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
Demand development Demand per capita Mt kg/capita 12 35 North America North America Europe 10 30 Asia and 25 Middle East 8 Western Europe 20 6 15 4 10 China Asia and Eastern Europe 2 5 India Middle East China 0 India0
4 | © UPM Advertising expenditure development
US$, billion 250 Europe North America Asia Pacific
200
150
100 Other Internet
50 TV
Newspaper Magazine 0 2010 2017 2010 2017 2010 2017
Source: ZenithOptimedia, March 2018 | © UPM In currency USD, Other: Cinema, Radio, Outdoor Internet share of advertising expenditure
70%
60% UK China 50%
40% USA Germany 30%
20% India 10%
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=100 110 Index 2011=100 Improved news
100 100 US Total direct mail (2
90 90 SC Europe Direct marketing (1 80 80
70 70 Standard news 60 60
50 50 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2017
1) Source: Eurograph, UPM, Paper demand for direct marketing 7 | © UPM 2) Source: DMA Statistical Fact Pack 2017 & USPS, Total number of Direct mail pieces in the US Paper grades by end uses in Europe
Standard Improved newsprint SC Share & other uncoated mechanical 100 % newsprint Direct Book & marketing Directories Magazine publishing
Newspaper publishing
0 % 2011 2017e 2011 2017e 2011 2017e 8 | © UPM 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
Not applicable, A few days About a week About a month 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%
Share of respondents 10 | © UPM Source: Canada Post 2015 Print media – the most sustainable choice
• ICTs have been estimated to • With 1% of the emissions, the contribute 2 to 2.5% of the value chain of pulp, paper and global greenhouse gas (GHG) print is one of the lowest industrial
emissions. [1] emitters. [2]
• Reported e-waste recycling • The global paper recycling rate
rate varies between the stands at about 58%. [3] regions: 35% in Europe, 17% The European recycling rate for
in Americas and 15% in Asia. [1] 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 74% 66% 68% 27% news
Source of 82% 80% 71% 43% advertising
12 | © UPM Source: [1] https://github.com/BuzzFeedNews [2] Marketingsherpa 2016 PUSH FOR PAPER Newspaper publishers’ print vs. digital revenues
Print vs. digital % share of publishers revenues 2017 2015
100 13% Digital 10%
75
50 87% Print
25
0
14 | © UPM Source: PWC media outlook Basis weight development
Average basis weight, Basis weight distribution, Western Europe 2004-2016 Western Europe in 2016, g/m 2 Standard Improved SC g/m2 newsprint newsprint 54 SC 48, 8 57- ≥55 60 52 Improved newsprint 54- 45 56 50 52
51- 48 52
46 42, 48,8 Standard newsprint 5 47- 50 44 45
≤45 42 40 <45 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 '16 '16 '16 15 | © UPM 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
Supply 1,4 Mt reduction > -5,4 Mt -6,8 Mt 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 Global order volume for web offset presses, M€/a 900 800 700 600 500 400
300 CSWO + HSWO 200 total 100 0 2009 2010 2011 2012 2013 2014 2015 2016 HSWO presses CSWO presses
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” SC HSWO / RG Advanced printability Smoothness SC CSWO
CTD Mech Higher bulk for CSWO stiffness and haptics Improved news Std Traditional CSWO newsprint paper portfolio
Bulk “Haptics & Readability” Absorption “Fit for CSWO process” 20 | © UPM WHAT DOES IT TAKE? Incremental is enough!
22 | © UPM