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00:00:20.000Welcome to Distribution Unpacked. My name is Charles McLaughlin and with me today is David Fucina. He's the channel development manager over at Double A. David, thank you so much for being on the show today.
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00:00:27.000Thank you so much, Charles. It's lovely to be here. I am a longtime watcher and first time participant.
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00:00:28.000Love that.
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00:00:32.000It is an honor and thank you very much for the opportunity to bring me out here.
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00:00:44.000Of course, we're thrilled to have you as a representative of the paper community here. Before we get too deep into it though, David, I'd love for you to take a quick moment to just kind of introduce yourself and your role at aa.
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00:01:55.000Sure, sure. So. So as you said, my name is David Fusina. I've been with AA for about 10 years almost, which is kind of hard to believe it's gone that quickly. But I am the channel development manager located outside of Philadelphia in the South Jersey area. I have a counterpart. Her name is Tamar Cheadle. Many of you guys know Tamar. She's been around for about 15 years and for the most part, her and I have split the US down the middle. Obviously, we share our national distributors while each of us focus on the regional consumers and as well as the regional distributors, everybody in the SP Richards family. If you're a distributor on the left side of the country, she'll probably talk to you. If you're on the right side of the country, I'll probably talk to you. I am also happy to report that our US team is growing. We just hired a new general manager in Chicago. His name is Brad, Brad Pelhank. And he's been with us for approaching five, six months, I think. And we are also looking to add some additional sales and marketing support.
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00:01:56.000So it's good.
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00:02:05.000It's good stuff. It's good commitment to the United States market from aa and we're excited to grow and learn all about what we can do.
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00:02:17.000That's exciting. I mean, we're always looking to get new sales connections with our supplier partners. Glad to hear you guys are expanding across the map. Been working with Tamara for a while, so it's good to give her a shout out as well.
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00:02:19.000She sends her best. She sends her best.
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00:02:53.000Oh, fantastic. Yeah, well. Yeah, well, we had a lot of fun at Supplier Summit back in the spring, so looking forward to connecting again soon. So now that, you know you guys have been in the market for a while now and now you're expanding, I mean, it seems like there's a lot of interesting momentum going on with you guys at aa, I was wondering if you could speak to some of that, give us some of the trends that you guys are seeing that maybe have led to some of this sales expansion or are there any other market trends that you guys are kind of eyeing right now in terms of this rapidly changing industry that is the wholesale distribution channel?
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00:05:29.000Couple things. First, let's talk a little bit about what's going on in the U.S. paper market. Right? So obviously domestic mills, they supply 80 to 90% of the overall consumption in the U.S. they're the big dogs, they're the big players, and it's great. They have good products, they have competitive pricing, they have different brands, everything. So that's what it looks like right up front. Now they're also evolving though. They close mills sometimes they rationalize products. They convert from fine papers to other paper products, packaging, you know, the booms in, in Amazon and home delivery, all the sudden we need more boxes and, and, and shipping materials. So as a result of that, you know, those domestic mills do everything that a robust and vital company will do in order to maintain their robust and vital business. So. But as a result of that, it does adjust the supply. And that's kind of where the import mills come in. That's myself. AA produced in Thailand. That's the gap that we fill when there is a change in demand, when there is a change in supply, that's the kind of material that we soak up. And obviously there's definitely room for premium quality suppliers, both domestic and abroad. I do take great pride in the fact that AA is a responsible partner to the United States. Thailand has traded for years in the United States and will continue for, continue trading. Responsible employer, responsible to the environment. We're a responsible competitor and we make an outstanding premium quality sheet. So the other thing that you got to look at though, when you talk about the world market is that, yes, we're produced in an area not in the United States. And that does make us susceptible to world events, right? I mean, yeah, wars, tariffs, trade wars, all of that stuff. It happens and we have to deal with it. Which, which we have. And I think that's really the message is that we've always managed to figure out where we fit in, how we fit in. Our ownership team loves the US they want to continue to play in the US Market. As I said, there's room for us. And so it's good, it's a good relationship and we are able to take advantage of some different shifts in supply from around the world. And I think that's kind of part of the reason why we have grown to where we are now.
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00:05:57.000Absolutely. And thank you for that insight. To me, when I think of AA in our channel, it's the premium quality paper, right? That's kind of where you guys have built your brand. I'm kind of curious to David, where you think the premium copy paper plays the strongest in this world of wholesale distribution? Like, where do you see the premium paper being most widely accepted? Like, what customer base?
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00:06:38.000Sure, sure. And that's a, that's a good question. You know, and it's an interesting question because we have, we've already had some success in the United States. Like I said, we've been here for 10 to 15 years. We're still relatively new from a brand building standpoint. But when you look at who really loves AA paper, you start with law firms, right? Lawyers, they print a lot of material, they read a lot of material. They like to have that smooth, thick, firm white sheet of paper. And I think if you would look at how we stack up and what our most vital vertical market is, it would start with law firms.
