Over the last few years the world economy has experienced many difficulties but it does appear that economic recovery may be just around the corner.

Many have observed the cyclic recession that has taken place every ten years in recent decades. There is a growing expectation amongst economists that 2004 will be the turning point. But there is evidence in the US of a break in the correlation between GDP growth and print sales. Whether the same effect exists in Europe is not clear but it is a warning bell – other media (and other ways of printing) may now be having an impact on the commercial print industry and this, together with a growing determination to deal with waste at all points in the supply chain,

suggests that previous rates of growth for printed matter (and paper demand) may not be restored, even if consumer demand is.

As a consequence of these factors, it is certainly the case in some sectors, and may be true in others, that output

volumes are increasing while revenues are reducing. Cost reduction is therefore a necessity for all involved in the supply chain, which is resulting in increased focus on the need for optimisation and automation of administrative processes. In this connection JDF is a timely and welcome development.

 

Despite the economic circumstances of the last four years, there has been growth in every print sector apart from that of business forms and stationery.In these cases (and to some extent with promotional print) there are two main factors involved:

The volume of print production is strongly linked with advertising expenditure (which itself also reflects GDP). There is current growth in advertising expenditure of some three per cent per annum in Europe, but this is lower than the five per cent per annum that was the norm during the last decade. Print is slowly losing market share of advertising expenditure as digital media grow strongly, but will maintain its commanding position for many years yet. Some marketeers are reacting to the growing body of evidence that demonstrates the (cost) effectiveness of print based advertising by using catalogues, magazines and direct mail to a greater extent than previously which tends to counteract any downward trends.

 

Although the last four years has not been a period of rapid capital investment, it is nevertheless the case that production technology has continued to develop. CTP is now widely installed, and this together with automated workflow developments has made a significant impact on prepress timescales. More automated presses are now installed which has reduced the minimum size of a viable print run. Digital printing systems have continued to develop, and based on the market survey conducted for this study the expectation is that digital print will move from a current four per cent market share to 14 per cent over the coming ten years, with about half of this being done by inkjet by about 2010.

 

It is easy to gain the impression that the newspaper market is declining and in some parts of the world, notably the US, that is so. It is also true of some sectors of the newspaper market. But European newspaper publishers in particular have introduced new concepts for the printed product (as well as developing other revenue streams) that are at least maintaining sales. In fact, in Europe the overall demand for paper for newspapers has increased slightly over the last four years and the projection is that modest growth will continue to at least 2008, thereafter depending on the assumptions that are made. Overall, growth is expected to be in the region of 0–1.5 per cent per annum. The main downward force is thought to be the Internet, which with the growing availability of broadband services, encourages greater use in a multi-media sense and for e-commerce. So, from 2010 onwards, the printed newspaper is projected to be in slow decline.

 

Magazines

Magazines remain as a very successful print product. A strongly growing sector is that of ‘customer magazines’. Business-to-business magazines have become significant users of the Internet,

especially for classified advertising, but also other reader services, and this is expected to have a marked overall effect on paper demand eventually. However, B2B is relatively underdeveloped in most Eastern European countries and these are expected to experience significant growth. Advertisers continue to find magazines an effective way of

contacting well-defined audiences, and consequently advertising revenues in magazines have continued to climb and are expected to continue to do so. A significant issue with magazine publishing is the waste in the supply chain. This is an environmental issue and also a cost issue for the publisher, and one of the drivers behind the push to gain a higher level of subscription sales. However, this still varies remarkably by country, although progress is being made. The projected future of magazines is for continued growth until about 2010 at a rate of about 4.5 per cent, then a variety of options depending on the assumptions applied.

 

 

This is a complex sector since books serve so many purposes and are produced in quantities from one to hundreds of thousands. The overwhelming majority of titles are slow-selling and this is giving rise to publishers considering digital print more seriously than ever before. Only a tiny proportion of books are produced this way at present (maybe two per cent) but this, together with Internet book retailing, is having a marked impact on the supply chain for book publishing. The most concerning factor regarding the future of books was the increased competition for readers’ time in relation to all other leisure pursuits. The projected future for books over the coming decade is for continued growth of about 1.2 per cent, depending on the assumptions applied.

 

 

Much of the current drive behind promotional print comes from direct marketing. Expenditure is increasing, typically at rates of five to ten per cent, although in many countries it has been higher in the past. Direct mail remains one of the most strongly growing print product sectors with an overall growth rate of around four per cent, although in 2001 the growth rate had slowed to three per cent, still quite a remarkable figure in a recessionary period. Direct mail is viewed as a successful print product, even more so if constructed with

customised content. Catalogues are increasingly distributed as a direct mail item, and the predictions of the previous report concerning an increase in frequency of a reduced pagination product appear to have been fulfilled. There is a growing appreciation of the benefits of using multiple media to address an audience. Hence catalogues and websites are now seen as mutually supportive, each leading potential purchasers to the other and more overall sales resulting. Similarly, the use of direct mail, together with email and customised web pages achieves a high success rate. So promotional print is now seen to have a key role as an important component of multi-media promotional campaigns. The key downward force in demand for promotional print is the Internet, and particularly the increasing tendency to make brochures available on websites

as downloadable PDF files which the recipient can print. However, overall catalogues are expected to continue to grow at about 4.5 per cent although there are possibilities for this figure to be rather less or considerably higher if economic circumstances are favourable. Brochures and direct mail are projected to have a growth of around six per cent per annum, although with this rate falling off around 2010. Directories do least well of these print products, although the projection does show growth of perhaps five per cent for about three years. However, in this product sector the impact of the Internet is almost entirely negative and hence it is only a matter of time before the curves level off or start falling. In the model scenario, 2006/7 appear as critical years in which reduction for demand of directories is likely to be observed.

 

Transactional print, forms and stationery Business forms appear to be in slow decline although not all agree with this. CAP Ventures suggests growth of 1.2 per cent per annum (whilst pointing out that this actually results in a reduction in sales value because of falling prices) and Pira market research suggests a growth of two per cent per annum. But this is balanced by the substitution effect of electronic systems and desktop printing (e.g. RIT suggesting a fall to 25 per cent of 2000 levels by 2020). However, the historic trend is one of decline, about four per cent per annum in recent years which is likely to be worse than average for the last decade due to recent economic circumstances. The projection places the rate of decline at about 2.5 per cent per annum. which is a result of balancing the negative effects by the assumed economic business growth with a corresponding increase in the number of business transactions, the majority of which are still expected to include a paper form at some point.

 

Business stationery and other transactional documents also show a reduction in demand. Again, this is the result of conflicting trends. On the one hand, less business stationery is being pre-printed, but on the other, the growth in direct mail (which uses many printed envelopes) tends to increase demand. The net result is decline at a rate of about 2.2 per cent which compares with the recent decline over the last four years of about five per cent per annum.

 

The growth sector is undoubtedly that of cut sheet papers, which even in the last four years of poor economic growth have increased in volume by about 3.5 per cent per annum. The outcome of the projection is overall growth of about 6.5 per cent per annum. and as far as paper volumes are concerned, this to some extent compensates for the reduction in the other two areas. However, for the print business, this is a real reduction in volumes, as more volume is transferred to in-house facilities and especially the desktop.

 

Taking all product sectors into account, the overall growth trend for print products is projected to be in the range of three to four per cent.