Commentary & Analysis
As Publication Markets Decline, SAPPI Steps Up Its Profile in Packaging
Anyone who has ever picked up a glossy magazine probably has touched SAPPI publication paper. Now the company hopes to achieve the same kind of ubiquity with its packaging papers.
By Patrick Henry
Published: September 30, 2015
When profit opportunities in other printing markets grow slim, eyes turn longingly to packaging—the only arguably “recession-proof” segment the industry can claim. Many commercial printers and other print providers have shifted to packaging production, and now the world’s largest producer of specialty coated papers hopes to move in the same direction.
Steve Binnie, CEO of SAPPI, made the South African company’s ambitions for packaging clear in a recent interview with BloombergBusiness. As demand for SAPPI’s signature publication papers wanes, he said, the company will try to make up for it by doing better in specialty papers for packaging. Specifically, he wants SAPPI’s packaging division to increase its contribution to EBITDA (earnings before interest, taxes, depreciation and amortization) from 18% now to 25% by 2020.
SAPPI aims to raise its profile in the segment by stepping up its attendance at international packaging trade shows: for example, Labelexpo Europe (Sept. 29 - Oct. 2) in Brussels and FachPack (Sept. 29 - Oct. 1) in Nuremberg. The specialty papers division also will exhibit for the first time at PackExpo in Las Vegas (Sept. 28-30). The company’s North American division, which launched a dedicated packaging group earlier this year, promoted packaging offerings in its stand at Graph Expo (Sept. 13-16).
SAPPI also is bringing new products to market for label and packaging producers. Recent introductions include atelier, a folding box board with exceptionally high brightness, gloss, bulk, and luxury feel; and LusterCote, a high-quality C1S (coated one side) label stock.
It isn’t directly related to packaging, but SAPPI has another diversification strategy for offsetting the decline of its graphic paper business. This is to expand its production of specialized cellulose, a.k.a. dissolving wood pulp, a raw material for textiles and clothing. According to the Bloomberg article, SAPPI, already the world’s largest source of specialized cellulose, wants to find other ways of profiting from the by-products of its pulp making operations.
SAPPI isn’t alone among paper manufacturers in its determination to derive non-paper sources of revenue from its existing mills. This article, also from Bloomberg, details the alternative products that European paper makers are developing as worldwide growth in demand for paper continues to plummet.