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How Toilet Paper Companies Dealt With The 845% Demand Spike | Big Business - YouTube
Channel: Business Insider
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The US is used to making and selling
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more than 7 billion pounds
of toilet paper a year.
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So how did shelves end
up looking like this?
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When the coronavirus pandemic hit,
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toilet-paper sales in
the US jumped by 845%.
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We're talking $1.45 billion
in sales in just one month.
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Look familiar?
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Priya Raghubir: If I don't
wear perfume one day,
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I will survive.
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But if I do not manage to go to the loo
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in a way that is satisfying to me,
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I'm gonna have a headache.
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Narrator: But the run on toilet paper
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wasn't the only problem.
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We spoke with a consumer behavior expert
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to figure out why this
phenomenon is happening.
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Then we got a peek inside
two toilet-paper factories
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to see what all this means
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for the companies making the product.
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From March 2 to May 2,
toilet-paper sales were up 71%
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year over year in the US,
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making it the most purchased
item at grocery stores
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across the country.
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And sales might have kept rising
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if it weren't for empty shelves,
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both in real life and on Amazon.
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Along with the US, a run
on toilet paper happened
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in Norway, Hong Kong,
Singapore, and Australia.
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But in other countries,
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toilet paper wasn't the hot commodity.
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In India, people bought up wheat flour.
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In China, it was a run on rice.
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Raghubir: It is whatever
makes you comfortable.
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It's something that will
last, and it won't spoil.
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Narrator: Then there's the fear you feel
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when you're staring at an empty aisle.
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Sahil Tak: People started
to be really scared that,
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look, I'm not gonna get
the paper that I need.
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Fear is a strong motivator,
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so whenever they had the opportunity,
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they would clear out the
shelf as soon as it restocked.
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Raghubir: Toilet paper allows them
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to exert some kind of control
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over a universe that is
completely out of control.
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Narrator: It's not just
the scared hoarders
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who are emptying shelves.
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There's also a divided supply chain.
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The toilet-paper industry
consists of two worlds:
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the consumer market,
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the small rolls in your bathroom at home;
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and the commercial market,
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the big rolls you use when
you're away from home.
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Tak: So, it's schools,
it's office buildings,
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it's restaurants,
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it's other food service, hotels.
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A lot of that business obviously
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has been shuttered due to the pandemic.
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Narrator: Though people aren't necessarily
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going to the bathroom more,
they are going more at home.
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Toilet-paper company Georgia-Pacific
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estimated people were using
40% more at-home paper,
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so we're using more small rolls.
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But can't companies
that make the big stuff
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just start making the small stuff?
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Well, it's not that easy.
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Tak: There's not a machine
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that'll take commercial bath tissue
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to then retail bath tissue.
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Narrator: At-home paper
requires different input paper,
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packaging, and different
machine configurations.
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Which means companies
in the at-home sector
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were pretty much on their own
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to meet an unprecedented demand.
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And they could barely
keep shelves stocked.
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Toilet-paper production
normally looks like this:
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One company makes what
are called parent rolls.
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Here, a mixture of paper and
water called pulp is made.
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Water is squeezed out,
and the remaining pulp
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is stretched out into thin sheets.
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It's heated and rolled
into massive, 9-foot rolls.
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There are about 46 miles of
paper in just one of these.
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Step two? Those parent rolls
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are sent to what's called a converter,
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a company that cuts them
down into individual rolls.
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Vince Reese: We unwind the
roles, ply them together,
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put the emboss on them,
put the perforations in,
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roll them up, and then cut them up
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into stuff that you and I would use.
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Narrator: Vince's
company, Cardinal Tissue,
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is a converter in North Carolina.
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Like most in the industry,
Vince's manufacturing line
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was already pretty much at capacity.
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He's producing a low-cost
product, so to make money,
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he was already producing a lot quickly.
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Reese: Most tissue manufacturers
didn't have idle equipment.
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We run our plants 24/7.
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Narrator: Over in Maine, Tissue Plus
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looked a little different
before the pandemic.
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Jake Cooper: Within those
three weeks, I have learned
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more than in my entire life.
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Narrator: This guy launched the startup
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from his dorm room in 2019.
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By January 2020, he hadn't even
turned on his machines yet.
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But now machines are running nonstop.
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To match demand, these two companies
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had a few tricks up their sleeves.
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Both had warehouses filled with stock.
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Reese: We emptied the warehouse
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and then ended in a situation
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where we're really just loading
it straight onto a truck
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and getting it out as it's made.
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Narrator: Vince narrowed
down his product portfolio.
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He went from producing
over a dozen products
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to just three or four.
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That cut down on the time it
took to change over machines
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to make the different products.
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Reese: Across the board,
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manufacturers told their customer base,
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"Hey, look, we're gonna
give you fewer options
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for this period of time
because we can't meet demand."
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Narrator: The company
also stopped throwing away
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any defective rolls and sold those, too.
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Reese: A lot of places said,
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"Look, it's better to have
a roll of toilet paper
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with a tail that isn't tacked down
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than to have nothing."
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Narrator: Tissue Plus made
a more radical change.
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Instead of going through
a distribution center
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to deliver rolls...
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Cooper: We literally had to adapt
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our little family-owned business
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to become a direct to consumer.
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Narrator: In March 2019, Jake
started an e-commerce site
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and started delivering
toilet paper through FedEx
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straight to customers' doors.
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Cooper: Not planned for, but it has become
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the largest segment of the business.
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Narrator: Now, Tissue Plus is making
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over 25,000 rolls a day,
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and it's getting orders
from all over the world.
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Cooper: A contact from Iceland
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who reached out and asked if we could
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spare a container of
toilet paper for them.
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And I said, "I wish I could
spare a container for you.
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I wish I could spare a truck.
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But we can barely fill a truck right now
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with the demand that's
going out the door."
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Narrator: Jake's hoping
to automate packaging
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to get up to 50,000 rolls a day.
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Cooper: You can innovate an IT chip
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in a processor in a computer
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as much as you can innovate
a roll of toilet paper.
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Narrator: Over at Cardinal Paper,
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Vince has managed to increase
shipments upwards of 70%.
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That comes out to a quarter
million rolls per day.
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Because of all these industry pivots,
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producers are starting
to catch up with demand.
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In March, 73% of grocery stores
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were out of toilet paper,
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but by May, the number dropped to 48%.
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So how can we keep closing the gap?
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Raghubir: I would say
estimate how much you need.
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Just buy that much,
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at the interval at which you need it.
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Narrator: Meaning no loading
up on 50 rolls in one cart.
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Reese: It's not very glamorous
to be making toilet paper.
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It's not like making Ferraris.
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It's definitely a
product that people need,
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and they have to have
it, and they rely on it.
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You kind of have a little
bit of a noble purpose,
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and I think people took that to heart.
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