Forty years ago Nick Gee was on an enforced gap year after leaving school: he needed to resit an exam to get the grades to study to become a dentist. His brother Mike suggested that Nick might man the phones at his new paper sales business while studying. “I was cheaper than an answering machine,” Nick says.
Nick Gee never did become a dentist, but there are no complaints. Between them the Gee brothers have built Denmaur Independent Papers into one of the largest merchanting businesses in the UK, one that continues to have ambitions to grow further, that continues to look forward.
Much has changed since the 1980s. At that time the small business specialised in sourcing and managing the supply of papers for book publishers. It was a time of consolidation for book publishers; it was a time for magazine publishers to flourish. Denmaur stretched into magazine publishers with longstanding marketing director Peter Sommerville joining the Gee brothers at this point. Sommerville retired a few years ago. Nick Gee continues as managing director while Mike Gee, now 70, continues to operate as CEO.
Mike has always been in the paper business, working for a number of businesses to learn the ropes of paper supply and importantly how to run a business like this. The paper business is even smaller than print, consequently networking opportunities proliferated for the young business.
When the opportunity arose Denmaur was born, aiming to work with publishers, which it did for its first formative years. “Mike was always going to work for himself,” says his brother. Many have also set up small businesses: to have a business that remains viable after 40 years is an achievement, partly explained by continuing to change and a willingness to take opportunities when they arise.
For example, at the end of the last century a young business formed by renegades from Robert Horne, trading as Independent Papers, was struggling partly, says Nick Gee, because its opportunity to secure supplies from mills was circumscribed. Denmaur stepped in. “That is when we became a stockist merchant,” he says. “Because we were able to open supply lines for that business, it became profitable within a year.”
A warehouse in Leicester and leading to the central distribution hub model was set up and continues to serve Denmaur well. “The cost of trunking between branches is high and the likelihood that the required paper is out of stock in the ideal location is also too high,” Gee says. “The central warehouse model has worked well for us.”
Close contact with end customers has helped Denmaur stay ahead of trends, leading to development of a strong environmental ethos and sustainability policies before much of the competition. The implosion of Paperlinx in 2015 “was massive for us”, giving Denmaur the opportunity to add to its team. It also led to the company cementing its position as a provider of sustainable papers through the acquisition of the Revive brand for recycled papers, part of the long environmental road the company is on.
Paper consumption was already falling before the collapse of Paperlinx with other changes in the market, mills dealing directly with web offset printers for example, already underway. In this instance Denmaur’s roots in paper management for publishers had already led to it looking after paper for major end users, retail and travel businesses for example. It was timely. With the collapse of Polestar group, there was a big swing to users wanting control over their paper. Denmaur could offer this. During Covid and its aftermath last year, the proximity to publisher customers kept the paper flowing for them even if there were some inevitable compromises. “It was as if we were part of their production team,” he says.
The strong paper management arm eased the pressure that led to other merchants heading towards packaging materials or display graphics media to find growth to replace commercial print volumes – indeed, Denmaur has in recent years developed its own strong position with the carton and packaging sector.
Like two of its rivals, Denmaur has changed hands in recent year. Mike Gee has known Harry Gould for much of his business life and when covenants around the sale of Gould Paper in the US expired an opportunity arose for Denmaur shareholders to extract some value and for Harry Gould to get back in the game. That happened four years ago. Gould can provide the impetus for M&A led expansion while leaving day to day management largely unchanged. Gould is in the UK once a month says Gee.
There have been acquisitions, but not in areas that have appealed to its rivals. In the meantime, Denmaur has led the way in terms of sustainability. Internally, the company has gained ISO 14001 along with multi-site FSC and PEFC accreditation, this being an absolute requisite for being in the paper supply business. There have been recycled and part recycled brands in the portfolio for more than a decade, Revive included. The acquisition of the brand has put the environmental stance front and centre along with a commitment to work with CarbonCo to offset carbon emissions in paper through the World Land Trust.
Denmaur had started to carbon balance the paper it supplied through offsetting in 2016. By the end of the financial year in 2021, it had achieved 100,000 tonnes of carbon balanced paper sales. By the end of this financial year, that figure has risen to 150,000 tonnes, confirming that carbon has forced its way to the top of the corporate agenda.
Now Denmaur has solidified the stance by committing to the Science Based Target Initiative with the goal of cutting carbon emissions by 46% by 2030. “We are the first paper merchant to declare a registered near term target through the SBTi,” says marketing and sustainability director, Danny Doogan. “Though there is only so much you can reduce in terms paper production, we think we have contributed in terms of our services – including carbon balancing.” Electric vehicles, changed lighting and energy sources have played their part while, under pressure from merchants like Denmaur, mills have started to Carbon Balance the paper they produce at source. Doogan has a vast spreadsheet to track the carbon profile of most of the commercial paper grades that Denmaur sells, ready to provide Scope 3 information to a customer where required.
