Looking at the future of cellulose
If you're a pulp supplier in it for the long term these days, there's no standing still. It's been clear for a while that real demand in traditional end-use markets such as graphic papers is not going in our favour and we'd be foolish to think that's going to change.
If you've looked at Södra PulpLabs recently you might be forgiven for thinking Södra is looking for an exit from traditional markets, but you'd be mistaken. It's true that we've been demonstrating what pulp can do in the form of a lamp and a children's chair. It's true that we're working with a leading Swedish extreme sports company to make disposable crash pods for extreme sportswear. It's true that we're keen to be at the forefront of innovation within the industry.
You might even have seen the on-line clips of our lab teams working on everything from biodegradable bubble wrap to bike helmets and wondered what these have to do with paper. These projects are intended to show what cellulose can and could do in the future, both in new fields, but also for our existing customers.
Only scratched the surface
The new bio-composite DuraPulp has only scratched the surface in terms of applications for speciality papers and moulded packaging, for example. We're spending a considerable amount on R&D to find out what other uses there could be in the future for cellulose that we haven't yet discovered - innovation is a prerequisite for success and we firmly believe that there is a host of applications out there waiting for a more sustainable solution which cellulose will be able to provide.
However, our long-term vision is that traditional markets are still very much our business - we estimate that new products will account for around a fifth of our revenue in 2020 - 80% will still come from traditional markets. In contrast to the graphic grades, the outlook for tissue and packaging grades looks positive and we want to be the supplier of choice for papermakers when it comes to performance, environmental credentials, logistics and service initiatives.
Sadly, every company has to make choices and the recent announcement that we intend to divest Folla (CTMP) is an example; we've tried to make it profitable, it hasn't worked, we have to change. No business can afford to lose revenue over a sustained period -we have to face up to our changing position in the new world order and serve our customers from a position of strength.
For us, that means meeting the current and future needs of our existing customers just as much as it does finding new ones. Our hope is that on the journey to discovering new applications and products, we will enhance what we're already doing, and that means making the best market pulp that we can.