With a growing printing industry and an estimated ink market of close to $1 billion, it is understandable that ink manufacturers would be interested in Latin America. This has led to growth for domestic and multi-national ink manufacturers, as well as some merger and acquisition activity.
Estimates of the size of the printing ink market in Latin America vary. For example, Siegwerk places the size of the packaging ink market at nearly $1 billion.
“According to our Marketing Department, the packaging ink segment for 2013 is estimated approximately 175,000 tons and €800 million,” said Pablo Paduani, vice president LATAM Region for Siegwerk. “Brazil, Mexico and Argentina are the three main markets, representing approximately 75% of the total.”
Brazil is the largest market in the Latin American region. Gero Pluecker, president of Cromos S.A. Tintas Graficas, noted that ABITIM, Brazil’s national printing ink association, reported that for the first three months of 2014, 34,000 tons of flexo inks were sold. Offset inks accounted for 28,000 tons, while gravure inks came in at 15,000 tons.
“In Brazil, there was almost no growth from 2013 to 2014,” Pluecker added. “Like it happens in other regions, there are no great expectations for growth for 2014 and 2015. The Brazilian economy is not growing. Argentina is worse, there is a sharp decline. In South America, only Chile, Peru and Colombia are doing fairly well.”
Headquartered in Mexico City, Sanchez SA de CV is focused on the Cnetral America region and Colombia, with subsidiaries in El Salvador (Sanchez Centroamerica), Guatamala (Tintas Sanchez Guatemala SA), Costa Rica and Colombia (Grupo Sanchez Colombia). Ernesto J. Sanchez, managing director of Sanchez SA de CV, said that Mexico’s economic growth has been slower than expected.
“As we approach the first half of the present year, Mexico´s economy continues to disappoint everybody,” Sanchez said. “Both analysts and government officials have reconsidered their growth estimates, and now it seems that our economy will be growing around 2.7%, way far from almost the 4% promised by the Pena Nieto administration. Pena Nieto and his team were able to pass several structural reforms, including labor, tax and energy, but positive effects in the country economy are yet to be seen. The Central America region, in general is experiencing a good moment in their economies, allowing a reasonable growth in their markets. “
“Latin America is a vast region with big differences between countries and economies,” said Fernando Tavara, president, Sun Chemical Latin America. “In general, the region has had positive growth, although not at the same level of previous years. Packaging grew close to the GDP level of each country, while the publications market has experienced moderate growth.”
Paduani said that 2014 will be a challenging year for Latin America, based on extraordinary events like the World Cup in Brazil and several countries’ presidential elections.
“We expect that the market will continue to grow,” Tavara concluded. “We will see more consolidation of the customer base and also significant investments by competitors in the region. Brazil will have a difficult year, since domestic demand is not picking up as expected with the World Cup.”
Growth Opportunities for Ink Manufacturers
In speaking with leading Latin American ink suppliers, it comes as little surprise that packaging offers the strongest opportunities for growth.
“Packaging is still the most vigorous of the markets, but every day, increasing demands from converters make it difficult for ink suppliers to compete in this market,” Sanchez reported.
“In general, the printing processes related to packaging are growing, but we are seeing a slow migration from gravure to flexo,” said Tavara. “The offset printing market is stable in Latin America and growing in some countries.”
“When it comes to packaging, flexo, gravure solvent-based and offset conventional drying continue to represent the major printing processes in the region,” Paduani said. “Growth was according to initial expectations. Flexo (solvent-based and UV drying) has shown a positive growth in 2013, and we foresee moderate volume growth in the region for 2014. We see further development projected in self-adhesive labels, shrink sleeves, laminated tubes, laminated structures and the HD flexible printing process. In addition, high printing speed inks will be on the spot.”
“The best opportunities are all types of UV inks, especially packaging (flexo UV and metal deco),” said Pluecker of Cromos, which recevied the award for best ink supplier from Graphprint recently.
“The Mexico and Latin America markets fared very well for us in 2013 as our Mexican and Latin American sales more than doubled,” Rob Callif, vice president of BCM Inks, said. “We continue to see Mexico and Latin America as a growth market for BCM. We see direct print graphics corrugated printing as a growth market for the region. This is mainly due to the food and beverage industry requiring more graphics and improved color consistency on their boxes and displays.”
Moves in Latin America
As mentioned before, there has been some merger and acquisition activity in the Andean region, covering Colombia, Ecuador, Peru and Venezuela. In both cases, Flint Group and Sun Chemical acquired the remainder of the shares of the respective companies they purchased.
Flint Group purchased Tintas Graficas Vencedor (TGV), a Lima, Peru joint venture Flint Group held with Corporacion Peruana de Productos Quimicos S.A., in mid-December 2013. TGV is a solvent- and water-based liquid packaging inks specialist, and also is involved in narrow web and sheetfed inks and flexographic plates.
Sun Chemical announced it purchased the remaining shares of Tintas SA and Sinclair SA, its Colombian joint venture companies, in early January 2014. Sun Chemical had held the JV with Inversiones Mundial (Grupo Mundial) since 1999, when Sun Chemical acquired Coates Lorilleux.
The Tintas/Sinclair Group had annual sales of $100 million, selling printing inks and related graphic arts products primarily to packaging printers.
“At Sun Chemical, we’re committed to Latin America, and have shown that with our recent acquisition of Tintas in the Andean region, our investments in new manufacturing facilities in Chile and Brazil, and other equipment investments in Argentina, Mexico and Central America,” Tavara said. “We hope to be a partner our customers can turn to for any need they may have – anywhere in Latin America.”
Siegwerk has also made important investments in the Latin America region.
“Siegwerk continued investing in Centers of Excellence located in Mexico and Argentina, opened a new-state-of-the-art facility in Bogota, Colombia and is building a new warehouse in Chile,” said Paduani. “Furthermore, Siegwerk has opened a new branch in Peru.”
Sanchez SA de CV has continued its investments into new facilities in the region.
“At Sanchez, we finished our Tepeji del Rio plant and all our liquid inks are now manufactured there, so we feel better prepared to service our flexo and gravure customers in the country,” Sanchez said.