It’s fair to say that Arjowiggins’ most recent history has been turbulent following its acquisition by Worms & Cie in 2000 which eventually morphed to become Sequana Capital. That company was placed in liquidation in March 2019. A subsequent management buyout in September 2019 secured 500 jobs in the UK and a second-phase MBO in October of that year secured another 300 jobs overseas.
However, as is now well known, Arjowiggins failed again in September of this year and its brands were bought by Antalis at the start of November.
But where has the story gone now? How might the market react?
Market changes
First off, it’s important to recognise that in recent times paper supplies have become tighter because of the large number of mills that have closed over the past four years. These closures have formed a perfect storm following the recovery from a global pandemic and the resulting growth in demand for some paper- and fibre-based products, various global logistics issues, the energy price crisis, spiralling raw materials costs, and the fastest rate of paper price increases in at least 20 years.
Justin Hobson, marketing manager at Fenner Paper, is well aware of the changing paper supply backdrop. And he’s seen the contraction of the market for corporate print accelerate faster since Covid the result of which has led to the number of print insolvencies rising.
But as regards the failure of Arjowiggins, Hobson thinks it’s given Antalis a large problem to resolve “as they are the major stockist for the Arjowiggins creative papers range”. He adds also that “it has caused some concerns where the papers were being used within the luxury packaging market... but rival suppliers have stepped in to fill in the gaps”.
Perhaps unsurprisingly, Simon Fisher, commercial director for Antalis Print, Publishing, Office and Visual Communications, takes an opposing view. It’s his belief that fine papers will “continue to be a significant part of the overall paper market and therefore it was important that Antalis invested in the continued supply of the premium fine paper brands”. As he sees it, the company “certainly hasn’t seen any negative change in demand, on the contrary, we have experienced a heightened level of enquiries”.
Arjowiggins is chiefly known for its creative papers range, which, by definition, is sold into the creative, graphic design and advertising world. But as Hobson comments, “this market is currently blissfully unaware of the end of Arjowiggins – the reason being that there is no solid news source for the creative industries that is interested in print and paper.” He says that in the past there used to be reliable printed magazines such as DesignWeek and Creative Review that would have reported changes in the industry and were industry sources, but now that “the creative industry is fed news by a vast array of websites and blogs, few of whom have interest in paper and print, there is no one reliable industry source.”
And none of this has been helped by the move from print to digital which has been running at an ever-increasing pace since the turn of the century, but especially so following Covid. It’s for this reason that Hobson believes that “the creative industries have far less regular contact with print and paper companies”. And this is why he feels that “the majority of the creative market will only become aware that Arjowiggins has gone when they request products and are told they are no longer available”.
It seems to bother Hobson that it’s the “printers that are the ones who are aware of the papers not being available, and they are the ones who are having to find alternatives and are having to call their regular suppliers – or find new suppliers – to find alternatives”. And from a customer service perspective, this is less than ideal. Hobson expands on this point: he’s seen customers become “a bit disgruntled” when told that a product is no longer available. However, if the statement is “followed with ‘the mill has gone bust’ then reality brings a ready acceptance and understanding of the situation and a search for an alternative”.
Interestingly, while Hobson comments that “Arjowiggins had an excellent range of creative papers, I can’t think of one totally unique product that they made”. In other words, customers may have to change to a slightly different shade or texture or weight, but there are plenty of alternatives for them to fall back on.
A smaller number of suppliers
The problem for the paper supply market is that over the last four years, some 6m tonnes per annum of production has been culled. Scheufelen, Lecta, Stora Enso, Sappi Europe, UPM, SCA, and Zanders Paper – they’ve all closed mills and/or exited parts of the market.
Of course, just because a supplier leaves the market doesn’t mean the market has shut up shop entirely. So, for Hobson, this means that suppliers will be able to cope with the new landscape in light of the Arjowiggins shutdown. Some customers may end up with a short-term problem while alternatives are sourced, but overall, he reckons that there is no shortage of manufacturing capacity within the market, despite the recent closures.
And further diminishing the risk, he says that Arjowiggins may have been a major presence in the domestic market but “in the scale of the industry it was not a big player; companies such as Fedrigoni, Cordenons, Reflex, Favini, Zuber Rieder, James Cropper and Lessebo to name but a few will be able to meet demand”.
That said, Fisher is more upbeat and says that Antalis “does not foresee any issues in the long to medium term with supplying our customers in the UK & Ireland”. In fact, as he points out, the company is working on relaunching the brands “with the support of best-in-class suppliers, with a renewed assortment and a real focus on quality and service levels”. Fisher also emphasises that from discussions it has had with potential partner mills, at a local and international level, “it appears that there is still plenty of manufacturing capacity”.
Demand for Arjowiggins products
So, with the end of Arjowiggins, what will happen to customer demand? Will it shift to existing products in the market or will new products from other markets which have traditionally not been sold in the UK take up the slack?
Fisher thinks that Antalis has little worry about in terms of changing demand. He says that when “Antalis acquired the worldwide portfolio of brands, among them the well-known Conqueror, Curious Collection, Keaykolour, Pop’Set and Rives [we] committed to continue to invest in, develop and grow these brands”. Again, he states that demand for the company’s newly acquired products remains high.
