20/20 Year in Review: What's in Store for drupa 2020
By François Martin, worldwide marketing director, Graphics Solutions Business, HP Inc.
2016 marked another riveting drupa, where the printing industry and its major players put their best innovation forward, demonstrating their latest technology advancements along with a few surprises. drupa 2016 put a focus on digital printing across manufacturers and ever-expanding application possibilities. The packaging segment also assumed a seat at the drupa table. Indeed, the landscape of drupa is changing as the industry evolves with market demands. In looking back at drupa 2016 with 20/20 hindsight, this article will explore emerging trends, pockets of print growth and what we can expect at drupa 2020.
Accelerated Digital Printing Adoption
Despite varying dynamics at play in the commercial, packaging and large-format printing segments, a prevailing trend is the continued transition from analog to digital printing. At drupa 2016, we saw an increase in commercially available digital printing solutions from historically analog printing vendors. We also saw key digital printing players unveil unprecedented digital printing technology to enter new markets that are currently dominated by analog.
The shift to digital is propelled by brands’ desire to better engage with consumers via personalization, localized point of purchase signage and multi-channel campaigns, among other emerging print applications. Brands are applying pressure on print service providers (PSPs) to deliver faster turnarounds for expedited time to market, customization and shorter run lengths to mirror consumer purchasing behaviors. PSPs are experiencing an increased sense of urgency to adjust their operating models and services to increase profitability. Digital can meet these demands like no other printing technology.
As evidenced by its prevalence at drupa, digital printing is gaining significant momentum across segments and applications, from postage stamps and pouches to building wraps and interior décor. In fact, digitally printed applications are growing at double-digital percent across most application segments, more than double the rate of conventionally-printed applications.
Commercial Printing Trends and Challenges
Substantial consolidation in the commercial printing segment, resulting from mergers and acquisitions, has led to a global downsizing of the commercial market by 20%. These consolidations are helping calibrate global overcapacity that is driving lower operating profits. At the same time, PSPs are increasingly turning to digital printing technology as a proven method to improve margins. Major deals signed at drupa 2016, such as KADOKAWA CORPORATION’s purchase of the HP Indigo 50000 Digital Press and HP PageWide Web Press T490M HD, demonstrated the industry’s desire to create more efficient supply chains by digitally producing high-quality, high-value applications in the exact quantities needed with just-in-time delivery.
Efficiency, production flexibility, high print quality and added value will continue to be of utmost importance to PSPs, as some pages and applications will decline or disappear altogether and become increasingly commoditized. We do see opportunities for new digitally printed pages to continue on a positive trajectory leading to drupa 2020 – not necessarily in higher volumes, but in higher profit margins. Many of these high-value pages are suitable for digital printing technology and especially HP Indigo technology, which was very visible at drupa and will continue to disrupt the commercial printing industry.
As we examine past drupa years, it’s astonishing to see how our industry has evolved since 2000 when offset printing was the “commercial printing king” at drupa. Driven in part by the Internet and social media’s influence on consumer behaviors, the printing industry experienced a digital tipping point in 2008, leading to drupa 2012 being coined the “digital drupa”. At drupa 2016, even the industry’s largest analog players introduced digital printing solutions. HP experienced its best drupa ever and established digital commercial printing as mainstream with a historic showcase of proven end-to-end digital solutions in Hall 17, filling the largest drupa hall in its entirety. We also saw digital package printing technology emerge at drupa 2016, edging its way into the drupa conversation and leading some to even consider drupa 2016 the “packaging drupa.”
Packaging: The Next Digital Frontier
The packaging landscape is very different than commercial printing in that the overall page volume is growing exponentially. Packaging page growth is driven by population increase, the rise in the number of SKUs on store shelves, the need for anti-counterfeiting measures, and demand from consumers for customized, personalized, localized and seasonal packaging. Brands also have higher shelf appeal standards as part of their broader multi-channel print and online marketing mix. New digital printing technology better equips PSPs to address these challenges across labels, flexible packaging, folding carton and corrugated segments.
