The Coronavirus and Print: Where do we go from here?

The virus is still in the air. Yet, the printing industry refuses to wallow in the doom and gloom of the past. Instead, as the New Year dawns, the industry is surging ahead to make up for last year’s losses, and add some neat profit as well. But what about the ground reality? Are we really ready? PrintWeek probes

10 Mar 2021 | By PrintWeek Team

That Covid-19 had a huge impact on the printing industry is an understatement. What happened in 2020 was simply unprecedented, especially after 24 March, when the country went into a lockdown. It was indeed disconcerting to see an industry, which works 24/7 (in most cases) shut shop for an extended period. This, of course, had a cascading effect on the profit margins. Yet, instead of crying over the spilt milk, the industry picked itself up as soon as the locked opened, and went to business with a renewed vigour. That was last year. With the dawning of a New Year, the industry looks optimistic, not just to make up for the losses it incurred in 2020, but also to earn some profit in 2021.

So, it was hardly a surprise when the Bombay Master Printers Association (BMPA) conducted a webinar on how the pandemic has had a positive impact on the industry on 15 January, where Iqbal Kherodawala, president, BMPA, talked to a few businesses that have taken the downtime to plan and make more and more for uptime.
According to Kherodawala, 37.6% businesses in India are implementing cost containment initiatives while 25.8% businesses are modifying their financial plans to address the economic woes it faced. However, 28.9% businesses were deferring or cancelling their planned investments.

Tushar Dhote on wedding album market
Wedding albums have seen a decline due to the restriction on gatherings. Although, all hope is not lost here because, according to me, the print medium is the only choice to capture memories in a true sense as digital photo albums do not give a touch of personalisation as well as its feel and embellishments that only the print can provide.

Plans after pandemic
Before the pandemic, Anuj Bhargava, director, Kumar Labels, was planning for a larger facility at its Greater Noida base. “But, as the pandemic struck, we realised that our customers who are in different parts of the country wanted us closer to them geographically. Just as the market opened, we realised that one of the quick things we had to do was to be multi-location. So, we planned and built a small facility in Goa,” he explains.
Tejas Tanna, director, Printmann, meanwhile used the downtime to upskill the company’s younger technicians. “We tried to give them a free hand. We developed a team where they got the confidence to run the factory even if the senior technicians were not around. The gap was bridged due to the pandemic,” he says.

For Milap Shah, CTO and CMO, PrintStop, the pandemic forced the company to try new avenues. “For example, we wanted to diversify beyond paper. The concept was moving slowly. But during the pandemic, we completely put our efforts on it and today 50% of our sales are non-paper. We could get a lot of new customers because we got into these different sectors,” he says.

Denver Annunciation, director for strategy, Janus International, added, “When I joined the company, 90% of our topline came from the beer industry. Today, beer doesn’t exceed more than 50% of our topline. The shutdown accelerated this process. For the last six years we have made active efforts to diversify and broaden our customer base. We invested in new machines just before and during the lockdown.”

Vivek Khanna, director finance and marketing, Ajanta Print Arts, on the other hand, went for ERP, because “cost is extremely important. More upskilling will help control cost. An ERP changed the way we looked at things. It gave us numbers and visibility. It gave a platform for everybody to connect”.

Riding high on packaging
If we look closely at the examples above, we will notice that packaging printers were in a better condition to withstand the pandemic blues than the commercial printers. After all, the demand for packaging remained (in some cases, even increased) while the demand for commercial prints plummeted significantly (with the closure of education institutes and the government ban on printing adding to the woes).
The numbers back up the claim. According to a research conducted by Smithers, Covid-19 has helped boost the eCommerce packaging market by almost 40% in 2020. The report says the global value for eCommerce packaging reached USD 51 billion in 2020, as the pandemic-induced lockdown and shop closures have pushed more consumers online.

Kulakkada Pradeep on work from home policies
It will definitely affect the stationery producers and paper suppliers as there isn’t any stationery requirement in offices. The overall migration to digital platform will affect the print volumes even if we are talking about the short run digital print volumes. Unfortunately, many of these existing print volumes may not come back in the future as the digital medium has had the time to showcase many advantages to the users. 

“As consumer habits change, business models adapt, and more retailers close physical stores; demand for eCommerce packaging will continue to boom through to 2025 at an accelerated compound annual growth rate (CAGR) of 17%. In 2025, this market will reach a value of USD 113.5 billion, over 10% of the total packaging market worldwide,” the report states.

