The promotional products sector is a 10-figure industry again in the United Kingdom.

A deep-dive analysis by Sourcing City, an ASI partner and trade service organization that provides a suite of solutions to the U.K. promo market, shows that in 2022 merch industry sales crossed the billion-pound mark again for the first time since COVID-19 struck.

Annual industry sales last year were more than 1.135 billion pounds, or nearly $1.4 billion, exclusive Sourcing City research shows. The tally includes revenue generated in the U.K. (England, Scotland, Wales and Northern Ireland) and neighbor the Republic of Ireland.

The 2022 sales total nearly matched the 1.168 billion pounds in business generated in 2019 – the last full pre-pandemic year. Profitability was up for many companies too, Sourcing City reports, though admittedly part of that was due to a reduction in overhead realized through factors like lower staff levels.

In 2020 and 2021, the British promotional products market lost an estimated $430 million in market value as the pandemic and its related fallout, such as societal lockdowns, depressed business. Still, nearly all that ground has been gained back, with 2022 sales at 97% of the 2019 number.

$1.4 billion,
or 1.135 billion pounds, was the tally of promo products market sales in the United Kingdom and the Republic of Ireland in 2022.(Sourcing City)

“It is pleasing to see that the U.K. industry continues to prove its resilience and entrepreneurial spirit,” says David Long, founder and executive chairman of Sourcing City, whose offerings include a searchable online database from which industry pros source a gamut of promotional products.

Long continued: “The world economy has faced significant challenges in recent years, and to date, the U.K. promo industry has responded well. No doubt there are more challenges to face, but this industry is known for moving quickly to respond to market changes, and I remain optimistic that we will come through the coming years strongly.”

Growth Drivers

As happened in North America, rampant inflation played a role in driving U.K.’s top-line sales gain, as industry participants had to charge more for the solutions they provided to remain viable amid escalating costs.

Even so, higher pricing was far from the only factor in the collective revenue rise. A post-lockdown return of events and general desire among clients across a variety of industries to intensify marketing efforts were essential to fuelling the sales ascent for U.K. merch purveyors. Employee gifting/retention initiatives helped, too.

“The U.K.’s love of face-to-face interactions and events of all shapes and sizes had been waiting in the wings to get moving after COVID,” explains Carey Trevill, CEO of the British Promotional Merchandise Association (BPMA), a professional trade body serving the U.K. promo products industry.

Trevill adds: “Events were jammed into the schedule and drove an exceptionally busy year, particularly over the summer and into early autumn, delivering for many their best year ever. In addition, whilst the pace slowed in other marketing and advertising spend, events were consistently reported as either static or growing into the end of the year. Budgets were and are being spent as we’ve made up for lost time.”

“The world economy has faced significant challenges in recent years, and to date, the U.K. promo industry has responded well.” David Long, Sourcing City

However, in geographic terms, the recovery wasn’t even. While sales were swift in the U.K., business was slower in the Republic of Ireland. Total market value in 2022 was still down 18.6% from 2019. “Over the pandemic period, the Republic of Ireland was much slower to relax COVID restrictions, which could be a delayed contributing factor,” Long writes in the Sourcing City analysis. “Reports say that latter 2022 was looking more positive.”

Back in England, there were an abundance of 2022 success stories to share. Horsham, U.K.-based TC Branding Group was among the distributors that had a banner year. Sales exceeded expectations. Business was especially brisk with the construction and travel markets. In particular, luxury travel providers, including those in the cruise business, were keen for solutions from TC Branding.

Industry sales in the U.K./Ireland were at
97%
of 2019 levels in 2022 – a near full recovery from pandemic lows.(Sourcing City)

“We have some very large cruise customers and their expenditure during the year was way up on previous years,” says TC Branding Sales Director Mick Humphries. “Overall, there was a very positive bounce-back from the difficulties of both COVID and Brexit. Large businesses in particular were very buoyant and seemed anxious to get back to their pre-COVID levels.”

Some large North America-based Top 40 distributors have been growing their presence in the U.K. market in recent years. Maine-headquartered Top 40 firm Geiger (asi/202900) has been a leader in this regard, expanding U.K. business through organic growth and strategic acquisitions. London-based Vicky Kinasz, managing director of Geiger U.K., says the division’s 2022 sales accelerated in line with its long-term growth plan.

“Our performance resulted from adding new clients and achieving higher sales with our top contracted clients year on year as our program orders returned strongly,” Kinasz explains. “Sales of eco products were also much higher than previous years, as corporations continue to push forward their ESG commitments.”

Sustainability’s Rise & Top Products

As Kinasz alludes to, demand from end-buyers for products made from more sustainable materials in a manner that minimizes environmental impact has greatly increased in the U.K. promo market. The demand quickened in 2022 and shows no signs of stopping in 2023, as evidenced at this January’s Merchandise World – the largest promo show in the U.K.

