Profitable and Growing 'Hot Markets'

When making business decisions that will drive growth, it helps to have a grasp on the “hot” markets that offer deeper potential.

“Hot markets don't necessarily have to be big, but they have to be profitable and they have to be growing,” Marco Boer said during a session at the inaugural PRINTING United Alliance Leadership Summit last week.

The Packaging Potential

Boer called out a few markets that are intriguing for a number of reasons. He started by taking a dive into the packaging segment, which includes a very specific subsegment of interest.

“Packaging is actually a really dynamic business,” Boer said. “So, the big thing right now is all about sustainability. If you go to any major brand, the first thing you'll probably see on their webpage is something that talks about sustainability and packaging.”

But what does sustainability in packaging entail? For starters, it’s crucial to think about light weighting to lower a package’s carbon footprint. To push the issue even further, companies need to reconsider embellishment, except when it comes to luxury goods. This is because it makes the packaging more difficult to recycle. Finally, there will be a reduction in shrink sleeve processes, with a shift toward more direct-to-object printing, which is easily recyclable.

In terms of the types of packaging that are seeing growth, Boer pointed to an uptick in the use of aluminum cans, and away from glass and plastic. “There's a big area of growth in aluminum right now for things like water bottles … and often you can command a premium for some of those kinds of packaging,” he said. Flexible packaging is also seeing an uptick, despite the challenges of its recycling.

One of the biggest takeaways from the packaging discussion was the importance of clearly communicating sustainability efforts. “Anybody who's a packaging converter, you better have a statement on [your] website easily identifiable about sustainability,” he advised.

Boer gave an example from a recent Digital Packaging Summit, where a Microsoft executive was included on a panel. The speaker mentioned that the company has an extensive list of criteria it uses to determine if it will work with a converter partner, with the No. 1 item being the inclusion of a sustainability statement on the converter’s website.

To drive home the issue of sustainability, Boer explored the recent EU Corporate Sustainability Reporting Directive (CSRD) that went into effect on Jan. 1 of this year. The directive, which applies to all large European companies as well as non-European companies that have substantial activity in Europe, intends to make companies more accountable by requiring them to disclose their impact on people and the planet. Although it may seem irrelevant since it’s a directive coming out of Europe, Boer cautioned that a similar-looking mandate is coming to California in 2025, with the potential to spread over time.

Addressing Advertising, Books, and Tech

On the topic of new mandates, Boer mentioned that there is an upcoming law in Illinois that will require direct mail to include a “warning sticker on it, like cigarette packs,” indicating that it is an advertisement. While that could complicate matters — not to mention the rising cost of paper and postage which complicates things further — Boer said targeted direct mail remains a hot market regardless.

“That's the opportunity because if you can manage all of these things and you can add more value through versioning and long-term campaigns that people are developing — programmatic campaigns — the better off you're gonna be,” he said. “So it's a hot market, despite the fact that the volume was down 11% last year, and this year it's gonna go down even more.”

Another hot market is one that Boer explained looks as if the revenues are stable, but is actually shifting rapidly: Books.

“It's all about digital print,” he said. “First of all, the world of mega-sellers is gone. … The volumes of these book sales have collapsed in terms of the number of titles, but the titles are exploding. As a result, runs are getting shorter and we're really driven by social media in order to promote a book.”

Boer then moved on to the opportunity that exists in the technology space. He said it’s important to analyze scale versus growth since some markets are very large, but are also niche.

“When you look at a hot market, be very careful to look at what the scale of that market is versus the growth rate,” he said. “You look at [the growth rate of] flexible packaging in the U.S. — it’s very fast, but if you look at the scale of digital printing of flexible packaging, it is teeny-tiny.”

On the flip side, wide-format graphics, Boer explained, shows the largest scale, but a slow growth rate. He advised attendees to focus on their core infrastructure and scale up from there.

Just the Tip of the Iceberg

To close out the session, Boer said that “we're at the very beginning of this growth stage replacing some of the analog print with digital print.” However, the value of the product has to be higher than ever before as print costs rise and economies of scale decline. Digital printing offers something conventional printing can’t.

“[It offers] immense flexibility, the convenience, the rapid turnaround, the reduction in waste,” he concluded. “So in short, it's a really good market to be in right now. You just have to figure out which market you're gonna focus on and then double down. Don't hesitate.”