Sean Milmo, European Editor03.15.19
Europe’s printing sector and its inks and other suppliers entered 2018 amid a lot of optimism about future prospects as a result of economic growth in the region being at its highest level since the financial crisis of 10 years ago.
However, it has started 2019 full of uncertainties and anxieties after much of Europe suffered an economic downturn in the middle of last year undermining expectations of a revival in printing and ink markets.
Instead once again, in key parts of Europe, printing ink sales went down last year.
Europe’s export-orientated economies, particularly those in Western Europe, have been hit by the effects of diminishing growth in global trade, stemming primarily from trade disputes, decreasing growth in China and weakening manufacturing output worldwide.
Economic forecasters are predicting that the slowdown in Europe will continue well into 2019. The European Commission, the European Union’s Brussels-based executive, predicted in February 2019 that growth in the 19-country eurozone would dip to 1.4% in 2019, whereas only six months ago it was expecting an increase of 2%.
Growth in Germany, Europe’s biggest economy and largest printing ink market, dropped to 1.5% in 2018, its lowest level in 5 years. This year the European Commission is expecting German growth of only 1.1%, half its GDP rise in 2017.
France has been suffering in a similar way from faltering global trade with its GDP growth expected to go down to 1.3% this year compared to 1.5% in 2018.
Brexit Looming for the UK
The UK, which is due to leave the EU at the end of March nearly three years after a referendum in favor of Brexit, has been wracked with uncertainties about the circumstances of its departure.
By mid-February 2019, it has still not reached a collective agreement with the remaining 27 EU member states about the terms of its withdrawal so that there was a strong possibility that it would crash out of the Union without a deal. This would mean that immediately after Brexit, it would not only be a non-EU third country, it would be one without a free trade agreement with the remaining 27 EU member states. It would not even have a deal to negotiate with by far its largest trading partner, so its goods would instantly be subject to EU tariffs and non-tariffs.
A no-deal Brexit could pose huge problems for UK-based ink manufacturers who export a lot of their products to the EU and rely on raw materials imported from mainland Europe, which are likely to be affected by UK tariffs and non-tariffs.
Economists are warning that in the event of a no-deal, the country would go into recession, similar to what happened in Italy in the second half of last year due to falling output
and investment.
Printing and Ink Facing a Slowdown
With these four countries – Germany, France, UK, and Italy – accounting for a large proportion of Europe’s printing and ink sector, there seems to be little hope of a reversal of the trend in the last several years of overall declining output in printing and hence in inks and other consumables.
Even in 2020, forecasters are expecting only a slight improvement in economic growth in Europe.
The high-growth Eastern European countries will not escape the slowdown. Poland’s growth will drop from 5.1% in 2018 to 3.2% in 2020, while Hungary will fall from 4.8% in 2018 to 2.6% and Czechia’s (Czech Republic) from 4.4% in 2017 to 2.7% in 2020, according to European Commission figures.
One bright spot for ink producers is the prospect of lower raw material costs following a drop in oil prices, which should trigger decreased prices along the petrochemicals value chain. But these could be offset by increased pigment prices, particularly for titanium dioxide. In addition, shortages of products like photoinitiators look likely to continue to be a problem as well.
Also, there is rising hope – at least in the longer term – that print publishers will increasingly be able to claw back revenues lost to digital advertising and the rest of the electronic media because of rising political and regulatory pressures on online platforms in Europe. While printing and other traditional communications sectors have been going through hard times, social media funded by digital advertising has continued to thrive. Despite adverse economic trends, digital ad spend is expected to go on increasing at high levels while expenditure on advertising in newspapers, magazines and other print continues to fall.
The first warning signs that changing economic conditions were having a big impact on the European printing sector was in the third quarter of last year, when the softening global economy started to impact consumption and investment in Europe.
It was evident from data collected by the German coatings and printing inks association (VdL) that showed a sudden 5.4% drop in output and 4.7% in sales among its members in 2018’s third quarter. This compared with an output increase of 0.6% and a 3% sales rise in the second quarter and a rise of 1.4% and 3.6% respectively in the first.
By the end of 2018, it was apparent that VdL’s printing ink members had been hit the hardest, with their output dropping by 5.2% and sales by 3.5% during the whole year.
Production by manufacturers of automobile coatings plunged by 8.7% by volume but fell only by 1% by value.
