Top 25 Hot Markets for Print Demand in 2016 Ranked by Demand Sectors/Categories

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The 2016 campaign promises to be about the same as last year; or maybe a point better, with nominal U.S. print revenues at $198B (+1 percent). This will be one-half of nominal GDP growth. To exceed overall expectations requires our industry to concentrate sales efforts among 13 demand sector/categories that will range from 5 percent to -21 percent growth. In addition are the four-year election season and the emergence of new demanders never before imagined.

The No. 1 print buyer will continue to be packaged foods ($1.27T, +3 percent; with $18.4B to print, +6 percent). The consumer shift from processed to “natural” foods will have the major 25 participants re-branding and re-packaging to maintain their collective one-half market share. Nestlé (+7 percent) will dominate at one-third of the new fresh frozen category by changing the way it prepares and presents its contents. Kraft Heinz and its spinoff, Mondelēz , will continue to co-brand food pairings with complementary outside packagers as with the long-running “s’mores” promotion with Hershey (+4 percent).

Ethnic offerings, led by Goya Foods (+92 percent), will have the largest number of new entrants, many offshore-to-onshore. Along with fresh prepared (+11 percent) and pet foods (+8 percent) there will be robust demand for roll flexo, variable-shrink and single-portion, and litho combo-packs and mass-container displayers. Also anticipate genetically-modified organism (GMO), or non-GMO, labeling on all foods on-pack or on-product.

Going with food at No. 8 is beverages ($480B, -2 percent; with $10.1B to print, -4 percent). The largest category, beer, wine and spirits (-2 percent) is in consolidation mode. Mega-mergers, as between Anheuser-Busch Inbev and SAB Miller, will be conditioned on divestitures in brands and realignments in distribution. More competition, rather than less, will pour into print for novel labels, carriers, closures, ad specialties, POP/POS and other large-format out-of-home.

Craft brews, small-batch wines and flavor-infused distilled drinks will take a 6 percent gulp in net share from the large producers. These boutique beverage market participants will use variable data direct mail and loyalty programs as interstate sales pop after shipping rules are diluted.

Soft drinks (-5 percent) will decline further, but at a lesser pace. PepsiCo (+6 percent) will lead a possible turnaround with hybrid drinks that converge with coffees and teas (+4 percent). Starbucks (+11 percent) will slow as other beverage brands branch out to retail. Dunkin’ Brands (+18 percent) is demonstrating how to leverage its brand across 100 percent independently-owned restaurant, grocery and institutional outlets while owning the ingredients.

Herbal, infused, energy and juice drinks categories will continue moderate growth. Dairy (-9 percent), with the exception of Shake Shack (+13 percent)—which will add 380 stores—will need to churn its image to reverse a five-year decline.

Completing the foods sector, and best for print media, is No. 11 food service ($968B, +6 percent; with $7.5B to print, +7 percent). Full-service restaurants will lead print demand increases as more take-out and take-home options are added to the dine-in. Darden (+9 percent) and DineEquity (+9 percent) will lead among the company-owned and independent locations across the country. Print excitement in fast-foods/casual dining (+8 percent) is in the home-delivery space. First-mover GrubHub (+53 percent)— with 35,000 restaurants—will be joined by Yelp (+62 percent), after its acquisition of Eat24, UberEATS (+45 percent) and a large menu of regional “food-runners.” There will be intense direct mail, vehicle wrap, FSI and signage buying.

New concept eateries will continue to starve out more established players whose same-location revenues are stale. McDonalds (-11 percent) contrasts with Chipotle (+14 percent) where the difference is the healthy quality of food served. For Wendy’s (-58 percent), 2016 is a turnaround or turn-off-the-fryer year. It will close 240 or one-third of its company-owned outlets and spend substantially on franchise development and increased traffic.

Our industry must get increased print onto the marketing “menus” in this widely dispersed segment. It’s a New Year’s must-do!

