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Dec 1, 2002 12:00 AM
In 2003, the printing industry has nowhere to go but up. A 1% “expansion” in 2002 — following a 7% decline — was too little, too late. In 2003, U.S. gross domestic product (GDP) growth will be no more than 3%. Nonetheless, since printing will lead the overall recovery by midyear, we anticipate industry growth exceeding 4%.
Three key factors will influence print's growth: federal government spending, organic growth in the private economy and consumer confidence spending. Since consumers are likely to curtail discretionary spending, marketers — and their printers — must focus on top markets.
The chart on p. 25 gives the overall size of 25 key market sectors. These 25 markets, if realized, will constitute about 88% of all printing after netting out overlapping revenues and buys. A forecast of $171 billion in total printing at plant billing represents a 3% to 5% improvement over 2002.
A snapshot of each category follows; each subhead gives print potential in billions (B) of dollars. Here, then, are the 2003 hot markets.
Periodicals ($55B; -1%) will be the only flat product after last year's 7% growth. Blame Rosie O'Donnell and Martha Stewart — newsstand disaffection for celebrity magazines and namesakes falling from grace are responsible for this slide.
Ten publishers and fewer than 50 printers will vie for $7B (80%) of the subscription-acquisition/ direct-mail pie.
Trade binders and book manufacturers may experience 10% or more growth, thanks to adult trades (<$7B; +7%), juvenile books (<$2B; +2%) and religious books ($2B; +11%).
Educational publishing ($13B; +18%) will accelerate with secondary-school and higher-education enrollments. Digital on-demand curriculum materials will gain popularity. This category is ready for new print sales and product initiatives, with a formidable content-management connection.
Record loan losses will slow commercial banking ($1,214B; +6%), but halfweb and letter shops will compete for more than $5B in direct-mail, statement and freestanding-insert (FSI) work as banks anticipate late-year economic expansion.
Signage forms and check printing represent $1B to $2B in sales.
Property/casualty insurers' ($956B; -3%) quest for premium income should help direct-mail, advertising, specialty and commercial work rebound somewhat from 2002.
Life insurance ($260B; -5%) was hurt by failed ad campaigns and cashout of whole-life policies, but should benefit from consumer-education initiatives as well as multicultural programs targeting the uninsured. Local brokers and agents, many with override dollars, are hot prospects, particularly for small shops, print distributors and reprographic centers.
Regional carriers will benefit as the federal government relaxes the Telecommunications Act of 1996.
Heavy print and media spending ($3B) will result in greater long-distance ($89B; +14%) and local-wire ($219B; +7%) penetration.
In the wake of directory ownership changes, as well as publication of e-mail and fax data, directories (<$18B; +17%) should head for market saturation and more than $3B for printers, paper vendors and brokers.
Heatset and fullweb printers can expect cable/ satellite ($128B; +10%) to be a $3B buyer.
Folding-carton, pressure-sensitive label and other OEM suppliers will gain from telecom-equipment ($100B; +8%) customers.
Third-generation, advanced wireless product introductions ($135B; +5%) will follow relinquishment of spectrum frequencies. Games, maps and other interactive visual communication promise a variety of print opportunities.
Platform wars will boost the potential print market, but packaged software ($56B; +5%) will feature fewer printed components as online help replaces printed manuals and related materials.
Web hosting ($40B; +8%) is resurging and could be a local buyer everywhere for $1B in sheetfed work.
Memory and storage ($75B; 0%) will be a difficult market, particularly for newcomers. Cisco Systems has contracted by one-third, a fate that could be shared by other network equipment and semiconductor companies. Current print suppliers will fiercely maintain their contracts at last year's levels.
Overall real-estate-related print will surpass $9B.
New residential housing ($473B;-3%) will decline slightly from the record-setting levels of 2002, but resale residential housing ($318B; +23%) will be strong. Open-web shops and sheetfed cover providers can anticipate $3B in this category.
Print potential for mortgage lenders ($81B; +9%) and commercial real estate ($350B; -10%) will be fueled by excess office, industrial and warehouse inventories.
Print spending in this category will increase by 25% — the largest gain in any category.
New medical products ($123B; +24%), ranging from personal diagnostic kits to inoculation systems, will be introduced.
At the consumer level, eyewear equipment is the largest buyer with one-tenth of the segment.
Along with biotechnology ($38B; +31%), education, promotion, labeling and packaging could surpass $4B in print.
