Insights from an Industry Expert

Economist and certified management consultant Vincent Mallardi is the gold standard source of data and insights about where different segments of the printing industry are going.

For more than 36 years, Mallardi has chaired the Printing Brokerage/Buyers Association International (PBBA). In this role, he oversees the organization’s Online Source Guide of more than 27,000 print brokers, print buyers, print-service providers, and print-industry suppliers.

Mallardi leverages these industry connections to research and write two popular yearly reports: “25 Top Hot Markets for Print” and the “100 Largest Print Buyers.”

Organizations can use these reports to develop plans for investments, equipment purchases, or account-based marketing strategies.

The LaManna Consulting Group engages Mallardi to provide information to private equity groups and others who are interested in buying packaging, labeling, wide-format, or specialty graphics operations.

Because many of these businesses are privately owned, Mallardi provides specific economic, ownership, and customer data that are almost impossible to get from generic business-data services.

About the Hot Markets Report

Mallardi’s “Top 25 Hot Markets for Print” report presents an in-depth examination of how different segments of the economy use different types of printed products.

Before investing in a printing company, you can use the report and Mallardi’s consulting services to determine whether the company you are considering buying serves markets that are fading, stagnant, or growing. The data can also help you determine whether the company is poised to deliver the types of printing that are likely to be most in demand over the next few years.

Mallardi has been tracking the Hot Markets for Print since 1980. He uses a variety of
quantitative and qualitative methods. In addition to insights from PBBA members, he reviews statistics from sources such as the United States Postal Service, the Consumer Price Index, the Federal Reserve Board Index of Industrial Production, and the Index of Leading Economic Indicators,

“The printing industry has never grown in lockstep,” Mallardi explains. Every year, some segments grow while others decline.

Some markets (e.g. packaged foods, beverages, and health providers) experience linear growth as the population increases. Other markets are more cyclical or are susceptible to temporary or permanent disruption by digital alternatives to print.

For example, many printed outdoor billboards and indoor printed signs are being replaced by digital signs. Printed books, magazines, and billing statements have also been affected by digital alternatives.

Each of the “hot markets” in the report has its own distinct set of packaging and promotional requirements: “There is quite a lot of variation in each category.” says Mallardi.

The types of printing each market segment uses are affected by the nature and scope of the business and the type of people who use their products. The volume of printing within each segment depends on the overall size of the market as well as shifts in economic, governmental, and technological forces within each industry.

“Understanding the categories matters,” says Mallardi, because “If you’re going to make an equipment decision, you must make it on tighter requirements than simply wanting to produce food packaging.”

To give you a sample of what his reports contain, we’ve summarized 10 of the 25 hottest markets for print in 2021.

Top Ten Markets in 2021

According to Vince Mallardi’s 2021-2022 “Hot Markets for Print” report, the printing industry is expected to reach $221.2 billion in sales this year. This is a 2% increase from 2020. Some of that rise will be driven by a pent-up demand for experiences and services that were shut down in 2020.

Mallardi admits that putting together the 2021-2022 edition of the “25 Hot Markets” report was difficult because so much uncertainty still exists about how fast various regions and segments of the economy will recover.

Plus, the COVID pandemic accelerated trends such as e-commerce, remote working, and the acceptance of online education. Some trends may have a lasting impact on the economy.

Here are a few observations about the 10 hottest markets on the list. Note that each market includes several sub-categories. Not all sub-categories will grow at equal rate.

1 Packaged Foods

Projected 2021 Revenues: $1.684 trillion (+8%)
Potential Spending on Print: $26.8 billion (+16%)

Segment Categories: Bottled/Canned Foods, Dry Foods and Snacks, Confections/Baked Goods, Other Fresh Packaged, Pet Food, and Residual.

Factors that influence growth include increased demand for single-serve packages and the rising acceptance of online ordering and home delivery of groceries. As more groceries are ordered online, the need for shipping boxes may increase while the need for in-store point-of-sale graphics may decline. When the purchasing decision isn’t made while the consumer views competing products on a store shelf, the importance of eye-catching, tactile packaging designs may decrease.

Over time, direct-to-object printing may reduce the need for companies to print and apply labels. Direct-to-object printing technology enables all label information to be printed directly on the package, no matter what shape it is.

According to Mallardi’s report, “Best positioned are corrugated and board printers and converters, and wide-format flexography for imaging polyethylene (PE) stretch wrap. In worst place are producers of (and suppliers to) bottled and canned prepared products.”

2 Medical/Pharma

Projected 2021 Revenues: $891 billion (+13%)
Potential Spending on Print: $19.6 billion (+4%)

Segment Categories: Medical Products; Pharmaceuticals/Biotech, Wellness Management/COVID Products.

