Unlocking Opportunities in the Paper Sector: Navigating Volatility, Sustainability and Growth

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Paper chase

The past few years have been volatile in the paper sector but now, with the return to the office and an increasing focus on sustainability, there is positivity and increasing opportunities for resellers in this market.

It has been a volatile time for the paper sector in recent years, with price rises and material shortages just two of the challenges presented to manufacturers and sellers. 

As Dr Liz Wilks from APP notes: “Since 2020, paper prices have almost doubled, with commodity shortages, energy prices, Brexit and surging freight costs feeding into rising prices,” says. “At the same time, significant growth in e-commerce – driven by the COVID lockdowns – brought an overwhelming increase in home deliveries. As demand soared, the price of paper did too.”

This rise in price was further driven by a strike at Finnish paper mills, which led to a brief shortage of paper at one point in 2022. “When we had the shortages, paper prices went up, but to a point where they should be, if the truth be told, where everyone in the chain was making a fair margin,” says Steve Carter from Advantia. “Because prior to a couple of years ago, it was just a race to the bottom. You were selling paper for the same price that you sold it 15 years ago. In some instances, people would give it away just to get in the door because you were always judged on how much your paper cost, which is not the right thing to do.”

Liz adds that paper and packing manufacturers are now starting to stabilise, as are costs. “Though high costs, supply chain challenges, and economic uncertainty may mean the benefit is not felt until the second half of the year,” she says.

Premium print

As mentioned, COVID changed the sector, and, as Paul Savill from Antalis notes, the mass digitisation during the pandemic negatively impacted paper volumes overall, but it has had other effects that present opportunities to sellers. “The documents that are being printed now have greater importance and impact, placing a stronger emphasis on the substrate used to produce the completed document,” he says. 

“Elements such as weight, whiteness and smoothness add to the tactile qualities of the printed document and play an important role in the overall quality of the document and how a document is perceived by the individual.”

Industry shift

Another aspect of the sector that is growing is the shift to paper and paper packaging with the focus on alternatives to plastics. “This has meant a flood of demand for paper products,” says Liz. “However, with the rise of the circular economy, advancements in technology, smart sorting and chemical recycling, there is also a trend for recycled paper. Both are demanded if they carry their sustainable credentials clearly shown.

Liz adds that changes within the paper and packaging sector are being driven by three elements. The first is a shift in consumer behaviour. “Consumers, especially the millennial generation, are seeking sustainable choices, there is far more awareness of environmental challenges today than ever before, including the need to reduce or even eliminate plastics,” she says. “Paper packaging is becoming a sustainable choice, given sustainable forestry management from source through to its recycling capability at the end of life.”

A shift in government policy, such as new plastic free legislation, is also driving change, Liz adds. “Consumer brands are now being forced to rethink packaging, as governments around the world implement new environmental legislation,” she says. “This includes those packaging products that consist of a combination of materials – plastic and paper. The separation of these materials being made easy at design concept as well as the material themselves.”

Finally, global brands are looking to promote good environmental stewardship to find and keep customers, and as part of its overall brand identity. “Many of these brands have made strong sustainability commitments and include those within their sourcing polices,” she says. “In the eyes of the consumer, packaging is seen as a representation of the brand and the product contained within it.”

Sustainability

With sustainability becoming increasingly important, Paul notes that customers are becoming more focused on the sourcing and total cost of ownership of products they purchase. “Here is where paper and paper-based products are understandably brought into sharp focus,” he says. “Customers increasingly want to be reassured that their product is sustainably sourced, ethically produced and has a minimal environmental impact.”

He adds that the recycled vs virgin fibre debate is often raised during sustainability-based conversations. “But to say one is better than the other is not necessarily the whole story,” he notes. “Without virgin fibre, recycled papers cannot exist and there are several well-respected sustainability certifications to support the use of virgin product.

“Beyond this we are seeing some new and innovations in the marketplace including ream and packaging that is fully recyclable, new product certifications such as Cradle to Cradle and a growing range of carbon neutral papers.” 

Duncan Smith, country director, production, UK & Ireland at Canon, adds that printer paper can support a business’ sustainable credentials when selected in line with broader sustainability goals. “Although often overlooked as a key part of the business workflow,” he says.