For inks, the decrease was similar in size as that in 2017, showing that printing ink production has been falling for the last five years in Germany.
The VdL is expecting that the decline in inks will continue this year, although it is predicting it to be limited to 3.5%.
One significant feature of the VdL’s figures for 2018 is that the decrease seems to have included packaging inks, which in recent years in the European inks sector have been considered to be a segment of virtually assured growth.
The British Coatings Federation (BCF), whose members include printing inks as well as coatings producers, reported that its “resilient” packaging inks sector achieved a “small improvement” in 2018.
But there was a “further sharp decline” in the UK’s newspaper and magazine publications sector, according to BCF, with ink producers continuing to feel the full impact of the ongoing shift to the electronic media.
The UK wallcoverings sector, a large proportion of which is printed, had a “particularly tough year” mainly because of weakening demand in DIY retail outlets due to the uncertain economic climate causing consumers to put off home refurbishment projects.
The BCF Business Confidence Index dived last spring to its lowest level for at least six years before improving last October. But the association’s inks and coatings producers still remained anxious about future export sales and new investment levels.
At the same time, the country’s inks and coatings companies had to contend with continued rises in raw material costs, some of them stemming from a falling value of the UK pound in the exchange markets. In the first nine months of 2018, the index of producer prices for raw materials in the sector was 9% higher than in the same period in 2017.
Average prices for resins and related materials were 12% higher, according to BCF while the price for TiO2 was 20% higher than a year ago.
While ink and coatings producers and other UK-based companies contended with the effects of weakening demand and rising raw material prices, they also have had to plan ahead for a no-deal in the Brexit negotiations. This was to ensure that once departure takes place, the industry continues to remain a “just-in-time” sector with minimum disruption to supplies.
“A’no-deal’ Brexit will result in a huge loss for our industry and UK GDP as a whole,” said Ellen Daniels, BCF’s head of public affairs. “(Altogether) 98% of BCF members have some form of trade with the EU. It’s vital that we maintain frictionless, tariff-free trade.”
The planning for no deal for the inks and coatings sector has consisted primarily of stockpiling key raw materials and finished products, which has often required hiring more warehouse space. It has also necessitated going through the process of setting up subsidiaries or affiliates in European Union countries to comply with EU regulations requiring business activities to be carried out by EU-based legal entities.
Nonetheless, the BCF has warned that the impact of tariffs on non-EU goods could lead to the loss of £1 billion (€1.1 billion) in UK exports of inks and coatings because the duties imposed on them would result in significantly fewer customers in the 27-state EU.
Regulatory Concerns
Brexit will increase the complexity and fragmentation of regulatory controls on the manufacture and use of printing inks and other products across Europe.
The UK’s break with the trade pact could mean, for example, that there will be two versions of the EU’s 11-year-old REACH legislation on chemical safety requiring the registration, evaluation, authorization and restriction of chemicals.
Inks on the EU market will have to be complying with existing legislation administered by the Helsinki-based European Chemicals Agency (ECHA), while inks on sale in the UK are likely to have to comply with a UK version of REACH operated by a UK agency which has yet to be created.
UK-based producers are unlikely to have to draw up new REACH registration dossiers to comply with EU rules. But, in the event of no deal, they will have to go through the procedure of transferring their registrations to a representative or importer in an EU member state to ensure compliance with the REACH requirement that registrations must be based in the Union.
It is not clear yet whether UK-based producers will be able to use their existing EU REACH registrations to sell their inks in their home market or will have to draw up
new dossiers.
The last and third tranche of industrial chemicals on the EU market was registered under REACH in mid-2018, bringing the total of registered substances marketed in annual quantities of one ton or more to more than 25,000. Registrants are now obliged to keep their dossiers, which will be constantly evaluated by ECHA and national regulators, up to date and to ensure that the data inside them meet quality standards.
In a recent review of the REACH legislation, the European Commission concluded that “there are gaps and severe shortcomings in the chemical safety information submitted
by industry.”
Among the other areas in which chemical safety rules will become stricter and more detailed are food contact materials (FCMs). The European Commission is currently conducting a consultation with stakeholders on the necessity for additional measures to control FCMs, including printing inks and coatings.
