Workplace360: For any readers unfamiliar with Antalis, could you provide an overview of the company’s history?
Tim Percival: Antalis was formed over two decades ago and resulted from merging various independent paper distributors around Europe. The company was known as Wiggins Teape in the UK before being renamed Antalis. The rebranding was part of establishing a common trading platform and identity across all Antalis entities, which now operate in 43 countries globally.
W360: Can you tell us more about your role with Antalis and how it evolved?
TP: I started my journey in 2006 when I joined Wiggins Teape as an Account Manager in Field Sales. For five years, I continued working in the office side of the business and progressed into a sales management position for the northern region. Following this, I became the National Accounts Director which was based in Dartford.
Antalis has gone through several restructures and transformations to stay relevant in the marketplace. Around 12 years ago, the Office Division underwent consolidation and centralisation, and I accepted the role of Divisional Director for Office. I also took on responsibility for the Xerox entity when it was acquired by Antalis. Following restructuring in 2020, the digital print market was added to my portfolio due to its correlation with cut-size paper and suppliers.
W360: Antalis also changed hands in the not-so-distant past. What happened?
TP: Antalis was initially owned by French investment firm Worms et Cie which later transitioned into Sequana. Unfortunately, the company entered into administration in 2019. However, Sequana had set up Antalis with its own treasury and financing and became an asset put up for sale to secure the best return for investors.
Kokusai Paper and Pulp, which is based in Japan, had been eyeing Antalis for a while and proceeded with the purchase in the second quarter of 2020, just as the pandemic began.
W360: How does the UK business stand today?
TP: Currently, it is split into three main divisions: Papers, which includes print and office; Visual Communications for signage and display; and Packaging. Since the UK represents a significant market for Antalis, we have influence over the overall group strategy and maintain a close working relationship with the central team in Paris, who are very supportive.
W360: Could you provide a rough breakdown of the importance of each segment within the total mix?
TP: In the UK, Papers represents around 60% of the business, while Packaging and Visual Communications account for approximately 40%.
The long-term strategic direction is to offset the expected decline in paper consumption by investing in emerging markets. We are focusing on potential acquisitions in the packaging and visual communication sectors – not only in the UK but also across Europe.
W360: Who are your key customer types?
TP: In the office segment, our primary customers are resellers, although there is a small percentage of direct consumer business. We work with most of the large companies, but mainly for specials-type items and non-commodity papers and packaging.
W360: I want to talk about your client relationships. Integra is a key partner, but could you elaborate on the importance of other dealer groups and customer segments?
TP: Given Antalis’ market position and strong supply presence, we major with most buying groups. They have a compelling proposition and any member that doesn’t utilise all the services provided should do so, particularly through this challenging trading period.
Encouragingly, all the dealer groups from 2019 are still operational. Consolidation has been discussed for a long time but hasn’t materialised. I guess it’s interesting to see how they have reinvented themselves with an increasingly cooperative approach, which from a supplier perspective is certainly more palatable.
W360: Are there any non-traditional customer types you are currently working with or considering working with in the future?
TP: Within the Office division, there are different channels. We have found success in the retail sector providing paper category management services to several major grocers. As a company, we are always exploring fresh routes to market.
Antalis does receive interest from non-traditional companies looking to collaborate via the Amazon marketplace. However, we tend to steer away from these due to potential conflicts with our existing business and the presence of our resellers on the platform. The challenge lies in figuring out how a new entrant adds value to the chain.
W360: During our tour of your facilities, I did notice a big Amazon Prime trailer at the loading dock. Can you tell us about your association with Amazon?
TP: We have a successful relationship with Amazon across multiple countries. We supply to them through both 1P and 3P arrangements. In the UK, this hits the sweet spot for us when it comes to small deliveries. We have a pick-and-pack operation for a select few product lines and Amazon collects the goods from us in the evening for distribution. Our partnership with Amazon is very valued and productive.
W360: How would you describe your USPs to someone at a dinner party who is unfamiliar with the industry? What value do you add to the paper supply process?
TP [laughs]: Firstly, if you were talking to anybody at a dinner party and mentioned the word ‘paper’, you’d instantly lose their interest.