Also, with continued demand for Covid-19 accessories such as hand sanitisers and face masks, there is a whole new packaging market to explore. Take for example, Thiruvananthapuram-based Orange Printers, which, after resuming work at the end of May 2020, started printing labels for sanitisers and hand-wash liquids, and also made tags and boxes for mask manufacturers, thus utilising 50% of its capacity. “Smiling in the face of a pandemic is not right. But there were moments of happiness when we witnessed progress in the label segment,” says Roy Thomas, managing director at Orange Printers.

Prakash Babu C, vice-president (south zone) of AIFMP, who runs Prakash Print Park in Bengaluru, says, post-lockdown, the company started in May 2020, and were able to use only 35% to 40% of its capacity due to the standard operating procedure and staff restrictions. “Gradually, we increased our production and right now, we are utilising 80-90% of our capacity.” Of course, Prakash prints packaging jobs, mostly labels. “From what I have seen, it is slowly picking up momentum in Bengaluru and I am sure in the coming days it will wriggle out of the current position.”

The woes of commercial printing
As the consensus goes, the packaging segment largely sailed through the pandemic unscathed, especially big converters. The real victims were the commercial printers and printers based in tier 2 and tier 3 cities.
Harjinder Singh, the honorary treasurer of the All-India Federation of Master Printers (AIFMP), as well as director of Swastika Printwell in Lucknow, explains, “The majority of the print industry in Lucknow belongs to the commercial segment of offset printing. The commercial printers have been facing stress during the past three years in this region. The situation was worse after the pandemic. It is because most of the firms are dependent on jobs related to the government. This includes, promotions, books, magazines, brochures and stationeries.”

And after the lockdown, the market trend changed. The order by the central government crippled the commercial printers when they directed all states to restrict or avoid printing of promotional articles such as calendars, diaries, greeting cards, among others. Today, commercial printers in Lucknow and the neighbouring Kanpur are running at 20-30% capacity utilisation since lockdown.

Singh says even the photo album market has suffered across the nation. “There have been restrictions and as a result, many marriages were postponed. This shift reduced the requirements of wedding cards and photo albums. Most middle-class homes have chosen to reduce their investments in marriage. Today, saving money is top priority,” he adds.

Same is the story with the education verticals. “Many small publishers are facing a huge cash crunch since the payments, which was expected mostly after the start of new sessions have stopped due to the cessation of schools and colleges and other educational institutions,” he explains.

Retaining customers
Fine papers specialist Sona Papers announced a new customer incentive programme that hopes to boost the morale of its existing business partners. The contest titled Bounce Back 2020 offered many attractive and exciting prizes, ranging from couple stay at a luxury hotel in Dubai including return airfare, the offer prizes. According to Raju Suneja, Sona’s marketing director, it is sure to attract eyeballs in the market. The initiative was launched on 1 November 2020 and according to Suneja, it has received a good response. The contest ended on 31 January 2021.

The reality across India
The same story is being repeated elsewhere in north India, in Jalandhar. Ashwani Gupta, vice-president (north zone) of AIFMP and general secretary of Jalandhar Printers’ Association, says, “In North India, after Delhi, Jalandhar is the hub for textbook printing. Punjab is a border state and it is far from the seaports. Due to these reasons, no heavy industry is situated in the state of Punjab. The major textile and hosiery industry is present in Ludhiana and so there are a few packaging houses. But Jalandhar depends on the printing of textbooks, plus commercial jobs related to schools and colleges, and a few industrial packaging jobs of smaller volumes.”
Gupta prints textbooks for various state governments and private publishers and duplex boards for the packing industry. He says right now he is using only 15-20% of capacity.

The story of commercial printing in farther east is no different. For example, according to Vihu Meyase, vice-president (East Zone) of AIFMP, the print industry in Kohima, Nagaland is shutting down.Meyase, who runs MKV Offset Press, Kohima, prints receipt books and all types of cards and today, he is utilising two-thirds of his capacity.

Bhopal witnessed several printing outlets shutting down. “Commercial printing, magazines, books, educational print material have taken a major blow,” says Manoj Agnihotri, vice-president (West Zone) of AIFMP. “Also, printers are suffering from the shift in bank printing (cheque books, passbooks).”

Agnihotri, who runs Mesh Prints in Bhopal, prints labels and mono cartons, and is running his press in full capacity, thus indicating the huge chasm in packaging and commercial printing.

Tirthraj  Joshi, joint secretary of AIFMP, who runs Shrikrishna Arts, Pune, says as far as the city is concerned, the situation is not good for commercial printers, but packaging is in a good condition. “The small and micro level printers have suffered a lot. Digital and screen printing are also in trouble. There’s about 20-25% work on offer. Many of us are not applying ink on rollers every day,” he says.

