Hot Markets Update — Summer Hot Spots
SPRINGING FORTH from winter recession grayness is summer recovery greenery. Inflation and foreign investment are the fertilizers, and are very positive for printing—via marketing materials or money itself.
We, as with all custom manufacturers, pass along increased direct costs and, then, use cheaper-dollar revenues to pay down balances on imported machinery. “Paper profits” (including profits on paper itself) also take on weed-like life.
Happily, there are six blossoming, long hot summer categories ripe for the picking, while competitors watch the grass grow. Five of these directly relate to what people (you know, the “consumers”) do during warm months and long days. They eat, drink, play and buy houses!
The top two appetizers on the seasonal sales plate are packaged foods ($777B, +11 percent; with $11.4B to print, +15 percent) and food service ($691B, +5 percent; with $4.9B to print, +2 percent). Sticker-shock at the supermarket is forcing brands to double-up on ad inserts, co-op ROP, in-store promotion, coupons and, best of all, green labels and packaging.
There are thousands of food producers and dining-out chains and franchises. Imported foods are now very expensive and are being advertised extensively. Find foreign food producers looking to become domestic. Shop the shelves for brands and addresses, find contract manufacturers, and do the labels, cartons, closures and POP/POS.
With food, there’s thirst. Beverages ($366B, +4 percent; with $8.9B to print, +1 percent) is the ultimate seasonal category with most print spends at this time of year. Get to the distributors who have co-op dollars. Their trucks are everywhere, so follow them.
Travel/hospitality ($760B, +1 percent; with 7.3B to print, +1 percent) is shifting to close-to-home mini-vacations. Regional advertising, with direct mail, FSIs and outdoor, is hot, as are near-shore destinations such as Canada, Mexico and the Caribbean. While the airlines drag this sector down, the hospitality category is very dispersed and print-friendly.
Also in the state of play is gambling/wagering ($797B, +7 percent; with $4.9B to print, +22 percent). The impaired economy is lucky for casinos, lotteries—and printers. Record demand for slot machines and the OEM screen-printed components, large-format digital POP/POS at hundreds of new locations, and robust personalized direct mail loyalty programs are the best bets.
Leisure activity ($187B, -4 percent; with $4.1B to print, -12 percent) is off except for horticulture and hobbies. Sporting and wheel goods, recreational vehicles and fitness, pools, gyms and clubs are at saturation. A slowly recovering market in real estate ($2.1T, +1 percent; with $11B to print, +4 percent) will build printed guides, screen signage and digital sell sheets.
Beyond summer seasonals are five autumn demanders, plus one that comes around every four years like the flu. Elections/federal and local will have more than $1B in print heading for landfills the second week of November.
Higher education ($151B, +7 percent; with $3.2B to print, +7 percent) is responding to the astonishing loss of students to proprietary schools. Marketing 101 is now on the action curriculum, and printers have to get back on campus with recruitment solutions.
Fall fashion ($567B, +12 percent; with $8.7B to print, +1 percent) and personal care ($360B, +4 percent; with $6.8B to print, +5 percent) are seasonal buyers of heatset web ROP and inserts, sheetfed packaging, and both digital and screen printed POP/POS.
Freight/logistics ($624B, +9 percent; with $4.8B to print, +65 percent) traffic peaks in the fourth quarter. Chase after packing materials, business forms, fleet graphics, stamps and, in the most growth, large-format digital and screen mobile advertising.
Three non-seasonal sectors are making impressions. Computer software ($434B, +23 percent; with $11.1B to print, +13 percent) is concentrated in networking and mainframe computing ($3B to print, +35 percent) and complex support software and maintenance for mobile and other wireless devices. This convergence with telecommunications ($1.02T, +9 percent; with $8.7B to print, +4 percent) and entertainment ($711B, +9 percent; with $5B to print, +1 percent) is compelling for our medium.
Launches of products and services are print-intensive, and the sales connections have to be made six months or more before introduction. That’s now—because November is show time. There are rapidly increasing numbers and varieties of mobile devices and connectivity methods beyond cellular. Online help, graphics cards for games, streaming video, mobile banking, sales transactions, flash ads, etc., are driving these categories.
The remaining 10 largest economic categories are declining in print demand. Publishing/non-newspaper ($108B, -3 percent; with $15.4B to print, -2 percent) and banking/insurance ($3.2T, +7 percent; with $13.4B to print, -15 percent) remain the largest buyers, but both are challenged.
The only bright spots, respectively, are juvenile/adult trades (+4 percent) and retail banking commercial print (+10 percent).
Very disappointing are medical products/pharmaceuticals ($384B, +3 percent; with $112B to print, -7 percent) and automotive ($1.6T, +1 percent; with $8.8B to print, -2 percent). A lack of novel, new products plagues both sectors and our pressrooms. China, this year for the first time, will manufacture more medicines and automobiles than the United States.
Eventually, the same will be said of print media, where we have lost the bulk of packaging, label and OEM work for electronic products ($680B, -9 percent; with $4.1B to print, -15 percent), home improvements ($973B, +4 percent; with $6.8B to print, -5 percent) and discount retail ($1.02T, +2 percent; with $5.2B to print, -7 percent).
Last is government/federal and state ($4.8T, +4 percent; with $3B to print, no change).
In print sales, the best course continues to be concentration on the sectors with the most upside opportunity, taking into account the seasonal patterns of each. PI
About the Author
Vincent Mallardi, C.M.C., is a well-known printing forecaster and presenter at major industry meetings. He has been the author of “Hot Markets” for the past 28 years. The complete 196-page “Hot Markets for 2008-2009” report is available for purchase at www.pbba.org or by calling (866) 546-2005.
Vincent Mallardi, C.M.C., is a the chairman of the Printing Brokerage/Buyers Association International (PBBA) and is a Certified Management Consultant in the paper, printing and converting industries. He is also an adjunct professor in economics. Contact him via email at vince@pbba.org