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CEO, Karstedt Patners, LLC

Digital4Packaging

By Kevin Karstedt

About Kevin

Digital4Packaging (D4P) is a forum to present ideas concerning the fast-charging application of a range of digital technologies that are transforming package printing. Kevin Karstedt, CEO of Karstedt Partners LLC, began his career in the “digital” world of packaging in the mid 1980s. His firm has worked with consumer product companies from the Fortune 1000 and 100 lists, package printers and converters from all market segments, and suppliers of products and services targeted at the packaging marketplace. The company has published a number of industry reports and is one of the foremost thought leaders regarding technology innovations for packaging and packaging graphics. More information about Kevin can be found at Karstedt Partners LLC
 

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The Flexible Packaging Sector, excerpts from 2012 PRIMIR Research

 
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I am often asked to give my impressions on various topics around packaging and how it is managed through the supply chain from concept to consumer. The flexible packaging sector is of particular interest and to bring some of these insights to the readership of Digital4Packaging we asked PRIMIR if we could pull excerpts from their 2012 study that Karstedt Partners was commissioned to write titled Packaging: Evaluation of Vertical Markets & Key Applications. This study was unique to many industry studies in that it looked at the force being placed on Brand Owners, the originator of packaging orders. Taking this focus a step further the study looked in-depth at the major vertical markets of food, beverage, household, personal care and healthcare to see what will be driving packaging demand in these verticals and thus driving the supply chain. Following are some of what we brought to PRIMIR members surrounding the folding carton sector. The full table of contents for the report can be downloaded here.  

Flexible packaging converters have been leaders in active and intelligent packaging for the past decade. The Freedonia Group projects growth in active packaging to be 6.5 percent per year to $1.9 billion in 2015. Advances in gas scavenger technology in food and pharmaceutical packaging are the drivers. There are also continued opportunities in self-venting substrate usage of the type used in microwave popcorn. An example of how pervasive these capabilities are, can be seen with the adoption of microwavable, steamed vegetable packaging. Originally developed for premium brands just a few years ago, it is now used for a very high percentage of products in the frozen vegetable and entrée section of grocery stores for national and private brands. Consumer preferences for more natural products with no or less preservatives are creating opportunities for packages that offer longer shelf lives for both fresh and processed foods.

Intelligent packaging, that is more a marketing and sales enhancing tool, currently comes in the form of QR codes and 2D bar codes that aid the brand in communicating with the customer. Freedonia projects expansion of this group now at 20 percent annually to $370 million in 2015. It is hard to quantify how much activities in this group will affect packaging converters, as much of the implementation is done through communications infrastructure, web sites and databases. Converters add the printed QR codes, bar codes and other graphic components. Intelligent packaging requires frequent package design changes to keep its promotions ‘fresh and engaging’ for the consumer. Heavy users of flexible packaging will use these active measures for better tracking and trace capabilities for food and other perishable products. This is significant in light of the passage of the Food Safety Modernization Act (FSMA, http://www.fda.gov/food/foodsafety/fsma/default.htm) introduced in January 2011. FSMA is contamination prevention legislation that will have a large impact on food processing and packaging over the next few years.

Brands and retailers are pushing for packaging and materials that help food products stay fresher longer. Source reduction initiatives are becoming increasingly valuable with initiatives taken by major retailers and brand owners to evaluate supplier packages for eco-friendliness and cost reduction.

Increases in the application are also driven by continued conversions to stand-up pouches and flat pouches in a number of markets including sauces, dried foods and spices. Flexible packaging converters also benefit from the increased use of convenience features such as zippers and spouts integrated into pouches, and the emergence of new applications and products such as flat-bottomed, side-gusseted pouches and hybrid pouch/folding carton products.

Growing efforts by retailers and brands to demonstrate their commitment to sustainability may lead to a renewed interest in paper, for its perceived benefits: renewable, recyclable and compostable.

Growth in food applications targets eat-on-the-run consumers that will drive more costly film and barrier coatings to extend shelf life. These trends boost the demand for food in smaller package sizes and more convenient foods designed to reduce food preparation time. Trends toward healthier eating will encourage food manufacturers to expand their offerings of products, especially snacks, baked goods and beverages, in single serving packages. Such products require more packaging than standard packages of similar items.

The fastest growing food packaging markets for flexible packaging are: beverage, meat and related products and snack foods. In non-food applications, advances will be led by pharmaceutical and medical product markets based on heightened barrier requirements, cost and convenience advantages.

New developments in barrier resins, bio-plastics, recyclability, biodegradable films and compostable films will also drive market expansion.

Other factors influencing the flexible packaging application include considerable cost and material reduction programs by major food manufacturers, brand owners and retailers. Packaging waste reduction initiatives at the local and government levels also impact flexible packaging producers.

Lean manufacturing programs are present at all levels of the flexible packaging segment. The goal of most converters is produce less waste, reduce set-up times, maintain consistency within and between jobs, and gaining overall efficiency.

There are industry efforts to expand the acceptance and use of digitally imaged flexo plates. In-the-round imaging has limited implementation to date. Other industry technologies that are in the ‘ramp up’ mode are extended color gamut printing, G7 near neutral calibrations and in-line full web defect detection systems. One of the great successes of recent years in flexographic printing is the relative acceptance of High Definition Flexography (HD Flexo).

While pre-recession growth rates of 4.5 percent per year are unlikely to be repeated for some time, industry associations and experts expect growth of around 1.8 percent per year for the next five years.

As part of the study, Karstedt Partners interviewed 122 Brand Owners in multiple vertical sectors as well as 60 converters and industry leaders to compile comprehensive trending information that will be affecting buying decisions for the next few years. For more on the study and to become a member of PRIMIR visit them at www.primir.org.

About PRIMIR
PRIMIR, the Print Industries Market Information and Research Organization, is a global source of data, analysis and trend information about print and related communications industries. PRIMIR research is funded by member dues and support from NPES. For more information about this PRIMIR study contact Rekha Ratnam, Assistant Director, Market Data and Research, at phone: 703/264-7200 or e-mail: rratnam@primir.org. For PRIMIR membership information, contact Jackie Bland at phone: 434/589-1444 or e-mail: jbland@primir.org.

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