Over the last 10 years, we’ve seen a complete label industry transformation, where digital is now a fundamental, if not the dominant, printing technology. The introduction of new industrial label technology at drupa 2016, such as the HP Indigo 8000 Digital Press and HP Indigo Pack Ready, will further accelerate digital adoption going into drupa 2020. Overall, labels and packaging represents a huge digital printing opportunity. Specifically, labels and packaging is HP’s fastest-growing graphics segment worldwide, with both digital label and packaging production projected to grow at double-digit percent CAGR.(1) We expect that the industry transformation that happened in the label market will happen in the flexible packaging and folding carton markets, and the rationale behind digital printing adoption is the same.
The corrugated packaging market is at the dawn of a digital revolution. It’s a very stable, mature market that hasn’t seen major technology innovations in 20 years and is ripe for transformation by efficient, just-in-time digital pre-print and post-print production at flexo and litho quality. Digital printing received a major vote of confidence from major global corrugated converters at drupa 2016, including Smurfit Kappa Group which is collaborating with HP to revolutionize the way high-value boxes are produced with the HP PageWide C500 Press. The emphasis on corrugated printing technology from multiple vendors was a surprise for many drupa visitors.
Large-format Printing Opportunities
Unlike commercial printing and packaging, the conversation is less about an analog to digital transformation and more about new application possibilities and growth areas. PSPs need to consider what applications will drive sustained future growth and which large-format printing technology is best equipped to address them. While traditional outdoor banner applications and building wraps are stagnating, indoor retail decoration and interior décor applications are booming. From a technology perspective, solvent-based printing is declining and latex and UV-curable printers and presses are overtaking a space that was previously dominated by aqueous and solvent inkjet printing systems.
Additionally, large-format color printing in the technical production and reprographic markets is increasing. PSPs stand to increase profits from efficient color printing that is faster and higher quality than light-emitting diode (LED) printers. There is also substantial growth in large-format multifunction printers, where one device prints, scans and copies, as well as an increase in the prevalence of mobile printing technology, allowing professionals to print whatever and wherever they need.
As drupa maintains its four-year cycle, drupa 2020 is already on HP’s radar. The research and development labs are hard at work to deliver innovative new end-to-end solutions and platforms that will surprise and delight our customers and help them grow their businesses. Digital printing is still in its infancy. By drupa 2020, we’ll see higher digital adoption rates across all segments, but we expect vendors to devote special attention to digital packaging solutions.
Future innovations will be driven by several factors:
- Brands will play a larger role in printing industry transformation from analog to digital, as expectations for creativity and consumer engagement rise. It is important for PSPs to educate brands on the possibilities with digital because they do not know what they do not know.
- Automation will bring enhanced efficiency to end-to-end workflows, and production management tools like HP PrintOS will become increasingly critical. PSPs will have an expanded awareness that printing is only a minor part of the total production process and that automation is required to streamline workflow across multiple presses and sites and increase profitability.
- The global printing community will need to continue working together to educate brands on the limitless possibilities with digital printing. Graphics user groups like Dscoop will continue to expand and encourage industry-wide collaboration and camaraderie. PSPs and converters will reinvent their value propositions and offerings as the lines between commercial printing, packaging and large-format printing blur. Natural application adjacencies and partnerships will develop, and technology will adapt to address customers’ needs.
- Pages and packaging sold in 2020 will require PSPs and converters to effectively harness the potential of digital printing and big data and leverage global partnerships to grow their businesses.
HP’s most successful customers adopted digital printing early and today are enjoying growing revenues across many markets, including commercial, labels and packaging and large-format printing. The reality is that PSPs’ conversations with their customers are shifting from cost per page to overall campaign relevance and how to best reach consumers. PSPs need to be holistic service providers and educate their employees on how to leverage digital printing to drive growth. PSPs who adopt new digital printing technologies, help their clients create innovative campaigns and applications, and make the impossible possible, while reducing their environmental footprint, will have the greatest success leading to drupa 2020.
(1) According to HP Indigo labels and packaging financial projections, L&P hardware and supplies revenues have grown by double-digit percentages since FY’15, and double-digit percentage growth is projected to continue into FY’17.