RISI Economists: US households could see lighter mailboxes this holiday season

BOSTON, MA, June 26, 2008 - RISI, the leading information provider for the global forest products industry, expects that publishers and marketers could sharply scale back plans this fall for catalogs and direct mail.

A weak economy, poor retail performance and slumping print advertising revenue combined with sharp cost increases for paper, postage, energy and transport are eating into budgets. In addition, most paper producers have announced a US$50-60 per ton price hike for July on coated mechanical paper -- commonly used for glossy catalogs and direct mail packages -- as they face year-over-year manufacturing cost increases of 12-14% in 2008 due to escalation in energy, wood, transport and chemical prices.

Printers are caught in a squeeze between these struggling factions, causing some to file for bankruptcy.

RISI economist John Maine explained, "At RISI we have been predicting a major reversal of the trend in North America towards increasing consumption in coated mechanical paper. New data from the PPPC (Pulp & Paper Products Council) show that the turnaround showed up with a vengeance in May: North American demand declined a whopping 13.5% as printers and other end users started cutting orders sharply to match the performance of their true consumption of paper, which has been very weak all year, and use up their excess inventory."

Maine continued, "If the producer price hike on coated mechanical goes through as announced, printers and direct marketers will have to sharply scale back plans in the fall to remain even close to budget. Producers are faced with the unenviable choice of absorbing higher costs or forcing customers to cut back on their business. Neither option provides a healthy outcome for the industry."

About RISI

RISI is the leading information provider for the global forest products industry. The company works with clients in the pulp and paper, wood products, timber, tissue, nonwovens, printing and publishing industries to help them make better decisions.

Headquartered in Boston (Bedford), Massachusetts, RISI operates offices in Brussels, Belgium; Atlanta, Georgia; San Francisco, California; Portland, Oregon; São Paulo, Brazil; Shanghai, China; Singapore; and Charlottesville, Virginia. More information can be found at www.risiinfo.com.