Karstedt Partners – What is the ICG?

Jay Willie – The Independent Carton Group (ICG) is an association of independently owned and operated folding carton companies. None of our members are affiliated with a major paper mill. Our mission is to help member companies competitively compete with the vertically integrated companies. We have three programs to help accomplish this mission; a purchasing program, a supplier assurance program and quarterly business meetings.

Karstedt Partners – Before we get to the nuts and bolts of the association, tell us how the association began.

Jay Willie – Heads of the original five companies met at Kennedy Airport in 1982 to discuss how they could help each other if one of them had a catastrophe occur at one of their facilities. These original member companies were Dee Paper Box, Zumbiel Packaging, Curtis Packaging, Lebanon Packaging and Harvard Packaging. As part of their agreement they began a tradition of best practice and technology sharing that continues today. In 1991 the association hired its first staff that included Andy Willie, recently retired from Curtis Packaging, as its first Executive Director.

Karstedt Partners – So in the following years the association began offering members more services, can you take us through that phase of growth?

Jay Willie – Through the early 90s Andy began evaluating how member companies purchased offset printing plates from various vendors. This first effort in volume pricing provided all members with a means to purchase plates in volume (by using their group consumption) that offered price advantages they could not gain individually. With this success to build on in 1999 the group created the ICG Purchasing Program, which now covers consumables that include paperboard, ink and even die tooling, printing presses and die cutters. We even have a program with Staples to offer office supplies to our members. To give you an example of our purchasing volume the ICG is the largest purchaser of paperboard from Clearwater Paper. In essence, the ICG is the purchasing arm for our members so they have a lot more leverage in negotiation contracts with vendors. Another benefit of the program is that it gives our members access to long-term raw material contracts that reduce the risk of interruption in the event of a paper shortage.

Karstedt Partners – What do you see as some of the major concerns facing your member companies?

Jay Willie – Our members are very concerned with maintaining margins. The economic conditions and competitive landscape have put a lot of pressure on carton converters. For example, the decrease in paperboard capacity in the US is creating an increase in board prices. The entire industry is faced with how to absorb or pass on these increases to the customer. They are also finding it more and more difficult to find qualified skilled labor on the manufacturing side. Fewer young people are getting into manufacturing related job tracks.

Karstedt Partners – How do you see the outlook for the carton market and for your members?

Jay Willie – Everyone is hoping for the economy to get better, assuming that occurs we see many of our members diversifying their product and service offerings. Many are adding new technologies to their manufacturing facilities that allow them to offer more value added products. Many members are expanding outside of their historic niche offerings to offer more full service capabilities to their customers. This can include offering product inserts along with the cartons.

We are also seeing more companies being purchased by private equity firms. As family owned companies look at succession planning many are offered the added option of private equity purchases, which were not such a viable option just a few years ago.

Karstedt Partners – Where do you see opportunities in the carton sector?

Jay Willie – As I mentioned earlier, I see a lot of opportunity for our members in expanding their product and service offerings. Adding more options in coatings and die cutting as well as new graphic features are being done as members reach outside of their niche offerings. I see the industry taking advantage of the green movement with the strength and “greenness” of paperboard packaging.

This article was originally posted on WhatTheyThink.com on 4/11/13.

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Questions on the Cost of Digital Printing:
From the questions submitted by attendees we were struck by the fact that only 6% centered on the cost of digitally printed packaging. This is interesting because historically most Brand Owner pushback to digital printing was due to the premium price short run digital packaging required over those delivered through historical channels. Most of the pushback came from purchasing and procurement functions that were focused on the “piece price” of the package not having visibility to the whole process. Does this mean that Brand Owners are now shifting away from this historical micro view of digital pricing? Jim Goldman of Global Innovation Professionals presentation addressed this issue very nicely in the webinar.

