The phenomenon is that a lot of manufacturing industry has moved out of the high labor cost markets and into lower labor cost markets leading to job losses and reduced economic activity in the developed world and job gains and increased economic activity in the developing world. There have also been some impacts from new technologies, which changed the mix of consumer products that have been in demand over the years.
The specialty papers printing market is also affected by these overlaying trends. As real incomes shrank in the US and Western Europe, the market for specialty paper came under pressure. Specialty papers, as covered in this report, are grouped broadly into décor papers, flexible packaging papers, label papers, and release liners, printing papers, filtration papers, electrical and security papers and a few other significant segments. Some segments are essential to business and commerce and thus sensitive to changes in economic activity; inkjet paper and thermal paper are good examples. Additionally, some segments are sensitive as they are non-essentials. Fine art, photographic paper, and book publishing, for example, do have economic sectors that depend heavily on these materials but they are more dependent on an indulgent consumer market. Other significant segments are cigarette papers which have lost volume in Western Europe and North America while gaining markets in Latin America, Africa, and Asia.
Figure E.1 Global specialty paper sales by broad category, 2010-20 (‘000 tonnes)
Each of these segments has thus been affected in different ways by the overall economic picture. The impact also varies by market, and by the degree to which that product has a traditional role. Perhaps one of the most significant developments that have played out in recent years is those in book papers. While a gradual trend away from hardback books towards paperback books has been going on for several decades, the book market in general is under pressure from the twin impact of reduced real incomes and the advent of electronic ‘e-readers’. In Western Europe, e-readers captured only 1% of the book market for a few years after their launch but this has now grown to 5% of the market. In the US the figure was close to 15% on introduction and is now about 25%.
In most other markets, the book format continues to be seen as traditional and the impact is more a financial one: if real income is squeezed, there will be reduced expenditure on books. In some markets such as Latin America or India, books are not traditionally purchased. These are newspaper or magazine markets with books only purchased as reference works. The global implication for the paper industry is that as book readership declines in the richer markets of the US and Western Europe, there are nevertheless opportunities for expansion of book sales in developing markets where education is strongly emphasized.
Flexible packaging papers represent the largest market segment of the specialty papers examined in this report. Business papers represent the next largest market segment in volume terms. Inkjet and thermal papers are buoyant as they are basic essentials in commercial and business environments.
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