In June last year, the European Parliament called for priority action by the European Commission on harmonizing at the EU level national FCM rules on printing inks, varnishes and coatings. The Parliament also urged proper assessments be carried out on impurities in chemicals in food contact materials and possible harmful chemical reactions in
FCM substances.
The European Commission, together with the European Parliament and Council of Ministers representing EU governments, are developing for an eventual EU-wide circular economy harmonized rules on the presence of potentially harmful chemicals in materials for recycling and reuse and ultimate safe disposal.
This will mean that ink and coatings producers will have to be careful about the types of chemicals used in all their products and possible changes in their safety profiles throughout their life cycles.
The EU has however been running into difficulties with the recent implementation of an ambitious packaging regulation for the serialization or identification of individual packs of medicines to combat counterfeiting of drugs.
The single packs have to carry a unique identifier comprising a product code, a serial number based on a randomized algorithm, a reimbursement number required by countries in which the medicine is marketed, a batch number and expiry date.
The unique identifier has to be encoded in a two-dimensional barcode within a machine-readable Data Matrix that can be accurately decoded by pharmacists using common scanning equipment at the dispensing point to the patient.
The scheme requires quality printing with high standard inks because the two-dimensional barcode has to be of sufficient resolution and durability to ensure accurate readability of the Data Matrix for at least one year after the expiry date of the pack or five years after the pack has been released for sale.
Soon after the regulation came into force in early February 2019, the central hub containing the data in the pack barcodes crashed. At the same time, pharmacists in some countries complained about being inundated by packs with non-compliant labeling.
Large numbers of SME packaging companies have been unable to afford the investment needed in new packaging lines, press equipment and inks. This has prompted some experts to predict that it will take a few years before the regulation is fully in force.
Inadequate new investment in new technologies could hold back packaging inks producers from realizing the potential for faster above-average growth not only in medicines but other packaging segments in Europe.
The apparent decline in packaging inks output and sales in Germany last year could have partly resulted from a softening of demand for added value inks.
“Unfortunately due to antitrust rules we do not have (firm) figures for packaging inks anymore,” explained Christoph Maier, head of the VdL’s economic and financial affairs department. “Our estimation is a small decrease for volume and sales in packaging inks in 2018 due to a weaker economy in Germany, especially for valuable packaging where more printing ink is needed.
INX International is expecting that the European packaging inks sector will continue to expand amid some switching in processes.
“(We) expect the packaging inks market to grow (in Europe),” said Peter Lockley, INX Europe president. “Although some exceptional circumstances may have a temporary impact on demand, e.g. in the UK if there were to be a hard (no-deal) Brexit, in general, we are not finding that demand in the packaging sector for our range of products is slowing down or declining.
“However, the rate of growth is always affected by the overall state of the economy,” he continued. “We expect migration from offset and gravure to flexo and growth of energy curable inks in the offset market. Digital solutions will continue to take a larger share as technology continues to improve.”
One segment in need of investment in the development of new technologies is the carton board segment of packaging, which has been taking share from plastics amidst increasing worries about the environmental impact of plastics waste. But to take full advantage of this opportunity, carton board needs the help of new inks and coatings technologies to provide the oxygen, moisture and other barriers and food safety features of plastic packaging.
The Publication Market
Although the European printing sector’s publishing segment continues to be hammered by the relentless rise in digital advertising, it does have a few success stories in its struggle with electronics competition.
For example, the output and demand for printed books have been rising while the steep rise in ebooks has been leveling out.
The UK book publishing industry, the world’s biggest book exporter, reported in July last year a 5% increase to £3.1 billion ( $4 billion) in physical book sales in 2017 while sales of academic journals also went up by 5% to £1.6 billion in the same year. Exports of physical books to the rest of Europe increased by 13%, according to figures from the UK Publishers Association.
Not all books sold by UK publishers are printed in the country or elsewhere in Europe, with some being printed in Asia. But with the aid of the introduction of digital printing technologies which is making European printing more cost competitive internationally, a growing proportion of books are now being printed in Europe.
Meanwhile, there are signs that sales of digital books in Europe, as well as academic journals, are beginning to stabilize. In the UK their combined sales went up by only 3% in 2017. Ebooks had a 16% share of the UK books market during the year.
