Containerboard and specialty printing papers/substrates are the bright spots for adding profit and value in print, according to a recent gathering in Chicago of 800 global pulp and paper industry CEOs and top executives, which I covered for Graphic Arts Magazine. It bears repeating: digital, customization and short-run printing for packaging, labels and marketing materials – that’s where the growth is. These forces are changing the traditional ways printers buy paper, board and synthetic substrates, giving them powerful new leverage over their biggest single expense – paper.
In the U.S., total commercial printing shipments declined in 2016, and by year-end, were back to early 2014 levels. (Canada’s stats weren’t available.) “Graphic paper demand will not return to growth,” warned John Maine, VP of Global Graphic Papers for RISI, the Boston-based advisory firm. A separate report from veteran print industry analyst Dr. Joe Webb showed that, on an inflation-adjusted, per-capita basis, print shipments would continue their significant decline in the years ahead. The 49% drop in print shipment value per capita from 2000 to 2016 speeds up to a whopping 60% drop by 2023 (down to $211 per person), with nearly all of it propelled by communications technology advances. Result: “Paper prices for printers today are lower than they have been in any time in history, particularly after adjusting for inflation,” said Maine. “Paper is readily available and going to remain very competitively priced.” That gives print company owners continued leverage over their single biggest cost item – paper – and a potential boost to operating profits.
On key end-uses, printed magazine circulation is forecast to continue its 1% – 2% annual decline. Catalogue mailing volumes and page counts also continued their declines. Yet, some sheetfed printers are positioned to benefit as more magazine, catalogue and book production shifts from web to sheetfed printing. Marketing mail is expected to hold steady through 2017 at about 80 billion pieces annually – about where it was in 1998. Silver lining: new DM printing and targeting techniques continue to make it a lucrative business for printers focused on evolving best ROI practices. Only modest growth is seen in boxboard, which includes folding cartons and food packaging. However, short-run folding cartons and other packaging for high-end retail has been strong in recent years and more growth is expected.
Print growth and profit opportunities – packaging, packaging, packaging
• Corrugated continues its strong run with the onslaught of e-commerce – and more compounded growth and demand are seen. This comes as global printing OEMs are bringing new large format UV inkjet printing technology, delivering personalized printing for long to short runs “direct to board”. Converters and printers see big opportunities here.
• Specialty substrates including films for commercial and package printing. This includes printing on film-based flexible packaging, which is seeing growth driven by lightweighting, waste reduction, branding, consumer appeal and more. The North American flexible packaging market is estimated at just over $30 billion in 2016, with average 2-3% growth seen over each of the next few years, according to the Flexible Packaging Association.
• Labels. This area is driven by increased demand for premium packaging as well as demand for shrink sleeves, linerless, pressure-sensitive and high-impact graphics. Growth areas include food and beverage, pharma, personal care, consumer products and other retail.
• Kraft paper demand is brisk as consumers and governments continue the shift away from plastic. While large converters typically apply printing, there’s a growing niche in printable roll and sheeted kraft papers for retail tags, cups and other packaging. Some 100% recycled kraft papers today enable up to 6-colour printing.
Dr. Harvey Levenson, former graphic communications department head at Cal Poly State University in San Luis Obispo, CA, wrote in a recent industry survey that “the only printing segments not negatively impacted by the Internet (and which have grown in spite of online communications) are those related to packaging: label printing, folding carton printing, flexible package printing and corrugated box printing.” He added that printing equipment manufacturers worldwide are currently pushing to show commercial printers that packaging “is a viable and profitable industry segment to enter. Most commercial printers don’t yet understand this. Yet advances in digital printing are rapidly addressing one of the largest concerns packaging print buyers have – reduced time to market.”
