Final Day of Digital Packaging Summit Proves Power of Digital Printing
Although Tropical Storm Nicole hit the southern part of Florida on the start of Day 3, attendees at last week's Digital Packaging Summit stayed warm and dry inside the Ponte Vedra Inn & Club in Ponte Vedra Beach, Florida, when the day kicked off with the last networking breakfast of the event.
Digital Printing Provides the Flexibility Brands Need
As attendees settled in for the final day of educational sessions, case studies, 1:1 meetings, Linda Casey, editor-in-chief of Packaging Impressions, took the stage with a panel of leading brand owners to discuss how brand owners can leverage digital packaging to elevate their brands.
Casey introduced Brian Keith, senior project manager, print manufacturing and color management, packaging and content, Microsoft Corporation; Hector Garcia, founder and brand guardian, MBN Creative; and Morgan Potts, founder and CEO, Granarly.
The three panelists represented brands of three different sizes. Unsurprisingly, Keith explained that Microsoft requires a large amount of packaging for its products, which includes its line of PC accessories, Surface products, and Xbox. One of the things that Keith pointed out is that when it comes to printing, the most important thing is that the experience must be the same no matter what technology is used.
“Sometimes we refer to our customers as fans, especially on the Xbox side,” he said.
That means there needs to be consistency in its printed output, which for Microsoft, is always evolving.
“One of the biggest wats we use digital is through what we call postponement,” he explained.
Postponement is when core SKUs are transformed into new SKUs, which can be unique to a region or retailer, and in response to demand spikes. Keith explained that in these circumstances, Microsoft tries to reuse the packaging as best as it can and that it doesn’t throw away its packaging.
Digital printing would also be beneficial if Microsoft dives deeper into personalization. Keith explained that currently, “fans” can personalize their own Xbox controller. He reasoned that it would be interesting to be able to produce personalize packaging to go along with the controllers. However, there is a challenge the team would face: its systems are designed for mass production and ensuring the right controller in the right box gets to the right customer would be difficult.
“It’s hard to get it right, and if you get it wrong, it’s really wrong,” he said.
While Microsoft products are easy to identify on a store shelf, MBN Creative has a different story to tell.
“You may not know us, but you’ve seen us,” Garcia said.
MBN Creative has worked with many premium brands to create memorable experiences using digital printing. Take, for example, MBN Creative’s work with Sniffin Griffin’s BBQ Sauce, musical artist Warren G’s line of sauces that needed a creative label lift. Garcia worked with the brand to create labels with foil, matte lamination, and a Spotify code, that when scanned by a consumer, brings up a custom playlist from Warren G – creating a truly multisensory experience.
Another brand Garcia highlighted was Autumn’s SuperNatural, an emerging health food brand that needed packaging fit to be shared at a launch party hosted by Oprah Winfrey. It’s Garcia’s strong partnerships with print providers that helped him fulfill those needs. In this case, the brand needed packaging within a few days, and Garcia knew who to call.
“I’ve been in the business so long, I have several different options, but it depends on what the client needs. … Overall, digital has saved my tail and saved my clients’ tails, it’s enabled me to get in front of big customers fast,” he said.
Far from the massive size of Microsoft, Granarly has had a similar experience with digital printing. Potts shared the story of how Granarly was born from a dream … literally. Her whiskey-infused granola is perfect for consumers on the go, with waterproof pouches ready for adventure. Although her packaging now makes a bright and colorful impact on shelf, it wasn’t always that way. Potts explained that when she first launched, she shared her product in Ziploc bags with hand-drawn labels, which eventually transitioned to a brown pouch, before making it’s final transition to the colorful and wildly branded packaging that it has today.
Digital printing didn’t just provide Potts with an avenue for creating short-runs of pouches quickly and cost-effectively, it was a lifesaver when the brand needed to reprint all of its packaging. Originally, the products said “nut-free” on the packaging before Potts realized it wasn’t allowed since peanuts are still present in the factory. “Thank god for digital printing,” she said, because it enabled her to quickly and cost efficiently reprint the packaging.
Originally, Potts explained, she wanted her granola to fit in with other granola brands on shelf, but she realized she wanted to stand out instead.
“Inkjet has changed everything for me,” she said. It allowed her to have the flexibility to look ready for the shelf, while experimenting to see what would work.
The Dynamic Relationship of M&A and Technology
Marco Boer, Digital Packaging Summit co-chair and vice president at IT Strategies, returned to the stage for a fireside chat with Peter Schaefer, partner at New Direction Partners and a regular columnist for Packaging Impressions magazine. Marco and Schaefer started the conversation by discussing what is driving the mergers and acquisition activity in the package printing and converting market.