No. 2 medical/pharma ($572B, +6 percent; with $16.1B to print, +4 percent) is in stable condition while the prognosis for No. 6-ranked health providers ($3.60T, +<2 percent; with $11.0B to print, +4 percent) is the most positive it’s ever been. Huge acquisitions, as with UnitedHealth (+52 percent), HCA (+27 percent) and a slew of other vertically integrated health insurance (+11 percent) providers with hospitals (+9 percent), signal massive marketing efforts to establish new and modified brand awareness and share.

Print variable data transpromo direct mail, out-of-home transit, facility signage and hand-out ad specialties will be especially vigorous, even as paper forms and labels continue to succumb. In pharma (+6 percent), sheetfed litho cartons, blister-packs, corrugated displayers and package inserts will continue to be prescribed. Flexo labels and shrink sleeves for medications and vitamins will be level, and only for those plants already producing them. New entrants stay away.

Oppositely, health care 3D printing is open for all newcomers. Synthetic substrates and specific-function inks, layered or weaved in-and-out of plane, is the most remarkable dimensional extension of our medium. To ignore it is like being a blacksmith a century ago.

Rising to No. 16 is personal care ($455B, + 5 percent; with $5.9B to print, +4 percent), cleaning up and grooming nicely for the next two years. Procter & Gamble (+3 percent)—the world’s largest consumer products company—will be post-restructure, and will have trimmed half its number of brands to its strongest 100, with emphasis in hygiene/sanitary/household products (+10 percent).

As P&G exits color cosmetics, hair and skincare, and fragrances (+6 percent), these categories will consolidate. P&G-shed brands will be tucked in to the offerings of new participants from other sectors, notably the online and big box retailers. Avon (-7 percent), Revlon (-3 percent), Mary Kay (-5 percent) or more brands will likely merge or be bought out. Trimmed lines will be re-packaged—a large-format sheetfed, folded carton opportunity—and rebranded.

CVS Health (+36 percent) will rename and decorate 4,600 Rite Aid stores after acquisition, as the Walgreen Boots Alliance is doing in Europe. The two firms will account for more than 60 percent of prescription orders, and will offer convenient health maintenance centers adjacent to the pharmacies, always in the back. Private label, non-prescription offerings will overtake name brands on the shelves. Consumption is increasing with the aging population: healthy for litho and gravure printing, and converting. Packaging, POS/POP, store signage and more FSIs will be scrip-ted.

Bound at No. 5 is publishing/non-newspaper ($75B, 0 percent; with $11.0B to print, -5 percent). The sector will continue to decline in print demand. but with very high margins for the publishers at our cost. Only in the United States is this sector giving up on print and throwing itself at digital. Print demand in the rest of the world is forecast up 2.3 percent across all categories to $273B (2017).

The few remaining U.S. book manufacturers and periodical printers will be more squeezed by the publishers, most of whom are now foreign-owned and indifferent to where they source. Cover prices are going up, unit demand is falling and margins are not survivable. Mergers will not cure print; only the unlikely restoration of the famous copyright “manufacturing clause” our industry allowed to disappear a half century ago. (What was anyone thinking back then?)

Popular/trades (+5 percent), the second of only two segments in growth, are increasingly being printed in China and Turkey at one-ninth of retail. The old-normal was one-sixth when produced domestically. Level are professional/educational (0 percent) textbooks and consumable work materials. All are grappling for content-rich sources for some print, but mostly digital, distribution. John Wiley & Sons (0 percent) is entering into joint ventures with trade groups. The first, with the ASME (American Society of Mechanical Engineers), is a minimum of 10 titles in 2016; more in the following years. HMHC (0 percent) are running losses at one-tenth of revenues.

Periodicals (+0.6 percent) will get a lift from new titles that complement online social media. Time Inc. (+1 percent) is buying small digital distribution companies to leverage their content; the latest is Hello Giggles. It is also testing money-back guarantees “if your ad doesn’t pay for itself.” Next, they will be asking the printers to kick in when the metrics go “south!”