The need for smart, compliant packaging drives demand. This includes: miniature, folded inserts; expansion labels; and blister packs, Other print includes waiting room posters, retail point-of-sale displays, and magazine ads and inserts.

As the need to promote COVID testing and vaccines wanes, print will be purchased to promote new types of medical devices.

Pharmaceuticals and biotech will benefit from the fast-track R&D experience of the COVID vaccines. Collaboration during COVID projects may lead to mergers within Bigger Pharma.

Emerging segments worth watching include cannabis products and telemedicine.

3 Health Providers

Projected 2021 revenues: $5.4 trillion (+12%)
Potential Spending on Print: $18.1 billion (+16%)

Segment Categories: Hospitals, Private Practices, Health Insurance, Third-party Administration, and Nursing/Home Care.

The return to “normal” will enable hospitals to bring back higher-revenue, private, non-emergency admissions, elective procedures, and outpatient activity. This will drive demand for new logos, decor, periodicals, outdoor advertising, and transit print.

Private physician practices are declining while the number of urgent care centers is increasing. Urgent-care centers may bring new names and the need for new brand identity graphics and care center decor.

The walk-in model is evolving into pre-care club memberships or concierge medicine, and affiliations with fitness centers, nutrition groups, or self-development groups. These new models will require promotion through open houses, loyalty programs, direct mail, and promotional products.

4 Beverages

Projected 2021 Revenues: $547 billion (+2%)
Potential Spending on Print: $11.1 billion (<4%)
Segment Categories: Soft drinks; Beer, Wine, and Spirits; Waters, Juices, Infused; and Coffees/Teas.

Demand for beer is declining while very positive outlooks exist for wines, liquors, and infused flavor beverages. Soft drinks are in the 14th year of flat to reduced consumption but still comprise ⅓ of the beverage sector. Coffees, teas, and juices will remain steady.

Types of print used include paperboard carriers, metal decorated cans, aseptic packs, stretch wraps, adhesive labels, bottle closures, floor and wall graphics, window clings, POP/POS displays, branded apparel, and vehicle wraps.

5 Publishing (non-newspaper)

Projected 2021 Revenues: $77 billion (-5%)
Potential Spending on Print: $10.9 billion (-12%)

Segment Categories: Professional/Educational books (and downloads); Periodicals and Ad Inserts; Adult/Juvenile Trade and Spiritual Books; Greeting Cards; Wrapping Papers; and Social Custom Prints.

Titles related to divisive politics and the presidential election have spiked and will level adult and juvenile trade book publishing to one-third of this segment. Periodicals are in steep decline, while religious publishing and professional and academic publishing will rise. Demand for greeting cards, envelopes, gift bags, ribbons, and wraps will remain steady.

One product that has potential for small-to-mid-sized shops is illustrated novels (e.g. comic books).

6 Real Estate

Projected 2021 Revenues: $2.47 trillion (+4%)
Potential Spending on Print: $10.8 billion (+0%)

Segment Categories: Residential (new and resale), Residential rental home/apartments, Residential condo, Commercial and manufactured; and Mortgages.

Retail closings and downward office rent renegotiations are collapsing commercial real estate. Skyscrapers, big-box stores, and shopping malls are becoming irrelevant and may need to be repurposed. The development of alternative uses for existing building spaces will create a demand for directional signage, decor print, and advertising materials.

Residential real estate is booming. Homebuilders and real estate professionals could generate an increased demand for signs, guides, free-standing inserts (FSIs), sell sheets, forms, direct mail, stationery, and 3D modeling.

Residential rental will be less tight as home buying rises.

7 Travel/Hospitality

Projected 2021 Revenues: $720 billion (+4%)
Potential Spending on Print: $10.2 billion (-5%)

Segment categories: Hotels/Resorts, Airlines, Cruise lines, Rail, Bus, and Car Transit, Destination Parks and Attractions.

After a horrific crash in revenues in 2020, the three primary segments of the travel industry (hotels, airlines, and cruise lines) have begun a slow 5-7-year recovery. Airports and airlines will continue mandatory spacing and reduced flights, which will partially be made up by increased air freight activity. Occupancy in lodging will slowly increase. Homestays will resume double-digit growth and challenge the hotel/resort categories.

International schedules will partially recover Cruise lines will resume activity with fewer ships and schedules for the first time in 70 years.

Print requirements will include updated schedules, travel catalogs, posters, periodicals, onboard and in-room amenities, and directional and decorate signage.

8 Telecommunications

Projected 2021 Revenues: $1,39 trillion (-2%)
Potential Spending on Print: $9.8 billion (-2%)

Segment Categories: Print and Online Directories: Wireless Mobile, Cable/Satellite/Pay-per-View; Wire, Local, Toll, Internet, Other equipment.

Five large companies out of 1200 smaller operators will account for ½ of the total print demand.

Types of print include retail packaging of mobile devices and accessories, in-store signage, window graphics and outdoor signage and transit advertising.