In speaking with Julie Okon, Publisher of Package Design Magazine about these responses she suggested another viewpoint, “because of all the applications questions, it may be that Brand Owners want to know if their packaging can be produced digitally and then they will ask how much it costs”. The vendor side of the digital printing industry has been working very hard to focus the cost question on the overall cost of the process rather than the cost of the package. But with procurement and purchasing functions being hammered to cut budgets and operations functions measured by sticking to budget and efficiency, looking at the larger picture of packaging cost is easier said than done.

When I boil down the total body of questions from the webinar that came in from Brand Owners and Designers (other questions came from vendors and others attending) they seemed to fall into four distinct buckets of interest; Cost (the smallest bucket), General (about who is doing what), Process (about how to get digital done) and Applications (about specific uses for digital).

Questions on Digital Printing Applications:

Most of those asking questions were interested in understanding how digital could be used for specific application needs. Of this group 21% were specifically interested in folding carton applications with smaller groups asking about bags, flexible packaging, laminates and chipboard applications. The short answer to all these applications questions is yes, digital printing can and is being used for each example. Today the capabilities of digital printing systems are fairly robust for many label applications and smaller format folding cartons, flexible packaging and shrink sleeves are being produced on the same web based single pass printing systems. Larger format flatbed systems are being used for larger cartons and corrugated as well as point-of-purchase applications. There were many new digital systems shown at drupa 2012 (the global print show that happens every four years in Düsseldorf, Germany) that will be coming to market over the next 8 to 24 months that have the potential to open the spectrum of what digital can accomplish for packaging applications. Format sizes, production capacity, image quality and connectivity to other systems are all going to be addressed by some of these new systems. Contact me directly if you have specific questions or click here to learn about our report titled, “Digital Printing for Packaging: Folding Carton Review”.

During the webinar Mike Ferrari of Ferrari Innovation Solutions gave his view of the trends driving packaging change and presented some examples of how digital printing is making a difference in branding and prompting products through digitally printed packaging.

The webinar was concluded with a lively Q&A session moderated by Jeff Wettersten of Karstedt Partners. It was that Q&A session that sparked this new series, the Karstedt Digital Packaging Spotlite geared at helping the Brand Owner (and their supply chain partners) to understand Where, How & Why digital printing might fit.

We encourage you and your colleagues to participate and to make it worth you while we will provide you a free overview document describing “Is Digital Printing Part of Your Brand or Operational Strategy?” a report published by Karstedt Partners in collaboration with Mike Ferrari that addresses many of the questions Brand Owners will have as they move their thinking to digital printing for packaging.

Click here to receive your Free Overview Report of “Is Digital Printing Part of Your Brand or Operational Strategy?”.

The post Karstedt’s Digital Packaging Spotlite: The Perception of Brand Owners on the Cost of Digital Packaging? appeared first on Karstedt Partners.

We’re pleased to announce that we will be rolling out an ongoing series of quick polls and surveys based on packaging’s hottest topics and give everyone a chance to chime in!

Introducing, ‘Karstedt’s Digital Packaging Spotlight‘ Series!

In addition to blog posts and articles, which you will find here, we will also be rolling these topics out on our  media partner and industry sites soon. We will be sending out special eBlasts to our community as the new data points and polls become available. You won’t want to miss them so be sure to sign up for our newsletter here.

The first survey in the Spotlight series addresses the issues of the costs of digital printing for packaging and whether or not brand owners even care. The results we have so far may surprise you, and if you are a brand owner we’d love to hear your thoughts.

Participating is easy, just answer the question below and your feedback will be included in our next Spotlight report.

Don’t forget, if you want the latest information on the “Digital Print for Brand Owners Report“, you can request a copy of the Executive Summary here.

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A critical shortage of container board and corrugated sheets led a group of Independent Corrugated Converters to found The Association of Independent Converters (AICC) in 1974. For the past 38 years, the primary mission of AICC has not changed as evidenced by the following paragraph from their website:

“AICC represents, and protects, the business interests of the independent sector of the corrugated, folding carton, and rigid box industries.”

We recently had the opportunity to catch up with Steve Young, President of AICC, and asked him to share his thoughts around the mission of AICC, the role of AICC, and the opportunities and challenges facing their members.