“Society’s love of books in all forms shows no sign of waning,” said Stephen Lotinga, Publishers Association’s chief executive. “Publishers are catering to modern consumers who are reading books in different formats across different platforms, but are still showing a very significant attachment to the printed world.”
However, there are few signs yet of a reversal in the steady decline in the circulation sales and advertising revenues of newspapers and magazine across much of Europe because of the intense competition from online advertising.
In the UK, one of Europe’s largest advertising markets, internet advertising is predicted by the marketing investment company GroupM to grow by 8.6% this year despite the possible economic setbacks from Brexit.
This compares with 11% in 2018, but it is twice the average rise in total UK advertising, particularly with 5% to 10% decreases in advertising in national and regional newspapers and magazines.
Nonetheless, there are hopes in the print media that the growth in online advertising may be peaking with some leading advertisers starting to spread their ad expenditure more across a mix of digital and offline media.
“(The trend) is how best to combine the various media, traditional and new, to getter better results,” said Ashley Friedlein, president of the London-based digital marketing consultancy Econsultancy. “All the research confirms that smart combination of multiple media outperforms using fewer media.”
Furthermore, advertisers and their agencies are becoming concerned about the lack of transparency in “programmatic” advertising, the highly automated system for allocating ad space to digital advertisers in opaque and complex transactions.
Moves by advertisers to a greater mixture of media outlets could be accelerated by these worries and by the growing political and regulatory pressures being exerted on online advertising platforms, led by Google and Facebook.
In Germany, the anti-trust Federal Cartel Office (FCO) announced in February 2019 that it would be restricting the ability of Facebook to collect personal data, one of the platform’s major sources of revenue.
A select committee in the UK parliament has urged that Facebook should be more tightly regulated. A UK government review on the future of journalism has claimed that online advertising is a threat to democracy because the loss of advertising revenues has caused cutbacks by local and regional newspapers in the coverage of the proceedings of municipalities and other elected bodies.
The review, issued in February 2019, has recommended that public funds be used to help finance an independent means for supplying “public interest” news.
Advertisers are aware that dependence on digital media could be risky.
“Brands are realizing that being digital only can be extremely limiting,” Dan Davey, chief executive of the marketing agency Progressive Content, told the annual Power of Print seminar in London in November 2018. A rising number of politicians and the consumers they represent in Europe also want more even balance between digital and traditional media.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.
However, it has started 2019 full of uncertainties and anxieties after much of Europe suffered an economic downturn in the middle of last year undermining expectations of a revival in printing and ink markets.
Instead once again, in key parts of Europe, printing ink sales went down last year.
Europe’s export-orientated economies, particularly those in Western Europe, have been hit by the effects of diminishing growth in global trade, stemming primarily from trade disputes, decreasing growth in China and weakening manufacturing output worldwide.
Economic forecasters are predicting that the slowdown in Europe will continue well into 2019. The European Commission, the European Union’s Brussels-based executive, predicted in February 2019 that growth in the 19-country eurozone would dip to 1.4% in 2019, whereas only six months ago it was expecting an increase of 2%.
Growth in Germany, Europe’s biggest economy and largest printing ink market, dropped to 1.5% in 2018, its lowest level in 5 years. This year the European Commission is expecting German growth of only 1.1%, half its GDP rise in 2017.
France has been suffering in a similar way from faltering global trade with its GDP growth expected to go down to 1.3% this year compared to 1.5% in 2018.
Brexit Looming for the UK
The UK, which is due to leave the EU at the end of March nearly three years after a referendum in favor of Brexit, has been wracked with uncertainties about the circumstances of its departure.
By mid-February 2019, it has still not reached a collective agreement with the remaining 27 EU member states about the terms of its withdrawal so that there was a strong possibility that it would crash out of the Union without a deal. This would mean that immediately after Brexit, it would not only be a non-EU third country, it would be one without a free trade agreement with the remaining 27 EU member states. It would not even have a deal to negotiate with by far its largest trading partner, so its goods would instantly be subject to EU tariffs and non-tariffs.
A no-deal Brexit could pose huge problems for UK-based ink manufacturers who export a lot of their products to the EU and rely on raw materials imported from mainland Europe, which are likely to be affected by UK tariffs and non-tariffs.
Economists are warning that in the event of a no-deal, the country would go into recession, similar to what happened in Italy in the second half of last year due to falling output
and investment.