Online greetings are impacting social expressions/cards (-10 percent) and envelopes. Gift/party-ware (+7 percent) will counter the decline, but with one problem—the paper and print are largely imported. American Greetings (+8 percent) will continue at one-third the size of Hallmark (+8 percent).

Drop-called to No. 4 is telecommunications ($1.48T, 0 percent; with $11.4B to print, -7 percent). The only growing ring to print is mobile, other wireless (+6 percent) where T-Mobile (+11 percent) is gaining share against AT&T (+2 percent), Verizon (+1 percent) and Sprint (-4 percent). Direct mail, out-of-home and in-store graphic demand will benefit VDP digital, web offset and wide-format screen printers.

Telecom equipment (-6 percent) will be on hold as consumers cannot keep up with the proliferation of offerings. Too many phones and too little disposable personal income will benefit retail ROP and FSI promotional coupon and event web work, and out-of-home digital signage.

Cable/satellite (-4 percent) is reciprocally growing the dish at the sacrifice of the wire. Both deliveries are doomed in the developed, computer-crowded PC2TV-ready economies. The rest of the planet will receive more satellite delivered content past 2020. Flat will be directories (0 percent) as there can be no fewer places for yellow and white sections to be. Print search has outlasted phone booths and land-lines for at least one more generation– and small businesses continue to sign on.

Gordon Henry, chief marketing officer with Dex Media (-6 percent), sees the future to be “enhanced print with online presence” as with their DexLnk offering. Visual search will replace voice and text, and should be a big boost to out-of-home print as the most efficient delivery medium for pictorial content.

Also in tech are No. 17 computer-ware ($838B, +3 percent; with $4.8B to print, -16 percent) and No. 20 electronics ($708B, +2 percent; with $3.7B to print, -19 percent). The only print not offshore is transit, in-store and direct mail, but at substantially reduced consumption. The breakup of Hewlett-Packard into three companies and the expected return of Dell to the public marketplace will help our medium. Along with Best Buy (-10 percent), these top three advertisers account for 30 percent of print spend in this space.

Look for Apple (+22 percent) TV as a 2016 game-changer as viewers opt to drop cable and satellite. The rollout will be entirely OOH screen and litho, similar to past introductions by the company.

The financial sector will continue to withdraw from our medium with the usual exceptions of card-issuer direct mail and name change-related signage. No. 7 banking/insurance ($4.87T, +7 percent; with $11.0B to print, 0 percent) will continue to close more offices than open. Screen and wide-format digital shops will be most adversely affected. No brand changes are forecast except among some of the regionals that will merge.

This sector regards our medium as for awareness-only, not for selling. Ad specialties, events and sponsorship print are all that remain. One selling opportunity will be in mobile payments adoption, something the banks want to succeed. Ten participants will account for 25 percent of the print demand. Capital One (+10 percent) will increase the most.

At No. 18, will be investment/brokerage ($1.32T, +3 percent; with $4.5B to print, -8 percent), which is no longer promoting to individual investors. High-end VDP view-books, portfolio reviews, mutual funds direct mail and transit cards for online brokerage should be level. Vanguard and FMR Fidelity will be at 8 percent of total print to this segment.

The durables sector of the U.S. economy will fare better during 2016-2017.

No. 3 real estate ($2.26T, +4 percent; with $12.8B to print, +9 percent) will build up from its No. 4 position last year and, some say, peak in 2016-2017. Residential rentals (+13 percent) are booming as more consumers either prefer, or are forced into, multi-unit dwellings. Aging mobile home and public housing lands will be redeveloped privately into affordable and upscale rental properties for millennials, seniors and immigrants. Additionally, more than 7.4 million borrowers will face foreclosure in 2016 because mortgages are over three months in arrears, and exceed the value of their homes. Open web, screen and digital signage print will increase by double digits.