Karstedt Partners- How many members does AICC have?

Steve Young- We have approximately 450 member companies, comprised of Independent Converters and suppliers. Many of our member companies have more than one location, so the number of locations involved with AICC is significantly greater than 450.

Karstedt Partners- Steve, what is the meaning of the phrase ““AICC represents, and protects, the business interests of the independent sector of the corrugated, folding carton, and rigid box industries.”

Steve Young- The integrated share of the markets our members participate in is approximately 80%. Consolidation among integrated firms continues, as we have seen in the past few years with International Paper/Temple Inland, and Rock Tenn/Smurfitt Stone.  Many independent converters, which is our membership, are dependent on the integrateds for raw paper, or sheet stock.  In addition, many CPG companies have a national or global footprint, requiring global or national supply capabilities.  Participation in AICC provides the framework for networking with other AICC members to serve these requirements through the First Pak program.  The primary purpose of AICC is to:

1. Address issues related to continuity of supply
2. Provide educational and statistical/metrics information and opportunities to the membership
3. Expand the geographic, product, and service capabilities of our members through the First Pak program and AICC networking opportunities

Karstedt Partners- How did 2012 conclude for your members, and what is the outlook for 2013?

Steve Young- Virtually all or our members reported volume increases in 2012.  The period from August to November is always a busy time with the build up for the holidays, and our members reported strong activity. Our members are uncertain about the outlook for 2013.

Karstedt Partners- In addition to the economy, what other concerns does your membership have for 2013?

Steve Young- price increases are a big concern, both for raw materials as well as for freight and utilities.  The corrugated industry just announced a $50/ton price increase on paper; this is the second in six months.

Karstedt Partners- Do you feel the increases in paper cost coming from the integrateds will open the door for exports or other domestic producers of paper?

Steve Young- As containerboard price levels rise, it will draw new competitors into the market.  Traditionally, imported paper from Europe or Asia, has been limited to specialty grades. We are now seeing the conversation expanded to include commodity paper grades.  We are also seeing renewed interest from Bag Stock and Newsprint Mills, companies such as KPAQ, SP Fiber Technologies and Hood Container are taking another look at opportunities in linerboard grades.

Karstedt Partners- What opportunities do your members see for 2013?

Steve Young- Anywhere where our members can expand their niche business, areas such as promotional work utilizing high-end printed graphics for instance, or kitting/fulfillment, and co-packing. Some of our members are more a logistics company than they are converters. This works out well for CPG companies, as our members have eliminated a bottleneck and source of irritation from the CPG.  Many of our members focus on finding the pain in our customers supply chain, and fixing it.  The pace of this diversification is quickening, and this trend will continue.  There are symbiotic relationships that exist within packaging, not only between corrugated, folding carton and rigid boxes, but other packaging types as well.  We also see similar relationships among materials, such as wood and foam used in display applications that can carry our members into the sign industry. The successful and strategic independents are not bound by a conventional definition, they are able to identify growth opportunities and execute strategies to pursue that growth. Some of this is out of necessity, especially in display and promotional applications.  Digital printing has enabled commercial printers and sign shops to enter this space and meet specific requirements.  The digital landscape is changing quickly, and our membership is keeping pace by developing strategies for digital printing, and expanding service capabilities to meet the needs of the customer.

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The advisory board has helped to frame content requirements and will be reviewing abstracts for Digital Print for Packaging 2013 and are searching for industry experts who can provide an engaging, knowledgeable and exciting presentation on one of the following topics:

• Market trends and technology
• How to work with customers to integrate digital
• Perspectives from brand owners using digital print for packaging
• Standards for digital technology
• Dynamics of color with digital print
• Color challenges and integration
• Global workflow
• Opportunities and hurdles: transitioning from traditional to new

For more information go to: http://www.smitherspira.com/digital-print-for-packaging-2013.aspx

To submit an abstract, please send your name, title, organization, presentation summary and biography to Barbara Fowler at bfowler@smithers.com no later than Friday, January 18th.