Printing and Ink Facing a Slowdown
With these four countries – Germany, France, UK, and Italy – accounting for a large proportion of Europe’s printing and ink sector, there seems to be little hope of a reversal of the trend in the last several years of overall declining output in printing and hence in inks and other consumables.
Even in 2020, forecasters are expecting only a slight improvement in economic growth in Europe.
The high-growth Eastern European countries will not escape the slowdown. Poland’s growth will drop from 5.1% in 2018 to 3.2% in 2020, while Hungary will fall from 4.8% in 2018 to 2.6% and Czechia’s (Czech Republic) from 4.4% in 2017 to 2.7% in 2020, according to European Commission figures.
One bright spot for ink producers is the prospect of lower raw material costs following a drop in oil prices, which should trigger decreased prices along the petrochemicals value chain. But these could be offset by increased pigment prices, particularly for titanium dioxide. In addition, shortages of products like photoinitiators look likely to continue to be a problem as well.
Also, there is rising hope – at least in the longer term – that print publishers will increasingly be able to claw back revenues lost to digital advertising and the rest of the electronic media because of rising political and regulatory pressures on online platforms in Europe. While printing and other traditional communications sectors have been going through hard times, social media funded by digital advertising has continued to thrive. Despite adverse economic trends, digital ad spend is expected to go on increasing at high levels while expenditure on advertising in newspapers, magazines and other print continues to fall.
The first warning signs that changing economic conditions were having a big impact on the European printing sector was in the third quarter of last year, when the softening global economy started to impact consumption and investment in Europe.
It was evident from data collected by the German coatings and printing inks association (VdL) that showed a sudden 5.4% drop in output and 4.7% in sales among its members in 2018’s third quarter. This compared with an output increase of 0.6% and a 3% sales rise in the second quarter and a rise of 1.4% and 3.6% respectively in the first.
By the end of 2018, it was apparent that VdL’s printing ink members had been hit the hardest, with their output dropping by 5.2% and sales by 3.5% during the whole year.
Production by manufacturers of automobile coatings plunged by 8.7% by volume but fell only by 1% by value.
For inks, the decrease was similar in size as that in 2017, showing that printing ink production has been falling for the last five years in Germany.
The VdL is expecting that the decline in inks will continue this year, although it is predicting it to be limited to 3.5%.
One significant feature of the VdL’s figures for 2018 is that the decrease seems to have included packaging inks, which in recent years in the European inks sector have been considered to be a segment of virtually assured growth.
The British Coatings Federation (BCF), whose members include printing inks as well as coatings producers, reported that its “resilient” packaging inks sector achieved a “small improvement” in 2018.
But there was a “further sharp decline” in the UK’s newspaper and magazine publications sector, according to BCF, with ink producers continuing to feel the full impact of the ongoing shift to the electronic media.
The UK wallcoverings sector, a large proportion of which is printed, had a “particularly tough year” mainly because of weakening demand in DIY retail outlets due to the uncertain economic climate causing consumers to put off home refurbishment projects.
The BCF Business Confidence Index dived last spring to its lowest level for at least six years before improving last October. But the association’s inks and coatings producers still remained anxious about future export sales and new investment levels.
At the same time, the country’s inks and coatings companies had to contend with continued rises in raw material costs, some of them stemming from a falling value of the UK pound in the exchange markets. In the first nine months of 2018, the index of producer prices for raw materials in the sector was 9% higher than in the same period in 2017.
Average prices for resins and related materials were 12% higher, according to BCF while the price for TiO2 was 20% higher than a year ago.
While ink and coatings producers and other UK-based companies contended with the effects of weakening demand and rising raw material prices, they also have had to plan ahead for a no-deal in the Brexit negotiations. This was to ensure that once departure takes place, the industry continues to remain a “just-in-time” sector with minimum disruption to supplies.
“A’no-deal’ Brexit will result in a huge loss for our industry and UK GDP as a whole,” said Ellen Daniels, BCF’s head of public affairs. “(Altogether) 98% of BCF members have some form of trade with the EU. It’s vital that we maintain frictionless, tariff-free trade.”
The planning for no deal for the inks and coatings sector has consisted primarily of stockpiling key raw materials and finished products, which has often required hiring more warehouse space. It has also necessitated going through the process of setting up subsidiaries or affiliates in European Union countries to comply with EU regulations requiring business activities to be carried out by EU-based legal entities.
