Digital Packaging Summit Spotlights How Technology Can Empower Printers, Brands
Optimism ran high at the Digital Packaging Summit’s return to Florida past fall as the industry’s leading minds shared how to succeed despite challenging market conditions.
Marco Boer, VP of digital print consulting firm I.T. Strategies and co-chair of the 2021 Digital Packaging Summit, opened the live, in-person event in Ponte Vedra Beach, Florida with an analysis of supply chain challenges. “Perfect storms," Boer said. "Storms are bad, but they clear the air.” Supply chain challenges are sparking conversations, he explained, that sweep away supply availability, pricing, and turnaround expectations and assumptions.
He also commended the audience for taking action toward resolving some supply chain problems by learning more about digital printing. “The power of digital printing has been there forever, but it’s getting amplified,” Boer said, adding that CPGs are facing their own supply chain problems, which results in last-minute orders, product or ingredient changes, and more. Digital printing, he reminded the audience, by its very nature, is agile and empowers print service providers (PSPs) with a flexibility that their customers need now more than ever.
Boer then took a deep dive into four digital printing packaging markets — label, folding carton, corrugated, and flexible packaging.
Label Market is Mature and Growing
“You’ve got all kinds of technologies to digitally print labels,” Boer said. “You’ve got electro ink, you’ve got dry toner, you’ve got different types of inkjet systems. So, it’s very well established that the technology works and it’s very high value.” He noted that although the digital label printing market is approximately 20 years old, it’s still experiencing more than twice the overall economic growth. “The market is growing at about 8%,” he said. “If you look at the general economy, we grow at 2% to 3% a year. So, 8% growth is pretty good for a market that’s well established.” He notes that there’s still plenty of room for growth in the digital label printing market because digitally printed labels represent a small minority of the pressure-sensitive labels printed today despite digitally printed labels’ high value. “We estimate that 7% of all pressure-sensitive labels are printed digitally,” Boer said, “yet those labels sell on average for about three times more money than a conventionally printed label.”
Folding Cartons Feeling the Pressure To Go Digital
“The folding carton market is extremely well served with offset technology,” Boer said. “Offset technology offers beautiful quality; it’s low cost; and folding cartons run lengths are still really long.” The market is changing, though, with folding carton printers and converters facing the same pressure seen across the packaging market to manufacture shorter run lengths of cartons with higher frequency. Boer expects the folding carton market to grow quickly from its current value of approximately $1.3 billion or ~1% of folding cartons printed. I.T. Strategies expects digital printing for the folding carton segment to experience ~7% CAGR.
Digital Printing To Disrupt Corrugated
Boer describes digital printing for corrugated as a disruptive technology in a conservative market. Like folding cartons, the current penetration of digital printing technology is low for corrugated. I.T. Strategies estimates that digitally printed corrugated accounts for ~1% of corrugated printed or ~$1 billion retail value. Boer forecasts an astounding ~72% CAGR for the digital corrugated printing market. Boer is especially bullish on this market because of the dominance of single-pass inkjet. “These systems, at the very highest caliber, can get through upwards of 90,000 boards an hour,” he noted. “That’s just some insane numbers!”
Brands’ Love Affair With Flexible Continues
“Brands love flexible packaging despite what they might say otherwise about the recycling issues,” Boer said. I.T. Strategies estimates the retail value of the digital flexible packaging printing market as ~$1.1 billion retail value; digitally printed flexible packaging accounts for ~1% of folding cartons printed. The digital flexible packaging printing segment is expected to enjoy a strong ~37% CAGR.
Lean on Partners During Tough Times
After his opening keynote, Boer introduced fellow co-chair and CEO of Karstedt Partners Kevin Karstedt. Boer and Karstedt conducted a multimedia panel discussion that encompassed live and video interviews with the keynote sponsors and their customers. Panelists included Brian Cleary, category manager, HP Indigo Label Solutions, HP Inc.; David Ellen, global divisional director, Domino — Digital Printing; Dean Kenan, digital packaging solutions, Screen Americas; Eric Steinwachs, director of sales and marketing at CDigital; Jim Priebe, executive VP and chief technology officer at Lithotone; John Abbott, president of Abbott Label; Rob Daniels, president of Quality Tape and Label, a Fortis Solutions Group; and Todd Blumsack, director, sales, Xeikon.
