AUDE Advisory Srl

1. The pulp and paper industry has historically been highly cyclical. What structural changes are now having a more lasting impact on the industry beyond traditional supply-demand cycles?

During more than 35 years in the pulp and paper industry, I have seen several cycles come and go. What feels different today is that the cycle itself no longer explains enough. Some of the fundamentals of competitiveness are changing structurally.

I would also distinguish between pulp and paper. In pulp, competitive fiber, energy, scale, new fiber sources and the geography of modern assets are increasingly decisive. In paper, the transformation is being driven more by changing end uses, with structural decline in some grades and new opportunities in others.

At the same time, factors we once considered external — geopolitics, energy security, regulation and trade flows — are now directly influencing industrial competitiveness. AI, automation and robotics will accelerate these changes further.

This is why I do not believe all today’s overcapacity is simply cyclical. Some assets will recover with the market; others will not.

The cycle will remain, of course, but the winners and losers of the next cycle will not necessarily be the same as those of the previous one.

2. How are changing consumer preferences, particularly the shift toward sustainable and fiber-based alternatives, reshaping global demand for pulp and paper products?

Consumer preferences can accelerate change but in my view they cannot create an industrial market on their own. Environmental awareness, generational change and growing expectations around recyclability, traceability and responsible sourcing are clearly creating opportunities for paper, board and other fiber-based solutions but I would challenge the idea that consumers will automatically choose fiber because it is perceived as more sustainable. When economic conditions become difficult, price, quality and convenience quickly come back into the equation. A fiber-based alternative will achieve real scale only if it combines environmental benefits with performance, reliable raw-material availability, consistent quality and competitive cost.

For this reason, I do not see the future as a simple substitution of plastic by paper. Different materials will continue to coexist.

The opportunity for our industry is to use the right material for the right end use and make sustainability work not only environmentally but technically and economically as well.

3. Which paper and board segments do you believe have the strongest long-term growth potential, and what factors will determine their success?

Packaging will certainly remain an important growth area but, looking further ahead, I’m particularly interested in the next generation of specialty and functional fiber-based materials. I think some of the most attractive segments of the next decade may not yet exist at meaningful industrial scale today.

Scientific research, materials science and generative AI can accelerate the development of new fiber structures, advanced coatings, barrier technologies and cellulose-based materials. This can allow fiber-based solutions to perform functions that today are delivered by plastics or other materials and open completely new end uses for our industry.

At the same time, after more than 35 years in this business, I’m cautious when everybody starts moving toward the same “growth market”. I have seen what can happen: demand grows, capacity follows and eventually too much capacity destroys the value that attracted the investment in the first place.

So I would look not only at where volumes may grow but at performance, scalability, cost and, above all, whether there is genuine customer demand. For me, the real opportunity is not simply producing more paper. It is expanding what paper and fiber-based materials can actually do.

4. How are capacity expansions, mill closures, consolidation, and regional shifts in production changing the global competitive landscape?

I think the competitive map of our industry is changing quite significantly. For many years, Europe and North America had a strong industrial position, while new capacity was gradually developing in other regions. Today the speed and scale of that shift are very different.

In pulp, large modern mills located close to competitive fiber and energy are changing the cost curve and strengthening regions that have a clear structural advantage. In paper and board the picture is more complicated. In Europe, we continue to close capacity in declining grades while converting other machines, particularly from graphic papers into packaging and containerboard. In China, at the same time, we are seeing significant investment moving toward specialties and higher-value grades but I would be careful with conversions. I have seen this many times in my career: changing what a machine produces does not automatically create demand for the new product. If too many producers move toward the same apparently attractive segment, we simply move overcapacity from one market to another.

Consolidation can help but only if it creates real industrial advantages and not simply bigger companies and technology may change the picture again. AI, automation and robotics could make some existing assets more flexible and competitive than we would have considered possible only a few years ago.

