Worldwide market for security printing expected to reach $37 billion by 2020

Market research from Smithers Pira shows significant market opportunities for security printing the Middle East. The Smithers report The Future of Global Security Printing Markets to 2020 tracks evolution across a worldwide market that will grow from $20.4 billion in 2010 at a compound average annual growth rate (CAGR) of 6.0% to reach $37.0 billion in 2020. A number of factors like the growing pressure of digital technologies supplanting traditional print solutions, and the slowing of large-scale passport upgrade programmes mean expansion in the second half of the decade will be slightly less than in the first.

Middle East

The same data shows that the market in the Middle East will almost double across the decade under study – from $1 billion in 2010 to just short of $2 billion in 2020. The region will follow the wider trend of a downturn in growth towards the end of this ten-year period, but with a CAGR still slightly above the global mean. With the exception of Africa it will be the fastest growing region covered by the Smithers Report. 

Globally two-thirds of growth in security printing can be attributed to two end-use markets – banknotes and tax stamps.

Banknotes

Banknotes – the largest end-use segment – are forecast to witness a slight decline in expansion. This is partially due to monetary policies and socioeconomic conditions creating a more competitive printing environment, but the deeper threat for the future will come from greater use of card and mobile payments reducing the need for hard currency. Banknote printers will to a certain degree be able to compensate for the declining rate of growth in terms of volume through higher prices charged for durable banknotes and premium security features.

On a positive note the financial end-use market in the Middle East can still be characterised as cash-intensive. Analysis has found that in most counties a strong attachment to cash remains – with 75–80% of retail transactions completed via this medium, and in some countries like Egypt the rate is even higher.

Regional instability also favours a preference for cash – especially as a medium for holding value – meaning banknotes and coins circulated and are less likely to be returned to the commercial or central bank. This results in central banks having to print more banknotes compared to less cash-intense societies – which increases their costs.

One disruptive trend in banknote printing is the replacement of conventional cotton paper with plastic substrates. This option has been adopted by Australia and Canada; the UK will join the trend in September 2016 with the issue of a new £5 note printed on the Guardian polymer base supplier by Innovia. Plastic banknotes pose new problems for forgers, but their main advantage is enhanced longevity with lifecycles 2-4 times longer than paper reported.

Plastic banknotes made an early appearance in the Middle East with a commemorative 1 dinar issued by the Central Bank of Kuwait in 1993 following its liberation during the first Gulf War. Hitherto the Arab states have not followed up on this trend, though Israel did begin issuing plastic 20 shekel notes in 2008, joining the paper denominations already in circulation.

Tax stamps

For the global security print market Smithers Pira identifies tax stamps as the second high-growth segment for the next five years. Tax stamps are issued to producers and importers of taxed goods like alcoholic and tobacco products to indicate government duty has been paid.

The forthcoming increase is principally due to an anticipated surge in demand towards the very end of the decade as track-and trace mandates for products like medicines and cigarettes are implemented. These will be both global, as with the UN worldwide Framework Convention on Tobacco Control (FCTC) due to become effective 2018; and regional, as is the case with the European Union’s Falsified Medicines Directive.

Today paper stamps with security features such as micro-lettering are widely used, but also widely counterfeited. Enhanced tax stamps with track-and-trace capabilities are significantly more expensive to deploy and operate, but are very effective in ensuring authorities earn their tax revenue. In the long run these systems are very cost-effective, prevent contraband trafficking, help to protect public health and reduce smoking by stopping illegal cigarette sales at below-market prices.

As enhanced tax stamp platforms are demanded it is likely to create greater demand for holographic security features and digital – non-print technologies.

Middle Eastern security printers are set to benefit from this increased demand. Smithers’ data charts how the combined regional demand for tax and postage stamps will increase at a rate of around 25% year on year across the study period.

Ticketing

An end-use segment where the Middle East, if not the world market, is set for a marked increase is in ticketing. This will flow from project to replace of aging transportation infrastructure in several countries.

ID documents

Moving forward, the prognosis for passports, national identity cards and driving licences is less buoyant, despite double-digit growth in the first half of the decade. This is principally due to major upgrade projects for passports –driven by mandates originating at the International Civil Aviation Organisation (ICAO) to implement electronic passports with embedded integrated circuits.

Many Gulf states have also adopted national ID card programmes carry chips and, in some instances like Qatar, biometric data. Enrolment for such initiative is not yet complete and simultaneously represents an opportunity and a threat to the wider security print market. This is because these electronic security documents, like the Bahraini national ID, can also operate as driving licences, voter identification and health cards – shrinking the number of cards demanded by the national market.

Moving forward, a similar effect will be seen from an increasing reliance on biometric data stored on integrated circuits and linking to national or international databases. This shift creates less of an onus to rely on conventional anti-counterfeiting print features, as even if plausible fakes can be produced any user will not be able to replicate the fingerprint or iris data linked to an individual identity.

The Future of Global Security Printing is available for purchase online. We are offering ME Printer readers an exclusive discount of 10% on this report until 31st August 2016. Please visit http://www.smitherspira.com/industry-market-reports/printing/the-future-of-global-printing-markets-to-2020  quoting discount code: ME10OFF

Smithers Pira is the worldwide authority on packaging, paper and print industry supply chains. Established in 1930, Smithers Pira provides strategic and technical consulting, testing, intelligence and events to help clients gain market insights, identify opportunities, evaluate product performance and manage compliance. For more information please visit www.smitherspira.com