Anthony Pratt reveals his biggest plan yet for Visy

Anthony Pratt has detailed his ambitious plan to achieve $10bn in annual revenue in six years.

Anthony Pratt at the Visy office in Melbourne. Picture: Stuart McEvoy.

Delivering top-price steaks cooked by celebrity chefs in unique, memorable packaging to a customer’s door. Manufacturing a small number of quality boxes with specific happy birthday digitally printed messages. Packaging with honeycomb or biodegradable bubble wrap.

It is all part of billionaire Anthony Pratt’s biggest plan yet for his box-making and recycling empire: to surf the online retailing revolution on the way to achieving $10bn in annual revenue within six years.

The numbers may look ambitious but Pratt says it is all about having a management strategy that is focused on achieving a particular outcome — in his case, $10bn in sales across Australia and the US by 2026 — rather than endlessly talking about and poring over a company’s processes and hoping an outcome follows.

It is a methodology Australia’s richest person, valued at $13.14bn on The List — Australia’s Richest 250, says many chief executives and boards don’t believe in enough, to the detriment of their customers and results.

“I am totally outcomes-driven, and I think this is a sleeper issue for corporate Australia. There is a tendency to be too process-driven so that you get to a point of saying ‘the operation was a success but the patient died’.

“The Green Bay Packers coach Vince Lombardi once said ‘winning is not everything, it is the only thing’. There’s a move away from that. People should remain outcomes-focused.

“A lot of the virtue-signalling at the moment is one example of being process-driven rather than outcomes-driven.”

Pratt has just overseen a record 12 months for his cardboard box manufacturing and recycling empire, but the billionaire wants another 45 per cent revenue growth by 2026, and believes the online revolution will help deliver it.

His Visy and Pratt Industries, based in Australia and the US respectively, made about $1.49bn in pre-tax profits from revenue of about $7bn in 2019, though Visy’s huge Tumut paper mill in NSW is currently battling bushfire-related problems.

A fire nearby has affected about 40,000 hectares of state and privately owned pine plantations, about 25 per cent of pine in the region, which may hit supply for Visy.

The family Pratt Foundation has donated $1m to bushfire efforts via the Foundation for Rural & Regional Renewal to support Tumut and surrounds.

Looking forward, Pratt is bullish and insists the technology boom will help drive sales at a far faster rate during the next decade than ever before.

Pre-tax profits were up about 15 per cent compared to 2018, which was Visy and Pratt Industries’ previous record result, as the companies continued to benefit from US President Donald Trump’s tax cuts and changes and organic growth in Australia, as well as a lower Australian dollar that helps drive food exports for its agriculture customers.

The $10bn revenue target will be achieved with the building of two new large paper mills in the US by 2026, both of which will deliver about $US1bn in additional annual earnings, and continued growth in Australia, where Visy already has about 55 per cent of the corrugated box market.

At least 20 per cent of that growth he believes will come through innovative box-making practices tailored towards clients who deliver to consumers directly, which is where Pratt’s ideas for uniquely tailored packaging come from.

“Wolfgang Puck said to me that even his classy restaurants like his Spago (in Los Angeles) are not above home-delivering. He wants the opening of the box containing the meal he has made to be an event for the customer. He thinks there is going to be a market for a beautiful box for food.

“So we are working with our key customers, if you are a Walmart or Woolworths or Coles, to do packing for both in-store and also for shipping direct to the consumer. It is not one or other, it is going to be both.

“What that means is more boxes and more paper. The specialty boxes will be higher-grade with personalised printing, and the traditional boxes will be made with less space wasted inside.

“We already have paper which wraps around fishing rods. Then you could have, for example, honeycomb instead of styrofoam inside a box. You have to be part of the internet revolution to be big. If you don’t, you’re doomed. Manufacturers have to be internet-savvy.”

With that in mind, he reveals that Pratt Industries has recently established a new online business called Brandable Boxes, which will shop custom-made personalised boxes to online businesses in small batches to complement existing and bigger deals with companies like Amazon and Home Depot. It has meant a considerable investment in technology that allows the printing of personalised digital messaging for Pratt Industries across several of its factories.

“We are selling to online people who may only want 50 boxes — usually people order millions of boxes — with their names on it,” Pratt says.

“We now have the technology that enables us to run a very short run with a particular name on the box without the (larger) set-up costs.

“We have the assets on the ground and now we want to really go after the online box market. We want to be the go-to company for people like the (shaving kit retailer) Dollar Shave Club, for example, where all of their sales are online.”

Pratt says his company has also developed boxes for online retailers like Net-a-Porter that allows dresses to be sent back in the packaging they arrived in, rather than the customer having to travel to the post office for a new box.

There are also tamper-proof boxes, a new collapsible box designed to cut own down on waste for consumers, and a padded envelope with a type of biodegradable plastic that will decay, to be used instead of bubble wrap.

“People are much more conscious of sustainability. Another example is instead of styrene being in a box with the food we have come up with a way of keeping the box cold for three hours using paper inside a box,” Pratt says.

“All of these are innovations which have sprung from the online retailing revolution. Our research and development is sending people overseas to look for things which already exist.

“We don’t have people in white coats in labs. Instead, we send people all over the world to look for (ideas) and bring them back. For us, a study trip is going through a supermarket in Sweden and looking at all the packaging. It is not rocket science.”

Pratt Industries has built five of the last six big paper mills to be constructed in the US — where 100 paper mills have closed since 2000. The latest was the $US270m facility at Wapakoneta, Ohio, opened by Trump and Prime Minister Scott Morrison in September.

Pratt has long been an admirer of the US President and ­famously bet $100,000 on Trump to win the last US election after watching the third presidential debate in October 2016. He has since gone on to build paper mills and cardboard box factories in the rustbelt states that swung to Trump in the election four years ago.

He is a big fan of the President’s policies, including tax cuts and accelerated depreciation schedules for big capital investments, which have helped him quicken the pace of his mill building. He celebrated New Year’s Eve at Trump’s Mar-A-Lago resort in Florida.

Pratt said the Ohio facility was already his company’s best performing mill. When asked where the next two would be built, he said he would not be surprised if they were constructed next to existing facilities in states such as Indiana, near Chicago, or Ohio.

“The American economy is booming and I think with what President Trump did with his tax cuts and one-year write-offs was lowered the cost of capital, which led to people building things and then more demand for labour, which has led to wages growing. I’m a fan of wages going up.”

As for whether he would support the president’s re-election campaign this year, he said: “I told him that we are building our next big operation in the state of Pennsylvania, and I know that is a big swing state, so we will see what happens.

“I think he will win the next election.”

The author travelled with Visy Industries.