So for me, the global competitive landscape will not be defined simply by who has the newest or biggest machines. It will increasingly depend on where the assets are located, their fiber and energy position, how flexible they are, how well technology is used and, most importantly, whether they are producing what the market actually needs.

5. What role are changing trade flows, tariffs, geopolitical tensions, and evolving supply chains playing in determining where pulp and paper production will be located in the future?

I have spent most of my career working across international markets and I do not think we are seeing the end of globalization. I think we are seeing the end of globalization as we knew it.

Production cost will always matter but today you also have to consider geopolitical exposure, tariffs, market access, logistics and security of supply when deciding where an industrial asset should be located.

Here again I would separate pulp from paper. Pulp will continue to follow competitive fiber, energy and scale, although alternative fibers could gradually create new production regions. Paper and board have more potential to regionalize, especially where being closer to customers, shortening lead times and having greater flexibility create a real advantage.

We should also watch what happens with digital B2B platforms. They could give producers more direct access to international buyers of reels, sheets and potentially even pulp, changing some of the traditional routes to market.

So I see an industry becoming more regional in some respects but still very interconnected globally. The best location will not necessarily be the place where you can produce the cheapest tonne. It will be where you can produce it, supply it and sell it reliably and competitively.

6. Sustainability is moving from a compliance requirement to a strategic priority. How is this changing investment decisions, product development, and operating models across the industry?

Sustainability is becoming part of industrial competitiveness and I see this as positive but there is one point where I think we need to be very pragmatic: sustainability should not become a justification for investments that do not have a sustainable industrial business case.

I have seen conversions and new products driven by regulatory, political or market expectations that looked attractive at the beginning but where demand, pricing or the economics of the underlying asset were ultimately not strong enough. Converting an obsolete machine does not automatically make it competitive. Sometimes you simply prolong its life while taking capital and management attention away from better opportunities.

For me, this is particularly important for Europe. Europe should continue to lead on environmental standards but it also has to turn that leadership into an industrial competitive advantage. If regulation makes European production structurally uncompetitive and investment moves somewhere else, to regions operating under different environmental standards, we may simply relocate environmental impact instead of reducing it.

Of course, traceability, responsible sourcing, resource efficiency and transparency across the value chain will become increasingly important but environmental ambition and economic reality have to work together. If the transition is not economically sustainable, in the long run it will not be industrially sustainable either.

7. With increasing pressure to reduce carbon emissions, energy consumption, water use, and waste, where do you see the greatest opportunities for mills to improve their environmental performance without compromising competitiveness?

When I started in this industry, a mill could largely live in its own world. We focused on fiber, machines, energy and tonnes. Today that is no longer enough. I think the next big efficiency gains will come from looking beyond the mill and optimizing the whole industrial ecosystem.

There is still a lot that can be done inside the mill: better maintenance, process optimization, energy and heat recovery, water recirculation and well-targeted investments. AI, sensors, automation and robotics can accelerate all of this. Generative AI combined with scientific research can also help us develop more resource-efficient processes and materials but we cannot stop at the mill gate. Mills, suppliers, converters, brand owners, logistics providers, collection and sorting systems, recyclers and commercial channels all need to be more interconnected. Data and AI can help connect these different parts of the value chain.

For me, this is where the real opportunity lies. We have spent years optimizing individual parts of the system. Now we have the tools to start optimizing the system itself and environmental performance, productivity and profitability can increasingly become part of the same industrial equation.

8. How are digitalization, automation, AI, and advanced process technologies changing the economics and operational performance of modern pulp and paper mills?

For decades, our industry followed a very clear industrial logic: locate production close to abundant and competitive fiber, secure energy and infrastructure, and then build larger and faster machines to maximize output and reduce manufacturing cost per tonne.

I have worked on both the industrial and commercial sides of the business and I think AI could challenge part of this logic. Of course, automation, sensors and AI will improve maintenance, quality, energy efficiency and process control but for me the bigger opportunity is connecting demand, orders, pricing, production, inventory, logistics and real margins much more closely, potentially in real time.