On the situation in Bengaluru, Kayu Dhanbhoora, partner of Kolor Kode, adds, “We have seen a drop of about 70%. This will continue for about 12 months after the vaccine arrives. The feedback from our customers is that most brands including some pharma companies have taken a huge beating. This is why they are being very careful with the limited funds that they have.”

This situation is not great in a city such as Mumbai, too. Vishwanath Shetty of The Printworks and a senior member of the BMPA says in the print hubs of Lower Parel, most units are facing an issue of shortage of staff. “Owing to which the finishing aspects dependent on manual intervention due to lack of automation or which are outsourced like lamination, aqua coating and UV coating are in a bad shape.Around two lamination units have shut. More than half of the machines in the whole industrial estate are idle. Work is at around 30% according to most of my neighbours,” he says.

Idle machinery, vulnerability and closures: all of these bear consequences to trigger a chain reaction. Shetty agrees. “It is already visible. Six months of no work and then now the work not being sufficient has badly skewed the earnings ratio. This in turn means that the vendor payments will suffer badly. Salaries of employees comprise of 25-40% of the turnover. With this revenue in danger the owners cannot afford the salaries leading to job losses. Even the break-even point is a distant possibility.”

Ad spend outlook
According to the Warc report, global advertising is facing a cut of USD 63-billion due to Covid. It is on course to fall by 10.2% or USD 63.4 billion to come down to USD 557.3-billion this year. The projections are based on data from 100 markets worldwide, and represent a downgrade of 2.1% points compared to Warc’s previous forecast of ad spends to reduce by 8.1% made in May.    
In absolute terms, this is worse than the last recession in 2009, when the ad market contracted by USD 61.3-billion (-12.9%). Further, after accounting for inflation, the real ad market decline is double the rate of the Great Recession, according to Warc.  

The report adds that it will take at least two years for the global ad market to fully recover, with a forecast of 6.7% rise in 2021 only enough to recover 59% of 2020’s losses. The advertising market would need to grow by 4.4% in 2022 to match 2019’s peak of USD 620.6-billion.

The report states that the traditional media has had a torrid year, accounting for the near-entirety of the advertising market decline in 2020. Globally, spend is down by a fifth (-19.7%), or USD 62.4-billion, to a total of USD 253.9-billion, with linear TV (-16.1%, down USD 29.9-billion) seeing the largest absolute cut to ad budgets. Cinema (-46.5%, down USD 1.5-billion), out of home (-27.3%, -USD 11.3-billion), newspapers (-25.5%, -USD 9.8-billion), magazines (-25.4%, -USD 4-billion) and radio (-18.4%, - USD 5.9-billion), along with TV, all recorded their worst performance in 40 years according to Warc.
Most are expected to see growth in 2021, though this is more a reflection of a poor 2020 than a steady recovery.  

What next?
Even Narendra Paruchuri of Hyderabad-based Pragati has a similar story to tell. “As far as we are concerned, the packaging division is okay. But the commercial printing division is not in a good condition. We may end up at two-thirds of our last year’s turnover. That’s where we are,” he says. But he doesn’t think that commercial printing will become irrelevant soon. “The reason why commercial printing has diminished in value is: there are no launches, no direct mail. In fact, there have been no activities that require commercial printing. In Hyderabad, the real estate sector has picked up. Print from that industry sector has returned to us.”

But he believes it will take some time for the market to come back to normalcy. “Yes, there will be some part of commercial printing, which will go away. That has always been the case.”

Prakash Canser, who runs the National Printing Press and the president of the Mumbai Mudrak Sangh (MMS), agrees. “Yes, commercial print business had suffered tremendously for various reasons during the Covid period. Since December, it looks like it is limping towards normalcy. People have started buying print, but in lower quantities. These will subsequently increase as demand for products and services will go up. Printers are struggling, but they will have to continue the trudge for a few more months.”

“Even before the pandemic, the scenario was already on a downward trend for many aspects of printing – especially for products such as direct mailers, magazines, technical journals and special paper marketing merchandising,” says Tushar Dhote, chairman and managing director at Dhote Offset TechnoKrafts. “In case of book printing, however, education and training manuals were not as affected as some other forms earlier. Now, books and training material are all of a sudden being seen in the digitalised form.”

Also, the closure of schools and colleges has had a huge impact on the printers, especially those who were completely dependent on them for their printing needs. “Top it with the fact that the government seems hell bent in taking huge steps for implementing digital platforms at a lightning speed, thus moving away from physical printing of diaries and calendars in the government sectors and giving the corporate companies a chance to do away with it this year,” he adds.

Dhote says all top-of-the-line printing was severely affected. This trend will continue for a year till the after effects of Covid-19 settle down and spending once again becomes the habit of this contemporary generation of working class.”

