Revenue will shrink as consumers opt for web content over print media
Los Angeles, CA (PRWEB) May 20, 2012
Since the 1990s, declining demand for print advertising and newspapers has negatively impacted the Ink Manufacturing industry. According to IBISWorld industry analyst Andrew Krabeepetcharat, “demand for news ink has decreased because readers have migrated to the internet for news content, causing newspaper and magazine circulations to fall. Newspaper and magazine publishers are not the only downstream markets that have declined. Manufacturers of packaged goods, which use ink for packaging and labeling, have also reduced their ink purchases as the recession caused consumers to reduce spending on packaged goods.” As a result, IBISWorld estimates that industry revenue declined at an average annualized rate of 4.3% to $4.4 billion in the five years to 2012. Revenue is expected to decline a further 3.1% in 2012 as people continue to limit their spending on consumer goods and increasingly opt for digital media over print.
Moreover, Krabeepetcharat adds, “falling revenue and rising raw material costs have caused profit margins to shrink. In 2012, IBISWorld estimates that profit will represent only 0.4% of industry revenue, down from 4.2% in 2007. Declining profit has caused many operators to reduce production capacity and cut costs where possible. Consequently, the number of industry offices and plants declined 2.6% annually on average over the five years to 2012. The reduction in production capacity has also caused the number of employees to decline at an annualized rate of 2.2%.”
In the years to come, the Ink Manufacturing industry will continue to face challenges posed by digital media. The rising popularity of new technologies, such as tablet computers and e-readers, will allow consumers more convenient and cost-effective ways to access information without print publications. In response to broader negative trends, operators will invest in research and development of new products to help fight falling demand. Digital ink technology is expected to benefit from this investment as print runs become smaller. Digital imaging enables printers to produce smaller print runs economically and offer customized printing. As a result, digital-specific inks will gain market share over the next several years, likely at the expense of the traditional lithographic inks that are used in longer print runs.
In 2012, IBISWorld estimates that the four largest players in the Ink Manufacturing industry will account for an estimated 50.9% of industry revenue. The industry displays a high degree of price competition between domestically produced brands. Price competition, rising raw material costs and declining demand in downstream markets have lowered profit margins, causing industry consolidation. The major industry players are Dainippon Ink and Chemicals Inc and CVC Capital Partners, a private equity group that operates in the industry via the Flint Group.
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IBISWorld industry Report Key Topics
Firms in this industry manufacture ink-jet cartridges and printing and ink-jet inks, including lithographic, flexographic, gravure and letterpress inks. These products are then sold to commercial printers, newspaper and magazine printers, office supplies wholesalers and screen printers. This industry does not include firms that manufacture writing, drawing and stamping ink; or toner cartridges for photocopiers, fax machines and computer printers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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