LEWISTON, Idaho (From news reports) -- Clearwater Paper is examining opportunities in a potential consolidation of the private label tissue industry after losing $28 million in 2021.

That possibility surfaced Tuesday when the company, which has its largest manufacturing complex in Lewiston, reported its financial results for 2021.

Net sales of private label tissue dropped by 18% in 2021 to $835 million compared with 2020. Clearwater Paper manufactures toilet paper, paper towels, paper napkins and facial tissue that are sold under store brands.

Net sales in its pulp and paperboard segment rose by 8% to $946 million compared with the previous year. Clearwater Paper's paperboard is used for items such as packaging, paper dishes and to-go food boxes.

A consolidation in the private label tissue industry could be on the table for a number of reasons, said Clearwater Paper's President and CEO Arsen Kitch.

In private label tissue, four or five customers represent close to 70% of all purchases at a time when suppliers are adding capacity at rates that exceed demand growth, said Kitch, who didn't name the customers or suppliers.

"That's not a long-term sustainable position to be in," he said during a conference call for stock market analysts Tuesday.

"Just to speak bluntly, we do think consolidation is needed to improve scale and improve the cost position of the industry," said Kitch, whose company made $77 million in 2020, the first year of the COVID-19 pandemic when families stockpiled toilet paper.

"Frankly, we're a willing participant," he said. "We'll look for opportunities where they make sense for us."

When asked to elaborate on what Kitch meant by his remarks or what parts of Clearwater Paper's tissue operation might be involved, Shannon Myers, Clearwater Paper's spokeswoman, declined to comment.

Although the company's private label tissue and paperboard businesses are positioned well in the long run, challenges its tissue sector experienced in recent months are anticipated to continue, Kitch said.

Close to 50% of Clearwater Paper's customer agreements for tissue are up for renewal this year, which is significantly higher than the 25% that are up for renewal most years, he said.

Over the years, grocery stores have lost market share to "mass" and "club" retailers, but grocery customers remain "critically important" to Clearwater Paper, which is committed to helping them grow, Kitch said.

At the same time, "we're focused on growing in club and mass and dollar," he said. "We've made a lot of progress over the years in growing our share in that space but ... we're still overweight in grocery."

The difficulties with supply and demand are just one of the issues in tissue, Kitch said.

Inflation for raw materials rose, prompting Clearwater Paper to increase prices to recoup some of the expenses, he said.

The company is working with its customers on product changes to reduce costs and finding operating and supply chain efficiencies, he said.

Plus, Clearwater Paper had a spike in COVID-19 cases starting in December and had some temporary downtime in lines where tissue is cut and packaged, Kitch said.

"Our goal is to identify COVID cases early and limit the risk of spread within our facilities," he said. "Regular testing along with our other safety precautions has enabled us to mitigate risks and minimize business impact."

On the paperboard side, Clearwater Paper is seeing strong demand for the product.

"We believe through product and brand development the business is well positioned to take advantage of trends toward more sustainable packaging in food service products," Kitch said. "Our paperboard business has demonstrated an ability to generate good margins and solid cash flow."

The tissue sector has potential, too, and over time is anticipated to benefit from a number of trends such such as the growing number of consumers who prefer private-branded products, he said.

"Tissue is an economically resilient and an essential need-based product," Kitch said. "Historically, demand has not been negatively impacted by economic uncertainty. We're optimistic that this business will generate meaningful cash flows over the long run."