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Keeping Ahead of the Curve. Sappi specialities: Berry Wiersum - CEO Sappi Fine Paper Europe

Berry Wiersum, CEO of Sappi Fine Paper Europe

But size in the case of the modern pulp and paper industry is not all that matters, in fact, it might even be a burden. We are now living in a world where the graphic paper industry is under massive and sustained attack from electronic media in the form of the iPad, the Kindle, and numerous other electronic readers and devices. In fact some industry commentators concede that graphic paper demand has been “falling off a cliff’’ of late.  Berry Wiersum, CEO of Sappi Fine Paper Europe, answers some straightforward questions about the company’s present challenges in graphic papers and how its ambitious plans in speciality and packaging papers are already paying dividends.

The company has recently spent 60 million Euros on a machine rebuild at its Alfeld mill in Germany, which set to almost double its speciality paper output. Start up of the rebuilt machine, PM 2, was 12 October last year.  

 

PACKAGING POLSKA: Did you see the rapid decline in demand for graphic papers coming and how has Sappi reacted to the challenge?

 

Berry Wiersum: Being successful in the paper business is all about being ahead of the curve, and that’s the real challenge in this industry. You have to see where the business is going and adapt accordingly, and of course as early as you can. In terms of the decline, when you witness a 6 – 8 percent fall in demand it soon becomes abundantly clear that something has to be done, and fast. We reacted very early – earlier than most - with some painful and well documented shutdowns over the last few years.

 

PACKAGING POLSKA: What are your thoughts on graphic paper demand, do you think it will reach a sustainable supply/demand level at some point or will we witness endless shutdowns?

 

Berry Wiersum: First of all graphic papers are, and will continue to be, our main business, and of course we believe that the demand will bottom out and level off at some point. In fact, our colleagues at Sappi in the US feel that the bottom has been reached there - that electronic devices have hit saturation point - and they are even talking of 2-3 percent growth on high end woodfree coated papers. The reason they are giving is that consumers still have a lot of trust in printed advertising, much more so than in online, it will be a very interesting area to watch over the next year or two.   

Europe usually follows in what the US does in some way or form, so we are expecting a bottoming out in the medium term future. The key here of course is to make sure we have the capacity to produce graphic papers when demand does come back!      

 

"Flexpack is actually a great story for the marketing departments of Fast Moving Consumer Goods companies (FMCGs) as new developments like our Algro Nature allow them to have a barrier on the packaging of a well-known brand that could be compostable, which is shouting at the buyer from the shelf because of its superb printability, whilst giving the compelling message of sustainability. It really does have massive potential" - says Berry Wiersum.

PACKAGING POLSKA: The next, brighter chapter for Sappi seems to be the one of speciality papers. Can you explain why this market is so attractive and why you think Sappi can make a success out of it? 

 

Berry Wiersum: The Alfeld mill in particular has always been something of a speciality mill for Sappi, so it is not a completely new chapter. What is new is our approach, which is harnessing the opportunities that are being presented via all sorts of elements, for instance EU regulation – which for a change is on our side - sustainability factors and customer preferences. Fiber based packaging and specialities really are beginning to come into their own, and the major brands are looking for a more reliable and larger capacity supply chain. We bring that, along with experience in the market and a very robust R&D support and expertise. 

 

PACKAGING POLSKA: What exactly are the specialty products you are focusing on and what market share do you already have?

 

Berry Wiersum: The main focus is on release liner, label products and flexpack. These are quite specialist areas, so there is not a lot of market capacity detail on all of them  – suffice to say that all are growing and we are looking to get more and more market share. Our topliner product Fusion, launched around three years ago, is cutting itself a nice little niche and we are selling around 10,000 tonnes, but we have high hopes for that as it is a 20 million tonnes per year business in terms of a market. 

But the really exciting area for us is the flexpack market, where we are already quite big, but where the potential could be huge. This is where a one-sided product is called for that has superb printability on one side, and then a rough side on the back which will allow all sorts of other material to be glued or applied to it, for example metal foils or plastics.

Flexpack is actually a great story for the marketing departments of Fast Moving Consumer Goods companies (FMCGs) as new developments like our Algro Nature allow them to have a barrier on the packaging of a well-known brand that could be compostable, which is shouting at the buyer from the shelf because of its superb printability, whilst giving the compelling message of sustainability. It really does have massive potential.   

And this is why we have spent 60 million Euros on the PM 2 rebuild at Alfeld. This will allow a major brand owner the freedom of choice to make an instant decision on an FMCG product. Imagine an item on a supermarket shelf that is a runaway success printed on flexpack, and they need to order not 10,000 tonnes, but 20,000 tonnes. They need the confidence to know that a major supplier can deliver. That supplier is Sappi Alfeld. We also have the inner confidence as we have been sold out of flexpack products for the last four years!    

