Current State and Growth of the Production Inkjet Printing Market

The year-end data for 2022 is not yet final, but from all indicators it was a great year for production inkjet printing. A confluence of variables amplified the inherent flexibility benefit of digital production printing, chiefly among them the rising cost of paper and labor, which drove demand for smaller run lengths, faster turnarounds, and more versioning with relevant content — effectively stealing volume from what remains a very large offset printing market.

Print providers faced slightly less challenges in obtaining paper, but paper pricing continued to increase. Bigger challenges were finding and retaining qualified labor, which drove up labor costs, a challenge that is not expected to abate. While no one likes rising costs, the majority of print providers were able to pass along those cost increases to their customers, while quietly taking a little extra for themselves.

As a result, many print providers using production inkjet output devices had a good financial year in 2022, but the day-to-day challenges aren’t getting any easier. It’s a much more emotional business, managing customers and staff expectations during what remain uncertain supply chain challenges. With lots of unpredictability in incoming orders, supply of materials, and labor, everyone is looking to develop an infrastructure that provides more flexibility.

Fortuitously, production inkjet technology continues to get more flexible and capable. New introductions of both continuous-feed and cut-sheet inkjet presses are up to 30% more productive than prior generations, while being able to print on a wider range of substrates. This has been particularly important when it comes to commercial and direct mail printing applications.

Decline of Transactional Printing Output

While continuous-feed inkjet page volumes are up about 15% from 2021/2022, success in growing print volumes has been uneven. For years inkjet technology benefitted from transaction print providers moving pages from toner to inkjet presses. Today, transaction print volumes are in overall decline, driven by rising paper and postage costs, causing statement providers to accelerate their shift from print to electronic communications.

Conversely, direct mailers are finding a resurgence in print, as social media advertising is being constrained in its effectiveness by tightening communication privacy laws. While also faced with higher paper and postage costs, the ability to better target prospects through versioning and more relevant (and sometimes personalized) offers is increasing the return on investment compared to static offset-printed direct mail. And unlike electronic direct marketing, direct mail in the U.S. is unstoppable, and effectively continues to be subsidized by the USPS in comparison to most other major countries in the world.

The growing availability of both cut-sheet and continuous-feed inkjet presses that can print on glossy offset coated stocks is fueling the growth of inkjet printed direct mail. A major breakthrough has been advances in the ability to inkjet print on thicker substrates like postcard stock, at rates of productivity previously not attainable.

Continuous-feed inkjet volumes continue to rise, despite the decline of transaction printing due to electronic alternatives.

Commercial Printers Comfortable With Cut-Sheet

Commercial printing, a category consisting of a broad range of applications ranging from business cards, flyers, and marketing collateral, to point-of-purchase posters, is also starting to discover production inkjet printing. Most commercial printers are interested in cut-sheet inkjet presses because that format conforms to the workflow they own and know, with the exception being applications that have consistent formats and high volumes, whereby continuous-feed inkjet is the far more productive option. Because of the flexibility of these devices, and the ability to print multiple applications on a single press, IT Strategies is finding that commercial printing is converging with direct mail.

The fastest growing application for production inkjet is book printing. Few would have predicted the growing demand for printed books 10 years ago during the onslaught of e-readers, but COVID helped fuel humanity’s need for the feel and comfort of a good book to escape from the pressures of daily life. In the U.S., some unique aspects of the book market helped to drive demand for inkjet printed books to record levels.

A single online retailer now controls more than 50% of all books sold in the U.S. That retailer has cultivated a consumer customer base that expects rapid delivery and low prices, based upon the retailer and its publishers running lean inventories. With the supply chain challenges in obtaining printed books from the Far East, the U.S. has seen a rapid return of book manufacturing, or what one might call its on-shoring.

There are only a few hundred book manufacturers left in the U.S., but many operate multiple continuous-feed inkjet presses, with quite a few having more than three of them, and one book manufacturer said to have in the tens of devices.

In total, continuous-feed page volumes were up about 14% from 2021 to 2022, despite the decline in transaction print volumes (see Figure 1). As the data shows, the strongest growth is expected to continue in books and general commercial/direct mail.

