5th drupa Global Trends
Report 2018 shows best global
results for print since 2013
E-books are seen to complement printed books, not replace them. Emails and social media are so universal and overwhelming for many consumers that printed communications are increasingly valued, particularly when integrated with digital communications. Packaging thrives, with digital SKUs increasingly adding to the mix for brand owners. And Functional print is ever extending the ways that print can support consumer lifestyles. Innovation, i.e. the exploitation of new technologies, is the key and is reflected in the positive investment plans. These are just a few trends. Here are more.
The 5th drupa Global Trends Report tracks key economic and market developments across the global print industry. The survey conducted in November 2017 had nearly one thousand participants with a good cross section from across most market sectors and regions. Of these, 708 printers participated and whilst the majority were from Europe (421), the rest of the world was well represented in all regions (287). There were 234 suppliers, of which 160 reported on Europe, but again the other regions were well represented.
This is the most encouraging report since this annual survey started in 2013 for most printers and suppliers in most markets and regions. It reflects the slow but steady global economic recovery from the 2008 recession and the increasing confidence shown by many in print as to how they can best exploit technological innovation and the integration of digital communications.
drupa Printer Barometer 2018
Printers in general are increasingly confident in their future prospects and their suppliers even more so. In 2017, 40% of printers described their company as in a ‘good’ economic state and 9% described it as ‘poor’ (the balance answered ‘satisfactory’). This gives a positive net balance of 31% and it is that net balance (plus or minus) that we show in the chart below and it is the % netbalance that is used in many of the subsequent charts.
Turning to market sectors, packaging printers have grown steadily in confidence; as have Functional printers until this year, when there was a puzzling loss of confidence (matched by a similar drop reported by their suppliers). Commercial and Publishing printers have also been gaining steadily in confidence, although there is a clear loss of momentum amongst Publishing printers this year.
Yet this positive story for most printers is nothing compared with the non-stop growth in confidence amongst suppliers, who have steadily increased the positive net balance each year since 2014 – 18% in 2014, 25% in 2015, 34%in 2016 and 53% in 2017. And this optimism is even in the struggling regions like Africa and the Middle East. The positive overall story for suppliers was reflected in a surge in the sales of core equipment/software/materials (+29% net balance). Indeed all revenue streams showed their best ever net positive balance.
But this positive story cannot mask the challenging financial pressures on both printers and suppliers. Falling prices and reducing margins have been the pattern since the survey started in 2013. Printers respond by increasing utilisation and hence revenues whilst trying to keep overheads as steady as possible. But the picture over time is easing somewhat, with this year’s widespread paper/substrate price rises not impacting too severely on margins.
Global printer financial performance measures
Regionally the picture is more complex. So printers in North America and South/Central America reported a positive net balance on prices whilst the Middle East reported a severe drop in margins. Suppliers found pressures on both prices and margins challenging in the Middle East and Australia/Oceania and particularly severe in South/Central America.
Printer financial measures by region 2017
Packaging printers come out best amongst market sectors with prices held almost steady. There was a surprise squeeze on margins market sectors with prices held almost steady.
Printer global performance measures by market
Reflecting the generally positive global economic conditions reported in this year’s drupa Economic Summary, both printers and suppliers reported an easing in the financial conditions, e.g. access to and cost of credit, although both reported ever worsening debtor days.
There is an amazing variety in the print processes used and digital print continues to spread. 65% of printer respondents have Sheetfed offset in their plants, 47% Digital toner cutsheet colour, 29% Digital toner cutsheet mono, 24% Digital inkjet wide format (sheet and roll fed) and 20% Flexo. As for growth in volume, Digital toner cutsheet colour has a positive net balance of 23%, Wide format 12% and Flexo and Sheetfed offset both 10%.
For conventional i.e. non-digital print, run lengths and lead times decline steadily year-on-year while the number of jobs rises. The pattern is the same for digital print with one important exception – run lengths are rising.
The proportion of total turnover from digital print is rising slowly with 23% of the panel reporting more than 25% of turnover was digital in 2013, up to 30% in 2017.