Oppositely, new/resale residential housing (+6 percent) will continue with less supply than demand as builders can’t find land and labor, and homeowners are staying put, locking out would-be buyers. Newspaper ROP/FSIs, out-of-home, wide-format screen and inkjet, open-web/sheetfed combo buyer’s guides and VDP digital direct mail will for the first time appeal to potential sellers more so than buyers in 2016 and 2017.

Mortgagers (+4 percent) will lend at a lesser increase than ad expenditures, principally funding direct mail linked to broadcast and cable spots. More foreign equity will be invested in this entire sector, especially from China, where developers like Landsea (+96 percent) will transform dilapidated waterfronts perched over brownfields from Weehawken to Martinez. Commercial real estate (+8 percent) is returning with higher priced office space, warehouses and retail—all good for view-books, high-end magazine inserts, wide-format storefront/building wraps and, as typical, “Available” signs. This industry is dispensed with no dominant demanders.

No. 9 is automotive ($2.26T, +3 percent; with $8.9B to print, +6 percent). New cars/trucks (+8 percent) should have the best performance in history, speeding up to more than 17.5 million cars in the U.S., at one-fifth of 88 million sold worldwide. With fuel prices turning in mid-2016, alternatively-powered vehicles will charge up, and light trucks will stall. U-turning will be used (-5 percent) and off-the-road (-4 percent) vehicles because of high operational costs, while parts/repairs (+<3 percent) will be in neutral.

Crashing are the independent car lots as the mega-dealers like Carmax and AutoNation out-stock and out-sell them. Auto insurers and finance (+8 percent) will rev up ROP, insert, VDP direct mail, vehicle wraps, events and out-of-home print. Ten buyers will constitute one-fourth of segment print.

Home improvements ($852B, +4 percent; with $6.3B to print, +8 percent) is No. 14. Steady home buying and higher home prices are the foundations for increased consumer spending. The replacement cycle for appliances (+7 percent) is underway, and ad expenditures will spin at Whirlpool (+10 percent), post-acquisition, rebranded Electrolux GE (at 2.5-times), and among all of the large, domestic major appliance manufacturers. In-store POS/POP and OEM cartons, manuals and labels will heat up the demand for large-format sheetfed and roll flexo output.

The big box stores, notably Lowe’s (+5 percent) and Home Depot (+2 percent), will resume both same-store and new-location growth, good for web offset FSIs, in-store screen and digital, and other out-of-home print. Record revenues at Stanley Black & Decker (+7 percent) signal resurgence in the do-it-yourself category, which will benefit lumber yards, and paint, home furnishings and hardware distributors and retailers. Lawn and garden and remodeling (each +3 percent) lag the sector, but are the least concentrated and therefore most nearby and available for our small press and digital sales efforts.

At No. 10 is travel/hospitality ($967B, +5 percent; with $8.9B to print, +7 percent). It seems everyone will get into this business in 2016. Homes, apartments and private cars (with their owner-drivers as an option) are changing the consumer experience and industry dynamic. New reservation systems will come from the likes of Uber (+322 percent) and Yelp (+45 percent) as mobile devices also navigate tours, directions, bookings and time management.

Increased travel is forecast across all demographics: mobile millennials, family-time boomers and empty-nest seniors. The biggest segment, hotels/resorts (+4 percent) will rely on loyalty programs, magazine and newspaper ROP, and be most impacted by the creative, conspicuous travel trend toward living among and experiencing, not merely visiting, divergent places. Air travel (+8 percent) will lose some of its lucky tailwind and be back on the runway as it takes off with psychographic data-driven VDP as a succession to tired and saturated loyalty programs.

The most market-savvy and print-intensive sector category will continue to be cruiselines (+9 percent) with robust heatset and digital print direct mail, sheetfed and screen out-of-home POP and onboard/dockside signage and amenities. Avoid destination parks (-8 percent), the least attractive and most passé non-attractions except for outdoor sheet and ad specialty producers.