The post Karstedt Partners on Advisory Board for Digital Printing Conference appeared first on Karstedt Partners.

Heidelberg Speedmaster XL 162

So lets assume that efficiencies in long runs is the reason VLF presses have been so hot (we can say that because of the 65% comment above). How about the discussion I had with a close friend who also purchased a VLF last year and is doing about 20 jobs a day through that press. That press is surely not doing efficient long runs but efficient short runs.

What I have been describing is the “conventional wisdom” for the past decade or so. Find ways to make it faster, better, cheaper… And what about all the talk about order sizes going down and short runs with little lead-time being the norm? That is the reason we need those big fast changeover presses right? Maybe not…

My work is great, I regularly speak to people all through the packaging supply chain about trends and what they think are the most interesting changes happening in our world of packaging. Having done this since 1996 I can tell you I have seen trends come and go, change and then change again, I can honestly say there has never been a dull moment.

Over the past few months I have been speaking with a number of carton converters and have come across in interesting shift in thinking. As many of you know I have been working in the area of digital printing for packaging for many years. And for most of that time converters have been reluctant to look at solutions that upset post press workflows such as die cutting and finishing… they need a solution (digital or not) that is 40+ inches wide to “fit in” and “play nice” with their current workflows.

Well, there seems to be a change in that mindset. I have recently met with a number of carton converters who are actively looking at smaller format printing solutions, particularly “half size” or 28 to 32 inch wide sheetfed presses. What has changed? Why the openness to workflow changes that allows a half size sheet to be accepted into the downstream workflows? That comes back to the opening paragraph where shot runs and shorter lead-times “the new norm” has forced carton converters to look for ways to produce short runs more effectively, and that is increasingly seen as possible by smaller efficient offset presses. Scouring press releases for the past year has shown an up-tick in the number that are touting presses in that 28 to 32 inch range being installed in carton plants with quotes like; “After spending time speaking with the manufacture, we concluded that the 28-inch press would allow us to cost-effectively service the short-run segment of our customers’ business.” In addition we have spoken with a number of converters who are actively evaluating this option and have come to the conclusion that they can be made to fit into their plant’s workflow. I have to tell you, this shift has caught me a little be surprise. Just two years ago, when working with a client on this very topic, the mindset of converters was not so inviting to the smaller format. What has changed?

Mitsubishi Diamond 1000 LS

Presstek 75DI

So, for carton converters looking for productivity gains, the next big thing may not be so big after all.

For more on this topic check out our 2012 drupa Packaging Review – Folding Carton Report.

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The Packaging Lifecycle – Revised View

Source: Karstedt Partners, LLC

This next graphic shows how the demand stream coming from the tails of the lifecycle diagram, quadrants A, B, C and E are driving 70% of orders but only 30% of volume and how that has shifted and is causing major problems in meeting the needs/

Impact of SKU Proliferation on Converters – The New Operational Reality

Source: Karstedt Partners

In the following illustration the yellow box represents the increased inefficiencies created through additional low volume production demands. In a capital-intensive business, profitability risk is far greater in the new model due to the extended time getting to volume runs, and the resulting overall lower capacity due to more production set-ups and greater inefficiencies.

Change in Demand Brings Inefficacies

Source: Karstedt Partners

The reality of the situation is when productivity enhancements are considered over a typical production period the overall impact on most converters is a net decline in capacity, as productivity enhancements have contributed to greater thru-put. Additional SKU proliferation, increasing demand from an improved economy, and limited options for additional productivity improvements from existing equipment and processes is straining operational capability.

The reduction in overall thru-put is also having a negative impact on profitability. This “perfect storm” is forcing converters to re-think their operational model. Converters commonly use the term “flexibility” to define what they are seeking. The perfect solution is a press that combines high productivity, print quality, converting and finishing options, media flexibility, at the lowest cost. Absent the “total solution”, converters are seeking to create a broader operational platform to manage variations in daily production demand. For years, converters have upgraded production presses, and have moved non-conforming production demand to older presses to improve productivity. Product requirements, along with changes in press technology, are creating problems around the traditional practice of being able to move demand from one press to another. Converters recognize that specific solutions are now required to manage specific requirements for print as well as converting. The needs of the customer, as well as the needs of the business, now require multiple options for printing and converting.