The commitment to the environment is underlined by other product lines that Denmaur has had a role in developing. Ecofoil Digital is a foiled paper or board for digital printing that is certified plastic free, so ending any concerns about end of life recyclability that hangs over foiling. Delipac, another exclusive grade to Denmaur, is a food and drink contact board that does not have the plastic layer that coffee cups and sandwich wraps conventionally use to separate what is inside the container from what is on the outside. This plastic film layer is widely known as a contributor to major pollution and recycling issues. “Delipac was slow to start,” says Doogan. “Now it has taken off, and is being used for drinking cups at major events and festivals, with a major high street chain discussing its adoption due to the mounting concerns around plastic.”
This is not the only incursion into packaging substrates for the merchant. In 2020 it took on board merchant Townsend Board tapping into a growing interest from commercial printers to diversify into carton printing. Denmaur’s Bardon warehouse is run with military precision and has the full set of certifications a customer might want. “We had our first unannounced BRCGS audit last month,” says Gee. It passed without problem – in fact, we were upgraded to AA+.”
The purchase of Townsend was just a preliminary as in June last year, Denmaur bought Middleton Paper comprising a merchanting arm, warehouse and reel converting at Walsall. “Middleton was a very exciting purchase for us,” says Gee.
Denmaur has been taking it carefully. Integration of staff at Walsall has been managed, helped by the continuing presence on site of Jason Middleton. “They are Denmaur people now,” says Gee. The portfolio of grades has been looked at. “We have released some grades, kept others where there was duplication.” One of the key papers was a South Korean paper which was being restricted by the mill because of the cost and logistics issues in supplying Europe in the wake of global lockdowns.
The jewel though will be the converting operation using the line-up of Passaban sheeters to cut down reels into bespoke sheet sizes. This is something that will be popular for carton boards. Where printers and buyers know where they are with standard paper sizes, so can order pallets of paper knowing that there will be a use for any that has been over ordered, this is not the case for cartons. The sheet is more expensive requiring optimal use of the sheet to produce carton blanks. A few centimetres more or less can have a big impact on how a job is laid out and so what size sheet is needed. This will also necessitate the site being brought up to the BRCGS standard alongside the chain of custody, ISO 9001 and ISO 14001 certifications this site holds.
Nor is Middleton the final piece of the jigsaw, or more appropriately, the logo. The group has introduced new branding with a four part logo to represent paper merchanting, packaging, paper management and converting. Further acquisitions will surely come as Denmaur evolves in coming years to take advantage of growth sectors and reduce exposure to the sectors that are slowly shrinking. After 40 years it has managed this process before even if Covid was in itself unprecedented. Fortunately Denmaur had already implemented a cloud based IT network which enabled the business to move to a work from home setting without missing a beat. If Denmaur escaped without heavy damage, the same is not true of the wider industry.
“It certainly stepped up the decline of commercial print,” says Gee, “made worse by the explosion in prices last year which have accelerated that decline. The increases were for genuine reasons but have led to further problems as there was panic buying to build stocks to hedge against shortages which has led this year to lower demand as companies have been normalising their stock levels and mills have cut back on production. Where the mills are integrated with pulp and paper they have done well, while others have fixed overheads and are operating on reduced volumes which has stopped prices falling as much as they should.
“We are optimistic for paper and fibre based packaging in the long term,” Gee continues. “Online retailers will need to use print, either through flyers or direct mail, to remind customers to return to their websites. The move away from plastics to cartons will continue.
“Across the sector we are seeing weaker companies under stress because of rescue loans taken during Covid and having to cope with lower volume. We are seeing the good companies come to the top, the companies that have had the courage to look forwards and not to repeat the same old, same old.”
When Denmaur started out in the 1980s, paper companies were almost the bankers of the industry providing credit terms that allowed ambitious printers to grow in an expanding market. Those type of credit terms are impossible now; the world has moved on. Today’s is a credit risk averse stance and even then Gee admits “it is not always possible to get it 100% right”. The emphasis on service that has prevailed as merchants duked it out with each other continues and next day and same day delivery is still the rule even if the need for this urgency continues to perplex seasoned merchanting professionals. “I can’t imagine that the vast majority of printers do not know what they are doing,” he says.
An ecommerce portal is coming this year and will enable printers to order beyond the hours that its office staff keep. “It will let printers place orders at any time of night and day – when it suits their business rather than ours,” Doogan explains.
Denmaur though is confident. It has recently introduced a line of laminating films, not just standard gloss, matt and soft touch products, but value added items like films with the look and feel of leather or wood. A first deal has already been signed with a major printers.
Those rolls of film can be added to the same delivery drop as the paper being delivered to the customer, a logic that might lead to other product expansions. It will help as demand for paper slides and the number of commercial printers declines. “There will be more packaging products and more innovative materials,” says Gee. “But graphic papers will always be part of the portfolio.”
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