No. 13 is fashion ($596B, 0 percent; with $6.8B to print, 0 percent). High-performance outdoor-activity clothing, athletic and footwear in particular, are the only “run”-away winners in ’16. Crocs Inc. (+31 percent), Under Armor (+28 percent) and 13 others will contribute nearly one-fourth of the sector’s revenues—a record share, and 15 percent of segment print.

To avoid eroding margins as discount retailers take clothing (-4 percent) sales away from specialty retailers, more direct-to-consumer selling is increasingly necessary. A resurgence of catalog work is inevitable for larger, multiple-signature heatset web plants. Jewelry (-4 percent) has been timed out by the Apple watch, which is hurting Fossil (-10 percent) and other traditional makers. Swatch (+1 percent) is the first responder with a s(mart) watch and ads to go with it. Catalog litho and outdoor, plus transit screen and digital demand, should rise slightly at 4 percent.

Entertainment ($940B, +2 percent; with $7.0B to print, +5 percent) earns applause as the curtain rises three places in two years to No. 12. The superstars are motion pictures/live events (+8 percent) that, together, will ticket a blockbuster $216B with $4.2B for posters, signs, displays, programs, tickets and all forms of souvenir and collectible print. There’s something here for every aspiring artist and printer!

Top USA billings will go to Disney (+11 percent) as the most diversified entertainment company on the planet. Others in the cast, like Live Nation (+5 percent) and Major League Baseball (-5 percent), aren’t keeping up with new, more stimulating forms of entertainment. TV, cable, radio, satellite (-12 percent) will be more content and less distribution-driven. Fox (-23 percent) is the worst performer, but all the networks are in misery. The now-stale mega-events from the past, like the Olympics, World Series, etc., will not inspire advertisers.

A tough act to follow is leisure activity ($197B, +3 percent; with $3.9B to print, +3 percent) dropping to No. 23. Toys/games (+4 percent) lead the category though the biggest players, Mattel (-11 percent) and Hasbro (0 percent), are losing their audiences. Boutique personalized and collectible toys, 3D digitally produced in the dark and custom-shipped, will be the next big thing—and from new companies identified only in the Hot Markets database.

Doubling down to No. 19 is gaming/wagering ($488B, -4 percent; with $4.0B to print, -19 percent). Casinos/on/off-track betting (-12 percent) are in steep decline in the number of players and capacity as more close than open. The exceptions are Native American casinos ($29B, +2 percent) increasing in locations and bringing self-sufficiency to many reservations.

The turnaround will occur as new mixed-use entertainment and resort centers are built. Already, in Las Vegas, 63 percent of revenues are non-gaming compared to Atlantic City at 30 percent.

State/province lotteries (-13 percent) will lose participation in most big states, notably Texas (-16 percent) as online gaming wins. Printed game cards will be flat, and POS materials will decline as retailers fold their game space. Fantasy “sports” is the new euphemistic term for near-gaming, and will likely be regulated (or killed-off) by 2017.

Discount retail ($1.64T, +4 percent; with $6.0B to print, -5 percent) is No. 15. Same-store sales at the big-box stores are reversing, and there are no places to build new stores. Walmart (0 percent) will fall to less than one-third of sector revenues and one-sixth of print; a 20 percent drop. Costco (+12 percent), happy-to-print, will engage our medium at a 2.1x multiple over WMT. Kroger (+16 percent) will gobble up Roundy’s and at least one additional supermarket chain in ’16 to surpass 3,000 locations, but discard at least $30 million in redundant print. Target (+3 percent) will fall to the third largest print demander at $451 million. Sears (-23 percent) will certainly be acquired by Amazon (+23 percent) as its direct opposite and inevitable successor.

Staples and Office Depot are now printers and broker-buyers, as well as FSI demanders. Get to know them before they buy regional independents (or the sheetfed operations of RR Donnelley or Cenveo) and vertically integrate as superior competitors to you.