Series Overview: True to its history of introducing new technology to the printing world, drupa 2012 offered plenty of new things. In addition it showcased a great deal of packaging specific offerings in printing and finishing technologies. If drupa 2008 was “The Inkjet drupa” this time around it was surely “The; ‘we think we have a digital solution for packaging’ drupa”. Karstedt Partners spent 10-man days on the floor meeting with equipment suppliers, users, journalists and pundits evaluating what was being offered by vendors, and what was being asked for by users. This 4 part series of posts offers an overview of what we learned from these meetings and can share with those interested in our opinions and observations. The full 61-page report is available by clicking here.

The post Digital Solutions for Packaging at drupa 2012: Part IV A deeper look at Unmet Needs in Package Printing appeared first on Karstedt Partners.

The Packaging Lifecycle – Historical View

Source: Karstedt Partners, LLC

Packaging Converters receive orders from Brand Owners and translate the demand stream into production orders. The next figure shows converter production requirements.

Packaging Converter Production Requirements – the Old Operational Model

Source: Karstedt Partners, LLC

Consumer behavior related to how we shop, where we shop, and what we shop for has changed over the past ten years. Likewise, the retailer and brand owner response has changed dramatically to enhance consumer engagement. The result has been rapid product proliferation. Twenty years ago, in most major product classifications, four to five major brand producers served 80% of that specific market demand. Put another way, four products served 80% of the market. Today, four to five major brand producers continue to serve most major product classifications, but instead of producing a single product, they now produce 250-300 variations of the same product. The product inside is the same, only the packaging has changed. The next figure shows how this dynamic is impacting the product lifecycle.

The Packaging Lifecycle – Revised View

Source: Karstedt Partners

The total volume produced has not changed; the total number of orders, as well as the distribution of those orders has changed dramatically. The number and frequency of mainline orders has decreased dramatically, while the number and frequency of orders for innovation, event marketing, low-volume SKUs and end-of-life requirements has increased dramatically. The challenge for the packaging supply chain traditionally has been to manage scale; the new challenge is to continue to manage scale while also managing scope. Industries with an infrastructure tailored to volume typically have a difficult time adding capabilities for speed, flexibility and convenience. This creates opportunities for new entrants such as contract manufactures and contract packagers.

The fourth post in this series: A Deeper Look at the Unmet Needs in Packaging,  will further discuss what challenges face packaging converters that digital and analog systems suppliers are trying to address.

Series Overview: True to its history of introducing new technology to the printing world, drupa 2012 offered plenty of new things. In addition it showcased a great deal of packaging specific offerings in printing and finishing technologies. If drupa 2008 was “The Inkjet drupa” this time around it was surely “The; ‘we think we have a digital solution for packaging’ drupa”. Karstedt Partners spent 10-man days on the floor meeting with equipment suppliers, users, journalists and pundits evaluating what was being offered by vendors, and what was being asked for by users. This 4 part series of posts offers an overview of what we learned from these meetings and can share with those interested in our opinions and observations. The full 61-page report is available by clicking here.

The post Digital Solutions for Packaging at drupa 2012: Part III Unmet needs in Package Printing appeared first on Karstedt Partners.

Analog Printing for Packaging

Several items stand out from the interviews:

• Traditional press manufacturers are focusing on driving down waste and reducing make-ready time. Press demonstrations were showing four-color press changeovers occurring in less than 15 minutes. Omet has redesigned their process for registering print, reducing scrap from typical 200-300 sheet quantities to 2.5 meters.
• Traditional press suppliers are no longer ignoring the impact of digital printing. KBA, Heidelberg, ManRoland, Komori, Mitsubishi, Bobst and Omet were all discussing plans and options for digital printing.
• Packaging is a growth opportunity for most traditional analog suppliers. Demand for packaging historically tracks to GDP, and unlike the Commercial Print Market, demand for printed packaging will benefit from digital media, rather than be harmed by it.
• Several traditional press manufacturers stated a nuisance order for Folding Carton is any order less than 5,000 impressions, 20,000 impressions are considered a standard run. One supplier estimated 65% of production jobs are less than 20,000 impressions. Whatever the actual numbers may be, the point is, regardless of how the jobs are run, individually on a narrow width press, or ganged on a wide press, changes in the order flow are creating headaches for the printer.

