Printed Wallcoverings Are Growth Market in Europe: New technologies, particularly digital printing, have been bolstering overall demand for wallpaper and other wallcoverings, whose sales declined in the late 1990s.
Demand for some printed wallcoverings in the region has in some segments of the market been taking sales away from paints and coatings, especially at the low-cost end. The printed wallcovering market has also been expanding across much of the rest of the world, particularly in emerging markets of Asia and parts of Eastern Europe outside of the European Union.
As a result, in the EU the share of imports from less expensive production sources like Asia has been increasing, forcing European wallcoverings producers and their ink suppliers to move into the premium end of the market.
This is particularly the case in the wallpaper sector, where prices tend to be in the lower spectrum of the wall-coverings market. Over the last few years, sales of the leading European wallpaper producers have been falling in the face of competition from imports from Asia and elsewhere.
New technologies, particularly digital printing and its software programs, have been bolstering overall demand for wallpaper and other wallcoverings, whose sales declined in the late 1990s. Improvements and innovations in inks have presented opportunities for more exciting designs, colors, textures and other functionalities, which have had a big impact on interior design in homes and commercial buildings like offices, restaurants, bars, hotels and even ships such as luxury yachts and cruise liners.
For printing services providers (PSPs), especially those who have invested recently in digital presses, wallcoverings have become an attractive market for seeking new business.
"As the rate of development in digital printing starts to level out and more PSPs invest in the technology, they will look to expand their existing product offering," Sean Holt, executive director of FESPA, the global federation of national associations for screen, digital and textile printing communities, said in an October 2018 blog.
He commented on a FESPA survey of PSPs that showed that 55% believe that expanding the range of their applications was extremely important to overall business, with the main target growth areas for digital printing including textiles, packaging and interior decor.
Currently the high-volume part of the wallpaper market has become so competitive that many PSPs have been concentrating on making inroads into localized markets or the premium end of the business. Ink producers in Europe, especially those making digital inks and toners, have been benefiting from this trend because it has boosted demand for higher value inks, which can be applied to a variety of different substrates like plastics, ceramics, glass, metals and fabrics.
A major driving force behind the underlying popularity of wallcoverings in both the residential and commercial sectors has been a desire for quality in designs and colors which satisfies a wide range of specific and personal tastes.
Leading suppliers of wallcoverings have to produce each year thousands of new designs in order to keep up with constant shifts in fashion and needs.
This change particularly suits the versatility of inkjet and electrophotographic printing, although the screen, flexo and rotary gravure processes have been able to cater as well to the requirements of what has become a dynamic market.
A big barrier, however, to growth in the upper end of the segment, especially in the residential part of it, is cost, which for many high-quality wallcoverings can be more than 10 times that for wall coatings. For many home occupiers and even commercial end-users, the cost of wallpapers is too high.
This is providing openings for print machine and software developers, as well as ink formulators, to introduce equipment to bring down production costs, especially with digital wallpaper printing at least to those of analog presses and their inks.
Soon digital wallpaper printing presses will be available to give printers in Europe the opportunity to provide high and low volume supplies of quality wallpaper at relatively low cost.
Industrial Inkjet Ltd (IIL) demonstrated at a digital printing exhibition in Amsterdam in April 2018 a digital wallpaper press, developed jointly with Konica Minolta primarily for the European market.
The machine aims to be competitive with analog processes by achieving speeds up to 70 meters per minute and to provide strong, uniform colors, especially with single whole-wall or mural images.
The main challenge for the developers has been the creation of a high pigment-loaded ink that meets all the potential customers' needs, complies with regulations and is suitable for a wide range of standard materials, including, in addition to paper, PVC and nonwovens.
"Our system is not just about low-volume mural applications," said John Corrall, IIJ managing director. "We believe it makes digital print accessible and economic in high-volume mass production wallpaper."
"When replacing older technology, the performance and cost are always key," he continued. "After that, what defines how well the technology is accepted is what you can do with it--what new abilities does it have and what opportunities does this give the user. With the right solution, digital has the potential to dramatically change what wallpaper is."
Typical of the adjustments being made by long-established wallpaper producers in the face of falling revenues and fiercer competition is the strategy being adopted by AS Creation of Germany, which is the European wallpaper market leader.
In its 2017 fiscal year, it made a loss, and in the first nine months of the current year its sales dropped 6% while operating profit went down. AC Creation claims that its wallpaper sales, which account for approximately 90% of revenue, have been decreasing less than those of its competitors.
AS Creation produces more than 6,000 different wallpapers and borders backed by a wide range of services, including a 24-hour delivery service. Its brands range from a low-priced assortment to higher-end exclusive, customized products to hand-made wallpapers for architects and interior designers. At its main plant at Wiehl-Bornig, Germany, it prints 74,000 square meters of wallpaper each year on gravure, screen and digital presses.
To improve profitability and return to healthy sales growth, it is now relying on its strengths in design. "AS Creation's success depends on offering our customers up-to-date and trendy products supported by first-class services," said Maik Kraemer, the company's chairman, in its latest annual report.
The company has also indicated that it may take opportunities offered by an expected consolidation in the wallpaper sector to expand through acquisition. This will follow the establishment of a joint venture in Russia and the building of a production plant in Belarus.
In a recent research report on AS Creation, the German bank M.M. Warburg & Co. anticipated that after its current transition period the company would be achieving annual growth rates of 5% in 2019 and 2020.
An advantage of having a strong presence in premium segments of the wallcovering market, particularly in the commercial sector, is that the higher margins protect the wallcovering suppliers from a loss of profitability during blips in sales.
It also gives opportunities to diversify into services such as on-site installing or mounting of the wallcovering. "It is easy to damage a perfect print without the necessary skills and knowledge to mount the product," according to Sentec International, a major distributor of wallpapers.
Muraspec, another leading wallpaper producer, reported increased sales last year after a period of falling revenue. This followed a change in strategy, backed by a diversification into nonwoven wallcoverings through the acquisition of Calcutta NV.
"We saw opportunities for using digital printing on wallpapers with nonwoven backing to provide whole new textures," said Azhar Siddique, Muraspec's head of business development, at the recent 100% Design exhibition in London.
"We have broadened our demographic targets to focus on millennials," he added. "Millennials want more decorative designs on walls, which is something wall coatings cannot provide. Also, they like having a choice of different substrates. We're seeing strong growth in demand this year."
Vescom mainly concentrates on the commercial sectors with architects being its main clients. With a lot of its output being customized wallcoverings, in which a big role is given to digital printing of vinyl, its manufacturing organization enables it to keep tight control on quality and design.
"The finish can transform the material entirely," explained design director Christiane Mueller. "We can make something matte or we can make it shiny. It's a technical choice between the inks and how you finish the film."
The company follows a flexible production model so that it can more easily satisfy the specific needs of its customers. "Where other manufacturers go for the industrial model, we focus on the customers model," said Arno Beurskens, a Vescom product development specialist.
Vescom sits at the high-margin, personalized and responsive end of the wallcoverings market while at the other a standardized, industrialized system is emerging. Neither will have been possible without the development of innovative printing and ink technologies, particularly in the digital field.
BY SEAN MILMO, European Editor
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.
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|Title Annotation:||european report|
|Article Type:||Financial report|
|Date:||Nov 1, 2018|
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