Pharmaceuticals ($115B; +22%) will grow as new drugs are introduced. But while the potential advertising, packaging and point-of-purchase (POP) work is enticing, this market requires a strong knowledge of the global medical/pharmaceutical market.
Beer and malt beverages ($43B; +5%) and wine spirits ($16B; +6%) are the bright spots here. Screenprinters and large-format sheetfed plants may benefit from “malternatives'” media, retail and customer venues.
Soft drinks ($41B; -7%) and dairy ($41B; -8%) are the marketplace losers and will likely increase their print advertising to regain shares.
Juices ($33B; -7%) will suffer from changing demographics.
Coffee will lead the prepared-drink category ($98B; +3%) as coffee blenders and coffee-house chains surpass $1B.
Industry sales and production will be steady at the previous year's levels — Ward's Auto predicts 17 million new higher-price vehicles ($543B; +6%) will roll off the assembly line, leading to sustained print media and collateral support.
Auto and finance insurance ($255B; +6%) and rentals and leases ($273B; +18%) will be powered by increased liability and interest rates.
As leases expire, a record 3.1 million used vehicles ($205B; -15%) will crowd dealers' lots.
Off-road vehicles ($121B; +3%) will require OEM multilanguage, instructional, maintenance and identification labeling.
Parts and repairs ($347B; -3%) will decline as supply chains squeeze suppliers and replacement options relegate broken vehicles to the scrap heap.
After a record eat-at-home year, this sector will slow and decline as more consumers dine out. Dry foods/snacks ($103B; +6%) and frozen microwave foods ($77B; +3%) are the best bets for commercial, flexo and other package printers.
Canned and bottled foods ($154B) face a 12% decline, fueling promotional spending that should maintain litho and flexo labeling to nearly $2B — 25% of the sector.
Baked-goods producers will spend less on wrappers and cartons as consumers become more diet-conscious.
Portion-controlled foods ($128B; +26%) offer the fastest growth — especially for meats, poultry and seafood in sanitary packaging with pressure-sensitive labels. An otherwise stale sector will benefit from new smart papers, inks and closure devices.
Everything that goes with construction and alterations — vehicle and onsite signs, freestanding inserts, cylinder engraving, packaging, sample books and horticultural print — will benefit from record residential resales and aging housing stock. Highlights include: remodeling services ($213B; +21%); floors, walls and windows ($61B; +35%); and lawn and garden ($18B; +19%).
Sales growth in home appliances ($98B; +7%) and tools and materials ($177B; +10%) will come from resale and residential activity.
Although many consumers will dress down or do without, footwear/hosiery ($61B; +6%) and jewelry ($17B; +6%) will account for $2B in sheetfed, screen and POP printing.
Intimate apparel ($16B) and general ready-to-wear clothing ($218B) prospects are weak: Zero growth is forecast.
Flat run-of-press advertising and declining apparel catalog sales ($17B; -9%) will challenge fullweb heatset salesforces to improve value-added list and distribution services and develop catalogs for conventional retailers.
This sector, which is gaining share at the expense of fashion and other specialty retailers, is projected to account for five percent of all printing by 2005.
Hypermarkets and warehouse clubs ($350B; +5%) are approaching market saturation, but the slowdown in new locations should heat up competition and the production of freestanding inserts to an annualized $3B or more than 10 percent of all web work. In-store graphics will remain a mainstay of screen and digital printers, at more than $300 million (M).
Earning back lost investor confidence remains a challenge. Stock brokerage ($318B; +2%) has already been hurt by discounting and online marketplace trading.
Mutual funds/management ($212B; +3%) is a $1B buyer of web and sheetfed work, but fund consolidation will impact print potential.
Investment banks' ($100B; -9%) print spending will be hindered by past fees and other excesses.
Fragrance ($13B; +8%) packaging, scented inserts and POP represent more than one-third of the sector's $4.6B printing. A boom in hygiene and sanitary products ($47B; +12%) bodes well for flexo and folding-corrugated specialists, with private and off-brand personal-care products representing an untapped potential print market.
Cosmetics ($24B; +4%) will continue to lose ground to drugstore generics, cutting $1B of in-store print by 50 percent.
Similarly, toiletries ($72B; +3%) and hair-, skin- and sun-care products ($65B; +3%) are de-packaging and discounting rather than investing in brand-building and promotion.
