IMPROVED NEWSPRINT FOR HIGH-VALUE PRODUCTS Ian Hamilton, Area Sales Director, South East Asia, UPM Asia Pacific PTE LTD
CONTENT 1 CHANGE IN MEDIA WORLD 2 PULL FOR PAPER 3 PUSH FOR PAPER 4 WHAT DOES IT TAKE?
CHANGE IN MEDIA WORLD CHANGE IN PAPER WORLD The papermaker s view
Newsprint demand development 12 North America Europe 10 Mt Demand development North America 35 kg/capita Demand per capita 30 Asia and Middle East 8 6 25 Western Europe 20 15 4 China 2 India 0 10 Asia and Middle East 5 China India 0 Eastern Europe 4 UPM
Advertising expenditure development 250 US$, billion Europe North America Asia Pacific 200 150 100 Other Internet 50 TV 0 Newspaper Magazine 2010 2017 2010 2017 2010 2017 UPM Source: ZenithOptimedia, March 2018 In currency USD, Other: Cinema, Radio, Outdoor
Internet share of advertising expenditure 70% 60% 50% 40% 30% 20% 10% UK China USA Germany India 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 6 UPM Source: ZenithOptimedia, March 2018
Newsprint demand and direct marketing Demand development in Europe Direct marketing development 110 Index 2011=100 Improved news 110 Index 2011=100 100 100 US Total direct mail (2 90 90 80 SC 80 Europe Direct marketing (1 70 70 60 Standard news 60 50 2011 2012 2013 2014 2015 2016 2017 50 2011 2012 2013 2014 2015 2016 7 UPM 1) Source: Eurograph, UPM, Paper demand for direct marketing 2) Source: DMA Statistical Fact Pack 2017 & USPS, Total number of Direct mail pieces in the US
Paper grades by end uses in Europe Share 100 % Direct marketing Magazine publishing Standard newsprint Book & Directories Improved newsprint & other uncoated mechanical SC Newspaper publishing 8 UPM 0 % 2011 2017e 2011 2017e 2011 2017e Source: Euro-Graph, UPM
PULL FOR PAPER
Direct mail gives people time to think Length of time direct mail advertising is kept at consumers' homes A few days About a week About a month Not applicable, I never keep these Flyers from grocery stores 36% 46% 1% 17% Flyers from other retailers 41% 18% 2% 39% Coupons for fast food 16% 8% 53% 23% Catalogues 16% 7% 35% 42% 10 UPM Share of respondents Source: Canada Post 2015
Print media the most sustainable choice ICTs have been estimated to contribute 2 to 2.5% of the global greenhouse gas (GHG) emissions. [1] With 1% of the emissions, the value chain of pulp, paper and print is one of the lowest industrial emitters. [2] Reported e-waste recycling rate varies between the regions: 35% in Europe, 17% in Americas and 15% in Asia. [1] The global paper recycling rate stands at about 58%. [3] The European recycling rate for paper has reached 72,5%. [4] 11 UPM Source: [1] tps://www.itu.int [2] Two Sides [3]. http://www.cepi.org/news [4] http://www.paperrecovery.org
Print is trusted Newspapers Broadcast TV Radio Facebook Source of news 74% 66% 68% 27% Source of advertising 82% 80% 71% 43% 12 UPM Source: [1] https://github.com/buzzfeednews [2] Marketingsherpa 2016
PUSH FOR PAPER
Newspaper publishers print vs. digital revenues 100 Print vs. digital % share of publishers revenues 2017 75 Digital 13% 2015 10% 50 25 Print 87% 0 14 UPM Source: PWC media outlook
Basis weight development Average basis weight, Western Europe 2004-2016 54 52 50 48 g/m2 SC Improved newsprint Basis weight distribution, Western Europe in 2016, g/m 2 Standard newsprint 48, 8 45 Improved newsprint 55 52 SC 57-60 54-56 51-52 46 44 Standard newsprint 42, 5 48,8 45 47-50 42 15 UPM 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 40 '16 <45 '16 45 '16 Source: Euro-Graph
Impact of recent newsprint capacity closures Newsprint volume change in Europe and North America 2010-2017, million tons Demand decline Capacity change Gap -5,4 Mt -6,8 Mt 1,4 Mt Supply reduction > demand decline 16 UPM
Global printing output development Publishing Graphics Labels & packaging UPM Source: Smithers Pira 2017
Huge decline in investments CSWO being hit the hardest M /a 900 800 700 600 500 400 300 200 100 0 Global order volume for web offset presses, M /a 2009 2010 2011 2012 2013 2014 2015 2016 HSWO presses CSWO presses CSWO + HSWO total 18 UPM Source: manroland web systems GmbH
Improved newsprint Value added CSWO papers Case: Super bright UPM Brite De Telegraaf switched their supplements from standard newsprint to super bright improved newsprint in magazine format. What did they achieve? The former insert become a real magazine The new magazine has a longer life cycle De Telegraaf was able to create a well-known and separate brand 19 UPM
CSWO paper range is expanding and crossing traditional borders Printability Smoothness SC HSWO / RG SC CSWO Advanced printability Higher bulk for stiffness and haptics CTD Mech CSWO Improved news Traditional CSWO paper portfolio Std newsprint 20 UPM Bulk Absorption Haptics & Readability Fit for CSWO process
WHAT DOES IT TAKE?
Incremental is enough! 22 UPM