Renova History and Management

Renova History and Management

Relatively strong brand in Portugal, medium size family business facing fierce competition from such consumer goods behemoths as P&G, as we all as from multinational paper manufacturers such as Kimberly-Clark and Georgia-Pacific.  Private labels are beginning to outsell national brands, and Renova has to deal with powerful retailers who are both customers and competitors.

Toilet paper accounts for half of Renova sales, kitchen rolls for 20%, napkins 17%, and tissue for 10%

After Portugal joined the EU in 1986 Renova started international expansion, to Spain in 1990 and France in 2002.  Renova does not emphasize its Portuguese roots and is seen as domestic in those 3 markets.

  Branding and Marketing

Since becoming CEO da Silva has been shifting Renova from being a disposable paper brand to becoming a well being brand. TO achieve this goal, Renova spent 1.5M per campaign each year and worked with some of the most famous photographers to create beautiful unconventional images associating Renova with wellbeing.

Renova has a strong brand awareness and image in its home market, perceived to be a prestige brand and is rated 7.5 on a 10 point scale, on par with L’Oreal.

Industry Overview

In 2005, disposable tissue and hygiene is a $26B category in Western Europe (equally split between disposable tissues and hygiene products

Between 2002-5 the market grew by only 2.4% per year due to a stagnant customer population and market saturation.

Renova’s share of Western European market in 2005 is less than 1%.  Main competitors in the tissue industry are $57B P&G and $16B Kimberly-Clark, along with giant paper companies and retailers.  There are also a number of medium sized European paper products that could potentially enter the Portuguese market.

The profitability of the tissue sector is low and strongly affected by energy prices, which have doubled between 2003-5 and by the cost of paper pulp which has remained stable after substantial fluctuations in 2000-1.

Portugal

Renova’s value share of the disposable tissue category is 35%

Due to almost universal market penetration (above 90%) and limited population growth, the toilet paper category has grown by just 1.5% per year over the previous three years and is expected to grow at the same pace for the foreseeable future.  Competitors in this category are the same as in the rest of Europe, except for retailers which are mostly local.