New markets present new opportunities for 'passé' print

Leslie spoke on how to turn seemingly insurmountable odds into an organisation's advantage - in a conference that is informally themed around the 'survival' of the print industry worldwide.

Sappi, the global leader in coated fine paper, is the main sponsor of WPC8 which is held every four years and for the first time in South Africa. The last 15 years has seen Sappi emerge from relative 'obscurity' in South Africa to become the world's first global fine paper company, the leading producer of coated fine paper in North America, Europe and Africa and the world's largest producer of chemical cellulose.

The power of print

Leslie spoke passionately about the power of print and the need to access new markets and opportunities.

"It is important to understand that we cannot rely on the traditional markets if we hope to maintain and grow the relevance of paper and print. The new and emerging markets of Central and East Asia, Africa and Latin America present us with new consumers and new opportunities. All relevant as we strive to meet our conference theme: 'The World of Print - Profiting Today & Tomorrow'," he emphasised.

"From the perspective of the paper manufacturer, three issues are of importance to me," Leslie explained. "In the first place, we as manufacturers must use our technology to generate exciting and innovative products that will allow people to use paper in new ways. We must allocate the necessary resources to innovation and process improvements."

As a demonstration of their investment in the industry, Sappi will shortly be opening their new Technology Centre and Pulp and Paper Training College, as part of the creation of a technology hub in Pretoria to utilise the heavy concentration of research capacity available between the University of Pretoria and the Council for Scientific and Industrial Research.

"In the second place, the industry has an 'old-economy' image. Paper is deemed to be passé and the alternatives are seen as much 'sexier'. This means that we may not be able to attract the young new talent that is necessary to keep the paper industry in touch with the demands of consumers. As paper manufacturers we must become more aware that we are not only competing against each other to sell each of you our specific sheet of paper, but we are fundamentally competing with alternatives, both traditional ones such as television (public TV as well as satellite) and radio, and now also with the Internet, email, movie screens, billboards and airport hoardings, DVDs, computer games, as well as word-of-mouth marketing.

"And in the third place, we must try to increase the size of the markets for our products, be that in communications or packaging. And this is where, as an industry, we can and should do something about growing total demand," Leslie points out.

During 2004 Sappi launched their 'Life With Print' campaigns in the United States and across Europe. In South Africa they have been working together with the local Magazine Publishers Association on a 'Power of Print' campaign, the second phase of which is due to be launched in a month's time, Leslie said.

"All these campaigns are aimed at reminding business decision makers - including publishers, CEOs and brand marketers of major corporations, corporate treasurers and CFOs, media buyers, corporate communicators, advertising agency strategists and graphic designers - of just how powerful print can be as a communications tool."

Sappi's remarkable success story

Leslie also outlined Sappi's successful transition from a regional leader in South Africa to a global company within the space of five years. With sales spread of 41% in Europe, 31% in North America, 15% in Southern Africa and 13% in Asia and the rest of the world, geographic diversity is one of the company's particular strengths, and it is from this platform that Sappi has been a leader in promoting the power of print worldwide.

Explains Leslie: "We have never been interested in size alone - being the biggest pulp and paper company cannot be an end in itself. Size and market leadership must deliver financial benefits. Our core objective remains providing superior returns to our shareholders. The pulp and paper industry is notorious for destroying shareholder value and not returning its cost of capital. We dare not under-estimate the negative impact this track record can have on our industry's ability to attract new capital for investment going forward. After this period of rapid expansion, the last five or so years for Sappi has seen a period of relative consolidation, while maintaining the objective of increasing our market shares in North America, Europe and in particular across Asia. We have also continued to pursue our strategy of entrenching our global position through acquisitions and investments."

He believes Sappi's success in pursuing its strategy can be ascribed to a few factors: 1. "In the first place a clear identification of the market segment where Sappi felt the opportunities and returns justified the risk.
2. Secondly, Sappi did not tolerate under-performing assets and closed these down. It also divested its non-core businesses.
3. Thirdly, Sappi set clear financial targets against which potential acquisitions were judged and applied strong financial disciplines to all new operations.
4. Fourthly, Sappi understood the value of local knowledge and of blending its own culture with that of the businesses it acquired, ensuring a smoother transition and a stronger team on the ground than might otherwise have been the case. Sappi's history dates back some 70 years. Some of the mills it acquired date back almost 400 years. The Warren company introduced almost every innovation in the fine paper market. Sappi has been able to draw on this entire heritage to become a strong global company with consistent rules and working methods while keeping close touch with local market conditions and customer needs and requirements."

Leslie explained that in reviewing where Sappi came from and how the company has grown, is a useful reminder that the print industry still has many opportunities that can be exploited.

"I do not believe we have reached any end in the road in growth prospects: indeed, the emerging middle classes in China and Eastern Europe will provide a rapidly expanding source of demand as disposable income increases and consumerism takes off.

"It is therefore critical that we as an industry, manufacturers and printers, respond positively and pro-actively to ensure that paper and print remains central to any and all communication efforts," he concluded.

Some 25 years ago Sappi launched a competition aimed at rewarding excellence in printing. Sappi Printer-of-the-Year awards are now made for Africa, for North America, for Europe and for their Trading region, including the Near and Far East, Australasia and Central and South America.

Act decisively

Leslie urged the industry to act decisively to address the main issue affecting the print industry's vitality, "namely a loss of perceived value relative to other media"

"The uniqueness of print has been forgotten. We have to re-establish the value attached to the unique position that print occupies in people's lives. As the different communications media battle to increase their own share of advertising and marketing budgets, the print industry must continue to grow its own share by telling the story of the effectiveness of print, of the value that print delivers as part of the communications mix."

Sappi's Life With Print campaign covers the important end-use applications of magazines, catalogues, books, print ads, inserts, direct mail, brochures, posters and annual reports (or rather corporate communications). The campaign also demonstrates the truly unique way print adds value to capturing memories, imagination and attention to build brands, sell goods and deliver corporate messages.

"A marketing programme combining print and television almost always out-performs one that relies solely on television or broadcast media (source: FIPP - International Federation of the Periodical Press) and print audiences are growing and more diversified than ever - each of you will know from your local newsagent the number of specialist interest titles and global titles with local editions that have been added and continue to be added to shelves," Leslie told the almost 700-odd delegates - the majority from overseas, with a 100-strong delegation from China.

"The campaign captures the fact that on the right paper, nothing compares to the power of print. It is tactile, portable, enduring and can reach the masses. Print conveys mood, emotion, attitude and energy. In the fleeting world of electronic ephemera, print is real and permanent," Leslie concluded.