In the first of two articles on how the Millennium Effect will impact paper consumption, the outlook shows a positive result is on the cards
by Mikael Selling
Producers look to benefit from the Millennium Effect
For many paper pulp and paper producers, the advent of the year 2000 has mainly meant worrying about whether computer systems will be able to cope with the change in date from 1999 to 2000. But as companies have grown more confident about their ability to make a smooth transition without any devastating technical failures, the focus on the year 2000 has switched in recent months. Instead of worrying about their computers, many companies are beginning to contemplate the possible positive impact of the event on paper consumption.
Recently, the Swedish consulting group, Opticom, undertook a series of extensive interviews to try and gauge what effect, if any, the millennium celebrations will have on paper consumption. The study concentrated on newsprint and magazine paper consumers across Europe in a bid to evaluate plans for celebrating the occasion. According to the group, the study clearly shows that the millennium effect that everyone has been speculating over will indeed happen, but determining how much extra paper will be utilized is still far from easy.
The report indicates that there are several scenarios that could offer the prospect of increased consumption as the year comes to a close. Some newspapers and magazines confidently predict volume-driving changes in current editions. For example, circulation increases may be generated within current editions and added to that there could be any number of new product launches. Not only that, but increases in pagination and advertising spending levels could also help create a consumption blip for publication grades.
The background
During the course of the study, the consulting group conducted interviews with key contact people within 124 newspaper, magazine and media brokerage groups across Europe. The questions were designed to get a comprehensive view of the markets and the respondents were selected in such a way that a significant number of key players in each geographical region were included. For example, in the UK, representatives from 19 newspapers and 20 magazines were questioned, with similar numbers interviewed from publications based in France and Germany. The Mirror, La Libération, Le Figaro and Die Zeit were among the publications represented on the newsprint side, while the magazine sector saw contributions from Reader's Digest, Femme Actuelle and TV Movie. Among the media brokers contacted were Carat International, TMP Worldwide and Universal (McCann Ericksson).
Depending on the area under investigation, between 16% and 33% of the newspapers and magazines had difficulties in answering the questions regarding the millennium. But as Opticom pointed out, this is often in the nature of things with these two target groups. Many of the respondents said that they are still planning, or have not yet planned their strategies in regard to the millennium.
The fact that there are a large portion of "don't knows" also means that some in this group could potentially add to the consumption gain, in addition to those who have already said that they will be using extra paper.
The results
On the basis of the study, it appears that 45% of the newspapers and magazines contacted expect to be publishing millennium specials to take advantage of the switch in date, while a quarter believe that the event will have a positive impact on circulation levels. At the same time, two-fifths of the magazine and newspaper representatives expect to see the millennium influence pagination and/or advertising spending levels.
With responses such as these, it seems clear that numerous newspapers and magazines are planning to realize "millennium plans" of such magnitude that considerable increases in paper demand can be anticipated. Unfortunately, being able to say that there will be an effect is not the same as being able to state what that effect equates to in tonnage terms, as the consulting group is candid enough to recognize.
Clearly, the variables influencing the equation are many and varied. For example, a change to an existing edition could simply mean that one supplement is dropped and replaced by another. On the other hand, a new product launch would suggest increased consumption. But trying to second-guess the effect of the millennium on circulation increases, extra pagination and improved advertising levels is a particularly difficult task, especially given the fact that the event is still some way off.
Opticom though, has tried to make some assumptions and offer its own ideas of where the consumption increases could come from and how much extra tonnage that will invlove.
Taking a basic model, the group has assumed that a normal daily newspaper is published 350 times per year and the average magazine once a week. The group has also taken planned millennium projects as constant and evenly divided over a 30-day period of time (15 days before and after). The group has also assumed that planned supplements and/or new products, increased pagination and/or increased advertising, and increased circulation each contribute an increase in the published editions total paper consumption of somewhere between 1% and 5%.
By extrapolating the results with the initial variables obtained from the study, Opticom believes that the millennium could lead to an increase in total demand (on a yearly basis) of newsprint and magazine papers of 0.8-1.5%.
Where next?
Given the relatively high capacity utilization rates among newsprint and magazine paper producers, the consultant concludes that even a conservative increase in paper consumption could produce dramatic consequences for the sector. Given the potential logistical problems that such changes could create along the supply chain, producers are recommended to inform their partners along the distribution chain that the millennium will have a significant impact on paper consumers.
For producers though, there is another possible effect. According to Opticom, the millennium effect could positively impact prices. The group points out that it may even be possible for producers to bring the psychological effect of the millennium change to bear on the market, even at this early stage.
Mikael Selling works for Opticom International Research, a global market research and consulting firm based in Stockholm, Sweden. For more information, the company can be contacted by phone on +46.8.50.30.90.00 or by e-mail at info@opticom.se.
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