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00:06:39.000Interesting. Yeah.
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00:08:19.000The next, the other one that's sort of interesting, but it's growing and it's very intriguing to us and we've really started to target it is healthcare. Okay. So you think about all the different, all the different urgent cares that are popping up, the emergency rooms, the hospitals in general and everything else. So what's the first thing that happens when you go into a place like that? I mean, you're scared, right? You typically aren't going to walk in there when, when your life is going very well. So, so you're already a little bit, a little bit sketchy. What's the second thing you do? You look around, you see it's either going to be very nice and clean and welcoming, or it's going to be dingy and dirty. And, and so with that, that's kind of a reflection of that facility's quality of care. Right. If you walk into a place that's organized, clean, smells good, nice people and everything else, you're going to have a very good feeling that they're going to take care of you. Trickle that down now to when you get your, your sign in paperwork or your discharge paperwork, when that's on a nice premium sheet of paper, again, it's a reflection of the brand of that hospital, a reflection of that care. And again, just like you want to make sure that you have a good solid lawyer that's going to print his documents for you on nice Sheets of paper. You got the same thing with the healthcare industry. And so, and again, the demand in that segment is growing as well. Like I said, with the urgent cares and the emergency rooms growing up around and everything else. So that's definitely an area that we are putting some focus to.
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00:09:37.000That's really interesting. I know healthcare for us has kind of exploded as a targeted vertical market. And you mentioned legal firms as well. I think that's been a long standing customer base for our distributor partners. It's, it's places that, you know, in an increasingly digital age, still heavily rely on physical copy paper. A lot of times are required legally to have files and paper and things like that. And it's interesting you talk about, you know, it being an extension of the brand, right. Because you have so many of our, you know, customers who have their own call it a, like a white label copy paper line. You know, they're like competing on that price point. And you think about like, you know, as a consumer, like an end user constantly looking for, I just need the cheapest copy paper. Right. For my home use. But that's, those aren't the markets that you guys have targeted. And I think that a lot of our customers, especially when they're looking to, you know, penetrate new markets, whether it is a non acute facility, an acute healthcare facility or maybe a local law firm they haven't knocked on before, being able to have those, those gap fills, like you said, offering that premium brand extension, places that rel. Rely on quality and, and also rely on paper at the same time. Right?
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00:09:49.000Absolutely, Absolutely, absolutely. So yeah, very well said. And yeah, that's, that's just some of the, the areas that we're, that we're focusing on right now. So yeah, so overall it's, it's, it's been good.
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00:10:41.000It's interesting to see all of those different market opportunities appear. All those vertical market opportunities, I think for us when we talk about how, you know, we grow as in wholesale distribution, it's all about how do we get our customers into new vertical markets? How do we get them, you know, selling into new products and acute healthcare facilities just in general are a huge part of that. So building on that, I'm kind of curious to know like, okay, I mentioned that our customers do are very familiar with the copy paper business. Potentially a lot of them are longtime office products dealers. But how can they take advantage of this expanding salesforce that you have have and this premium product that you have to really succeed going into the, into the next year and taking advantage of some of these trends and markets that
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00:11:00.000you're referring to, a couple things. Let's start first by talking about education. Okay, sure. This is sort of a twofold kind of education answer. First, there's the education industry. Right. Where I would like to give a shout out to Harry Clow.
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00:11:03.000Shout out to Harry over at Newell. Yeah, Newell Brand.
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00:11:07.000Yeah. Like I said, I've been watching, I've been watching the show for a while and there you go.
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00:11:08.000Yeah, friend of the show.