Nonetheless, the BCF has warned that the impact of tariffs on non-EU goods could lead to the loss of £1 billion (€1.1 billion) in UK exports of inks and coatings because the duties imposed on them would result in significantly fewer customers in the 27-state EU.
Regulatory Concerns
Brexit will increase the complexity and fragmentation of regulatory controls on the manufacture and use of printing inks and other products across Europe.
The UK’s break with the trade pact could mean, for example, that there will be two versions of the EU’s 11-year-old REACH legislation on chemical safety requiring the registration, evaluation, authorization and restriction of chemicals.
Inks on the EU market will have to be complying with existing legislation administered by the Helsinki-based European Chemicals Agency (ECHA), while inks on sale in the UK are likely to have to comply with a UK version of REACH operated by a UK agency which has yet to be created.
UK-based producers are unlikely to have to draw up new REACH registration dossiers to comply with EU rules. But, in the event of no deal, they will have to go through the procedure of transferring their registrations to a representative or importer in an EU member state to ensure compliance with the REACH requirement that registrations must be based in the Union.
It is not clear yet whether UK-based producers will be able to use their existing EU REACH registrations to sell their inks in their home market or will have to draw up
new dossiers.
The last and third tranche of industrial chemicals on the EU market was registered under REACH in mid-2018, bringing the total of registered substances marketed in annual quantities of one ton or more to more than 25,000. Registrants are now obliged to keep their dossiers, which will be constantly evaluated by ECHA and national regulators, up to date and to ensure that the data inside them meet quality standards.
In a recent review of the REACH legislation, the European Commission concluded that “there are gaps and severe shortcomings in the chemical safety information submitted
by industry.”
Among the other areas in which chemical safety rules will become stricter and more detailed are food contact materials (FCMs). The European Commission is currently conducting a consultation with stakeholders on the necessity for additional measures to control FCMs, including printing inks and coatings.
In June last year, the European Parliament called for priority action by the European Commission on harmonizing at the EU level national FCM rules on printing inks, varnishes and coatings. The Parliament also urged proper assessments be carried out on impurities in chemicals in food contact materials and possible harmful chemical reactions in
FCM substances.
The European Commission, together with the European Parliament and Council of Ministers representing EU governments, are developing for an eventual EU-wide circular economy harmonized rules on the presence of potentially harmful chemicals in materials for recycling and reuse and ultimate safe disposal.
This will mean that ink and coatings producers will have to be careful about the types of chemicals used in all their products and possible changes in their safety profiles throughout their life cycles.
The EU has however been running into difficulties with the recent implementation of an ambitious packaging regulation for the serialization or identification of individual packs of medicines to combat counterfeiting of drugs.
The single packs have to carry a unique identifier comprising a product code, a serial number based on a randomized algorithm, a reimbursement number required by countries in which the medicine is marketed, a batch number and expiry date.
The unique identifier has to be encoded in a two-dimensional barcode within a machine-readable Data Matrix that can be accurately decoded by pharmacists using common scanning equipment at the dispensing point to the patient.
The scheme requires quality printing with high standard inks because the two-dimensional barcode has to be of sufficient resolution and durability to ensure accurate readability of the Data Matrix for at least one year after the expiry date of the pack or five years after the pack has been released for sale.
Soon after the regulation came into force in early February 2019, the central hub containing the data in the pack barcodes crashed. At the same time, pharmacists in some countries complained about being inundated by packs with non-compliant labeling.
Large numbers of SME packaging companies have been unable to afford the investment needed in new packaging lines, press equipment and inks. This has prompted some experts to predict that it will take a few years before the regulation is fully in force.
Inadequate new investment in new technologies could hold back packaging inks producers from realizing the potential for faster above-average growth not only in medicines but other packaging segments in Europe.
The apparent decline in packaging inks output and sales in Germany last year could have partly resulted from a softening of demand for added value inks.
“Unfortunately due to antitrust rules we do not have (firm) figures for packaging inks anymore,” explained Christoph Maier, head of the VdL’s economic and financial affairs department. “Our estimation is a small decrease for volume and sales in packaging inks in 2018 due to a weaker economy in Germany, especially for valuable packaging where more printing ink is needed.
