Page 28 - Print 21 Sep-Oct 2019

Paper
The Australian paper market has undergone significant upheavals over the past few years, with the sale of the country’s two largest paper merchants to Japanese firms amid rising prices for pulp and paper driven by overseas mills. Jake Nelson reports on how the big players are adapting to a changing sector.
Paper merchants
turning over a new leaf
With the 2009 sale of Australian Paper, Australia’s only commercial paper manufacturer, to Nippon Paper; the merger of fine paper merchants BJ Ball and KW Doggett into Ball & Doggett in 2017 under the umbrella of Japan Pulp and Paper (JPP), now known as Ovol; and the purchase this year of publicly-traded Spicers by another Japanese firm, Kokusai Pulp and Paper (KPP), it’s safe to say that the top end of town in the local paper industry has been seriously shaken up over the past decade.
As far as Craig Brown, CEO of Ball & Doggett is concerned, the consolidation in paper is simply a reflection of the market as a whole.
“There’s lots of consolidation happening at all levels of the market, whether it’s at a supplier level supplying printable materials like
we do, or at a printer level across many sectors of the market.
“Consolidation is inevitable,
as it fortifies future revenue and delivers an economy of scale that
is needed. I think it is a given that we will see continued mergers
and acquisitions across the print market and the supply chain, be it manufacturing or distribution,”
he says.
According to Brown, Ovol, as
the world’s largest paper trading business representing a hefty portion
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of global mills, has enabled Ball & Doggett to become more flexible, access more product, and better target its offering to the market.
“We have been able to sharpen our range of stock and broaden
it as required to suit emerging print technologies. As technology develops, the advent of inkjet puts more pressure on the quality and appropriateness of products, so the Ovol investment has allowed us to keep up with that.
Market requirements
“Where we were broad, particularly in competing commodity brands, we have reduced the range which has allowed us to run deeper inventories. We will continue to modify our stock holdings in this area in conjunction with the market requirements,” he says.
Reduced stock ranges from which the market has moved on have allowed Ball & Doggett to better serve areas where there is more demand, says Brown.
“It’s no secret that digital technologies are taking what was traditionally an offset space, and that requires us to adjust our product focus somewhat to suit these emerging technologies.
“Range reviews are a constant part of our business as we look at ways to introduce new, more relevant products to the market.
We work closely with the OEMs in this space to help anticipate the market requirements ahead
of time,” he says.
Despite these benefits, the rising cost of pulp and paper from overseas mills is still putting the squeeze on the industry. Brown acknowledges that this global manufacturing dynamic is bigger than Ovol and Ball & Doggett, but stresses that the company remains committed to ensuring Australia and New Zealand have the most economical options available.
“There is an inevitable structural change occurring within paper manufacturing. Paper mills are reducing capacity in white printing papers as these volumes continue to decline globally,” he says.
In particular, says Brown, this manufacturing capacity for white printing paper is being replaced by growth categories such as tissue and packaging.
“The biggest impact is on coated paper, which unfortunately is seeing the greatest decline. One of the challenges for many of us locally is that this still represents our single biggest category and this market volume change isn’t always quickly or easily replaced.
“So absolutely the Ovol alliance has allowed us to look at new suppliers, but at the same time pulp and paper prices are a pure economic supply- and-demand situation,” he says.