Bags accounted for
11.8%
of promo U.K.’s market value, making bags the top-selling product category at 133.6 million pounds.(Sourcing City)

“There has been a noticeable increase in the demand for sustainable products,” Long writes in the Sourcing City report. “Suppliers have responded, and the majority of new products coming to market have a sustainable claim. The challenge is being sure that the products are truly eco-friendly and filtering out any that may simply be ‘green washing.’ A large range of certification is now available from a number of bodies and provided by many suppliers. Distributors are going through a steep learning curve to familiarize themselves with this information.”

The Sourcing City report shows that the top 10 product categories, as determined by percentage of industry sales, were bags, pens/pencils, mugs, plastic giveaways, sport bottles, confectionary, clothing, keyrings, paper pads and USB accessories. The report notes that apparel is likely underestimated, as sales of clothing by textile printers, specialist clothing resellers or suppliers direct to end-users, among other things, are not included.

As the promo market grew, so rose the number of searches in Sourcing City’s online product database. Searches increased 36.7% in 2022. The 10 most frequently searched themes were exhibition giveaways, eco-friendly ideas, desk gifts, drink related, travel related, concerts/festivals, pocket gifts, children’s gifts, Olympics and Christmas ideas.

Who’s Dominating the Market?

Data from Sourcing City shows that market share is especially concentrated among about 6% of the industry’s largest distributors.

There are 2,467 distributors in the U.K./Ireland, but just 156 companies account for 60% of the entire market spend – about 660 million pounds. Meanwhile, companies with more than 1 million pounds in sales represent 72.6% of the market spend but are only 14.4% of all distributor companies. The biggest distributor firm is Brand Addition (asi/202515), which generated 115 million pounds in sales across its business operations in the U.K., U.S. and Germany, Sourcing City states.

156
distributors account for 60% of the entire promo market’s revenue in the U.K./Ireland.(Sourcing City)

Meanwhile, the number of suppliers operating in the U.K. market has remained fairly constant, despite the economic challenges of the pandemic. There were about 2,220 suppliers in 2019 and there are just under 2,200 currently. Suppliers most often searched for in Sourcing City’s database were PF Concept UK Ltd, European Solutions, Midocean, Impression Europe, Clipper Gifts, Your Promo, XD Connects, Laltex Promo, Promo Catering and Pinpoint Badges.

2,196
The number of suppliers in the U.K./Ireland market.(Sourcing City)

As in the U.S., suppliers have dealt with labor shortages that appear to have contributed to customer service issues in some cases. They’ve also tightened credit terms for distributors to reduce risk exposure, and during the earlier pandemic downturn pulled back investment in stock, which contributed to inventory shortfalls. Still, on the whole, most suppliers have found ways to adapt and move business forward amid the return of demand.

“In spite of all the challenges suppliers have had to face, the majority had a solid upturn and recovery in 2022 and seem optimistically set for the future,” Long says.

2023 Outlook

Will that optimism translate into continued robust industry performance in 2023?

Certainly, the U.K. market is facing no shortage of headwinds. It’s been a turbulent time in U.K. politics, and geopolitical issues such as Russia’s invasion of Ukraine have contributed to instability and inflation that’s not good for the economy. The International Monetary Fund has predicted the U.K. will experience a gross domestic product contraction in 2023.

In industry-specific terms, securing adequate labor levels and fallout from Brexit – the political and economic decoupling of the U.K. from the European Union – present hurdles. Brexit-related “additional complex regulations and paperwork continues to be a thorn in the side of any company that exports or imports from or to the U.K.,” Long says, which has hurt business with mainland Europe for some companies.

“We’re confident the U.K. promo market will continue on a slow and steady path to growth.” Carey Trevill, BPMA

For all that though, U.K. promo pros say the first six weeks of 2023 have presented many encouraging signs. They’re confident that business will continue to churn.

“We are predicting another strong year ahead in 2023, and despite the general fears of recession, the market appears buoyant in the first couple of months,” Kinasz says.

Humphries reports that TC Branding has experienced no signs of a slowdown. Much to the contrary in fact.

“The market is very buoyant,” he states. “One area of particular growth seems to be companies purchasing welcome packs for new members of staff. In the past, much of our merchandise was purchased by companies wishing to promote themselves. Now, there are many companies wishing to purchase promotional merchandise to reward their staff.”

Trevill shares that the “signs are good” for another winning year.

“January was a pretty solid start for the industry and with many other factors, such as stock and freight finally normalizing, and the dip in the economy now not as bad as we feared, this has helped many businesses feel more confident about the months ahead,” she says. “It’s still tough out there but with spend still increasing across the board, we’re confident the U.K. promo market will continue on a slow and steady path to growth.”

Word on promo U.K.’s performance comes as ASI Research’s Distributor Quarterly Sales Survey showed that promotional products distributors in North America collectively increased sales by 11.4% year over year in 2022 to $25.8 billion. The revenue total tied the domestic market’s all-time sales record, which was set in 2019.