Over the years I have seen how much value can be lost through overproduction, downgraded material, stock lots, repulping and excess inventory. So a machine can look extremely efficient from a production point of view and be much less efficient when you look at the economics of everything it produces.

This is where AI could make a real difference. Instead of optimizing only how many tonnes a machine produces, we can increasingly optimize which tonnes actually create value and this may even change some of our assumptions about scale. In certain markets, a smaller, highly automated and flexible machine, operating much closer to real demand, could create more value than a larger machine with a lower theoretical cost per tonne.

For decades we have optimized machines to produce more tonnes. Maybe the next step is to optimize them and the whole system around them, to produce more value.

9. What barriers are preventing more widespread adoption of advanced technologies across the industry, particularly among older or asset-intensive mills?

For me, one of the biggest barriers is not the technology itself. It is whether management really understands what the technology can do, where it can create value and how to integrate it with the industrial knowledge already inside the company. This is particularly important in older and asset-intensive mills.

Capital is obviously another barrier. Industrial AI is not simply a software subscription. You may need sensors, data infrastructure, automation, integration with legacy systems, new skills and organizational change. The investment can be significant and the return is not always easy to calculate in advance and this creates a very understandable concern for management: what if we get it wrong? You can lose competitiveness by investing too little but you can also spend a great deal of money on technology you do not fully understand and end up less competitive than before.

I think the winners will be the companies that combine their existing industrial knowledge with AI, data, automation and robotics, using each of them where they can produce measurable results. If management gets this right, I believe technology could even make some assets competitive again that in the past we might have considered structurally disadvantaged.

Technology is available to everybody. The difference will be made by the management teams that understand where and how to use it.

10. How do you see the relationship between virgin fiber, recycled fiber, and emerging alternative fibers evolving as the industry balances resource availability, quality requirements, and circularity?

I do not see virgin, recycled and alternative fibers as three competing choices. They are parts of the same system, and we need to learn how to balance them better.

Recycled fiber is fundamental to circularity but recycling itself does not create new fiber. Recycled fiber progressively lose quality and some material is lost through each cycle, so fresh fiber has to keep entering the system.

I think Europe could face a particular issue here, graphic papers have historically been one of the routes through which virgin fiber entered the recycling loop. As graphic paper production declines structurally while demand for recycled content continues to grow, maintaining enough good-quality fresh fiber in the system becomes increasingly important.

This is also why I’m interested in alternative fibers such as bagasse, bamboo and other non-wood sources. If they can achieve the necessary quality, availability, scale and economics, they could complement traditional virgin fiber and perhaps create new regional production ecosystems.

Further ahead, AI and materials science may also help us find new combinations and new uses for fibers that today we do not consider viable.

So I do not see the future as virgin versus recycled versus alternative fiber. The real challenge is to keep enough fresh fiber circulating while using every available fiber as efficiently and circularly as we can.

11. As packaging continues to drive demand for fiber-based materials, how is the shift away from plastics creating new opportunities—and what challenges could limit this growth?

I would first challenge one part of the question. I do not think we are seeing a global shift away from plastics. We are certainly seeing substitution in specific packaging applications, particularly in Europe but globally plastic consumption has continued to grow and we should not assume that the plastics industry will stand still, it’s also investing in recycling, circularity, material efficiency and new technologies.

For me this does not make the opportunity for fiber-based materials smaller, it simply means we have to compete for it. New barriers, coatings, fiber structures and advanced materials can open applications that paper could not serve effectively in the past and AI, materials science could accelerate this significantly but we also have to be realistic about economics. 

Consumers may say that sustainability matters to them but if an alternative costs significantly more or performs less effectively, purchasing behavior does not always follow environmental intentions and we should remember that the world is not only Europe. Regulation, purchasing power, infrastructure and environmental priorities are very different from one market to another.