Alarming at No. 21 is security/protection ($296B, +10 percent; with $4.6B to print, 0 percent). A false sense of safety (inevitably to be interrupted) is slowing growth and print demand. This sector is a dichotomy between virtual data security/integrity (+3 percent) and physical personal/product safety (+7 percent); and it ranges from national military to sub-division “rent-a-cop” activities.

Honeywell (+4 percent) will continue as the biggest print buyer at 6 percent of this dispersed sector of uncountable participants. UTC (+9 percent) and ADT Tyco (+6 percent) and NCR (+4 percent) will be the largest revenue performers, and the most sustained print demanders. ID theft, home invasion, chemical hazards, epidemic exposure, product tampering and document counterfeiting require task-specific multi-film, multi-substrate passes, closures, seals, wraps, tape, labels, notifications, alarms, cancellations, voids and even timed destructions. We should learn and profit in this clandestine craft with a great upside for a few adventurers among us, especially as roll-ups accelerate as with turn-arounds at Diebold (-11 percent) and Wincor Nixdorf (+4 percent).

Reversing and moving up to No. 22 is logistics/freight ($860B, +7 percent; with $4.4B to print, +19 percent). “Free” shipments of online-ordered retail goods are propelling FedEx (+5 percent) and UPS (+5 percent) to nearly a combined $0.9B in print. Only the USPS (+6 percent) delivers more by pieces, weight, destinations and revenues at a forecast $71.9B with over $1.5B in print, or one-third of the sector. Adhesive stamps, virtual mail, roll labels, money orders, signage and pre-printed package components will continue to rise as Every Door Direct Mail (EDDM) reciprocates.

Air, sea, rail, pipeline and overland (+8 percent) are minimizing printed forms, labels and boxes but should be sold on vehicle and container wraps as passive ad revenue. Ever stop at a rail crossing? Imagine a show while you idle. Sales pros: it’s a biz to make happen!

At No. 24 will be “big” government: federal/state ($6.96T, +4 percent; with $2.3B to print, +21 percent). Besides a printing increase in fiat money and other security-intensive documents, the federal government will spend slightly more in fiscal 2016, mostly in defense and homeland security. The larger, 60+ percent portion of print increase will be at the state level. The number of bids is increasing in the naïve expectation that governments can reduce costs through outsourcing or as a bargaining chip to get concessions from employees at in-plant facilities.

The third option, privatization, is being pursued by only a small number of print providers, principally those in intermediation (BPOs and FMs). Distributed digital print, web offset and screen will account for the major portion of state procurements.

At No. 25, as in every four years, is election politics ($12B, +344 percent; with nearly $2.3B to print, +305 percent). The transformation of the United States into a socialist country is in the balance, and the polar oppositions will be the most intense since the Civil War—and may result in a second one.

Philosophies aside, this will be a big vote for print of every variety; in particular direct mail, signage, ad specialties, vehicle wraps, handouts and FSIs. Get out the print!

Off the Top 25 will be societal activity ($209B, +3 percent; with $1.9B to print, +1 percent), which includes all not-for-profit religious, charity, cultural and advocacy organizations; and higher education ($202B, +<4 percent; with $1.6B to print, -4 percent). Remaining are residual demand categories ($7.62T, <1 percent; with $8.5B to print, +264 percent).

The Hot Markets 25 will account for 94 percent of total print, down from 96 percent last year. This signifies the exciting emergence of new and evolving demand categories, and the impending decline of the traditional mainstays we have depended upon.

Our industry must wake up to the new socio-political and techno-economic realities of this century. Already we are 16 years into it in denial, and your sales activities can no longer be dissipated in legacy categories.

Target the top 10 growth sectors/categories with print demand percentage increases before they—and you—are over! PI

About the Author
Vincent Mallardi, C.M.C., is a certified management consultant in the paper, printing and converting industries. The entire “Hot Markets for Print Demand 2016-2017,” with all buyer data access for your regional market and product specialties, are available by emailing him at vince@pbba.org