Different marketing messages yield different results

There is a stark contrast in the marketing messages delivered between traditional and analog press suppliers. Analog suppliers speak about productivity and flexibility. Digital suppliers speak about one-to-one marketing, personalization, and customization. In terms of productivity, analog suppliers speak in terms of sheets produced per hour, using the sheet size as a reference point. Digital suppliers also speak in terms of sheets per hour, but use terminology such as B1 or B2 size configurations that are foreign to most North American Converters. The prospect for both suppliers is typically a converter, so why is there a difference in the message conveyed, and what is the impact on the converter? We spoke with several converters that attended drupa to gain their thoughts; following are a few comments on the topic.

• “With economic uncertainty continuing, our business focus is on doing more with less. That means how we continue to grow the volume and produce it for less. Fewer people, less expense, and less material are a way of life in our business. Digital technologies can certainly play a critical role in fulfilling that need, but digital suppliers must learn how to connect their technology to my immediate need. One to one marketing is nice, but the supply chain from the Brand Owner to the Converter cannot manage one-to-one marketing campaigns today”.
• “What constitutes a low volume run? Digital printing is not about managing to a theoretical run volume, it is about increasing the utilization of high volume assets.”

Drupa attendees seeking packaging solutions now have multiple options to consider. How will the respective technologies be positioned in the market? What is the marketing message and how do converters perceive it?

Impressions post drupa

• Traditional analog suppliers are in a tough position. The supply base will undoubtedly experience additional contraction and consolidation. A digital solution will not solve the problems faced by analog suppliers, but it may be critical to have a solution in place to preserve a relationship with key customers.
• Digital suppliers need to articulate the digital value proposition. The need for variable data in Commercial Printing is a critical requirement. At least initially, variable data for most packaging applications is not a critical need.
• In speaking with several converters post drupa, we asked if digital printing is now the lowest cost investment option for incremental capacity. They believe it is, but need more information related to how much capacity it will deliver and what the impact is on current operations. The answer for which technology to pursue, traditional wide width presses versus narrow width sheet-fed digital presses, will take some time to sort out. In an uncertain economy, converters like the security of limited investment.

Winners and Losers

While all participants were claiming drupa was a tremendous success, with the exception of Landa, we saw nothing on the print side of technology that was a game changer.

On the traditional analog side, most companies in the sheetfed offset have made solid improvements in productivity, sustainability and scrap reductions. The absence of a clear winner in terms of technology typically pushes the purchasing decisions to ancillary services such as parts and service. Pre-press integration will now begin to become a larger part of the decision making process. Heidelberg and KBA will retain a dominant market position due to their strength with large companies purchasing multiple presses. Companies such as these find it convenient to have commonality in equipment throughout their facilities. Smaller participants such as Goss, Ryobi, Mitsubishi and Komori will survive as long as their customer base survives. Heidelberg and KBA continue to grow share in Asia, a historical strong hold for Komori and Ryobi. It is too early to predict the future of ManRoland. Do new customers need them as a potential supplier? Will existing customers abandon them on new press purchases, seeking greater security in other suppliers?

The introduction of combo presses and the expansion of DI technology into packaging will be intriguing to watch. Combo presses may find a niche in high value packaging applications such as beverage, cosmetics, and premium brands. The challenge these companies face is finding printers with enough volume in the target applications to justify the investment. DI technology is also interesting. It has been around for some time, and the traditional issues (no variable data capability and imaging errors in the plates) creating doubt around the investment have been addressed. The price point for this technology is below many comparable pure digital systems, with higher thru-put and a potentially lower cost of print.