Direct-mail, newspaper inserts, magalogs, outdoor and on-premise décor and signage may reach $3B, the fastest growth of any segment or category. This category has crossover potential with pharmaceuticals (see No. 6), making it a hot market, indeed.
Hospitals ($615B; +11%) have reinvented themselves as wellness centers.
Third-party administration/health-insurance ($512B; +8%) companies are losing covered individuals. In the absence of government health-care reform, the marketplace will force a shakeup, leading to new products — and print opportunities — in all formats and processes.
Hotels/resorts ($268B; +1%) are a hot opportunity — record availability will drive advertising and sales promotion.
Airlines ($145B; -11%) and intercity rail/ bus ($30B; -11%) are foundering.
Cruise lines ($40B; +7%) account for the majority of transportation-related print.
These categories will be soft as consumer spending becomes less discretionary. Print should benefit as manufacturers, distributors and retailers attenuate advertising and promotional spending.
Excess inventories for PCs and peripherals ($246B; -4%) and home-entertainment receivers and players ($393B; -8%) will spur cross-selling, rebates and last-ditch mega sales.
Motion pictures ($39B; +3%) will spend $1B on print.
Competition from online downloads will hamper print potential for video- and audio-recording packaging, label and store promotions. New digital-delivery options will result in many retail closings.
Video rentals ($31B; -3%) and live concerts ($40B; -2%) will cool, but out-of-home amusements ($195B; +11%) will be a bright spot for folding-carton and program printers. Casinos and betting parlors will grow fast, accounting for 25% of this category.
Print spending for petroleum ($1,137B; +13%) will be unchanged at $800M, primarily for POP signage and some marketing reintroductions, most notably from Exxon Mobile and Shell. Labels and packaging will again exceed $1.1B.
Electric and gas producers/distributors ($1,493B; +19%) will usher in the post-Enron era by explaining higher rates and business practices to regulators and consumers through increased print advertising, direct mail and statement-stuffers, which could result in $750M web work.
Sheetfed, screen and digital shops should concentrate on outdoor, fleet graphics and directional signage, which could double to $700M if predicted name changes materialize.
After McDonald's and other fast-food vendors ($88B, +5%) posted first-ever revenue declines, this category is poised for a comeback. Coupons, game pieces, POP, tray liners, bags and wrappers are projected to reach $1.5B.
Full-service restaurants, taverns and clubs ($346B; 0%) are at saturation; printing per location will be less than $2,500.
Institutional food service ($64B; -7%) will be impacted by the drop-off of travel/hospitality. Nonetheless, this group will buy $200M in private labels, packaging and sanitary paper products.
College/university enrollments ($41B; 0%) will remain stagnant while alternative advanced education ($9B; +20%) emerges as a new category.
Traditional educators' development ($22B;-15%), athletics ($9B; -9%) and cultural events (<$3B; 0%) could result in more than $2B in print sales.
With the war on terrorism as justification, government growth and printing orders are accelerating.
Federal government (>$320K; +7%) outlays for defense and health/human services may bring print buys to $1.5B, a record 25% increase.
State-government (>$140K; +6%) revenue shortfalls will mean new debt and taxation, which could result in $1.5B in print sales.
After two years of reduced giving, the cycle of philanthropy is rising. The aging population and reservoir of intergenerational wealth seeking shelter from taxation are fostering foundations and bequests.
Religion ($178B; +6%) will rebound.
The American Assn. of Fundraising Counsel is forecasting gains in health charities ($24B; +9%) and arts and culture ($17B; +6%).
Society benefit ($14B; -17%) and environment ($8B; -11%) will pose a challenge. Fundraising and issues-specific direct mail, event promotion and premiums could result in $2.5B for print.
This category includes tamper-proofing, integrity-protection, warning/detection and identification products of every conceivable type. Anti-copying and counterfeiting features, release adhesives, latent-image, thermochromatics and other available or new enhancements should be promoted and sold to both public and private sectors.
By most estimates, more than $270B will be spent on security, with $2.4B in heavily value-added print included.
|RANK/CATEGORY||SIZE*||GROWTH RATE||% TO PRINTING||PRINT POTENTIAL*|
|* Figures in billions||Compiled by PB/BA International Inc.|
The full text of “Hot Markets for 2003,” a 170-page report, may be ordered from the Printing Brokerage/Buyers Assn. International Inc. (PB/BA) (Palm Beach, FL). For more information, call (866) 586-9391 or e-mail firstname.lastname@example.org.