. It aims to double its level of sales every five years, while earning a return of 10-20% on operating capital.

The company expanded further at the start of 1995, when Duni acquired Cross Paperware from Scott Paper. This added considerably to the scale of Duni's UK disposable tableware operations. In the same year, it divested its NL Whittaker wholesaling business in the UK to Bunzl. More recently, Duni acquired Habi, Finland's market-leading candle manufacturer, in September this year.

Market potential

Duni's most substantial market is Germany, with the UK also of considerable importance to the group. In Scandinavia, the company's market share has consistently exceeded 50% in the meal service sector over the past few years. But it is in southern Europe where the company recognizes considerable room for growth. Not only is eating out (and the use of paper napkins and other disposable products) popular in countries such as Greece, Italy, Spain and Portugal, but they also attract around 50 million foreign tourists each year. Many of these tourists come from central and northern Europe and are already established consumers of Duni products. Other potential growth markets for the group include Eastern Europe, Latin America and Japan, where a conversion plant was recently set up by one of Duni's partners.

In 1994, Duni started up a converting facility at Poznan in Poland, and now it also has sales companies in Russia, Romania, Hungary and the Czech Republic, as well as sales agents in the Baltic countries. A sales office was opened in Mexico City in early 1998.

In the USA, where the consumption of disposable tableware products is well developed, Duni's major market sectors include consumer, distribution and cash and carry. The company has a production site in Milwaukee, and it expanded its flexographic printing capability several years ago to cover its entire food service product range. The company claims that this addition adds ambience to products and gives Duni's consumers a competitive edge.

In 1996, Duni US constructed a new building to concentrate all its operations at one site, with the company installing the latest printing technology and comprehensively upgrading its computer system. During 1998, capacity was being expanded.

Tissue talk

Central to Duni's product development, its converting/manufacturing and its marketing strategies is the ownership of three tissue paper mills in Sweden - Skapafors, Dals Langed and Kisa. With an annual production of around 60,000 tons, these mills are an important strategic resource and guarantee a constant supply of raw materials. They enable the company to manufacture products to a high and uniform standard and also supply tissue paper to customers outside of Duni's own operations.

Products at the mills include Dunisilk and the trademark products Dunicel and Dunilin. Other products include Duness, which is a tissue product with a plastic layer between the layer of tissue, Dunett, which is a low-price alternative to thin damask paper tablecloths and its Banquet Line, which was introduced in 1997 and is a strong, textile-like paper material for tablecloths and napkins.

The Skapafors mill benefited from a SEK 175 million investment program several years ago. This program involved the installation of a new 10,000-12,000 ton/yr machine for the production of Dunilin (dry-laid tissue paper) and was the largest capital project ever undertaken by Duni. It started up in the fourth quarter of 1995 adding considerably to the group's technical capabilities and overall capacity. Duni has established a new marketing organization to sell this high-quality specialty tissue paper to third party customers. The Kisa mill was last renovated in 1996, to improve the production process.

Future flair

In 1997, 36% of Duni's meal service sector sales came from paper napkins, 16% from tablecloths, 13% from bakery care and gift wrappings, 12% from paper plates and plastic products, 9% from candles and 14% from other products. A particular focus of group effort is the development and rejuvenation of the Duni brand strategy. This process is to be continued in the years ahead.

The strategic emphasis of group activity in the "at-home" sector will be to leverage and further develop relationships with other consumer goods groups in areas such as distribution, while new distribution channels such as home decorating and specialty stores are to be targeted.

In the "away-from-home" sector, Duni intends to use its direct sales force to act as consultants to assist professional caterers in creating attractive concepts. This should help expand the market for the company's products in the hotel and restaurant sectors. Duni will also seek to increase market penetration in the USA, the UK, Benelux and Eastern Europe, with expanded production capacity in the USA and Poland to be used to maximum effect.

According to president and ceo of Duni, Cony Carlton, "Duni is revitalizing its brand heritage and expanding into new geographies. The company is executing a restructuring program within its product supply to ensure increased competitiveness...design and concept is becoming a key selling point in the table top assortment."

Part of group strategy will be to actively cooperate with leading designers in Europe and worldwide and to join alliances or partnerships with other international branded consumer goods companies.

Within its branded goods business, Duni's mission is "creating and enhancing eating and drinking occasions". The company sees its principal competitive weapon as "The Duni Way", which involves strong product branding and the use of high quality materials and designs in product development. During 1997, for instance, Duni launched its Artstyle brand of paper products in Scandinavian markets. Developed specifically for retail through the specialty trade (home decorating stores, gift shops, department stores and glass and crystalware boutiques), Artstyle has been extended to the German, UK, Dutch, Belgian, French and Swiss markets during 1998.

In order to develop the Artstyle napkin range, Duni collaborated with artists Lasse Aberg, crystal and porcelain designer Ulrica Hydman-Vallier, fabric maker Mairo and ceramics producers Matteus Collection.

During 1997, and continuing into 1998, Duni has been formulating and implementing a number of measures to ensure strong growth. These include the creation of a pan-European basic (and streamlined) product lineup, the closure of a number of plants and warehouses and the adoption of other efficiency measures.

Duni first ventured into papermaking in 1800. But its modern origins began in 1949, when the Bonnier group acquired Billingsfors Langed, which manufactured paper napkins and other products under the Duni name. In 1990, Duni Bila was established as the result of a merger of the Duni group and the Bila group of companies. The Duni group became a wholly owned subsidiary of Tidnings Marieberg, which is one of Scandinavia's leading media groups. The name Duni Bila was changed to Duni in 1992.

In early 1997, Tidnings AB Marienberg sold a 50% interest in Duni AB to Scandinavian Equity Partners. This was to ensure that Duni AB could pursue its desired growth strategy. A new holding company, Duni Holding AB, was formed to own all the shares of Duni AB, its operating unit. Tidnings AB Marieberg and Scandinavian Equity Partners are equal partners in Duni Holdings. The intention of the owners is to list Duni on the stock exchange within the next several years.

In 1997, Duni's packaging sector accounted for 14% of the group's sales. According to Duni, its central strategy is "to produce and supply the retail trade and selected industrial segments in Europe with environmentally-friendly bags, carrier bags and bag blanks of consistent high quality, delivered on time".

Duni's involvement in the packaging sector is conducted through the Stenquist group, which is the largest producer of paper carrier bags in Northern Europe. Its paper-related product lines are supplemented by plastic bags and plastic carrier bags, which account for around 20% of Stenquist's turnover.

Within the company's core Nordic markets, Stenquist's strategy is to maintain and attempt to enhance its status as a favored supplier through its range of products and level of service. In other European markets, the company's strategy is to expand its presence, partly through a process of prudent acquisitions of smaller suppliers. Particular future opportunities have been identified in Poland and Austria.

Mark Payne is founder and head of the consultancy, MBP Research, and the author of over 800 published books and reports in the paper and other business sectors.