Is Digital Packaging a Leap of Faith for Commercial Printers?

By: Prokom |

The global packaging markets continue to show steady growth and consequently, they are of considerable interest to the digital print manufacturers and their customers, the general commercial printers. However, the promise of a gold rush of new opportunity appears to have been an illusion because digital print still remains a niche part of the overall market. However, communication and purchasing trends are changing due to evolving consumer demands and the ability to easily leverage new technologies. On-demand business models are now driving new possibilities for digital print in marketing collateral, POS and packaging.

Markets are adapting and changing incredibly quickly and printers need to assess where their best opportunity lies. The computer software and games sector are prime examples of how quickly change can occur and the impact it has on print and packaging. In the case of the gaming industry, the advent of the Internet enabled online downloads and low cost or free apps. Computer software and games programs are generally no longer bought in-store, therefore they are not packaged but simply downloaded from the cloud.

Looking ahead and doing the necessary research on your target markets in order to predict triggering events will be critical to long-term success. It will also be essential to kill existing products and reinvent them with new applications before they either become commodities or disappear due to new consumer preferences or the introduction of new enabling technology. This constant evolution of products and business models is going to increase the use of digital printing exponentially.

Is it realistic to expect the average commercial printer to compete in such an unfamiliar market as packaging? Digitally printed packaging is probably the most talked about market opportunity but has the lowest uptake. Firstly, we need to qualify what we mean by the digital packaging opportunity. The digital packaging opportunity does not and probably never will include the majority of fast-moving consumer goods packaging found in high street supermarkets due to the enormous volume requirements, the wide variety of format sizes and substrates being used. However, there is a vast array of packaging applications where digital printing can be more successfully used than the traditional print on packaging processes of offset, gravure, and flexography. Segments like pharmaceutical and cosmetics generate large volumes of high value, short-run products. A lot of these products also require quick turnaround and the use of variable data for language and ingredient changes as well as anti-counterfeiting applications for brand protection, which make them perfectly suited for digital printing.

Digital print has played a part in the packaging supply chain for many years, but it has always been on the periphery for proofing, prototypes and sales samples. However, it is now gaining significant growth from the short run and general packaging applications. As digital technology becomes more capable from increases in production speeds, improved print quality and utilization of a much wider range of substrates, it will become attractive for mainstream packaging applications as well.

The top drivers for Packaging innovation in order of priority are:

1. Cost reduction
2. Product Differentiation
3. Quality Enhancement
4. Consumer convenience
5. Improving environmental performance

Digital printing can certainly play an important part in all the major drivers for packaging innovation. From a manufacturing perspective, it is about reducing cost, achieving greater efficiency in the supply chain and a reduction in carbon footprint. Digitally printed packaging can deliver low volumes, which contain an element of personalisation or versioning and the use of print on demand to significantly reduce production cost, inventory and waste. This can be effectively supported by automated workflows, which can reduce order processing and manual touch points.

The digital packaging market is currently in its infancy but it is growing rapidly, largely through the production of labels, cartons and corrugated packaging.  In a recent report by InfoTrends, the worldwide growth rate of Digital Packaging is estimated at 15% CAGR. The best entry point for commercial print providers is to become a “one-stop shop for packaging”, working with smaller clients who have a particular set of product requirements such as labels, cartons, supporting point of sale merchandising and marketing collateral.

Advantages for digital printers

Digital also has some key benefits over its traditional print process competitors, which make it an increasingly attractive proposition for brand owners, packaging converters and commercial printers looking to enter the packaging market. The key benefits include:

• High set-up costs of Flexo/Offset and Gravure compared to digital
• Reduction in capital equipment costs
• Reduction in staff levels
• Re-engineer supply chains to reduce cost, waste & inventory
• Digital Security features & coding
• Opens up new niche markets

There are other opportunities where products are linked to specific time-sensitive promotions and events where digital printing becomes an obvious choice because of the lower volumes, the requirement for specific branding, versioning and the need to eliminate waste and obsolescence.

Benefits for brand owners

The key benefit that digital print delivers for smaller brand owners is increased flexibility over production and the ability to control marketing and packaging budgets more effectively. For brand owners, the emphasis is slowly moving away from the unit cost of the printed package and is becoming focused on the end-to-end supply chain cost. Consequently, there is huge interest in how digital print can provide solutions to supply chain problems by creating efficiencies and reducing cost. Web to print systems are a great example of this and we have already seen many successful applications, which have created new business models and driven large volumes of personalised, digitally printed packaging.

When supply chains are re-engineered or optimized using the full capability of digital print, automated workflows and integration with the Internet amazing transformations can be achieved. Below are some statistical examples of what digital printing and supply chain re-engineering has been able to achieve:

• Delivery times cut from up to 17 weeks to 2 days
• Up to 70% saving of packaging material costs
• Overall costs reduced by up to 30%
• Waste reduced to almost 0% from up to 20%
• Reduced administration charges & ordering costs
• Reduced transportation and warehousing
• Improved cash flow

This kind of commercial result provides a fantastic opportunity for printers to become more valuable to their customers and generate increased revenue and profits. The packaging market will continue to grow steadily and there is no doubt that the future holds tremendous growth potential for digital printers willing to embrace a range of business opportunities. With creative ideas and careful planning that leverages the full range of digital capability – this may not be such a big leap of faith as most commercial printers might think.

Article originally published on Prokom.org, available here.