the parent roll merchant business 2017... · for parent rolls in north america quality tiers made...
TRANSCRIPT
2017
Scott Griffin, Director of Tissue SalesCentral National Gottesman Inc.
Creating a More Efficient Marketplace
The Parent Roll Merchant Business
Professionals around the world to serve a range of clients in the forest products and metal industries
2,5001886A leader in pulp, paper packaging, tissue, wood products and metals for more than 131 years
Sales of more than $5.5 billion and more than 6.7 million tons of pulp and paper products annually
BILLION
PRIVATELY OWNEDand operated by the fifth generation of our founding family
Focused on our core businesses: pulp, paper, packaging, tissue wood products and metals
to the strength and future growth of our industry
COMMITTED
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Who We AreWe’re a global company with offices in 29 countries and a commercial presence in more than 100 countries worldwide, building on long‐standing relationships with both customers and suppliers
Global ReachRepresented across North America, Latin America, Asia and Europe with sales into over 100 countries
Local PresenceOffices in 29 global locations and in 48 cities across North America, with agents and affiliates in an additional 75 locations
Strong Market KnowledgeWe understand what drives your business, no matter where you are located
Relationship DrivenOur people are at the center of our relationships with customers and suppliers around the globe
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How We OperateOur three divisions specialize in the global sales of Tissue, Pulp, Paper, Packaging, Wood Products, and Metal, as well as Paper Distribution and Publication Papers
• Pulp• Paper• Packaging• Tissue• Wood Products• Metal
Central National Division
• Coated and uncoated papers• Packaging• Digital substrates• Board grades• Wide Format
North American Distribution Division
• Books• Magazines• Catalogs• Retail• Direct Mail
North American Publication Division
Unwinding The Parent Roll Trade
The Fundamentals: What Do Parent Roll Merchants Do?
Transaction Structures: How Are Transactions Made?
Path Forward:Creating Efficiencies in the Supply Chain
Trends: What’s Going on in the Market?
How is the Parent Roll Merchant involved in Technical Guidance and Product Development Today?
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The Parent Roll Merchant C o r e S e r v i c e O f f e r i n g s
CreditProtection
Logistics &Supply Chain
Sales & Marketing
ProductDevelopment
Technical Guidance
Trade & WorkingCapital Finance
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Central National Parent Roll Tissue Business Wh e r e d o we p l a y ?
Forest
Pulp Mill,Recycled Fiber
Tissue Mill Consumers
Retail & Distribution
Parent Tissue Roll
Converting
We Operate Here
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Retail
Tissue Mill
Parent Tissue Roll
Converting
The Merchant’s CustomersWh o a r e we s e l l i n g t o ?
Integrated Converters
IndependentConverters
Away-from-Home
or
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100% Structured Tissue
Ultra Premium
Blended Recycled/Pulp or 100% Virgin
Premium
for Parent Rolls in North America
Quality Tiers
Merchant insight into the distribution channels and quality tiers is essential when sourcing product for their customers that achieve the correct price/value relationship
Made of Mostly Recycled Fiber
Economy/Value
Retail Channels
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100% Structured Tissue or High Quality Light Dry Crepe
Best
Blended Recycled/Pulp or 100% Virgin Light Dry Crepe
Better
for Parent Rolls in North America
Quality Tiers
Made of Mostly Recycled Fiber
Good
Away-from-Home Channels
Companies today are doing more business with fewer resources, and the merchant’s role is to help bridge that gap for their clients
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Why Source ParentRolls Externally? • Prepare for New Machine
• Expand Market Capabilities
• Protect Market Share
• Reduce Raw Material Costs and Improve Efficiencies
Spot Transactions
• Immediate and unplanned need to purchase or sell product
• Usually little or no advanced notice
• Supply or demand is typically not recurring
• Immediate confirmation, usually within a day
Medium-Term Transactions• Proactive production and sales
plan outlining upcoming need
• More notice from the supplier or customer regarding requirement
• Fixed supply or demand period: 3, 6 or 12 months
• Business confirmation within 14 days
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• Carefully planned distribution arrangement between mill management and parent roll merchant
Long-Term Agency Agreements
• Long-term planning with 1- to 2-years lead time
• Distribution channels identified and extremely well defined
• Supply is ongoing
• Comprehensive review of sales and marketing plans, capital requirements, forecasting, technical development and workflow process
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3Product Development & Technical Guidance
“There is no such thing as a commodity. All goods and services are differentiable.”
