Deep Dives into Digital for Three Packaging Segments
A printing company targeting the packaging and label markets needs two things: press equipment capable of producing what the markets want to buy; and a strategic understanding of what customers in those markets expect from print service providers who want to do business with them.
The Digital Packaging Summit covers both fronts with an agenda that balances technical updates with market-focused briefings on putting digital printing systems to their best and most profitable uses. On Wednesday, Nov. 7, “deep dive” breakout sessions on the label, folding carton, and corrugated segments offered guidance to print firms already established in these markets and to newcomers aspiring to break into them.
Marco Boer, conference co-chair and VP of I.T. Strategies, and Bob Leahey associate director for Keypoint Intelligence-InfoTrends, addressed labeling, which Boer identified as the first segment of the packaging market to embrace digital printing. He noted that although only about 5% of the total volume of labels is produced digitally, labels printed this way account for 20% of all expenditures on labels because brand owners are willing to pay premium prices for them.
Boer said the digital label market has a four-part structure defined by production technologies: tabletop inkjet and toner; light production inkjet and toner; hybrid inkjet; and production, stand-alone inkjet and toner. Trends within its sectors include follow-on sales of digital equipment to existing users; and technical advances that make newer models twice as productive as legacy devices. Boer reckoned that about 15% of all label converters have a digital press of one kind or another.
What it adds up to, said Leahey, is a market that is “kind” to digital systems because they fit so many label production requirements so well. He predicted that although digital’s present share of label output is small, an upward trend will occur as the equipment manufacturers continue to bring new solutions, especially inkjet platforms, to market.
Leahey observed that over time, “converters get better at digital printing” in terms of selling it as well as producing it. This means that they are achieving more utilization and deriving more value from the label printing systems they have invested in.
Among the points made by Kevin Karstedt, conference co-chair and CEO of Karstedt Partners, in his folding carton overview was that when it comes to choosing a digital imaging process, converters tend to prefer whatever comes closest to the conventional production standards they are used to.
Citing survey data from his firm and the Specialty Graphic Imaging Association (SGIA), Karstedt noted that the statement “match my analog print and quality” drew the second-highest percentage of response to a question about selecting a digital option (surpassed only by aqueous inkjet). Data from the same sources indicate that the digital press formats seen as most desirable by folding carton producers are B2 (half size) and B1 (full size).
Most, although not all, folding carton producers with digital presses have developed appropriate pricing models for that portion of their business, according to Karstedt. His advice to those with the task still ahead of them was, “Don’t commoditize your digital capability – sell it.”
Karstedt ballasted his deep dive with some comments gathered from brands about their perceptions of digital printing. Among them:
- “Five years ago I was wowed by digital, 10 years from now I will be wowed by digital, right now I am guarded as to what it can really do for us.”
- “I would like to see it as a regular process, not a specialty.”
- “Digital has the potential to be a supply chain changer, the next generation or two will make big changes.”
His colleague, Jeff Wettersten, president of Karstedt Partners, similarly noted that brands using corrugated packaging are looking to digital for help in simplifying and streamlining their supply chains. He said that digital adoption was growing throughout the corrugated packaging supply chain and that as a result, converters that have adopted digital methods “are hitting their ROI targets.”
Wettersten’s advice for corrugated producers included urging them to focus continuously on differentiating their products and services. “Why invest today with a multimillion-dollar investment if you’re going to be a me-too two years from now?” he asked. He also counseled digital print service providers not to succumb to pressure on what they charge for their services.
When a customer insists on an unreasonable reduction in price, Wettersten warned, “you’re dead. Run, don’t walk” away from the confrontation. Everyone benefits when the customer sees that instead of trying to make the carton cheaper, there are ways to make it better.