KEY TAKEOUTS FOR THE FUTURE OF THE PRINT AND PACKAGING INDUSTRY 

Despite the devastating impact on the South African economy due to COVID-19, pockets of positivity signal that there is a potential recovery on the rise. If companies, who managed to weather the challenges bought on by COVID-19, now want to take up the opportunities amid this climate, they need to understand the tipping points brought on by the pandemic, and tap into the changing needs and behaviours of consumers.

This is the view of Brandon de Kock, Director of Storytelling at WhyFive, a leading data-driven consumer insights  consultancy. De Kock was the guest speaker at a recent Novus Holdings online session, “The Insight Edge”, hosted by Peter Metcalfe, Group Executive of Sales at Novus Holdings. De Kock shared fascinating insights on the impact of COVID-19 on the saving and spending habits of South Africans, and what this may mean for the future of the print  and packaging sector.

WHAT DID COVID-19 DO TO THE INCOME OF SOUTH AFRICANS?

“The impact of COVID-19 was really felt at the bottom end of the income-bracket. Those who earn more than R30 000 per month were more resilient to the economic effects of the pandemic,” explains de Kock.

The graph, compiled by BrandMapp, shows the eight-year trend of taxpayers by income bracket, according to the annual Treasury Budget Review figures. It illustrates that only 10 239 taxpayers – who earn more than R30 000 per month – dropped off in 2020 compared to the previous year. This is especially interesting given that there were 153 136 taxpayers earning less than R10 000
who dropped off in 2020 compared to 2019. “This indicates a sliver of hope on the horizon in that the majority of middle-income taxpayers – those with the spending power in South Africa – weren’t as badly affected as initially feared.”

BEWARE THE DEBT

However, he pointed out that more than 2 million individuals pay 80% of all personal tax, while 280 000 individuals pay 40% of all personal tax. Furthermore, 40% of South African adults are debt-stressed. “The implications of having too many overly indebted people may play out in the economy in the next six to 12 months. We have to worry what another petrol increase, or rand devaluation could do to debt-stressed South Africans. These could be tipping points. Debt could be the caveat to experiencing an economic recovery in this country.” He added that a clear warning sign was that in the first three months of 2020, first-time defaulters missed payments of R20,73 billion of the total R1,6 trillion of consumer debt.

GREENSHOOTS AND POTENTIAL FOR THE PRINT AND PACKAGING INDUSTRIES

Despite this caution, there are green shoots happening in the economy, indicating that people have money to spend. For example, in February 2021, total vehicles sold were 37 521, only 13% down from February 2020.

Another unexpected shift was that in 2020 non-traditional ecommerce categories such as groceries, wine / alcoholic drinks, computers and software, as well as cellphones, experienced huge increases in online transactions, snatching the glory from traditional ecommerce market leaders like clothes and fashion, as well as shoes and bags.

“In some cases online retailers have recorded a 30% increase in sales in non-traditional categories, which means if the consumer behavior is changing and more purchases are being made online, printing and packaging sector to print more, and package more goods,” said de Kock. This year also saw the sale of well-known kitchen brand, YuppieChef, to Mr Price Home for a whopping R460 million, announced in March 2021. “Yuppiechef grew a business on great service and trust, but the brand is built almost entirely around packaging. Their loyal customers are willing to pay a hefty premium, but every time you get a delivery, it feels like your birthday, thanks to clever, beautiful printing work and packaging,” said De Kock, adding that the deal signifies another positive spin-off for this sector.

PRINT CIRCULATION TRENDS

He added that there are similar and interesting trends in the printing landscape, the most notable being that “70% of people are reading newspapers, they are simply just not willing to pay for them.”

According to BrandMapp’s research, 38% of people surveyed indicated that they don’t buy newspapers, yet they still read them, which is a 4% jump compared to 2019. The same trend is evident for magazines, with 29% of people saying they still read magazines. Positively, 50% of adults regularly read community newspapers. But, perhaps the most encouraging of all, The Daily Maverick print newspaper has grown from a circulation of 18 000 in September 2020 to 32 000 in February 2021.

“The Daily Maverick print edition has used a nonconventional business model, which is why its circulation figures are bucking the trend,” said de Kock. “This shows that the print industry is working, but the old ways of doing things no longer applies. This presents an immense opportunity for businesses who are agile and willing to re-look their business models.”

NOVUS HOLDINGS: WELL POSITIONED TO HELP BUSINESSES THROUGH THE CHALLENGES

What do media businesses need to do to capitalise on the opportunity? “Businesses should seek partners like Novus Holdings, who understand the unique constraints facing the sector. These partners are often up for the challenge to innovate and make good ideas work harder and smarter. If partnerships are aligned, then we will see more successes in the sector,” said de Kock. He added that this applies to businesses in print media, packaging and those who require print products outside of the printed media sector.

Metcalfe added that Novus Holdings continues to be a customer-focused business. “Connecting to the consumer has never been more important and therefore the concept of ‘where printing is personal’ remains at the core of our business approach at Novus Print. We understand that our customers are under pressure given the current economic environment and our aim is to collaborate on a  compassionate, value-driven and resourceful level that provides high quality products and peace of mind with every order,” concluded Metcalfe.