“When it comes to paper choices, businesses are looking for a recyclable, high-quality material, and reliability is key. That’s why Canon’s climate compensated papers are designed to be compatible with Canon devices, as well as other printer brands in the market. This means that customers don’t need to change their existing workflow to improve their sustainability credentials. 

“As a result of this commitment, we offer a complete range of climate compensated printer paper for both in-office and wide-format industries such as architecture, engineering and construction. Canon’s Red Label Zero FSC® and Recycled White Zero FSC® demonstrate how sustainable progress can start with even the simplest change, by 

reconsidering the essential elements of the print workflow such as paper.”

Tips for resellers

But while there is a range of sustainable paper available, it is important that vendors and resellers understand the priorities of their business customers, says Duncan. “For example, we have worked hard to respond to the demand for recycled paper among our customers,” he says. “Canon’s Recycled White Zero paper is made from 100% post-consumer paper waste, meaning customers using this paper can be assured that they are contributing to a more circular economy.”

Steve adds that customers, particularly those concerned with sustainability, now want to know where their paper is coming from, and dealers should push the sustainability credentials of the paper they have – even if its costs more than less sustainable paper.

“Within our group, some dealers are winning new customers because of their sustainability credentials,” he says. “The customer is saying to them, ‘Where are you on your sustainability journey? We need you to prove it to us, show us where you are getting your product from? How does it get to market? What’s the carbon emissions? That’s where you can do your story with your paper. One of our dealers is a long way down the road on sustainability and doesn’t even talk to them about product. His opening gambit is normally, “I don’t want to talk to you about products. I’m here because we need to about the Net Zero sustainability journey.”

Another way for dealers to sell paper is to reestablish it as a premium office product, Paul says. “Something that has a story to tell that stretches way beyond the unit price,” he says. 

“Resellers need to be able to understand what applications the customer is running and present the correct solution as papers have different qualities to match the job in hand. Is it an email you are printing, an external letter or a full colour document? Without this expertise, opportunities can and will be lost, whereas presenting the right solution will position the account manager as a paper consultant, building trust and loyalty with the customer.”

Ian Kindness, head of sales at Calington UK, adds that resellers should have a supplier code of conduct. “One that covers ethics and labour practices, for example,” he says. “Resellers should ensure they have a list of questions to ask suppliers that covers everything from the source to the end of life i.e. from well managed raw material/fibre, lifecycle analysis to how the consumer would dispose of it and any certifications that the packaging may hold.

“Speak with suppliers to understand how sustainability is a core part of their business and how it relates to the raw material, production and finished product [including] visit the supplier to carry out their own due diligence.”

Future

With sustainability becoming increasingly important to customers, future innovations in the paper market will revolve around paper products that compensate emissions at every stage of the product lifecycle, says Duncan. “Encouraging businesses to look beyond their own walls and consider the sustainability of the wider supply chain,” he says. “In this way, we believe that climate compensated paper will define the future of the print industry and will be a key differentiator for resellers and businesses across the channel. 

“To achieve greater sustainability across their operation, it is important for businesses to partner with vendors and resellers that share their sustainable priorities. Canon’s commitment to sustainability, makes us a trusted provider as we work alongside our channel partners to deliver on shared sustainability goals.”

Steve adds that with more people going back to the office, it should mean that use of paper goes back up again in the months to come. “We’ve got dealers that take a full container of paper every couple of months, which is 54 pallets and a pallet has 200 reams of paper, and they’ll sell it in a couple of months. When you go back to lockdown, that would have lasted probably six months, so you can see it’s starting to take effect.”

Although he adds that there are still some concerns in the sector. “Paper coming from Asia is being diverted away from the Red Sea,” he says. “That’s already having a £50 a tonne surcharge put on it because it’s got to sail longer to get round into Europe. Because of that, the pressure is then on the European mills to produce more. They’re at maximum production from what I gather. There’s concern about where that will lead.”

While that may be a concern, there are nevertheless plenty of opportunities for resellers when selling paper, and there is a margin to be made with sustainable and premium quality papers.