On the digital side, it was interesting how toner technology stole the show. HP, Landa and Xeikon all positioned themselves as the clear market leaders. Maintaining that leadership will require delivery of successful solutions on the promises made. Surprising is the lack of any real attention to Kodak, Xerox, Konica Minolta, Epson, FujiFilm. Oce and Screen. These companies have all enjoyed success in other digital arenas, but they have thus far failed to captivate a new audience with solutions suitable to garner attention. Kodak may be a wild card with either their stream or prosper technology, but for now, only two companies, Bobst and Sun Automation have acknowledged being development partners, and both are struggling.

The third post in this series: Addressing the Unmet Needs in Packaging, will discuss what challenges face packaging converters that digital and analog systems suppliers are trying to address.

Series Overview: True to its history of introducing new technology to the printing world, drupa 2012 offered plenty of new things. In addition it showcased a great deal of packaging specific offerings in printing and finishing technologies. If drupa 2008 was “The Inkjet drupa” this time around it was surely “The; ‘we think we have a digital solution for packaging’ drupa”. Karstedt Partners spent 10-man days on the floor meeting with equipment suppliers, users, journalists and pundits evaluating what was being offered by vendors, and what was being asked for by users. This 4 part series of posts offers an overview of what we learned from these meetings and can share with those interested in our opinions and observations. The full 61-page report is available by clicking here.

The post Digital Solutions for Packaging at drupa 2012: Part II – Press Manufacturers Changing Messages appeared first on Karstedt Partners.

The objective for this analysis is to assess the potential opportunities, threats, and implications for the packaging supply chain posed by new products and initiatives introduced at drupa 2012. Following are a few general comments and impressions regarding the show. In preparing for the show we scoured the web sites and presentations of the major players attempting to gain a feel for the state of the market from their perspective. The following slide from KBA caught our attention, and raised a big question; How is the industry going to respond to a 49% decline in revenue?

Source: 87th Koenig & Bauer AG Annual General Meeting, June 14, 2012

At 73% share, sheetfed offset dominates the new equipment market. Market segmentation of sheetfed offset typically groups press sizes into the following configurations: less than 24 inches, 24-36 inches, 37 to 42 inches and 43 inches and above.

As we prepared for our drupa interviews, we desired to understand where companies participated and what their outlook was for their particular segment of the market. Following are some observations:

• Press options for the under 36-inch segment are numerous with no shortage of participants. Heidelberg is the dominant player in this segment, with a 35% share in the 50 x 70 cm format size and a 48% share in the 70 x 100 cm format size. The bulk of Komori, Ryobi, Mitsubishi, Gallus, Presstek, and Omet sales also come from this classification.
• Press options in the VLF (very large format) size, or above 40 inches reduce dramatically. KBA is the market leader, followed by Heidelberg, ManRoland and Goss.
• Packaging applications are beginning to become the driver for sales in the VLF format. A sales manager from a large press supplier estimated 65% of VLF presses sold are being purchased for packaging applications.
• Digital printing is having the greatest impact in the 50 x 70 cm format size. Hot button issues are the requirements for flexibility, derived through flexibility in format size, quick set-ups and changeovers, and solid integration of pre-press to press.
• Digital capabilities in the 70 x 100 cm format size are now being introduced. FujiFilm, Screen, HP, MGI and Landa all displayed technologies targeting this format size. Having missed the boat on the 50 x 70 cm format size, traditional analog suppliers are quickly announcing strategic partnerships with digital developers.
• Entry into the 70 x 100 cm format size has also opened the door into potential expansion into Folding Carton. While Commercial Printing applications remain the primary target, Folding Carton is viewed as a potential opportunity through Commercial Printers as well as Folding Carton Converters.
• The introduction of off-line converting equipment specifically designed for packaging applications makes an off-line digital printing solution much more attractive.

The next post in this series will look how digital and analog systems as well as their promotions to the packaging market have progressed since drupa 2008. For the full review click here.

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