German tissue paper manufacturer innovates to circumvent high production costs

Chocked by the high costs of energy and pulp, the German tissue paper manufacturer Hakle has been betting on innovations to maintain its production. The company started to use coffee waste as raw material, an alternative that also contributes to the environment.

Recently, Hakle filed for insolvency due to the skyrocketing energy costs in Europe, caused by the Russian invasion of Ukraine. In addition, the company was strongly impacted by pulp prices, which, since 2020, have increased significantly due to high demand in China, the world’s largest consumer.

Knowing that large amounts of coffee grounds are produced by the European food industry every year, Hakle found a way to turn this waste into raw material to make toilet paper rolls.

According to marketing director Karen Jung, the company’s factory in Düsseldorf produced the first rolls using the new method last week. “The goal is to use 20% to 25% of coffee grounds as a raw material for making paper, replacing wood pulp,” Jung said, adding that the company is working to achieve these levels. “That doesn’t sound like much – but it does mean that a quarter less trees need to be used,” she added.

This is not the first time the company has innovated in its production process. Two years ago, Hakle even used grass grown in the Rhineland to make toilet paper.

In recent times, the manufacturer has gone through several cycles of ups and downs. After 2020, when it grossed around €80m ($80.2m) in sales and made around €700,000 in profit, it now sees its revenue shrink as production costs explode.

“The cost of a toilet paper roll depends 80% on pulp, energy and logistics – and all three of these factors are driven by world markets,” Jung said.

The price of gas has risen to 400 euros per megawatt-hour and up to 1,000 euros for electricity – a very high cost for the company’s factory in Düsseldorf, which consumes around 100 gigawatt-hours a year.

Hakle has nearly a century of history and has gone through several different owners over the past 40 years, including US consumer goods giant Kimberly-Clark and a Luxembourg private equity firm, before Volker Jung acquired 50% of the shares in 2019.

The company has already stopped using gas, replacing it with gasoline, in its paper production processes. As for the electricity used for converting the rolls, the ultimate goal is to cover half of your needs using solar power.

According to Jung, the three-month preliminary insolvency process has given the company some breathing space as it seeks to fulfil a flood of orders. “”After a short, total halt of activities [at the start of September], now we really have to put our foot on the accelerator,” she said.

Hakle intends to continue investing in its Duesseldorf plant, which has more than 220 workers.