The pandemic has exemplified the importance of relationships in business, and Abbott shared one experience that showcased Abbott Label’s partnership with Domino. “Right when we got our first Domino in,” he said, “all this COVID was coming down and travel was shut down. One of Domino’s tech reps put his camper on the back of his truck and drove down to Dallas from Chicago and parked in our parking lot. He lived in our parking lot while he got our press up and running. I don’t know how much more of a commitment you can get out of a company, especially at that time in our country.”
It’s About More Than a Device
Boer and Cleary started their multimedia interview with some straight talk. “Obviously front of mind for everybody at this conference is,” Cleary said, “‘Can I make money with a digital asset or a digital device?’ The truth is just a box doesn’t do it. What it really takes is quite a bit of experience and quality people.”
Daniels echoed the sentiment. Explaining that Quality Tape and Label experienced exponential growth since the printing company’s founding in 1979 by his grandparents, Daniels explained, key to that growth was openness to trying something new and leveraging partners to cross new frontiers. As an example, Daniels shared with the audience the condensed story of how QTL entered the shrink sleeve market with no prior knowledge. “I was able to call my rep at HP and he sent me a how-to guide,” Daniels said. “We bought literally one roll of shrink film from Avery Dennison and started playing with it. That was three or four years ago. Today, 53% of our sales are shrink sleeves.”
Investing for the Future
Karstedt interviewed Priebe about Lithotone’s experience as a pioneering adopter of digital printing. “You have a unique piece of history as you have the first digital press out of Screen,” Karstedt prompted. Priebe wanted to concentrate on breaking a myth about digital presses. “We had always thought, a digital press comes in and three years later, you have to throw them out and put something else in. But this digital press is still running today. The press is doing everything it did before, and it is state of the art.”
Like Cleary and Daniels, Priebe credited his strong relationship with his press manufacturer partner with his printing company’s ability to grow beyond having conventional offset as its primary offering. Today, Lithotone prints digital labels, large-format, and more. “Once you get involved with Screen and show your ability to be progressive,” Priebe said, “they bring you other things that allow you to expand the work that you can do. The work we do today is nothing like what we did 10 years ago, and Screen has been there for all those steps.”
Agility for the Win
Steinwach’s story was also one of transformation. “When COVID happened, a third of our business was promotional products, another third of our business was licensed products,” he said. “Back then, I couldn’t imagine what could take out trade shows, amusement parks, movie theaters, sporting events, airline gift shops, college gift shops, high school. Well, I found out what can take them all out.”
With two-thirds of his business base disseminated, Steinwach knew CDigital had to jump on any new business that came its way. “Thankfully being digital, we’re flexible.” CDigital replaced that business with a “crazy amount” of labels for hand sanitizer, 5-gal. water bottles, and marijuana products. “Two years ago, I would never imagine printing full color labels for pop tops, bags, and preroll tubes. I wouldn’t even know what those were three years ago.” CDigital went from losing more than half of its business to having its best year in 2021.
Digital Printing’s Evolving Role in Packaging
The final presentation of the opening day came from Cory Francer, analyst at NAPCO Research, who pulled from his experience both from his time as editor-in-chief of Packaging Impressions and his current role as packaging and printing analyst at NAPCO Research. Francer shared highlights from NAPCO Research’s COVID-19 Print Business Indictors Research, which comprise six reports that were published from May 2020 to August 2021, along with examples from Packaging Impressions’ reporting to provide context to show how package printers and converters used digital printing to help both themselves and their customers during the pandemic.
Francer noted that early in the pandemic, printing sales dropped drastically across applications. How much? Commercial printing saw sales drop 57%; graphic and sign production, 52%; apparel decoration, 68%; and package printing and converting, 15.3%.