Functional printers are now largely digital, with 60% reporting digital being more than 50% of turnover. 42% of Commercial printers report more than 25% of turnover as digital, 21% of Publishing printers do so, but just 12% of Packaging printers.
Despite the attention given to ecommerce in general terms, only 27% of all panel printers operate a web-to-print/storefront installation, up just 2% from 2014. For Functional printers it is an important source of orders, but it is less so for the other sectors, with minimal impact in Packaging.
Reflecting the growing confidence amongst the drupa expert panel in general, capital expenditure continues to grow amongst printers and suppliers alike. Globally 33% more printers reported an increase in expenditure than those reporting a fall, with North America most positive at +51% and Australia/Oceania the lowest region at +18%. Not surprisingly Packaging printers reported the biggest positive net balance at +45%, Functional at +42%, Commercial at +30% and Publishing at +20%. Finishing is the most popular focus for investment for the second year running, followed by print technology and then prepress/work ow/MIS.
Plans for print investment in 2018 depend on the market sector, with Flexo the most popular choice in Packaging, followed by Sheetfed offset. In Commercial it is Digital toner cutsheet colour that leads followed closely by Sheetfed offset and Digital inkjet wide-format. In Publishing it is Sheetfed offset that leads and Digital toner cutsheet colour in second. While in Functional, it is Digital toner cutsheet colour that leads and Digital inkjet wide-format in second.
Given the very positive economic confidence shown by the suppliers, it is not surprising to report that they continue to invest steadily,with a global 18% positive net balance in capital expenditure, with a range from +41% in North America to +8% in Africa. Building new sales channels is the most common focus. Year-on-year suppliers report an ever-growing expenditure on marketing with a substantial increase in positive net balance from +26% in 2014 to +39% in 2017. Product training and online content/education are the most popular tools to grow.
As last year a lack of demand creating strong competition were reported as the two most common constraints to growth by both printers and suppliers. Printers put their faith in reduced staffing levels and improved productivity linked to systems integration to help achieve higher profit levels, while suppliers plan new product launches and new sales channels as their preferred route to higher profits. Suppliers were asked what technology trends will have the most disruptive impact on print over the next five years? Automation and data exchange (so-called ‘Industry 4.0’) was the most popular, followed by cross-media integration with print and the use and management of big data.
Market sector trends
85% of Commercial printers globally describe themselves as offering ‘General commercial print’ with an average of 1.8 additional specialist markets. But these vary significantly by region e.g. 81% in North America offer Direct mail but none (0%) in the Middle East and only 2% in South/Central America. Variable data print is the most common added- value service, followed by Creative design and Stock, storage and fulfilment.
Publishing printers in most regions face declines in core product demand and respond by widening their product range. Hence Newspaper printers offer magazines and catalogues, Magazine printers offer catalogues and Book printers diversify to offer digital book production, both short run and on-demand, to complement conventional production. Yet the impact of digital media on existing business is still modest with few reporting significant numbers of lost titles to online-only editions.
Packaging printers in the main are enjoying good levels of demand, so the pressure to diversify is less – just 1.8 applications per company. As for digital print, the number offering this continues to rise globally from 24% in 2013 to 35% in 2017. 18% of Tags and Labels printers report over 10% of SKUs are digital, as do 15% of Cartons/Board printers and 13% of Flexibles printers. On the other hand there is little growth in Added Value SKUs (e.g. variable data), with a typical gain of just 2% more printers reporting any additional impact over five years.
Our sample of Functional printers has in the main diversified into Functional print from other market sectors and these still report a signicant proportion of turnover in other markets. In the functional markets, Digital inkjet has become the dominant process (65% use this) as Screen/pad has declined (down to 24%).
This is the most positive drupa Global Trends Report yet. Both printers and suppliers are bullish in their forecasts. Meanwhile digital media and communications continue to spread and integrate. However instead of being viewed as a threat to the future existence of print, printers and suppliers are increasingly finding ways to exploit these new and evolving technologies in ways that place print as a central tool for consumers.
This report has been published by Messe Düsseldorf, while Printfuture (UK) and Wissler & Partner (Switzerland) conducted and authored this report series.