So I would not build a strategy on the assumption that paper will win because plastic will somehow disappear or be regulated out of the market. Fiber-based solutions have to win because they are the better solution for a particular application — environmentally, technically and economically.

12. What capabilities will pulp and paper companies need to develop to remain resilient amid volatile energy prices, raw-material availability, changing regulations, and evolving customer expectations?

I do not think resilience means being able to predict the next crisis. Nobody can do that consistently. For me, resilience means understanding change early enough and having the flexibility to react.

One capability I consider increasingly important is curiosity, both in management and across the organization. Companies cannot look only at their machines, their products or even their direct customers. Knowing your customer is no longer enough. You need to understand your customer’s customer and, ultimately, what is changing final demand and those changes can come from almost anywhere: geopolitics, energy, regulation, environmental priorities, technology or consumer behavior. Sometimes the most important change affecting our industry starts completely outside our industry.

AI and data can help us detect these signals earlier, analyse scenarios and make decisions faster but management still has to know which questions to ask and then be prepared to act on the answers.

There is also a financial side to resilience that should not be forgotten. You need the balance sheet, cash generation and investment capacity to change sourcing, products, technologies or markets when circumstances require it.

So for me, a resilient company is curious, connected to the world around it, financially strong and able to act before a change becomes a crisis.

13. From an investment and business-strategy perspective, where do you see the most compelling opportunities emerging across the global pulp and paper value chain over the next five to ten years?

If I were investing in the industry today, I would be very cautious about putting money into a particular grade simply because everybody calls it a “growth market”. I have seen too many situations where capital followed expected growth and eventually created the next area of overcapacity.

I would be very interested instead in investments that make a company more connected to where demand and value are moving: market intelligence, data and AI, flexible production, logistics, recycling systems and new commercial channels.

I also think partnerships will become much more important. Global B2B and e-commerce platforms — including platforms such as Alibaba — may create new routes to international markets and also provide useful signals about changing demand. Partnerships, joint ventures or selected investments in production capacity in target markets can give access to specific products and customers without immediately committing huge amounts of capital to new, inflexible capacity.

There are also very interesting opportunities around materials science, AI and new fiber technologies, particularly where they can create end uses that do not exist today at industrial scale and I would not ignore existing assets: in some cases technology and better market connectivity may unlock value that the traditional operating model could not.

In a more volatile world, owning capacity is not always more valuable than having access to the right capacity, in the right market, with the right information. That is where I would increasingly look for investment opportunities.

14. Looking ahead, what will define the next generation of successful pulp and paper companies, and what strategic decisions should industry leaders be making today to stay ahead of these structural shifts?

If I were leading a pulp and paper company today, I would start from the assets I already have, where they are located and what real competitive advantage each of them can have in the future but then I would make what I consider a fundamental change in management thinking. We are not here simply to run our machines at maximum capacity because we own them. We are here to use those assets, together with our people, technology and market knowledge, to capture the best opportunities available and generate sustainable, industry-leading EBITDA.

Today we have tools that allow us to understand the world and individual markets at a level of detail that was simply impossible in the past. We can combine industrial experience with AI, real-time trade-flow data, digital platforms and direct signals from customers and consumers. Traditional industry reports are still useful, but sometimes, by the time a structural change appears clearly in a report, the market has already moved but knowing what is happening is not enough. Production has to become more flexible as well. Companies need to be able to adapt their product mix, develop complementary products and, where it makes strategic sense, move into selected components or materials that strengthen their position and I do not believe we need to own everything. If another company has the technology, product, raw material or production location we need, a partnership or joint venture may make much more sense than building everything ourselves.

Management therefore has to keep asking some very practical questions: which assets should we invest in, which should we transform or diversify, where should we partner, and which assets should we eventually exit?

For me, the winners of the next generation will not necessarily be the companies producing the most tonnes. They will be the companies that understand earlier where the world and their markets are moving and have the knowledge, flexibility and courage to move with them.