The decline in package printing sales didn’t last long. By early June 2020, Francer reported, most package printers surveyed by NAPCO Research reported a sales increase. The changing retail landscape during the pandemic favored printers that could serve smaller brands. Consumers were not only more willing to try new brands, but shoppers were also more apt — often because they lacked other choices — to make those purchases online. This created opportunities for printing operations that could provide digitally printed corrugated.
At the end of 2020, Francer notes, vaccine rollouts helped grow optimism. This optimism, paired with improving market conditions, led to a high percentage of package printing providers reporting expected growth in May 2021. Just among flexible package printers alone, 69.6% surveyed by NAPCO Research reported expected growth.
Empowering Start-Ups and E-Commerce Brands
Francer also kicked off the following day’s educational program with a fireside chat with David Lukshus, president and CEO, Cog LLC. Lukshus and his team at Cog are well known by brands for their innovative and commercially feasible and reproducible packaging engineering and prototyping work. Cog has successfully leveraged its skills honed doing brand packaging design, development, and prototyping for brands such as Procter & Gamble into superior consumer engagement for several start-up and challenger brands.
Lukshus laid out step-by-step advice for package printers and converters who want to help their start-up and e-commerce brand customers succeed. These tips started with treat challenger brands like new parents and their brand as their first baby. He noted that partners who understand the strong emotional connection between a challenger brand’s team and the brand will be able to more effectively communicate with the brand team. Secondly, he advised digital printing and packaging companies to “be prepared to wear more hats than with a mature brand” and take on a proactive role with the brand’s design team. His third tip for digital printers and converters who want to bring lasting value to startups and commerce brands is not to assume that all start-ups and e-commerce brands are small. He noted that start-up and e-commerce brands come in different shapes and sizes. Finally, he advised printers and converters to expect these customers’ print needs to evolve quickly and to “expect the second job you print to be very different from the first.”
Pandemic Shows Digital More Capable Than Anticipated
Karstedt followed with a panel discussion where package printers and converters — Mark Wegmann, managing member, Wegmann Group; Tom O’Brien, president, AccuLink; and John Simpson, general manager, Southern Champion Tray — shared their real-life experiences growing their digital printing businesses.
Simpson shared the personal pride he had working for a company with a long history in the paperboard packaging industry. He noted that Southern Champion has been “paperboard packaging specialists since 1927.” Southern Champion had been doing conventional paperboard packaging for a while and did it well, so they watched the progress of digital printing, but had little desire to invest until the technology was more reliable and mature. “We had no appetite for being on the bleeding edge,” he said.
Only when the market conditions and the technology were ripe did they want to make a bet that could significantly impact their customers in the mid-level CPG space. “As we watched the average run length of our products going down while our sales were increasing, we also saw the time was right from a technology standpoint — so we bought an HP Indigo 30000 and it’s been a good asset for us.”
Southern Champion initially used the Indigo for its shorter run work, but that changed when the pandemic hit. “It turned us upside down,” Simpson said, “We started having the number of SKUs actually go down, and our customers started asking for longer runs. That being said, we’re grateful we had the digital technology because it was very needed capacity.” During that time, Southern Champion also learned that the digital press’ crossover points where a job moves from digital to conventional could be thousands higher than their original projections.
How Innovation Can Be Personally Fulfilling
O’Brien’s journey was different than many PSPs in that Acculink was a digital printing provider from its start. The jump for Acculink was going into flexible packaging, and the opportunity was to create a more eco-efficient flexible package — an endeavor that O’Brien found personally rewarding. “I’ve always had an interest in sustainability and compostability,” he said. Acculink uses a process that helps ensure that flexible packaging made from compostable films remains as eco-friendly as the original materials. “There are bio-based films available today, but the minute you put a laminating structure on them, you’ve destroyed compostability,” O’Brien explained. “We’re using a liquid coating instead, and we hit it with a high dose of electrons to basically create print protection with e-beam coating.”