 

Sappi's topliner product Fusion, launched around three years ago, is sold around 10,000 tonnes, but the company hopes that it will reach 20 million tonnes per year soon.

PACKAGING POLSKA: Can you tell us more about the rebuild project and what has been done to PM 2 at Alfeld to increase the ability to deliver this product and service?

 

Berry Wiersum: This has been a very exciting project and started up absolutely on time. First of all, you don’t just spend 60 million Euros without doing a lot of homework – which we did over the last five years. We did three presentations to the main board of Sappi in South Africa, and after the third one it was decided that the project was a “no brainer”.

PM 2 was the only graphic paper machine at Alfeld, PMs 1, 3, 4, and 5 are speciality machines, so it was out of place in the mill. We have discovered that it doesn’t really make sense to be producing papers in the same mill that have different cost structures. So graphic paper production was shifted to one of our other mills in the group. We looked closely at various suppliers in the industry for the rebuild, and various designs – we have our own Sappi project teams and machine experts. In the end we decided to go with Metso (recently renamed Valmet) and a design that incorporated a Yankee cylinder. It was a fascinating project that took two years to plan just from a logistical point of view – the Yankee cylinder had to go through numerous villages, with all the permissions that entails. When it got to the mill we had to employ only one of three cranes in Europe to lower it through the roof of the machine hall. 

The machine, which started up on October 12th is the fastest speciality paper machine for one side coated in the world running at 1200 meters per minute. It is also uniquely purpose built for speciality production with all its vagaries of differing drying demands.

What it means to capacity at the mill, is an increase of 135,000 tonne per year of specialities, and it will produce all of our products including Fusion and flexpack products.

 

PACKAGING POLSKA: So it looks like you are making the seamless transition from a market leader in graphic papers to a market leader in specialities with the start up of PM 2.  Has it really been that easy?

 

Berry Wiersum: I can tell you there has been nothing easy about this. For a start, this has been no normal start up, as it is not just the paper quality that needs approval, there are all sorts of tests and inspections on the machine, the surroundings, and the raw materials – remember we are dealing with food here, and the customers we are talking about are the big brands - these people are not in the game of taking risks.   

Alfeld has actually been producing specialities for 100 years or more, and on the sustainability front was one of the first mills in Europe to go totally chlorine free. However it is food safety that has become a major issue recently, in fact it has almost become an obsession – even more so than the issue of sustainability. Making specialities as one would guess by the name is a lot more bespoke. We actually offer our customers a menu, for example: “Would you like an OBA or not? If not and you still want brightness but no OBA we have an alternative”. Or, “Do you need compostability?” We have a huge number of choices, as well as the obvious sustainability angle. This is not just a case of leaning on a button and producing paper. In the case of Alfeld we are a 100 percent virgin fiber mill which means we have had none of the issues of relating to mineral oils which we have heard so much about over the last couple of years.

 

PACKAGING POLSKA: Any changes in regard to raw material?

 

Berry Wiersum: Alfeld is an integrated mill, but due the bespoke nature of specialities as discussed, there is a call for other special pulps from time to time, the start up of PM 2 has made us just slightly less integrated.

 

PACKAGING POLSKA: What weights will you be producing in specialities?

 

Berry Wiersum: From a very fine 17 grams per square meter to 400 grams per square meter.

 

PACKAGING POLSKA: What impact will the expansion have on Sappi as a whole?

 

Berry Wiersum: Sappi will go from a 5 percent specialities business to 10 percent business and of course the turnover will increase overall. One of the really exciting things about the speciality market is that you are not hit by the commodity type aspects of pricing as we are on graphic papers. So if we are creating a product for a customer where there is no comparative product, pricing is much less an issue. It is also the case that the price of paper in the FMCG sector plays a significantly smaller role than say paper in the price of a printing job. This overall increase in margins is obviously fantastic for the whole of the Sappi business. 

 

PACKAGING POLSKA: And what is next for Sappi specialities?

 

Berry Wiersum: Over the next three years our plan is to double Sappi’s turnover in speciality papers and of course the next question is: are there any other mills or machines that might be ripe for converting? Will there be the available investment funds? You can be sure we are already thinking ahead of the curve on that one….  

 

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Editor's note

Who are we?

It protects, expands the expiry date, persuades. Packaging. Influenced by an intriguing design, often we decide to buy something on impulse, that wasn’t to be found on our shopping list. We are tempted by their beautiful forms, intrigued by embossed printing made by innovative, cutting-edge technology and by the use of unusual materials.

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