9 Personal Care

Projected 2021 Revenues: $597 billion (+11%)
Potential Spending on Print: $9.0 billion (+9%)

Segment Categories: Cosmetics and Toiletries; Fragrances; Hair, Skin, and Sun Care; Hygiene, Sanitary; and Animal/Pet Care.

The demand for sanitary/sanitizing products will rise 10% in 2021 (after doubling in 2020) The demand for cosmetics, perfumes, makeup, and toiletries have dropped (-10%), but the demand for hair, skin, and sun-care products are rebounding (+8%).

In-home network-marketing operators are reaching out to consumers with new private-label offerings. Postcards, packaging, fragrance cards, samples, and gift wraps are replacing retail store display graphics.

10 Banking/Insurance

Projected 2021 Revenues: $5,870 (+3%)
Potential Spending on Print: <$9.0 billion (-9%) Segment Categories: Commercial Banking, Life Insurance, Property Casualty insurance, Credit/Debit payments systems. Consumer branch banks are not where the money is made by big banks. Remote transactions are becoming the norm, which means that paper forms and checks are gone. Direct mail, commuter rail, and event-sponsorship print have been used to promote the migration from brick-and-mortar banking.

The Other 15 Hot Markets

The other 15 segments on the Top Hot 25 Markets list for 2021-22 include:

11 Foodservice
12 Home Improvements
13 Automotive
14 Discount Retail
15 Entertainment
16 Fashion
17 Security/Protection
18 Logistics/Freight
19 Investments/Brokerage
20 Leisure Activity
21 Computerware
22 Primary/Secondary Education
23 Government (Federal and State)
24 Energy
25 Gaming and Wagering

Altogether, the Top 25 Hot Markets may account for up to 97% of the total amount spent on print in 2021.

The Hot Markets Continually Evolve

The top 25 segments vary each year. For example, some segments that dropped off the Top 25 list in 2021 were:

  • Higher Education
  • Electronics (Non-telecom and robotics)
  • Societal Activity (Elections and Charitable Giving)

The shutdown of college campuses affected not only classrooms and dorms, but also bookstores, events, and stadium graphics. How many students will choose to return to campuses in 2021 is still unclear.

The electronics category, which once focused on the sale of TVs, radios, cameras, camcorders and iPods, is in a state of flux. Consumer electronics today include in-home robots and Internet of Things devices such as wearable devices and the Amazon’s Alexa personal assistant.

Another market that has been transformed by technology is telecommunications. In 1980, the telecommunications category referred primarily to landlines and switching equipment. Today, telecommunications primarily refer to Internet communications and mobile phones.

The popularity of different forms of printed products changes over the years, too. For example, targeted direct-mail has regained popularity because it provides a way for digital marketers to cut through the clutter of email and other online messages that are easily deleted.

As the demand for corrugated shipping boxes rises, marketers may choose to include printed promotional inserts into home-delivered boxes or print targeted ads on the shipping boxes themselves.

The digital transformation of printing is enabling print-service providers to offer dozens of innovative and measurable formats that weren’t economically feasible before.

Updating the annual “Hot Markets” report is an ongoing process, says Mallardi, partly because earnings reports and other statistics are released at various times of the year.

Private equity groups hire Vince Mallardi to drill down further into the print markets of a specific market segment or region: He says, “They are investing large amounts, so they need detailed and reliable financial information.”

Mallardi enjoys these assignments because it gives him the chance to study data at granular level and project it out to the larger market.

Even if you don’t plan to invest in a printing-related business, it can still be helpful to follow Mallardi’s “Hot Markets for Print” report. Because printing is used by so many different segments of the economy, fluctuations within the printing industry can be considered leading indicators of the economy as a whole.

As Mallardi points out: “When people start buying more printing, it means the economy is going up, and when they buy less, it’s going down.”

For More Information

An 8-page summary of the Hot Markets for Print report was published earlier this year by Printing Impressions (NAPCO Media). You can download that 8-page summary here.

The full “Hot Markets for Print” report is more than 130 pages long and includes detailed projections by the segment subcategories and geographic regions. The detailed report also discusses the types of printing each market segment buyers.

The LaManna Consulting Group retains Vince Mallardi and the PBBA data room for our M&A due diligence research.

“Vince’s information is extremely valuable for the buy side process to understand and dive deeper into the evaluation of a potential industry seller,” explains Rock LaManna. “Over 90% of print companies are privately held and Vince has decades of experience and data to organize. He can provide information about suppliers, customers, competitors, number of employees, facility sizes and more. Call me at 561-543-2323 to learn more.”

For more information about the the “25 Top Hot Markets for 2021/2022” report, the PBBA, or Vince Mallardi’s consulting services, call Vince at 215-821-6581 or via email at vince@pbba.org.