– Theodore Levitt HBR Marketing Success Through Differentiation-of-Anything
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CreditProtection
Logistics &Supply Chain
Sales & Marketing
Trade & WorkingCapital Finance
ProductDevelopment
Technical Guidance
The Parent Roll Merchant Core Services Specializing In
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Technical Guidance
Sample Testing and Variability• Material (primarily pulp variation)
• Process (how the pulp is handled ahead of and on the machine, or other machine settings)
• Sampling (how and where the sample is taken and cut)
• Test Equipment (features and capability)
• Procedure (different test procedures and/or the human factor running the test)
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Price to Value: Bulk + SoftnessProduct Development
Bulk 65 - 90 mils/8 ply
NTTBulk
35 - 45 mils/8 ply
CONVENTIONALTISSUE High Bulk
70 - 105 mils/8 ply
Low Bulk 50 - 60 mils/8 ply
TAD
*Testing based on 100% high quality virgin fiber content base sheets.
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Merchants specialize in identifying opportunities to bring new products to market, helping to communicate the product’s value proposition and pull demand through. The challenge is differentiating their products from the competition.
Where’s the opportunity?
Product Development
Opportunities in Overlap CONVENTIONAL
TISSUE
NTT
TAD
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Parent Tissue Roll Types
Conventional, NTT & TAD
Converting Process
Determines Quality Attributes of Each
Roll Type
Product DevelopmentT i s s u e Tr i a l s Y i e l d N ew D i r e c t i o n s
Finished Products/Attributes
Softness/Hand feel, Bulk, MD, CD, Stretch, Converting
Efficiency
Technical Sales/Data
Sound Technical Data Validates Market Feasibility
Communicating Price/Value
What is the Value Proposition Being
Delivered?
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Consolidation & Mergers
Amazon/Whole Foods
Supply ChainP a r e n t R o l l P r o d u c t i o n / C o n v e r t i n g
MillennialsBuying Habits
New Market EntrantsLidl
EnvironmentalChain of Custody and Stewardship
Increased Competition
IncreasedChannel Fragmentation
Dollar General, DGX
Non Store SalesOnline Retailers
*Contribution by Patrick Boateng, Retail Store Buyer
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Parent roll sales are often an afterthought or stop gap to keep paper machines running
12
Spot Parent Roll Suppliers
Highly competitive business influenced by regional supply and demand
11
Regular Parent Roll Suppliers
97
Independent Converters
• Freight may account for up to 20% of the overall landed price
• Short lead times common due to market fluidity and changing needs
• Longer Supply Chains require more variables to manage
Logistics are critical
Independent converters look to their relationships with merchants to help ensure consistency of supply
Parent Roll Trade North America
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Parent Roll Trade
Market Themes in 2017 • 8 of last 9 Machine Announcements have been TAD,
NTT and, or ATMOS Technology (represents 589,000 tons out of 639,000 tons)*
• Limited TAD Parent Roll Supply in North America
• More availability of NTT as new machine start ups have come on line
• Ability of AFH converters to upgrade certain products (multifold and hard wound towels)
• Demand for solution providers from higher cost, older mill assets having challenging machine trims and limited production capabilities
• Parent Roll demand continues to outpace domestic supply for all grades and quality segments
• Ocean Rate increases coupled with higher pulp costs have made Asian and other parent roll imports less competitive
• Increasing need for customization
• Merchants must be well versed in the production capabilities of the mill and the converter
• Mills rely on merchants to help sell full trim of the paper machine
* Volumes based on Risi statistics
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Looking Ahead • Merchants will have more product categories to
manage as differentiation continues• More long-term agreements with merchants
offering services beyond Sales and Marketing, including Logistics, Trade Services, Technical Guidance and Finance
• Increased demand for merchant services with new market entrants