APP subsidiary Mercury: Little local impact expected
By Kaitlin Mayhew -- email@example.com
STRASBURG -- Kroger food stores, as well as all stores owned by the company nationwide, will no longer sell paper products from Asia Pulp & Paper.
The Kroger Co. released a statement two weeks ago stating that after an "independent review" the company and its family of stores will no longer stock the toilet paper and paper towel products, many of which are sold under the name Paseo.
A portion of the products are processed at one of APP's subsidiary companies, Mercury Paper Co., in Strasburg.
"Obviously, we were disappointed to hear of Kroger's announcement, particularly for the consumers who shopped at Kroger subsidiaries and recognized the value in PASEO," read a Mercury Paper statement released after Kroger's decision.
Philip Rundle, special adviser of corporate and government affairs for Mercury Paper, went on to say that the loss of Kroger as a retailer for APP may not directly affect Mercury Paper all that significantly.
"Our relationship with Kroger is mostly through one of its California banners and our sister manufacturing company in California," he said. "Our growth plans for the coming years are unchanged, and we are confident that North American customers will, in time, see value in providing their shoppers sustainable tissue sourced from Asia and converted here."
Rolf Skar, senior campaigner for Greenpeace, said that the consequences for APP as a whole may be more severe, especially when it comes to sales within the U.S.
He said that based on Nielsen information, Paseo's total 2010 U.S. sales were around $20 million. Of that, roughly $15 million came from Kroger.
"I think it's an enormous wake-up call for the executives at APP," Skar said. "We're talking about a company that has annual sales of $82 billion."
By making this decision, Kroger joins Food Lion, owned by the Belgian Delhaize company, which announced Nov. 1 it would no longer stock Paseo products.
However, when it comes to companies that have cut ties with APP, and not just specifically their Paseo brand products, Kroger is just the latest in a long line that has been growing for a number of years.
Staples, for instance halted business with APP in 2008. Hasbro, Lego, Nestle, Kraft and Hewlett-Packard have all made commitments to steer clear of APP products, as well as Kimberly-Clark, another large tissue company.
Keith Dailey, director of external corporate communications for The Kroger Co., confirmed that Paseo products were sold in their Ralphs and Food 4 Less grocery stores in California. He said that made up less than 10 percent of their stores nationwide.
"After independently investigating APP's alleged deforestation and animal abuse practices in Indonesia, we chose to suspend purchasing products from the company until it seeks credible, third-party certifications related to sustainability," Dailey said. "The facts are clear that the Indonesian company's practices do not live up to the environmental standards Kroger expects from suppliers."
Skar believes that this decision by Kroger will not only inspire other companies who stock Paseo products to follow suit, but that it will also discourage any firms considering the addition of the product line.
"[APP should say] 'We need to meet certain criteria for these retailers.' One of these is going to have to be a certain amount of environmental responsibility," he said. "That's what people want to buy now. They don't want toilet paper made out of tigers' rainforests."
He also said he doesn't think the absence of APP products on the shelf will mean no low-cost paper products.
"That's another reality check," he said. "There's a lot of toilet paper out there. The U.S. is a mature toilet paper market. There are major brands. They can easily fill a store shelf."
Audrey Jackson, state director for the Virginia chapter of Americans for Prosperity, said she is still concerned that backlash from Kroger's decision may ripple through the local community.
"We will continue to urge Kroger and other American big box companies to protect hard working Virginians, while urging Kroger to reverse its decision," she said.