In this briefing, Smithers Pira examines the state of the European printing industry specifically in terms of the performance and next steps for various printing equipment and processes.
Printing equipment
Challenges continue to present themselves throughout Europe for traditional printing equipment suppliers.
Investment in offset machinery is still falling back, and there are few examples of major investments in web offset occurring. There are exceptions; flexo and gravure printing equipment sales have held up better due to the recovery in packaging output, although sales of publication gravure equipment are still depressed.
On the other side of the coin, digital print has been on the receiving end of much investment and has remained buoyant in comparison to other sectors. Leading German machinery manufacturers have been among those seeking to link up with Landa and their new offset digital nanography technology. Ahead of full-scale commercialisation it is difficult to assess the impact of Landa's technology yet, though sales of digital printing equipment as a whole are expected to grow strongly over the next five years, with inkjet in particular making inroads.
Overall, sales of printing equipment are forecast to grow by just 0.2% per annum in real terms over the period of 2013-2018 to 5.20 billion euros. Analogue printing volume, excluding packaging, falls by 9.5% globally, with a drop of 34.7% in constant value terms. Meanwhile, digital is taking on much more share. Digital's share of the whole market doubles in constant value terms from 9.5% in 2008 to 19.7% by 2018.
Printing processes
The situation looks similar for a range of printing processes. Sheetfed offset printing output fell by an estimated two per cent last year to €35.7 billion. It did however remain the single largest sector of the market, though this position is likely to be taken by flexo in the near future. This is due to the higher share of the mix accounted for by the growing packaging category versus the declining graphic print sector.
These declines in graphic print are likely to be most strongly felt in the web offset arena going forward, which has been hit by falling demand for printed catalogues, newspapers and magazines where web offset has traditionally been particularly strong. Coldset printing revenues are forecast to fall by 30% over the next five years, and heatset will be down 20% over the same period. This follows on from estimated declines of seven percent and four percent in output from the respective processes in 2013. Similarly, screen and letterpress will both continue to lose share. In contrast, flexo output will grow slowly in real value terms, partly due to rather flat demand for corrugated in Western Europe. This is to some extent due to the eastward shift in key manufacturing areas.
As afore mentioned, faster growth will occur in digital printing, especially inkjet. Inkjet is set to gain from electrophotography in some areas - laser overprinting of litho pre-print in transactional and direct mail is increasingly being replaced by full-colour inkjet single-pass printing; electrophotographic printing output is though expected to grow, and much of the growth is likely to be value-driven. In the next five years, inkjet printing output is forecast to grow by two-thirds overall in real value terms to €13.7 billion with electrophotography ahead by 23% to €19.7 billion.
What's next?
During the past year there have been few changes in the fortunes of the printing industry. Unfortunately for print suppliers, the general upturn in the economy hasn't had a significant impact on European print demand, and most of what has been lost in terms of printed volumes will not be recovered. This difficult market situation is leading to depressed investment in traditional printing equipment, and it seems the most profitable way to proceed is to partially switch to digital printing technologies. In this way, companies should look for a new way of doing business in line with a shift toward shorter and a larger volume of print jobs, backed up by investment in web-to-print and other similar business support systems. We are seeing structural changes led by consumer behaviour and growing competition from alternative media in an ever more complex communication world. The link between print demand and GDP was broken in the 1990's, and there is little chance of going back. Print has to demonstrate effectiveness - if it can, it will be used, but if not, it won't.
In some cases, the shift to digital has led companies to examine whether they can make inroads into packaging. The shift from printed piece to digital has led all kinds of equipment suppliers to see if they can gain a foothold into packaging. While digital itself currently only holds a small share of package printing if we exclude areas like labels and corrugated display materials, there is no doubt that major players in digital equipment look upon packaging as an area to exploit in the medium and long term.
Over the next five years, however, growth in printing output will be restricted to packaging and labels as a whole, as well as shorter-run printing jobs delivered using digital electrophotography or inkjet. Traditional graphic print will remain under pressure as print volumes generally decline, and this will lead to further consolidation within the industry as traditional business models pursued by smaller printing operations come under threat. There are however, opportunities for traditional printers to broaden into new areas.