Schaefer distinguished the package printing industry from other printing segments, such as commercial – noting that “packaging has been generating double-digit growth.” Emphasizing the fact, Schaefer said that while commercial printing has become more attractive to private equity buyers, the interest in commercial printing businesses has not yet accelerated to match that in package printing and converting.
Part of the demand for package printing and converting businesses, Schaefer explains, is driven by the fragmentation in the industry. “Fragmented industries are exciting to private equity buyers,” Schaefer told the audience. Boer added “because they are inherently inefficient compared to companies that scale.”
Schaefer, whose firm usually represents the seller in M&A transactions, suggested looking at fragmentation differently. “When you’re buying companies in the same industry and combine them, there are cost-savings and synergistic opportunities. This becomes a case of one and one equal more than two, and that’s what’s exciting for private equity.”
Schaefer also explained that investment in and successful implementation of market-differentiating technology is exciting to PE investors. “Our industry has become an industry of ‘haves’ and ‘have nots,’” Schaefer said. “The Haves are like probably everyone here [at the 2022 Digital Packaging Summit], they’re the ones that are embracing the technology changes in the industry and they’re investing in their companies and they’re the ones that are embracing the technology changes in the industry.” Schaefer added that many of the most forward-thinking package printing and converting companies are even changing how they view their businesses to not just see a printing or a converting company and adding more services including, yes, digital printing, but also adjacent services such as data analytics.
Taking a Deep Dive in Breakout Sessions
After lunch on the third day, attendees transitioned into one of the four breakout sessions, which featured deep dives into labels, folding carton, flexible packaging, and corrugated.
During the deep dive on labels, Cory Francer, research analyst at NAPCO Media, joined Linda Casey on stage to explore four trends in the label space: leveraging purchased materials and purchasing additional materials; adding value that buyers will pay for; onboarding and training new employees; and automating processes to ensure efficiencies and protect profit margins.
Casey shared that she’s been hearing from label printers that as the paper stock challenges wane, those that bought what they could, when they could, now have their money tied up in the product and a growing challenge is that stock ages. She explained that many are wondering how far past the recommended “expiry” date can stock be used. Label printers are looking for guidance on how to move the paper stock and accelerate sales.
When Francer shared some data on when supply chain conditions are expected to improve, he asked the attendees what they’re experience has been. Dimitri Stamatiou, VP of Multi-Color, shared his expectations.
“I don’t think we’re going to see it improve any time soon,” he said.
As other attendees chimed in, it’s clear that although many printers are seeing some improvements in paper stock supply, other consumables and products are now facing challenges.
Another challenge facing label printers – as well as the printing industry, as a whole – is labor shortages.
“There is still a labor shortage problem, but it’s a different challenge,” she said.
She explained she has heard from label printers that they want the education to train new employees. Francer asked the audience if anyone had strategies for recruiting employees or training them.
One audience member shared that with automation, they look at operators as technician roles, providing them with higher pay, but expecting them to monitor multiple systems at one time. This helps them attract higher-quality candidates. Another audience member shared that they are developing a system of training and deciding if it’s useful.
To give attendees an idea of what brands are prioritizing for packaging-related objectives, he shared research showing that brands are thinking about their packaging and labels going forward and asking, “What is the value our printing partners can bring to us?” One element he stressed is the importance of value-add components. Casey backed up that statement by explaining that many brands like to hit a multisensory experience with their packaging: tactile elements, scent, look, etc.
To close out the session, Francer and Casey shared their key takeaways, which included automation is the key to success; labor remains a challenge; the importance of leveraging printing and finishing technologies; prepare for mixed run lengths and higher print volumes; and finally, don’t hoard materials, but buy accordingly for materials that are in short supply.
Closing Out Another Successful Event
Attendees were again treated to a day full of education sessions, rewarding case studies and 1:1 meetings. Remarking on the power of the event, first-time attendee Jeff Licht, director of operations for Tapp Label operations at G3 Enterprises, Label Division said, "I came to meet and network with my peers, speak to our partners — whether it be materials or equipment — and compare notes and learn where the business is going."
Gerardo Alvarado, sales director for Logic Group — also a first-time attendee — shared similar feelings about the Digital Packaging Summit. "The attention to detail in the 1:1 sessions, the uninterrupted concentration on information," he said. "I also found the sessions, the data, the numbers that we lack in the print world. I know a lot of us go with our gut feelings when we are trying to execute anything in the print world, to see numbers and real data, that is really valuable and I haven't been able to see that anywhere else."