The estimated $600 million to $700 million Latin American market for printing ink is expected to expand by a healthy 3 percent this year as the industry struggles to upgrade and standardize technology, industry executives say.
“The challenge is not growing the business; it’s keeping it profitable,” said Ursula Stevens, a corporate vice president for Sun Chemical Latin America, in Fort Lee, NJ.
“For ink makers, acquisitions have been the name of the game. But there is too much consolidation going on in the industry. Companies that have been acquired have financial problems and excess capacity,” said Ms. Stevens. “If a client isn’t profitable, then we aren’t, so we need to partner with them and guarantee that when we’re done with them, they’ll be profitable.
“We’ll have a couple more years of mergers and acquisitions before the market stabilizes,” she added.
As larger domestic and multinational printers acquire smaller companies, new equipment is being installed to raise the standard of the acquired operations. The resulting challenge is to train the operators of the new machinery to reach internationally-recognized quality standards, Ms. Stevens noted.
“Our people have more technical background than marketing background. If you can get the product accepted on a technical level, it’s sold,” she said.
Penetration of new markets in Latin America also appears to be more a task for technical consultants than for manufacturing and sales pioneers. “Our focus is on post-sales customer service. That's why we have technical support people in every country,” said Dominique Marchand, the director of marketing for Flint Ink Latin America, in Buenos Aires.
“For example, while we have no production plant in Peru, we have technical support specialists available 24 hours a day 7 days a week,” she said.
Potential for Growth
As Argentina and Venezuela move toward stability and the other large economies in the region continue to recover from the effects of the U.S. recession, the printing ink market should be poised for even stronger growth in 2003.
“We’re hoping for 5 percent growth for the coming year,” said Ms. Marchand. Overall, the ink industry generally follows the rise in gross domestic product in Latin America by a lag of about nine months, suggested Ms. Stevens.
Major ink manufacturers are seeking to replace imported product sales in Latin America with domestically-produced ink sales, which should improve the region’s global competitiveness in printing, the ink executives say.
“The challenge in years to come is lowering the cost of production, so we may make investments to expand our business locally,” said Ms.Marchand.
Among segments of the industry in which consumption is growing fastest are flexographic printing, commercial printing – primarily magazines, and sheetfed printing, which are all expected to demonstrate high single-digit expansion this year.
Among major players in Latin America, Flint Ink claims a sizeable percent of the market. “We are now one of the top suppliers in South America.” said Ms. Marchand.
Sun claims position as the largest vendor in the region: “We have more than a one-third market share,” said Ms. Stevens. And BASF frequently figures as one of the top three players. Smaller players in the overall Latin American market include Tintas Sanchez, Cromos and Tupahue.
Within solvent liquids, other major players include SICPA. In water-based liquids, Luminar and Orema also are market contenders. Seller and Printcor also compete in the sheetfed market. US Ink is a notable player in the coldset segment. And Delcor and Supercor are active in the heatset segment, as well.
Regulatory evolution increasingly will affect the ink market in Latin America as environmental restrictions are tightened. “We just don’t have the same level of environmental laws and enforcement from country to country in Latin America as in the U.S.,” said Ms. Stevens. “Costa Rica may be leading in the environmental effort, followed by Chile; but it will be five years before the region is where we are in the U.S.”
With stricter emissions enforcement, the use of solvent-based liquid inks will be increasing replaced with water-based inks, manufacturers said. “With the exception of Mexico, water-based inks are not as popular in South America as in North America,” said Ms. Marchand. “However, we have made a strong environmental commitment to promote water-base inks. We expect significant growth in the next five years.”
Strategic linkages, if not alliances, between ink manufacturers and producers of printing ink are one way that the ink makers are identifying customer need changes well ahead of the selling curve.
“We have good relationships with all the equipment manufacturers, and we know where equipment is going and what the (customer’s) strategic plan is,” said Ms. Stevens.
Flint Ink Latin America signed a distribution agreement with Tensor Group Inc. that makes Flint the exclusive agent for Tensor presses in Latin America, with the exclusion of Mexico, according to Fernando Távara, vice president of sales and marketing for Flint Ink Latin America, in Miami. Tensor manufactures web offset printing presses for newspaper, insert and commercial printers.