STATIONERY NEWS: Australian Paper recently announced a feasibility study into the development of a major recycling plant at its Maryvale Mill as part of its Future Fibre Strategy. Can you summarise some of the key aspects of the Future Fibre Strategy and how they will impact on the company's core paper products?
CRAIG DUNN: The background to the Future Fibre Strategy is quite extensive:
Australian Paper currently procures 92 per cent of its fibre inputs from local Victorian sources and almost two-thirds of our wood is plantation and recycled fibre.
The remainder is a mixture of sawmill waste and certified regrowth wood from the Victorian Government through VicForests.
Around 85 per cent of Australian Paper's fibre is certified to the FSC or the Australian Forestry Standard which is endorsed globally by the PEFC.
Australian Paper signed an agreement in 2005 for significant additional plantation wood supply around our Maryvale Mill, however this has been unable to deliver to projections. Fire and drought have also intervened, impacting on our long-term wood supply.
A review of our long-term strategy was announced in mid-2011 with a focus on sourcing additional plantation and recycled fibre to meet our future requirements.
This review included an extensive stakeholder engagement program to ensure balanced outcomes.
The Future Fibre Strategy was launched in September last year and announced that Australian Paper would be increasing our usage of plantation and recycled fibre; however Western Victorian plantations established for the export woodchip market were not a sustainable supply source for Maryvale Mill due to a number of factors.
An update to the strategy was released in March with Australian Paper announcing a major feasibility study into a new recycled paper plant for Maryvale, access to significant additional plantation volumes from some of the closest parts of Western Victoria and improved yields from our largest plantation wood supplier.
For more information including the Poyry Report which examined wood supply from Western Victoria go to http://www.australianpaper.com.au/environment/future-fibre-strategy.aspx
The impact on the company's core paper products is threefold:
· If the feasibility study for the recycled plant proceeds, it will secure the local manufacture of high grade recycled papers.
· Australian Paper would significantly increase its volumes of recycled office paper and envelopes.
· Maryvale's future fibre supply will be assured.
SN: The company has a significant presence with Australian-made products. How have you communicated this point-of-difference to end consumers and what is the strategy going forward?
CD: Australian Paper is the only local manufacturer of office papers and is the largest private employer in Victoria's Latrobe Valley.
Australian Office is the sales and marketing arm of Australian Paper and is the largest manufacturer of envelopes in Australia and the only significant local manufacturer of paper- based stationery products.
We continue to work closely with the Australian-made campaign and feature the famous green and gold Australian Made logo on our products.
We have also recently launched the www.onpaper.com.au website to educate the community about the importance of local manufacturing and the significant economic and social contribution which Australian Paper makes to regional communities and the national economy as a whole.
We will be seeking opportunities in future to further increase consumer awareness of Australian-made paper and our market research shows that this is becoming an increasingly important message for buyers of paper and stationery products.
SN: Australia Office does have some 'leading brands' - how important is branding - and marketing - in what could be described as a commoditised category?
CD: Branding is vital to our business. We continue to invest in all of our brands, not just by creating high impact TV ads for Reflex, but through innovation, quality improvement and continual new product development.
We aim to create value for our consumers by meeting their full range of needs.
As the only Australian manufacturer in many of our categories, we are well-positioned to create brands which are directly relevant to the requirements of Australian consumers.
In the stationery and envelopes categories our leading brands are Reflex, Olympic, Tudor, Optix and Queen's Slipper. Renowned brands Reflex, Australian, Brilliant, Optix, Tudor and Olympic represent key brands in our office papers category. In support of our extensive Australian- made range, we offer our customers additional access to superior international brands such as Color Copy sourced through our strong global supplier network.
Melbourne based, Australian Office has stationery operations facilities in Melbourne and Adelaide and sales offices in all mainland capital cities and the ACT.
SN: One of your brands – Queen's Slipper playing cards – has an interesting market position, how is this product performing in terms of sales via various outlets and in the context of the gaming/casino industry?
CD: Queen's Slipper is one of the strongest retail brands in the stationery category nationwide.
Queen's Slipper 52s is the clear market leader selling more than one million individual decks of cards each year in Australia.
We sell this product through a wide range of stationery, mass merchandising and grocery retailers. This continues to be a value-added product which can support high retail margins with the consumer focus on premium quality and Australian-made.
SN: In the absence of any current 'industry data' - how has the market for stationery paper products performed in the first quarter of the year - at least from an Australian Office perspective?
CD: We had quite mixed results across various product categories in the first quarter. In general, our market research is highlighting a number of interesting trends within the stationery paper product markets, some that are providing opportunity for growth and others that are potential threats to traditional product ranges. In many categories, the positives from product innovation and population growth are being off-set by structural market changes such as online education and competing technology platforms.
SN: Finally, what is your forecast for the stationery market for the remainder of 2012? Are there any particular challenges that could impact on suppliers and resellers?
CD: The forecast for the 2012 stationery market is a stronger second half that will result in a flat market versus prior year. Australian dollar foreign exchange forecasts are quite diverse for the remainder of the year.
As a large local manufacturer, it is hoped that the record highs that we've seen over the past 18 months will soften in the coming months, particularly with the most recent RBA comments on low inflation and likely interest rate decline.