Wegmann also shared that he finds innovation satisfying on a very personal level. He emphasized that the PSP does a considerable amount of research and development into transforming regular packaging into unique packages. “As my wife likes to say, I piss away a lot of money on the bleeding edge,” Wegmann said, “We do a lot of things that are out there.” This experimentation, Wegmann explained, gives the PSP insight into how to use digital printing technology and variable data to enhance a consumer’s brand experience and thus the value of the printed packaging.
Use Digital To Focus on Immediate Needs First
You can’t digitally print if you don’t have the stock, so supply chain naturally was another well-attended session. Boer led the discussion. Panelists were John Millin, president, Midland Packaging; Todd Frendt, chief operating officer of CNC Group, and Todd Meissner, president, Color Ink/FunDeco. Millin brought perspective from the supplier side, while Frendt and Meissner spoke from their experiences respectively on the label segment and the folding carton and direct-to-corrugated segments.
Meissner emphasized the importance of aligning your supply efforts and production with your client’s needs. “Being a digital-based production plant, we can do more just in time,” he said. “We ask them to prioritize the SKUs that they’re desperate for and let them know that we can do that for them just in time. … We’re using all the digital tools within our plant to get those shorter runs produced more efficiently at as low of a price as we can.”
Frendt advised printers to ask their customers for as extended of a forecast as possible. He emphasized this is the time to lean into those relationships and ask them for more insight into their businesses. “Some of our larger commercial customers have given us an extended forecast of six months up to a year out,” he said. “We can then go to our paper suppliers and give them a heads up and that helps make sure we have our allocation when we need it.”
Discover How To Deliver More Value to Brands
To help the audience better understand how to meet their client’s most important needs, Karstedt led a brand owner panel with Lisa Sohanpal, founder and CEO, Nom Noms World Food; Eddie Simeón, co-founder and CMO, Hella Cocktail Co.; and Patrick Poitevin, principal scientist, Mondelēz International. The three brands relayed their experiences growing their investments in digitally printed packaging. Sohanpal and Simeón used digitally printed packaging to start their businesses; obviously, Poitevin, hailing from Mondelēz, came from a big brand perspective.
Audience members heard arguments for prioritizing work with smaller brands as these brands require shorter runs that need fewer materials. Simeón reminded the audience smaller brands grow, and by working with smaller brands now, PSPs can earn the longer run business when supply chains return.
Poitevin shared that his expectations for digital printing have changed since making his investments. He went from looking at digital printing to replace some of Mondelēz’s traditional package printing volume to realizing it truly is not a like-for-like comparison. Poitevin has become an advocate within his company for the higher value of digital printing — even making headway in helping procurement understand the value of digital.
Deep Dives, Focused Views, M&A, and Networking Abound
The sessions described in this article are just some of the Summit’s educational program. On the third day, there were deep dives into different label segments, with a candid discussion about mergers and acquisitions with Melanie Yermack, director of investment banking at Mesirow Financial, and Peter Schaefer, partner at New Direction Partners; several small focus sessions about a wide range of digital packaging converting and printing topics; and more networking.
Leading organizations in the digital packaging space not only shared their knowledge with the industry but also supported the invite-only event so PSPs can attend the all-inclusive event for free. As much as these industry advocates wished they could have helped host the entirety of the printed packaging community at the Summit, they know that not every PSPs had the opportunity to attend. For those who couldn’t be there, some of the sponsors participated in video interviews with Packaging Impressions and NAPCO Research. Here is a sampling of those videos: BaldwinTechnologies bit.ly/3HCby65 | Dantex Group bit.ly/3B4u9p7 | Heidelberg bit.ly/3sqmxJJ | Highcon and Tilia Labs bit.ly/35SIObf | MBO America & Komori America bit.ly/3spFCf0 | SCREEN Americas bit.ly/360ccMY | Xeikon bit.ly/3sqRbCB | Zund bit.ly/3JgNAxB