Downward trend continues also in 2023
FEPE envelope production volumes in billion pcs.
The negative trend in sales volumes in the European envelope industry continued also in the second half of 2023. The industry has had to live with double-digit declines in quarterly volumes for more than a year now. With a minus of 11% compared the previous year, the decline in delivered volumes have shown however a slowdown in the 4th quarter of 2023 but remained unchanged below the long-term trend. From January to September the year-on-year decline was over 15%.
While our customers’ high inventories had a negative impact on our industry’s business activities in the first few months of the calendar year, since the summer months there has been an unexpected weakening in demand that went well beyond the usual seasonal downturn. One reason for this is likely to be found in the paper shortage of the previous year and the resulting price jumps in 2022. The already existing substitution pressure on envelopes is likely to have increased further as a result of last year’s market distortions in the paper market.
The high expectations for the eCommerce business with large-format pockets and gussets were also not fulfilled.
The German eCommerce association bevh recently published figures that signal a further decline in online orders by around 14%, at least in Germany.
Bevh: eCommerce business will remain rather weak also in 2024
As Martin Groß-Albenhausen (Deputy General Manager of bevh), explained to FEPE “There is not just one reason for the falling sales in online retail. And unfortunately, this negative trend is likely to continue in 2024 and 2025, before we may see a recovery again in 2026.”
Q1 is normally the best quarter of a year.
The advertising market in 2023 is also below expectations
Due to the unclear economic situation, many companies also cut their advertising spending and the agencies suffered from smaller budgets. In the mailing segment and in the overprinting area, we saw to significantly falling order sizes and overall significantly falling sales quantities. The declines in this area were 25% and more for some of our member companies. Only at the end of the year we saw a slight recovery of the advertising segment.
Envelope market shrank by 5,5 billion units in 2023
2023 was more than disappointing for our industry overall. This negative development affected almost all product categories, including inserting-envelopes, which, however, were still the most robust overall. The negative trend was also confirmed in supplier surveys. Almost all suppliers surveyed reported significant volume losses.
The German market was even weaker compared to the rest of Europe. Especially due the weak summer months, the forecast for the full year 2023 must also be revised downwards. For FEPE members only we have determined a volume of 31 billion pcs. (-15%) in 2023, which corresponds to a total European market (including non-members) of approximately 36 billion units (-5,5 billion compared to previous year).
The eCommerce packaging business, which is becoming increasingly important for the industry, is not fully recorded in the FEPE statistics, but is likely to have continued to grow overall for FEPE members in 2023.
Better order intake at the end of the year
As several market participants report, incoming orders picked up significantly towards the end of the year, which led to improvements in the order stock and a better machine load at the beginning of the year. It is therefore to be hoped that the start to the first quarter of 2024 will be better than in the previous quarters.