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00:14:33.000Exactly. It was very interesting. So Harry works for Newell Brands and he talked about, he sells pens, right? Pens, markers, all this creative stuff. And he talked about the resurgence of incursive writing and in the schools. Right. So it accesses a different part of your brain when you are putting pen to paper rather than just interfacing with the screen. And I was like, wow, Harry, that's fantastic. You and I are reading the exact same studies. And yeah, what applies depends also applies to paper. Now I'll take it even a step further. So I have two kids that are going back to school next week and one's in private school, one's in public school. I live in New Jersey. And both of them, both of their schools have a new cell phone policy called off away all day. And so again it's, it's that trending now more towards keeping the screens away and letting the kids interact with, with everything. And that includes more printed material on paper, that includes more tablets for them to write on, that includes making paper airplanes and throwing it at the girl sitting in front of them. And you know, all the great stuff that paper does. Now you may ask like, well, is, does AA really fit into an education platform? Because maybe some of the products are a little bit different, maybe it's a little bit more price conscious and everything else. And my answer would be that yes, we do sell to certain schools and there's other ones that, that we don't. But the point is, is that somebody is supplying those schools. So maybe it's a lower end copy paper. And that gets back to the original point that I made about a shift in supply and a shift in demand. Somebody has to soak up that extra stuff. So that takes away from some of the other products that are available in the market currently. Sure. So that's my, that's my quick, maybe not so quick explanation of the education market. But you also asked the question about how, how to, how we can succeed. And as far as double A is concerned, when people try double A paper, they really, really like it. It's a very Sticky brand, meaning that once you try it, you don't want anything else. And the best way for us to, to help and help our customers and get it in front of more and more people is to deal directly with, with the SP Richards customers, that whole dealer community, the independent dealers and everything else. And, and that's what Tamar and I are currently doing. But yeah, the United States is a pretty big place, right. So for two people to just cover all of those areas can be. And I think that's leading to why we're getting some additional help because we want to attack that and our whole goal is to educate the customers, right, Educate them on how our paper is made. The sustainability story of our paper, which we can talk about soon. But, but there's so much to the AA story and we really want people to know it and understand it so that they can then explain it, to explain it to their customers. I mean there's no, there's no, you don't really need to explain the quality of our sheep. When people try it, they see it, they see it immediately. It's a great sheet of paper. But when you couple that with the sustainability story, that's when you get a really, really interesting, compelling story for a
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00:15:19.000customer that makes a lot of sense because like for customers to succeed, it's to understand that need for the premium brand and the understanding that there's a time and a place where it makes a considerably measurable difference. I think anyone that hold the paper in their hands would understand that's used to handling more economical copy paper would understand that too. Right. So it's just having that good, better best offering available and to lean on you guys when best is on the table. Right. Whether that's education or otherwise. I find it interesting too, you mentioned this sustainability play because you don't often combine premium paper good with being sustainable. You want to get a little bit more into how you position the brand balancing both of those things.
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00:18:31.000You're right. It's challenging to make a very high quality sheet while keeping an eye on how sustainable it is and that. But trust me, that is exactly what has built AA from the very beginning. So as far as sustainability goes, that's everything that we do. There's many different projects going on at the mill in Thailand which is a state of the art mill. And the goal for the mill is actually a 25% reduction in carbon emissions by 2030, carbon neutrality by 2040 and net zero emissions by 2050. So how are we going to do that? What kind of stuff is going on. So already we're using electric transport vehicles throughout the mill, EV battery, and that's where the first thing started. We have solar panels all around the mill to generate electricity, used basically for the internal workings of the mill, not really the production aspect, but you know, the offices and the lights and all that sort of stuff that's really driven by solar panels. Now we have our own reservoir that collects rainwater and that water is used in the paper production. So that's another, another project that we have going on. And you know, at the heart of it, we grow our own trees. That's really the story. And if you're not familiar with aa, that's been the story of AA from the beginning. So I guess way back when they designed a eucalyptus tree, they enhanced it, and now it's called the paper tree. It's faster growing than a normal eucalyptus, has a higher fiber density, which affects the quality of the sheet and the number of fibers within each square meter of it. The trees are planted by local farmers across the country and they plant them in between the rice fields. So now you're taking advantage of unused land, right? You're putting a tree in an area where there was nothing before. The trees grow in about three to five years they're harvested and double A purchases them, giving extra income to the farmers, extra income to the local communities. And, and again, it's a cycle cyclical, sustainable process that gives us an excellent raw material for the production of the paper. With that you have, you have, you know, once you get the, once you get the tree, what makes the cut for paper goes one way down the assembly line. The other stuff that gets stripped off the leaves, the bark and all that goes the other way that then gets, gets put into the biomass electricity facility. So we're generating our own electricity for the paper production. We got the water from the reservoir. No waste is wasted. It's a pretty compelling story and one that AA is very proud of. And again, and the key to it, like we talked about, is how do you do quality with sustainability. The key to it is the tree, because the tree is a super enhanced tree. Much, much higher fiber density than other trees. And that's what gives us our super smoothness and in the body of our sheep.
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00:19:19.000That's incredible. It sounds like you guys have built like a systematic, you know, a system for not only just being more efficient with, you know, your materials and your usage and all that, but you're also building it from the brand story. It's just when you practice like ethically and Systematically, sustainably. It lifts the whole brand, it lifts the integrity of the, of the whole system around it. It gives you that kind of, that staying power, which is fantastic. And for those listeners at home that maybe aren't as familiar with, like the forestry paper pulp industry, how unusual is it to have not only grow your own trees, but to have, like, certain tree varieties that you guys kind of own, you know, is that like an unusual thing?
