Executive summary of analysis by Andreas Weber, Head of Value
Print is becoming increasingly relevant – not only on the stock markets, but also and in particular with professional investors.
However, a closer look throws up a great many questions and even contradictions for (industry) outsiders. It is virtually impossible to obtain an overview of the position of “print as a business” from the current situation. This is because print is big – with an annual turnover of some US$898 billion (approx. €830 billion) in 2015.
In order to be able to evaluate print correctly, three different aspects need to be examined and assessed:
- (Global) economic importance of print
- (Unexpected) growth drivers in the print business
- Positioning and strategies of technology suppliers
1. (Global) economic importance of print
- The print market is extremely important, rivaling automotive engineering, the financial sector, and advertising. This is actually nothing new and has been the case for generations!
- One key trend in the print shop market is that print shops are becoming leaner, but added value needs to increase despite shrinking production volumes. Print shops must therefore continue investing so as to improve production efficiency and unlock new growth markets.
- drupa 2016 made it clear on a global level that print media have by no means had their day and can be put to more effective use than ever. It is therefore wrong to paint a gloomy picture. The prospects are excellent!
- The only way to add more value with print, though, is to stimulate the demand for modern-day print products on a sustained basis. Print doesn’t sell itself!
- New kinds of striking concepts that are geared to market requirements and adopt an integrative approach to the professional manufacture, distribution, and use of print media hold the key to the future of print.
- In order to be successful in the printing industry, it is vital not to rely solely on vertical positioning in individual applications, but to cater specifically to customer and market needs and ensure continuous innovation leadership.
CIMPRESS, the world market leader in online print, has turned its new headquarters on the east coast of the United States into a creative temple for the art of printing that attracts talented “digital natives” to its workforce. Photo: Screenshots from Margulies Perruzzi Architects video.
2. (Unexpected) growth drivers in the print business
A) Strong growth impetus for print thanks to digital pioneers
- When it comes to driving growth and providing impetus for print, Internet companies, platform operators, and above all online/eCommerce suppliers are important – possibly more so than any other player.
- Big data, the Internet of Things, and mobile shopping will also provide dynamic momentum for interactive commerce. For example, online orders are combined, packaged, and delivered with printed enclosures in an automated process.
B) Online print – the most dynamic growth segment at present
- More than any other part of the printing industry, the online print sector is a pacesetter that is already seeing strong sales, with significantly higher double-digit growth and maximum profitability thanks to standardization and automation.
- Relevant technical innovations are identified extremely quickly and implemented in a way that immediately helps add value.
- The boom in mass customization in print will accelerate this development.
C) Trendsetting 4D printing opens up new dimensions
- The 4D graphic printing process is one of the world’s most important emerging technologies (Gartner) and is only just getting started on the market. It’s still too early to provide valid market data/KPIs, but a look at the dynamic growth of 3D printing as a whole enables parallels to be drawn and evaluated.
- The considerable importance and excellent prospects of 4D printing are in any case clear. Not only print shops and versatile online print businesses are involved, but also all kinds of other companies, including manufacturers of consumer goods, the commercial sector, and even online startups.
D) Packaging – core competence enjoying extremely strong growth worldwide
- Almost half of global print sales are generated by packaging and label printing and the total will have reached around €472 billion by 2018 (approx. €390 billion in 2015).
- The packaging and label printing market is currently expanding by some €25 billion each year and will soon account for over 50 percent of the global print volume. Online trade and multichannel applications including communication at the point of sale are key growth drivers.
- Offset and flexographic printing are by far the most important processes and will still have to handle the bulk of production in 10 years’ time. Digital printing technologies (especially inkjet printing) are growing at an above-average rate – in particular thanks to manufacturers working together – but still remain at a low level in terms of market share.
- Those print shops that offer integrated solutions geared to customers, a high level of automation/standardization, and digital process expertise are one step ahead of the rest.
3. Positioning and strategies of technology suppliers – from compartmentalized thinking to a customer-focused holistic approach
- There are thousands of print and paper technology suppliers. Printing industry customers are confronted with a multitude of identical or similar offers.
- Despite everything – and probably also due to the ever-present digital print manufacturers who like nothing better than to predict the demise of print if the industry fails to invest in digital printing – manufacturers using traditional offset, gravure, and flexographic technologies appeared to be falling behind.
- However, despite having to face serious crises that threatened their very existence, the long-established groups Heidelberger Druckmaschinen AG (Heideldruck) and Koenig & Bauer AG (KBA) have maintained their strong position and been completely revitalized.
- The world of offset printing, which was left for dead, has been successfully resuscitated and proactively integrated into the world of digital printing. Digital printing technology, on the other hand, remains compartmentalized with its standalone solutions and relies on displacing existing solutions through substitution.
- Investors and the stock exchange acknowledged the renaissance of German companies KBA and Heideldruck at drupa 2016. The sales and earnings of both have improved as a result – with confident forecasts of upward share price movement.
- For companies focusing uniquely on digital printing technology, on the other hand, big ambitions and significant research outlay have not had a positive impact on their share price to date.
- The two German printing press manufacturers KBA and Heideldruck – the industry frontrunners – are successfully defending their leading positions and once again enjoying profitable growth. As things stand at present, Heideldruck has the best chance of building on its dominant market position in the digital era thanks to its holistic and expedient digitization strategy focusing on print.
- Consequently, Heideldruck has become the pacesetter in the digital transformation of the global printing industry. In addition to different printing technologies, the entire print shop management process – including digital administrative/process control and cloud-based services – is being incorporated for optimum networking. The benchmark here is to ensure the best possible customer focus.