Figure 1: Continuous-feed Inkjet Pages (Billions) by Application WW 2019-2027

Click to enlarge.

Cut-Sheet Inkjet Volumes Grow Rapidly

The cut-sheet inkjet market is younger than the continuous-feed inkjet market, and the average print volume per device is about 4.5x lower than that of a continuous-feed inkjet press. The combination of a much smaller installed base and lower monthly print volumes per device resulted in a page volume total for cut-sheet inkjet printers that was about 6% of the total pages printed on continuous-feed printers in 2022 worldwide. In part because it is still such a young market, cut-sheet inkjet saw tremendous volume growth in pages during 2022.

The growth in cut-sheet page volumes did not result from an increase in new machine sales (the manufacturing industry is still struggling with supply chain issues), but rather because the average capacity utilization increased above normal as a result of COVID-accelerated trends. The value of cut-sheet inkjet can be mainly attributed to its flexibility.

The majority of cut-sheet inkjet presses match output quality to offset and digital color presses and, unlike older digital color presses, offer the productivity required to meet customer turnaround and job volume requirements. IT Strategies preliminarily estimates that the market saw between 30-40% page volume growth in cut-sheet inkjet pages, far above other printing technologies.

Most of the growth has come from direct mail/general commercial printing applications, which accounted for nearly 60% of the pages produced. Transaction pages accounted for about 20% of pages (mainly on first generation, B3-format, cut-sheet presses), books for about 10% of the pages (photobooks, art books), and other pages (point-of-purchase signage, etc.) account for the remaining 10% of pages printed.
On the same scale of the continuous-feed page volume graph (Figure 1), the cut-sheet page volumes (Figure 2) look deminimus.

Figure 2: Cut-sheet Inkjet Pages (Billions) by Application WW 2019-2027

Click to enlarge.

The relatively low page volume begs the question of whether cut-sheet inkjet is replacing offset pages. Clearly the answer is not yet. IT Strategies estimates the majority of B3 inkjet presses have been installed as replacements for older digital color presses, offering higher productivity/lower running cost. The B2 and B1 cut-sheet inkjet presses have mainly replaced offset presses but, in many cases, they are doing something that offset wasn’t able to handle, such as very high amounts of versioning for rapid turnaround print jobs.

Consolidation Driven by Less Demand for Offset

The commercial printing market, towards which many of the production inkjet presses are targeted, continues to consolidate as demand for offset printing plummets. Total offset pages are down nearly 50% since 2012, and the rising price of offset paper (up more than 40% since 2019) is making print more and more of a luxury. While that is bad news for the commercial printing industry — whose business model has long been based upon ever larger economies of scale — it is good news for the production inkjet printers whose inherent technology benefit of being able to produce just-in-time, small print run/high-frequency change jobs make it the technology of choice as we head into the future.

Over the last decade, the number of commercial printers in business has declined around 3-4% annually. While this attrition rate is significant, it hasn’t declined as much as the demand for offset printing. This has led to large interest in private equity-driven market consolidation — entities who are shedding offset capacity, and investing heavily in driving more automation to what has historically been a manual labor-intensive industry.

IT Strategies predicts this means we’ll see more and more large account deals for production inkjet presses, as those consolidated entities’ main concern is reducing their dependency on labor. The commercial printing industry’s transition from a world of “haves and have nots” will likely accelerate. The “haves” will continue to invest, and to depend upon automation and products like production inkjet presses to growth their revenues and profits.

The “haves nots”, the ones that cannot afford to invest, will try to hold onto the labor-intensive business models, depending upon fully amortized offset printing presses to carry their ever-growing labor challenges and costs, until their business model is no longer tenable. In many cases the decision to continue to follow the latter business model is tied to the ownership’s age, where looming retirement makes it unattractive to invest in new technology and automation.

As all of these trends shake out, it will drive up the demand and usage of production inkjet presses. The discussions about production inkjet no longer revolve around “does it meet offset output quality?” but rather "when do I add my second, third, or even 10th production printer?” The tipping point when more pages will be printed inkjet than printed offset is unlikely to happen during the 2020s, but statistically we’re set on a path where that ratio will certainly occur in the 2030s.