INX International is expecting that the European packaging inks sector will continue to expand amid some switching in processes.
“(We) expect the packaging inks market to grow (in Europe),” said Peter Lockley, INX Europe president. “Although some exceptional circumstances may have a temporary impact on demand, e.g. in the UK if there were to be a hard (no-deal) Brexit, in general, we are not finding that demand in the packaging sector for our range of products is slowing down or declining.
“However, the rate of growth is always affected by the overall state of the economy,” he continued. “We expect migration from offset and gravure to flexo and growth of energy curable inks in the offset market. Digital solutions will continue to take a larger share as technology continues to improve.”
One segment in need of investment in the development of new technologies is the carton board segment of packaging, which has been taking share from plastics amidst increasing worries about the environmental impact of plastics waste. But to take full advantage of this opportunity, carton board needs the help of new inks and coatings technologies to provide the oxygen, moisture and other barriers and food safety features of plastic packaging.
The Publication Market
Although the European printing sector’s publishing segment continues to be hammered by the relentless rise in digital advertising, it does have a few success stories in its struggle with electronics competition.
For example, the output and demand for printed books have been rising while the steep rise in ebooks has been leveling out.
The UK book publishing industry, the world’s biggest book exporter, reported in July last year a 5% increase to £3.1 billion ( $4 billion) in physical book sales in 2017 while sales of academic journals also went up by 5% to £1.6 billion in the same year. Exports of physical books to the rest of Europe increased by 13%, according to figures from the UK Publishers Association.
Not all books sold by UK publishers are printed in the country or elsewhere in Europe, with some being printed in Asia. But with the aid of the introduction of digital printing technologies which is making European printing more cost competitive internationally, a growing proportion of books are now being printed in Europe.
Meanwhile, there are signs that sales of digital books in Europe, as well as academic journals, are beginning to stabilize. In the UK their combined sales went up by only 3% in 2017. Ebooks had a 16% share of the UK books market during the year.
“Society’s love of books in all forms shows no sign of waning,” said Stephen Lotinga, Publishers Association’s chief executive. “Publishers are catering to modern consumers who are reading books in different formats across different platforms, but are still showing a very significant attachment to the printed world.”
However, there are few signs yet of a reversal in the steady decline in the circulation sales and advertising revenues of newspapers and magazine across much of Europe because of the intense competition from online advertising.
In the UK, one of Europe’s largest advertising markets, internet advertising is predicted by the marketing investment company GroupM to grow by 8.6% this year despite the possible economic setbacks from Brexit.
This compares with 11% in 2018, but it is twice the average rise in total UK advertising, particularly with 5% to 10% decreases in advertising in national and regional newspapers and magazines.
Nonetheless, there are hopes in the print media that the growth in online advertising may be peaking with some leading advertisers starting to spread their ad expenditure more across a mix of digital and offline media.
“(The trend) is how best to combine the various media, traditional and new, to getter better results,” said Ashley Friedlein, president of the London-based digital marketing consultancy Econsultancy. “All the research confirms that smart combination of multiple media outperforms using fewer media.”
Furthermore, advertisers and their agencies are becoming concerned about the lack of transparency in “programmatic” advertising, the highly automated system for allocating ad space to digital advertisers in opaque and complex transactions.
Moves by advertisers to a greater mixture of media outlets could be accelerated by these worries and by the growing political and regulatory pressures being exerted on online advertising platforms, led by Google and Facebook.
In Germany, the anti-trust Federal Cartel Office (FCO) announced in February 2019 that it would be restricting the ability of Facebook to collect personal data, one of the platform’s major sources of revenue.
A select committee in the UK parliament has urged that Facebook should be more tightly regulated. A UK government review on the future of journalism has claimed that online advertising is a threat to democracy because the loss of advertising revenues has caused cutbacks by local and regional newspapers in the coverage of the proceedings of municipalities and other elected bodies.
The review, issued in February 2019, has recommended that public funds be used to help finance an independent means for supplying “public interest” news.
Advertisers are aware that dependence on digital media could be risky.
“Brands are realizing that being digital only can be extremely limiting,” Dan Davey, chief executive of the marketing agency Progressive Content, told the annual Power of Print seminar in London in November 2018. A rising number of politicians and the consumers they represent in Europe also want more even balance between digital and traditional media.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.