This Key Note Market Report analyses the UK market for printing and its suppliers. Printing permeates almost every UK business sector, making it an indicator of the health of the whole economy. The market is a net contributor to the UK balance of payments, despite the fluctuations in the exchange rate. However, despite all these inherent strengths, the current economic climate finds the printing market under intense pressure. The major issue affecting companies in the market — with the exception of market leaders, such as De La Rue — is weak profitability. Profitability has been poor for around a decade, but it has become a particular concern over the last 5 years, since 2002. Key Note estimates that the UK market for printed products in 2007 was worth £11.62bn.
The UK printing industry provides products and services to the following business sectors: advertising literature; books, brochures, leaflets and reports and accounts; bound stationery; business forms; newspapers; packaging; periodical and journals; printed labels; programmes, tickets, vouchers and business cards; and security printing.
2007 was a particularly difficult year for the printing market. The volume of demand for printed products was generally stable and, in total, appears to have grown. However, some sectors suffered a fall in demand. Furthermore, printers faced rising prices for their basic raw materials — energy, paper, board, plastics and inks. Conversely, the intense competition for print contracts keeps prices low.
The UK printing market is fragmented, with thousands of small and medium-sized firms: only 3.3% of companies recorded sales of more than £5m, and only seven UK companies reaching turnovers of £300m or more. Gradually, year by year, the number of printing companies is shrinking; and it is clear from a survey by the British Printing Industries Federation (BPIF), in 2007, that every printer expects this trend to continue, and that most printers expect it to accelerate.
The industry continues to restructure, with acquisitions, mergers and management buyouts (MBOs). As a result, private-equity firms have taken an interest in the market, aiming to take advantage of the trend towards consolidation, by investing in companies that they believe are in a good position to acquire competing or complementary businesses. Two sectors that are especially susceptible to consolidation are book and magazine printing, and this is likely to continue into 2008.
The main threat to the printing industry is the Internet. Not only is advertising slipping away to online sites, but in some print sectors — such as catalogues, brochures, reports and accounts, and stationery — the Internet is replacing printed media. For the management of the industry, training is a pressing issue, and will need to be addressed more vigorously in 2008.
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