Package Printing Converts: Transformations from Commercial PrintingMay 2013 By Erik Cagle, senior editor
Service became a rally point, as Reid constantly heard stories from customers about lackluster performances from other suppliers, including marathon phone holds, inexperienced CSRs and late shipments. So when Graphic Dimensions decided to roll out New Dimension Labels, it was stocked with label industry veterans throughout the division.
"Creating a new brand helped drive home the message that this brand is dedicated to labels. We are label experts and this is not just a new product offering," Reid notes.
Niche in Custom Labels
New Dimension Labels has carved a niche with custom prime digital and flexographic labels, servicing the food/beverage, health/beauty, nutraceutical and household products, to name a few. To help bolster the new division, which launched last November, the firm acquired an HP Indigo WS6600 digital press. New Dimension Labels is expected to increase the parent company's sales by 30 percent in the first year alone, according to Reid.
"We pursued custom labels because the packaging segment of the printing industry is growing," he notes. "There are opportunities for distributors to participate in that growth segment. For us, planning was the key."
Similarly, two years ago, Henry Serrano attended an NAPL Top Management Conference with his partner. Serrano, the president of Miami-based folding carton firm Vista Color, had reached a crossroads. A commercial printer since the mid-1990s, Vista Color had acquired an in-house printing business of a pharmaceutical company that produced small literature inserts, adhesive roll labels and folding cartons. By the year 2000, Serrano had divested the labels to concentrate on folding cartons. The commercial work would continue to dwindle and, in 2011, folding cartons completely took over.
"After we attended the conference, my partner and I realized we were in a declining, diminishing market," Serrano notes of commercial printing. "Packaging was more than 80 percent of our work at that point; the old 80/20 rule. As the product changed to folding cartons, we started to run out of space. We needed areas like the bindery to convert to packaging.
"We realized we were in a mature and saturated industry, that prices would continue to drop, and the sheer volume would diminish in commercial basically due to the fundamental ways that people communicate."
Vista Color currently serves the pharmaceutical, nutraceutical, health and beauty, spirits and consumer goods markets. The company produces heatseal and faceseal blister cards, along with synthetics (plastics such as Polypropylene and Polystyrene). Serrano says the company draws its strength from the diversification in carton styles, ornamental decorations that make the cartons pop. Food and spirits have enjoyed significant growth. However, like commercial, the folding carton market is mature, saturated and highly price-sensitive. This segment is seeing its greatest challenge coming from the plastics industry, which has garnered packaging share during the past decade.
The migration to folding cartons hasn't been without its challenges, led by a retooling of the entire facility, according to Serrano. He must buy paper directly from the mills and do his own sheeting in order to maintain competitiveness. Acquiring the in-plant gave Vista Color a foundation from which to work, but training and adapting the employees to folding carton work was something of a task.
"It's a major struggle to find talented people; it's important to have expertise in the folding carton business," he says. "There's a lot of issues with structural integrity, and it may need to be used on automated, high-speed packing machinery."
Casting a large net—the company serves Latin America and the Caribbean, as well as U.S. concerns—has bolstered Vista Color's ability to compete. The printer also placed an order for a seven-color Heidelberg Speedmaster XL 106 sheetfed offset press, which will go live in September.
Too Late for Folding Cartons?
However, if you're looking for advice when it comes to breaking into the folding carton game, Serrano may not be the ideal candidate for offering positive feedback. He's not convinced it's such a good idea for commercial printers to make the leap.
"Honestly, it's too late," he says. "It's not a market sitting there waiting for us to take it over. There are major players that are highly skilled and tooled. It's tough to be able to compete in the volume business unless you retool your factory and include sheeting, structural engineering, diecutting and die making. It adds more expense for a market already mature and saturated. (Printers) should use a lot of caution."
The migration to package printing is generally a gradual event, as was the case with Service Litho-Print of Oshkosh, WI. As recently as 2006, point-of-sale (POS) represented more than 60 percent of its business, but owner Steve Elbing had already made the decision to focus on lenticular work and package printing. The POS jobs, while strong in price, were inconsistent projects.
"In lean times, companies didn't necessarily cut their marketing and POS spend, but then that strategy changed, and they got cut as well," Elbing notes. "Today, POS only makes up seven percent of our business. We saw it becoming more and more competitive."
Elbing points out that while competition is stiff for SBS board specialists, his company is adept at inking synthetic substrates including PVC, Polypropylene and polyester, along with foil board. The second key to the transformation is Service Litho-Print's ability to add embellishments: foil stamping, embossing, special laminations and coatings. This allows the shop to pursue high-end cosmetics and other packaging niches.
One of the keys to Service Litho-Print's success was in using a third-party firm to provide diecutting and scoring, which can be problematic when dealing with plastics. Elbing had heard about difficulties his contemporaries had endured, thus having an "outside mentor" helped avoid the pitfalls associated with getting scores deep and correct.
Service Litho-Print has been able to introduce lenticular folding cartons at the point of sale, particularly for high-end packaging, to help bolster brands. For example, Elbing can marry lenticular with a regular SBS carton, preserving the brand image on one side while allowing consumers to flip it over to see the product via the lenticular side. This is particularly effective for a product such as perfume.
As a UV printer, one of the challenges Service Litho-Print faces is using the right type of synthetics. "You don't want to introduce a brittle nature into the stock, which can happen if you don't have the proper material," he says. "It can also happen during converting. With plastic cartons, clients run a 'drop test' and if it shatters when it falls to the ground, that's not looked upon kindly. Fortunately, we have some good (substrate) suppliers and we don't have many issues."
In hindsight, Elbing wishes he had made the jump to packaging sooner. But as a company that has developed a strong niche in lenticular work, the advice is to be patient and studious.
"It's not done overnight; there's definitely a learning curve," he says. "You can't take an order, especially with the higher-end specialty cartons and boxes, and be able to efficiently and effectively do it right away. Clearly, there is some R&D involved." PI