Hobson isn’t so sure and thinks that “an example of this would be what is commonly known as tracing paper. Arjowiggins has dominated the market for decades with a product called Simulator Transparent and more recently Curious Translucent. But with the demise of the Arjowiggins Chartham mill, it leaves only one European manufacturer for this type of paper: Reflex Paper in Duren, Germany. Their product, Spectral Translucent, which has been available in the UK for many years, is now the obvious replacement product.”
But what are the ramifications of this if there are fewer – or no – ready alternatives? Could prices rise beyond the usual, now high, inflationary moves?
Fortunately, as Hobson explains, paper is a global market and although in this particular instance – transluscent paper, a very niche product – there is now only one European manufacturer, “alternative product can be imported from other regions, so if the price were to increase too dramatically, it would just come in from other countries”. And China is a good example of an alternative source, especially if, ironically, the former Arjowiggins mill in Quzhou China restarted production of what Chartham no longer makes.
Turning to two of Arjowiggins key products, Conqueror and Keaykolour, Hobson states that there are plenty of alternatives for them too. Of the Keaycolour coloured paper range, he says that the market leader is Colorplan from GF Smith, but there are other ranges such as Sirio from Fedrigoni, Vanguard from James Cropper, Gmund Colours from Gmund, and most recently, a new range, Lessebo Colours from Sweden’s Lessebo Paper.
And of Conqueror, he highlights “Zeta, Europe’s leading business stationery paper, with laid and wove finishes which are available with or without a watermark – they are the most readily available, direct replacements for Conqueror.” He adds that although paper is manufactured by Reflex in Germany, Zeta has been established in the UK for many years.
It shouldn’t be forgotten that the business stationery market has shrunk dramatically over the last decade so, although Arjowiggins’ products occupied an important niche, it is still a niche.
The move by Antalis
Now that Antalis has bought the brands of Arjowiggins, there are a number of natural questions to ask, the most pressing being how and where will it get the Arjowiggins papers made in the future?
Fisher says that its customers should not be too concerned about supply. Rather, he made the point that Antalis is well on its way to having production restart. As he says, “discussions with potential partners are well advanced and we are confident that these well-known and respected brands will be back in production shortly.” Further, he says that the company has “significant stocks to cover the short- to medium-term” demand.
And his comment follows the line taken at the start of November when the acquisition by Antalis of the Arjowiggins brands was announced. The release at that time noted that Antalis had “acquired the vast majority of the remaining finished goods of [the Arjowiggins] brands. This additional stock, on top of the current inventory we already have in our warehouses, should allow us to respond to most of our customer demand in the coming months until the transition to new sourcing in Q1 2023.”
The release went on to say that in countries where Antalis or other KPP Group distribution companies are not directly present, “our plans are to continue to make these brands available through a network of distribution partners”. That indicates surety of supply.
However, from his standpoint, Hobson comments that as “Antalis have bought the brands, they obviously have plans for them”. That said, he thinks “it will be tricky to get manufacturers on board to make the products for Antalis as in most instances, those mills already have their own brands out in the market”. A worse problem for Antalis to counter, as noted earlier, is that in the intervening period, customers could move onto new products. And if this happens, as Hobson says, “it will be a tough job to win them back”.
But taking a practical stance, Hobson knows that Arjowiggins was a good manufacturer, and he was “sad that one of the last mills making fine papers in the UK has now gone”. But as a supplier of creative papers in the UK market he says that Fenner Paper has “increased enquiries and orders for alternatives to the Arjowiggins products that are no longer available. We have increased our stocks of certain items to take into account increased demand, especially of Zeta Laid and Wove”.
The risk from other suppliers
Looking to the future, could other paper suppliers fail? It’s entirely possible. Hobson has over the last decade seen a number of mills cease production – most recently Meerssen Papier (Marsna) in Holland, which produced coloured and speciality papers, and which stopped this time last year. But as he comments, “in the current market, with all inputs and energy prices going up, all manufacturers are vulnerable and sadly no one is safe”.
Fisher would not be drawn about the situation that others might find themselves in. However, he did say that “we sincerely hope that others don’t fail”.
But in commenting on his own company’s situation, he said that “it was very sad that our long-term partnership with Arjowiggins ended in this way. However, our decision to acquire all the brands was based on our resolve to continue to support our customers and maintain the supply of premium fine papers to the paper industry”.
Through buying the brands, securing significant additional stocks and finding high quality mills to produce the brands in the future, Fisher reckons that the impact to the Arjowiggins brands will be relatively small and should present “significant opportunities in the future”.
JAMES CROPPER
James Cropper sales director Nick Barnes, in response to questions from Printweek, said that “everyone at James Cropper was naturally upset by the news. Our thoughts are with the employees and the local community, as well as everyone else who will have been affected”.
He continued: “We continue to work through challenging times with volatility in energy and raw materials and while James Cropper is also not immune to these effects, we are confident the tough decisions we’ve taken over the last year place us in a strong position for the future. With our focus on colour and fibre and experience in high-value segments, we recognise that some customers may be looking for alternative options given this news. We’re open to discussing potential opportunities on a case-by-case basis through our sales team.”
James Cropper also makes the Colorplan range for GF Smith, a direct competitor to Keaykolour.