Joking aside, I would talk about the breadth of range. We offer 13,500 SKUs in the paper category, and even within the copier paper category, there are over 1,300 lines tailored to different market needs, such as quality levels, sizes, and grammage.
Our focus is not solely on commodity products but also on providing value-added solutions. Antalis maintains a customer-facing sales force and adopts a consultative approach, considering ourselves as partners to our key clients. We simply want to help our customers do what they do, but better.
W360: What about partners in terms of brands? Where is your emphasis with the vendors and with the mill community?
TP: Given the pressure on paper manufacturing capacity, a lot of mills became less interested in customer own label products and made a move toward mill-branded papers.
But, because of Antalis’ scale and purchasing strength across our global network, a unique aspect is that we retain our own merchant labels – it sets us apart as a paper distributor.
I would include Xerox here as we hold the distribution of Xerox in Western Europe, and the brand is a very big player in the UK and Europe. It has been a successful arrangement.
Additionally, we have our own brand called ‘Image’, which offers various quality levels to cater to different consumer needs. The copier paper market isn’t solely about providing the cheapest option; there is a demand for more selective and suitable products for specific applications.
W360: Let’s delve into some of the issues impacting the paper industry that you just touched upon.
TP: Describing the past three years as challenging would be an understatement. The sector has faced significant impacts from various events.
In 2022, we thought we were pretty much out of the woods with the pandemic consigned to memory, but its effects on capacity and production have endured. It’s like somebody chucked a rock into the middle of a lake and even today, we all continue to feel the ripples in numerous ways.
W360: Such as?
TP: Last year, as the appetite for paper was picking up and offices were reopening, there was a surge in distributors repairing their inventories. This spike placed an artificial demand on the paper mills which were naturally delighted as they had been running at such short capacity. Unfortunately, the shortage of supply in the first three quarters of 2022 resulted in a dramatic oversupply situation in the fourth quarter and into 2023.
W360: How has the war in Ukraine affected the paper industry?
TP: In the UK alone, we estimate that the Russian supply of cut-size paper before the war totalled approximately 40,000 tonnes. Consequently, a substantial part of the market has just stopped.
Going back to ripples, pre-war Russia accounted for nearly 5% of global pulp production. I remember in 2010 when the Chilean earthquake struck.
At that time, the country contributed about 3% of worldwide pulp and the consequences of that disaster led to seven concurrent price increases in the paper sector. While we have not seen such drastic price changes directly attributed to the dreadful Russian scenario yet, the expectation is for its effects to hit us at some point.
W360: We’ve been hearing about the headline inflation rate starting to fall gradually, but you’re saying, in paper terms, prices may still increase.
TP: Well, no. From both a market perspective and a supply position, prices have softened. This is largely a reaction from the mills facing low-order books due to the oversupply situation. Orders were delayed or cancelled, prompting mills to reduce prices in an attempt to fill their machines. However, this doesn’t stimulate demand.
While it’s an international issue, in the UK, there was probably in excess of 35,000 tonnes of oversupply which needs to wash through.
W360: You’re a paper guy and used to fluctuating prices, but for independent resellers, it’s yet another challenge to navigate amid all the other headwinds.
TP: It’s been hard and will continue to be difficult for the rest of 2023, possibly into next year. The best-case scenario is that the oversupply product I just mentioned washes through, and common sense and equilibrium returns in terms of supply and demand.
Here’s an easy way to visualise what’s actually happened: the cost of pulp – a fundamental component in paper production – has surged by over 80% since Q1 2020. Although it has started to dip, the decrease is only around 20%.
But paper prices did not go up by 80%, so the mills are still hurting because of their input costs. They are left with two options: either continue supplying at negative margins, which is unsustainable, or shift their focus to more profitable product areas.
During the pandemic, approximately three million tonnes of capacity were removed worldwide due to the drop in demand. That’s huge. In addition, once a paper machine is converted from making uncoated woodfree, eg offset paper and copy paper to say packaging board, it isn’t generally converted back again.
W360: Are business supplies dealers adapting to the opportunities in the packaging sector?
TP: Antalis is fortunate to have a market-leading packaging operation, allowing us to offer a diverse range of products. We consistently witness growth in this segment through the reseller market and those that embrace it are doing well. While it may require a different sales approach, the margins available offer the chance for success.
