The Australian envelope market is down but not out as the sector regroups in the wake of recent corporate acitivity.
Market intelligence service Pulp & Paper Edge (PPE) reports that Australian Paper’s recent acquisition of the assets of two envelope over-printers has “churned the market, created a flurry of merger and acquisition activity” and has resulted in reduced envelope imports.
In a year when Australia Post “stunned the direct mail sector” by dramatically increasing delivery rates, many in the paper and printing industry considered Australian Paper’s asset acquisitions to be at least curiously timed, PPE said.
However, on closer examination of the sector and its supply chain, the purchase of assets from Trade Envelopes (Queensland) and Envelope Specialists (Western Australia) makes far more sense.
According to PPE, what is most important in these acquisitions is that Australian Paper purchased no envelope manufacturing equipment or trade and removed no envelope manufacturing capacity. What it acquired, in bothcases, were over-print assets of businesses that bought envelopes and printed on them for their trade customers.
PPE estimates Australia’s total envelope market currently approximates 3400 million envelopes per annum with an additional 600 million envelopes per annum in the New Zealand market.
The total market has declined approximately 10 per cent, with the major factor impacting the market being Australia Post’s price hikes for delivered mail.
In that context, the decline in the number of envelopes in the market may well continue, but the worst may well be over, PPE said.
Major commercial users of direct mail are expected to continue to use mail and therefore envelopes in largenumbers, for marketing purposes, as well as for billing. That situation is unlikely to end quickly, making the totalmarket a little more attractive than it may otherwise look on initial examination.
Candida Stationery, the second largest envelope manufacturer after Australian Paper, manufactures in New SouthWales and in New Zealand. In June, seemingly in response to Australian Paper’s acquisitions, Candida Stationery purchased the assets of South Australia’s E.S. Wigg & Son (the third or fourth largest envelope manufacturer in Australia).