Kayu Dhanbhoora on the changes in the education vertical
Educational vertical has seen nil requirement. The year book was not published this year. Another factor is that right through the year, companies usually have regular training and other team building programmes, which have stopped. Correspondingly, all the printing of collaterals for this has also stopped.

Shetty of The Printworks, adds, “The commercial print market will take time to go back to earlier levels. More people have got used to online shopping out of sheer necessity. This negates the demand for point-of-purchase displays. One aspect of the print jobs that cannot be done remotely due to lack of technical set-up is designing. So, it will take time to catch up.”
But Narendra Paruchuri is optimistic. “Work from home (WFH) is a temporary phenomenon and people will want to return to their offices soon. In fact, I see a rise in print volumes as most of the literature and training materials will have to be printed. To give you an example, WFH has increased the business of courier companies as the hard copies and samples, which were circulated in offices manually are now being sent through courier to various locations.”

But Dhote is cautious. “The spending and cost-cutting aspects are taken up very seriously by the corporates and other print buyers. This will affect the large print quantities to a greater extent. This, in turn, means that short-run printing and POD will stand to benefit.”

Yes, the situation is grim, and the future will see a marked change as to the technology adaptation. Kulakkada Pradeep, chief executive officer at Future Schoolz, argues that Covid-19 era brought in an important realisation that the digital medium has taken over many of the print segments. “This has led to a shrinkage of the print market size in 2020. Many publicity related segments, which were catered by printers will eventually vanish if it hasn’t happened already,” he says.

Is this the end for printing? Not really, says Pradeep, adding, “We have to expect new areas to emerge as well. It will take some time to understand the ill effects of digital communication or the excessive use of it. But one clear trend I can see is the emergence of printers as solution providers rather than just being printers. They will need to provide solutions for social media and digital platforms as well in the future. I feel, this could be a real opportunity for them.”

Finally, is it the right time to focus on losses due to productivity standards? Pradeep answers, “The overall observation is that Indian print community is less inclined to workflows and processes, which is the reason for the poor productivity standards. A productivity audit should be the first thing to be conducted in many printing presses. For example, during the productivity audits conducted by Future Schoolz at a few leading presses, the data presented was heartbreaking. They had to take immediate steps to arrest further losses.” 

Ushering in the virtual
One of the biggest aspects of the industry has always been the annual exhibitions, both in India and abroad. These exhibitions where not just platforms for manufacturers to showcase their latest innovations, it was also a place for printers to see new technologies and meet their peers and exchange note. With all major exhibitions postponed in 2020, the industry has found a new platform — in the virtual space. However, trade show organisers believe that this exodus will be short-lived. “I feel it is a temporary phase... preference for feel and touch is always there and will remain so in future, too,” says Kamal Chopra, chairman, Pamex and president of All India Federation of Master Printers (AIFMP).

Another term that has been doing the rounds in the industry is “hybrid exhibitions”. This essentially means a combination of virtual and live exhibitions. The term is best explained by Sabine Geldermann, director at Drupa: “Hybrid trade fair will combine the on-site event with additional digital content. With the hybrid show, we also give those visitors who are unable to travel the possibility to take part in the industry get-together. At the same time, we meet exhibitors’ needs to reach the international community personally.”

Meanwhile, Milind Dixit, managing director at Koelnmesse India believes that there is no replacement for one-to-one interaction. “Meeting people is the very human nature of all of us, especially in the Asian continent. I foresee an era of hybrid exhibitions.” Similarly, Neil Felton, CEO, Fespa feels that “virtual meetings have played a useful role, but they’re no substitute for in-person meetings”.

Most of the industry insiders strongly agree that in-person meeting is essential for business development. But, according to Raj Manek, managing director at Messe Frankfurt India and executive director and board member of Messe Frankfurt Asia, digital intervention can be a major asset if used to its potential. “However, it has to be balanced with in-person meetings, be it within organisations or with clients, business partners and industry associates,” he says.

Drupa, Gartex Texprocess and Screen Print have already announced that its events will be hybrid in 2021.

Meanwhile, Anant Ahuja of Irregulars Alliance and Bakheda Studios argues that the next wave of the economy lies in virtual packaging launches. “The eCommerce industry has boomed in the past quarter. However, the luxury and lifestyle segment will not be much affected by its growth, not discounting the fact that brick-and-mortar stores have taken a huge hit,” says Ahuja. “We’re looking at the next billion people using the Internet and brands want to ride that wave. As much as I love my textures and printing techniques, we’ll only have a handful of brands sticking to the traditional norms.”