Analysis: Digital begins to make its mark on packaging

We’ve all been talking about digital printing for packaging – you only need to have a look round the halls of a show like labelexpo to see how names such as HP Indigo, Xeikon, Kodak and others are becoming fixtures in the label printing scene. Can makers are at it, too – both Ball and Crown have recently been promoting their digital print capabilities. And brand owners are in on the act as well. Procter & Gamble recently declared that it would only work with packaging suppliers who had digital capabilities.

So what’s next for the market? A recent report published by Pira gives us some insight into digital printing’s current and future place in the market. In ‘The Future of Digital Printing for Packaging’, the research organisation estimates that the value of digitally printed applications produced within the UK alone is set to top £265m by 2014; a growth trajectory of 185%. Within that, short-run flexible packaging such as pouches, printed film and bags are likely to reflect the biggest rate of expansion.

From a low base of less than 2% of the global market for digitally printed packaging in 2004, flexible film applications are estimated to be worth £191.3m in five years’ time – a 7% overall share of the digital market that will come close to challenging that of folding cartons (7.8%), says Pira.

Digital’s extension into flexible matches a requirement from brand owners for greater on-shelf differentiation while at the same time maintaining tighter inventory control. The sector is also being driven by improved filling technologies; the increasing adoption of retort pouch packaging, and opportunities to demonstrate environmental awareness.

Label applications will continue to dominate the sector in volume terms (50.5% of the worldwide market, with a value of £2.09bn). But growth is slowing due to market saturation; a clear spur to digital technology manufacturers to target new applications.

Other sectors predicted to register a growing adoption of the digital option over the next five years include corrugated board, estimated to be worth £631m (15.3% of the overall global market), and flexible paper applications (£227.5m/2.8% market share).

Competing technologies

But digital has a long way to go. Flexo is still the preferred option for packaging print – around 40% of all applications, compared to digital’s comparatively paltry 3%. Pira concludes that flexo represents the main process to be targeted.

But even within the digital market, there is a battle for supremacy between two key technologies: toner-based and the rapidly improving inkjet. The two are currently neck and neck, but Pira predicts that inkjet will account for almost two-thirds of the £4.14bn digital market by 2014. This is down to capability across a greater range of widths; its applicability to different substrates, faster running speeds and in-line integration.

Major challenges

And there are more hurdles. The Pira report flags up a rapidly developing awareness among brands and retailers of the potential offered by digital. But it would appear this has been correspondingly underestimated by converters as a means of opening up new market opportunities. Furthermore, outsourcing short-run digital work can cost up to half as much as conventional print.

The initial challenge posed to flexo by digital has in turn been increasingly countered by technical improvements to the established process and the evolution of hybrid systems to handle both volume and short-run requirements.

While quality of reproduction is no longer a significant issue, digital print’s advancement could yet be hampered by at least two factors outside of its control: the relative slowness of FMCG marketing to fully realise the opportunities afforded through variable data customisation; and the logistical efficiency of the existing supply chain model to keep pace with an increasingly short-run, fast delivery production process.

Digital may not be dominating the market yet. But however sceptical you may be, don’t write it off; it will be on a shelf near you soon.

‘The Future of Digital Packaging’ is on sale now. Contact stephenhill@pira-international.com

‘A fast-growing market’

Alon Bar-Shany, vice-president at HP Indigo, gives Jill Park his perspective on the state of the digital market.

“Over time our label customers have moved from a basic offering of labels to shrink sleeves and quite a few flexible packaging applications as well – today, you’ll find quite a few businesses that do all three. We are starting to see interest from flexible packaging converters beyond the traditional label firms that have just moved to flexible packaging. Folding-carton companies are starting to talk to us, too.

“For the label market, the existing digital format is great, but the packaging industry definitely wants a longer format. It’s a question of the break-even point and applications. At the end of the day, there are very long runs where it’s all about commodity printing. However, it’s not just a question of print cost, it’s the fact people want lower inventory, faster time to market and customisation. The trends in the market are in our favour, long runs will always exist and we are not going to go there as the value is low for our customers.

“I wouldn’t say digital print is the standard today that everybody knows and wants, even though it is by far the fastest-growing segment. It’s still surprising to see how many people do not know the technology exists. At Label Expo, for example, we are going to focus on the brands as well, and promote how digital print can help protect brands, lower inventories and shorten time to market. These are areas where we can encourage take-up of digital.”

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