Dealers need to be proactive in this area and in simple terms, a change of approach to focus on the warehouse and distribution areas of the business as opposed to the front office areas is what’s required. We have multiple examples of resellers approaching their existing customers this way and opportunities being realised.
W360: What are your internal forecasts for office paper consumption, including A4, A3, and other important grades?
TP: It’s incredibly difficult to accurately gauge office paper consumption over the past 12-18 months. Being optimistic, the average demand observed in Q1 and Q2 2022 may still be relevant today. If you take the pragmatic view, the industry has faced a situation of supply constraints, extreme price inflation and an economic downturn since September last year, none of which would positively influence demand or would encourage an optimistic outlook.
W360: Why has paper always been so price-sensitive?
TP: It’s a major frustration. Paper is one of the few products within the core OP market where everybody thinks they know the price. Invariably, what the majority of people talk about is the lowest price.
However, with inflation affecting costs, selling paper as a loss leader is no longer sustainable for many. I have certainly seen a lot of previously accepted contractual periods completely go.
W360: If dealers move from using paper as a loss-leading line, it could be good for the industry.
TP: From a resale point of view, it has been wretched because they’ve had to keep up with the inflationary process. But, speaking to some, they appreciate the higher prices, especially those on margins that have compensated for the decline in demand.
W360: Another big issue is Brexit. How has it impacted your organisation?
TP: Initially, it was quite painful, especially with elongated transition times for goods entering the UK. Over time, we have adapted, and Brexit-related processes are now embedded into our normal working practices.
Nevertheless, we’ve had to dedicate resources to address issues not present pre-Brexit.
W360: Sustainability is firmly back on the agenda. Where is Antalis on this journey?
TP: I’d like to think we lead the way. Over the past few years, as an organisation, we have significantly reduced our carbon footprint. As part of our sustainability efforts, we are installing a full aisle of solar panels, which will make us 100% self-sufficient for our electricity needs.
We have introduced some electric vehicles into our fleet. However, this area remains challenging as paper is inherently a heavy product. Finding vans fit for purpose, bearing in mind mileage requirements, has been a struggle.
The real trick is educating people about what really is sustainable and environmentally friendly. To this end, Antalis has developed a Green Star System which is a straightforward way for consumers and our customers to understand the environmental impact and sustainability implications of each item that we sell.
Launched for the Papers division, the Green Star System now extends to Packaging and Visual Communication. Every product is assessed for its environmental credentials, considering factors like manufacturing processes, route to market, and relevant accreditations. It is represented with a simple zero to five star rating.
W360: Would it be fair to say there’s nevertheless a lot of misinformation surrounding paper and its environmental impact? Does our industry do enough to communicate the truth to consumers?
TP: Yes, there are still myths, and I believe we can do more to address this issue. When sustainability started rising up everybody’s agenda paper manufacturers were scratching their heads and thinking, well, we’re already pretty good at this.
One manufacturer has been quoted as saying the industry is the envy of others because it relies on a truly sustainable and natural source of fibre. However, there are still question marks over sustainability in some paper manufacturing operations.
W360: We’ve gone through some tough years. What are your thoughts on how it has all panned out?
TP: One of my favourite expressions is ‘we’re good at difficult’, which has come back to bite me frequently in the past few years. Due to various dynamics and situations, it’s been a real slog to get through it. However, it’s remarkable to see the resilience of the dealer market.
W360: It’s a bit like whack-a-mole.
TP: Definitely. How many times have we used the expression ‘the perfect storm’? It would be refreshing to have a ten-day forecast without any mention of bad weather.
W360: Thinking about the future of this industry in the next few years, how optimistic are you?
TP: I think it’s going to be very tough, especially considering the uncertainties surrounding the long-term implications of returning to workplaces. However, I do think resellers will continue to demonstrate adaptability and diversification, with consolidation likely to occur.
W360: Any other plans for Antalis that you haven’t shared yet?
TP: Over the past few months, we faced issues during the SAP integration, which caused some service interruptions. The benefits realisation stage of the implementation has yet to come.
Clearly, we wouldn’t have made this big jump if there wasn’t something tangible at the end of it. So, watch this space. We aim to ensure Antalis remains relevant to the market, and I believe we’re in a pretty good place at the moment.