Books: paper price soars and print runs shrink – 03/21/2022 – Market

An abrupt rise in the price of paper earlier this year threw publishers’ budgets out of balance by unexpectedly raising the costs of producing books, promotional materials and packaging.

Inflation reached several categories of paper —in national production destined for editorial lines, it reached 65% in the last two months alone. For the final consumer, the result is already more expensive books and magazines and a smaller variety of publications.

The reasons are diverse. One of the main ones is the dollar exchange rate, on which the prices of several of the inputs used in book printing are based: paper, inks, rubber blankets (which transmit the ink to the paper) and printing plates.

There is also the shock of the pandemic, which increased demand for pulp and other types of paper, such as those intended for fast deliveries and shipping boxes, and inflated air and sea freight.

The president of Abigraf Nacional (Brazilian Graphic Industry Association), Sidnei Anversa Victor, says that companies cannot absorb such high readjustments.

“The entire publishing and graphic sector, including packaging and promotional material, has paper and cardboard as its basic raw material. The way in which the price has gone up is impressive, impossible not to pass on”, he says.

Fernando Steven Ullmann, CEO of Ipsis Gráfica e Editora, says that in addition to the rise in national paper, it has been difficult to replace it with imported paper: “And it’s not that they are cheaper, they aren’t, there was a real increase in currency strong and is difficult to bring”.

Publishers try to limit giveaways; budgets expire

Budget survival is also shorter. In December, the publisher Lote 42 ended a crowdfunding for the printing of the comic book “Apocalypse, Por Favor”. The budget made by the publisher at the time reached a cover price of about R$ 55.

Financing closed, the book will not be able to be placed on the market for less than R$ 85, such a difference in costs in just two months.

João Varella, founder of the publishing house, says that the company will cover the value of those who bought the publication when the crowdfunding was made: “We will not be able to launch with that value”.

At the end of 2021, Panini, which publishes Marvel and DC in Brazil and has a vast catalog of collectibles (such as sticker albums), announced new prices for several titles starting in January.

Barbara Robles, publishing marketing manager for the publisher, says that, in addition to printing, costs with logistics and licensing contracts played a role in the decision to readjust prices.

Still, according to her, part of the cost increase was absorbed by the company, thanks to the diversity of products and finishes. The impact is not linear, with the same percentage for all products. New adjustments are not ruled out.

At Panini, says the marketing manager, the readjustment is already beginning to affect graphic costs and all businesses that have national paper as their raw material.

Junior Fonseca, director of manga publisher NewPop, took to Twitter to vent after the price of a release by the publisher, MDZS, estimated at about R$65, was the subject of complaints.

“Only in the graphic part, all inputs went up in price. Paper (+30%), cardboard —which we use in the covers— (+20%), ink (+25%) and plates (+20% ). Imagine the impact of all this. Remembering that the final price does not go to the publisher”, he wrote.

Fernanda Saboya, director of Editora Melhoramentos, says that the company has made an effort to avoid generalized highs. Cover price adjustments have been limited to specific titles. The publisher has also been slashing profit margins and cutting costs.

“It is necessary to take into account that this is a delicate moment for the consumer, with an increase in inflation, so the total transfer of the increase tends to make access to the book more difficult”, he says.

For Ipsis’s Ullmann, it is impossible for the price level of books to remain the same. “Depending on the size of the publisher, it takes a while for the increase to be absorbed, but we run a serious risk of a downturn in the industry.”

Book runs expected to shrink this year

With so many variables on the table, the graphics and publishing market tends to shrink. Tavares, from CBL, says that print runs in Brazil are already low, and the smaller, the higher the cost. Shootings over 10,000 units are reserved for award-winning authors – “best sellers or books by influencers”.

Judging by the numbers of copies alone, scanning might seem like an alternative. In 2020, according to consultancy Nielsen, sales of ebooks rose 83% compared to 2019. Revenue grew 11%, but still corresponded to only 6% of publishers’ revenue. Still, growth compared to 4% in 2019.

Varella, from Lote 42, however, sees the market in a dilemma. “Everything digital has grown in 2020, but considering that the ebook has been around for decades, funded and encouraged by tech giants, I think it’s safe to say that the reader rejected the format.”

For him, despite an increase in ebook sales in 2020, the format, as it exists today, does not sufficiently exploit the potential of the technological environment. “The future of the book is getting more and more bleak. The digital format has not proven itself friendly,” he says.

Print-on-demand would be another way around [a alta de custos]but it raises the book’s unit value a lot, he says: “Perhaps we need to value the materiality of the book more, publish less and better.”

The president of Abrigraf Nacional, Sidnei Victor, says that the impact can be seen in the reduction in the number of publications and in what she calls the “disappearance of newspapers”, the publications of neighborhoods and entities.

In the printing industry as a whole, the readjustments also come through cardboard, used in packaging.

A partner at Congraf Embalagens, Sidnei Anversa Victor Junior (son of the president of Abigraf) says that the increase for cards comes a little later than those destined for printing.

As in other sectors, there is still instability in the supply of imported inputs, which leads to an increase in inventories. If, on the one hand, having raw materials in storage makes it possible to fulfill orders more quickly, on the other hand, it reduces liquidity.

“It is very complicated to assemble a price. With the stock, we are not able to negotiate better prices, because it increases our cost”, says Junior.

Paper price follows the global market

Those who produce the paper say that the price variation follows the international market.

Sylvamo (former paper arm of International Paper) says that the entire logistics process until the product reaches the consumer has been affected by cost increases.

“Sylvamo has sought to balance the increase in costs with price increases in a balanced way, based on the commitment and responsibility that our products have in the process of educating the Brazilian population”, says the company, in a note.

Suzano announced in January an increase of 35% in paper for editorial lines — the company is one of the main suppliers of writing and printing papers (it is estimated that it has 40% of the market in Brazil).

This increase ended up being paid in installments after negotiation with the CBL (Brazilian Book Chamber), says Vitor Tavares, president of the entity. The first part, 10%, is already in effect — the others will come in April and June. “Almost 20% of the cost of the book comes from paper. An increase like that, all at once, would compromise the editorial production”, he says.

The director of commercial operations at Suzano’s paper and packaging unit, Guilherme Melhado Miranda, says that domestic sales are a priority in the company’s commercial strategy, but that demand is less than the installed capacity.

“The price trajectory, even in the domestic market, follows the international dynamics and is influenced by variables such as the global price of raw materials, production costs, prices practiced in the foreign market, the exchange rate and the relationship between supply and demand. “, it says.

Suzano sold 966,000 tons of printing and writing paper in 2021, up 15% from 2020, and 66% of these negotiations were within Brazil.

The volume accounts for 45% of the 1.4 million tons projected by Ibá (Brazilian Tree Industry), which brings together forest-based companies (paper, cellulose and wood).

The entity does not comment on prices, but says that, in 2021, production for printing and writing rose 11.7%, and sales, 23.1%. This category includes papers for books, posters, folders, flyers, and office supplies such as diaries, envelopes, and notebooks. Ibá does not separate how much paper is used in each product.

In the 4th quarter, around 7% of the segment’s demand came from the cardboard packaging industry, according to Suzano’s balance sheet. The company predicts, however, that the chip market will be able to regularize the supply, and the demand for this type of material will fall.

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