Karstedt Partners has teamed with Sean Skelly (founder of Jetrion and former GM for EFI) to produce a video series to help those in packaging that are looking to better understand how digital printing can be used for Packaging and Label applications.
Here is the Pilot video of the new series!Continue reading
In past articles we have brought forward excerpts from a 2012 PRIMIR study that Karstedt Partnerswas 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 label sector. The full table of contents for the report can be downloaded here.
Label growth will continue, driven by several factors. One major factor is the continued stream of regulatory requirements mandating label changes on a wide variety of consumer products. This factor does not show signs of diminishing and will help drive label production to move forward. Another growth-enabling factor is the trend to connect packaging to social media and on-line brand campaigns. This is especially strong in the label application due to the relative ease in producing labels versus other forms of packaging and to the prevalence of digital printing in the labels application.
|North American Label Usage by Key Verticals: 2005 – 2015 ($ millions)Shipments in Thousands of Square Inches (MSI)|
Source: PRIMIR – Packaging: Evaluation of Vertical Markets & Key Applications – 2012
The Freedonia Group forecasts U.S. label shipments to grow 4.8% annually to $20 billion in 2015. Pressure-sensitive labels will account for 70% of that total. They also see growth in other label technologies such as stretch sleeves, heat-shrink and in-mold labels. These efforts correspond with desires by brand owners for 360 degree product information and no-look labels.
There is a great deal of research and development happening in the label segment to reduce material and production costs. Converters drive these shifts to clear, no-look labels, shrink sleeves and new substrates, striving to build tighter bonds with brand owners who want innovation. Label versatility provides innovative possibilities in graphic design and structure allowing changes in the label application to happen more easily than in other applications.
Paper-based labels are expected to remain dominant in the market, according to Freedonia, but there is a broad shift in favor of plastic packaging, which is better suited to plastic-/polymer-based, pressure-sensitive, heat-shrink, stretch sleeve and in-mold labels. There is also growing interest in bio-polymer polylactic acid but it is not significant.
Another market trend is to use product labels on primary packaging where secondary or outside packaging is eliminated. Examples of this include toothpaste that is increasingly not in folding cartons but in stand up tubes and dry goods that are in bags with attached labels. The industrial market increased its use of labels on more products from water heaters to lighting fixtures that is increasing the development of all-weather industrial labels that can be printed with high quality graphics that will withstand harsh environmental conditions.
Label converters strive to reduce production operation costs while continuing to bring innovation and value to their customers. Discussions with label converters show a common need for production flexibility. Our interviews with label converters showed the same desire for production flexibility, giving it the highest ranking. Flexibility is required so they better address their customer needs.
High definition flexography has been embraced by the label application, accounting for half of the label segment revenues. Flexo-printed, self-adhesive labels dominate growth in this segment because of its versatility. High definition flexography has strong working relationships between press manufacturers and suppliers of anilox rolls, inks and printing plates. These kinds of alliances are crucial for the label application’s technological growth.
Flexo presses are also known for their versatility and the integration of other processes within a press configuration. Many now include hot foil, gravure, screen, embossing, die cutting and slitting inline with as many as 10 flexo stations making very complicated labels possible in a single pass press run. This versatility is highly sought by label converters but the added complexity of setups, combined with the decrease in run lengths are two factors that pull against the added versatility.
In the label application, offset presses dominate high quality and efficient production of glue-applied labels. Offset represents about 17% of the application’s revenue and is tied to the market decline in glue-applied labels. Outside of the beverage market, pressure-sensitive or self-adhesive labels take a dominant share of the market.
The erosion of gravure in the label application has slowed down significantly from five years ago. Most feel the exodus of converters from gravure has essentially stopped. Innovations in the efficiency of gravure presses and in cylinder manufacturing have helped gravure. Gravure is strong in the high quality, moderately long to long run orders that are still required, and will continue to be as that line of work levels out.
The most significant trend affecting label converters is the familiar mantra of more SKUs that drive the need for more flexible manufacturing capabilities and the ability to react quickly to demand shifts in production. In the 2010 PRIMIR study, “Benchmarking and World Market Trends for Flexographic Printing”, 73% of label run lengths were less than 10,000 meters with 25% of the total under 3,000 meters. Additional information on run length trends can be found in a 2011 study published by Karstedt Partners addressing digital printing’s viability in the labels segment. The Karstedt study shows that in North American label production, 57% of label jobs are for orders of less than 50,000 labels. Looking further, all orders of less than 50,000 labels accounted for 623,932,154 MSI (Thousand Square Inches) of the total 13,583,867,623 MSI of finished printed labels or only 4.5% of the label volume. Put simply, 57% of orders represent only 4.5% of volume. This speaks volumes to the application’s need for operational flexibility and illustrates why digital printing systems are successful in penetrating this market and why eight out of ten of our label converters interviewees say they will get into or expand their capabilities in digital printing over the next five years.
Fueled by digital capabilities, label converters expand their product offerings into shrink sleeves and even folding cartons, providing new revenue streams. Innovative converters looking to sure up their relationships with customers and leveraging the capabilities of their production equipment champion these efforts.
Label converter interviewees identify food and pharmaceutical verticals with the greatest volume focus. They see medical, health and beauty and nutraceuticals with the greatest value focus, while beverages, industrial and household products are mixed. This is interesting in light of the brand owners interviewed where the beverage and pharmaceutical interviewees both ranked labels with the highest value of all the packaging applications.
With label converters providing a high level of innovation directed at their customers, only half felt their customers would be willing to pay a premium for these solutions. As stated earlier, 72% of the brand owner interviewees said they would be willing to pay more for those solutions.
The label converters also said they feel provoked by commercial printers. This is a real challenge to many label converters as commercial printers can efficiently print wet-glue labels on offset sheet fed and some digital presses. Commercial printers most likely supply these services to small local product producers that have a connection with the company producing brochures and business cards.
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 http://www.primir.org.
The Print Industries Market Information and Research Organization (PRIMIR) is the premier market research association of the graphic communications industry. It was formed in 2005 when GAMIS and the NPES Market Research Committee merged. Both had a long history of producing quality market research about the industry.
Members are from diverse segments of the industry (manufacturers and distributors of equipment and supplies, printers, trade shops, publishers, and paper companies), and are foremost in their area of specialty.
This article was originally published on WhatTheyThink.com:Continue reading