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00:19:53.000I think the fact that we've developed our own eucalyptus, I think, is probably the most special of the sauce. You know, most of the domestics, they're very responsible in how they do it as well. There's no more clear cutting. They replenish their forests. They do all the right things. But the type of tree and the consistent raw material, that's kind of what sets AA's apart. And we only use, we only use that. Those trees for the production of our. Of our paper. So that, that I think is really what sets us off and makes us a little different than some of the other products that are out there and
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00:20:35.000continues to bolster up that premium brand offering. Right too. Absolutely. You can't just replicate it somewhere else. You know, it's the unique look and feel of the brand, which is, which is awesome. So, David, we'd like to wrap up these, these episodes with a closing question. You know, the tagline here at sp, Richard, just simplifying complexity. The idea of taking this complicated world of wholesale distribution and through whether it's service, assortment or, you know, supplier partners, simplifying it for our customers to be able to, you know, succeed in their local business. So with that said, like, how is AA simplifying complexity in this wholesale distribution space?
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00:21:21.000Great question. I didn't see that one coming. So, simplifying complexity. And yeah, it's a really interesting question now, so I'll answer it this way. I mean, first of all, is it easy to plant a tree, harvest it, turn it into paper, somehow ship it across the world, put it in a warehouse, and ultimately getting to a. Getting it to a new employee who's working on her first big presentation and wants it to look pristine and be the best thing that people have ever seen or felt? Is that easy to do? No, it's not. There is a lot of complexity in order to make all that stuff happen. But you know what? It's something that we do every day. It's something that we do with great partners.
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00:21:22.000Right.
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00:22:21.000We have great sales channels, we have great educational materials available, great product placement with our wholesalers like S.P. richards. And we could not thank you all enough for really taking that complexity out of it and going from here forward and saying here, here's a great product that you can use. You don't want to know what goes on back there because there's a lot of work to get it here. But here it is now and that's how we are trying to simplify it. Ensuring that that customer journey to our product is direct and clear. We want to educate the customers, we want to educate the salespeople so that they understand it and can deliver it to end users with confidence and understand it. The other thing that I just want to mention a little bit off the bat, I mean, yes, it's difficult to get the paper made, it's difficult to get it here, but we only have three SKUs.
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00:22:27.000That's what I was going to say. I was, yeah, from a SKU density perspective, it doesn't get any simpler than three SKUs.
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00:23:23.000Does not get any simpler than three SKUs. And so it begs the question, you know, could we maybe become a little bit more complex and maybe we could introduce, I don't know, maybe some different carton sizes, maybe you know, a five ream, a three ream, an eight ream, something along those lines, maybe some different basis weights, maybe a 24 pound as well as a 20 pound, maybe a 26 and a 32, maybe a, a 12 by 18 size or a 13 by 19 to handle some of the digital printers that are out there. So I said all those things and yes, we are working on all of those things right now and I will tell you to pay attention in 2027 we may even have some them available towards the end of this year. So yeah, I think that's, that's another thing where we're not going to go completely crazy to where in 2028 we need to rationalize SKUs. But sure, we have a little room
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00:24:50.000to grow right now. And so that's kind of the thing. Yeah, I mean, yeah, go back and ask our friend Harry Clow about how he feels about his skew assortment. I'm sure have the opposite story. You know, having to have every color, tip size, pack size, all those different things, colorways, all that stuff. So no, I think what you said is true. There's something to be said for like being the go to premier premium copy paper line, having this streamed assortment, having the expanding sales team. It's, it's a compelling, it's a compelling story especially as we're as customers or dealers are looking to expand into new markets that may demand that kind of quality paper that they hadn't considered before. If they're just used to selling economy line, you know, white label stuff by the truckload. Now they're trying to, you know, sell janitorial sanitation stuff to a hospital and they also want to sell copy paper. They may have to step up their game a little bit. Right. So it's just interesting to have those options available. And you know, you guys are on call always, of course, for those channel needs and it's, it's an exciting stuff and I'm looking forward to all the stuff you teased about for 2027 and to see how you guys kind of expand, Whether it's through product or sales or into new markets or anything like that. It's always, it's always great to watch. Well, you know, David, thank you so much for your time today and for lending us your. Your thoughts and your expertise. We, we greatly appreciate it. Is there anything else you want to say as we wrap up today?
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00:25:06.000No, I would just. Just a big thank you. You know, I'm so, I'm so pleased that we were able to. To get in front of you, get on this show. It's. It's a very cool, it's a very cool thing to do. I'm definitely nervous about coming on, but you put me quite at ease and.
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00:25:07.000Great.
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00:25:29.000Hopefully we got some good information out and. No, no, for all the dealers, please give us a call. Talk to tomorrow. Talk to myself. Talk to your sp Riches dealers with any questions. We have sample kits available. We have, you know, custom marketing materials, all that sort of stuff. We're more than willing to, to help you out because we are all about growing double A and you're having a good time, so. Very good.
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00:25:37.000Awesome. All right, well, David, thank you so much for your time today and everyone at home. Thank you for listening and have a great day, everybody. See you later, David.
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00:25:50.000Talk to you soon. Bye.
