The Universe is Changing. Again (with Advent of Digital Packaging and Labels)
Set the time machine to 2000. Gas is cheap. We can actually take Swiss Army Knives and liquids on airliners. Heidelberg, KBA, Komori, manroland, and a couple others are the leaders of the offset print world. Mark Andy, Gallus, Markem and others are their counterparts in flexography.
Together, these companies dominate the process of putting ink on paper, plastic and fiberboard. Even though run lengths are dropping, revenues are strong, sales from drupa 2000 make vendors happy, and life is good.
Those pesky, arrogant technology companies like HP, Indigo, Kodak, Xeikon and Xerox are making noise, schlepping “digital presses” that smear some kind of powdered plastic on a page and call it printing, but they are just glorified copiers for Pete’s sake, all hype and no substance. That new digital technology they promote is interesting but it’s slow, expensive, low quality, and will take decades to replace real printing.
Then the universe changed.
What the analog print guys didn’t understand (or want to admit) was that technological advances feed on each other. That the more one learns about say, electrophotography, the faster it can be improved. Toner particles shrink, processing speeds increase, substrate options expand, image quality improves. Meanwhile, print runs continued to decline and the higher costs of digitally printed pages mattered less and less. Customers began wanting jobs turned around immediately, and more and more print providers—and their customers—began taking advantage of this new way to print.
Fast forward to 2013. The old guard of offset printing are shadows of their former glory and the digital press vendors are the lead sled dogs of print with their machines finding homes on many print shop floors. Those pesky upstarts of 2000 now dominate floor space at trade shows where the old school presses may not even show up. While offset pages still dominate total volume, the most profitable pages are streaming off digital presses. Shorter runs, often with variable content, have become business as usual and those former intruders are now industry leaders, with customers producing a vast array of documents that were once the bread and butter of offset printing.
Unfortunately, some other old school companies have either short memories or never took seriously the admonition of Georges Santayana: "Those who don’t remember the past are condemned to repeat it."
Within the storm of change, the safe haven for the analog guys was packaging and labels. The logic seemed unassailable. Both require large runs, making them unsuitable for digital presses. Digital presses are too slow, have too many substrate limitations to be useful or profitable for the unique needs of labels and packaging, and no one needs that fancy-schmancy variable printing on packages.
For the past few years, several leading digital press players have been developing, building and selling machines that make short runs of folding cartons, labels and POP displays. They have been quietly reaching out to advertising agencies and corporate brand owners, showing them how digital printing offers an entirely new way to leverage brands, align with customers and address the needs of an ever-changing and increasingly fickle marketplace. And those folks are starting to pay attention.
They have seen numerous examples of customized or short-run labels for wine bottles, candles, golf ball sleeves, micro-breweries, and more, some of which could be replicated on conventional presses—at a higher cost. But even some non-custom jobs can fit well on digital presses, gaining an edge by minimizing changeover times between multiple short runs. Still, such apps are the label and packaging equivalent of customized brochures, or short-run books and manuals in production printing and graphic arts. They fill some niches, and one is justified in asking whether digitally printed labels and packages can translate into profits for a print provider. And can such jobs scale?
Your Very Own Coke
The latest poster boy for what really can be done with digital label printing is a recent program HP did in conjunction with Coca Cola placing personalized labels on Coke bottles across Australia, and was then replicated in Europe. Consumers could walk into a supermarket and find Coke bottles labeled with their own name or the names of friends, colleagues, and family members. Great for parties, gifts, special occasions, office refrigerators, and more, people couldn’t get enough of them, snapping up the personalized bottles as fast as they could be produced.
Although the labels were essentially a large number of short-run batches of a lot of first names, this was not a simple process. Thirty five countries, hundreds of names, four alphabets, a couple dozen languages, and local-country labeling requirements made it a massive undertaking, involving HP customers in several countries running their HP Indigo WS6600 label presses hard. But for Coke, it increased sales and brand recognition, especially among non-Coke drinkers—the target for this campaign. Was it cost-justifiable? Hard to know, but it demonstrates just how far the envelope can be stretched with digital printing for labels and packaging. And the potential is clearly there for much broader uses than selling sugared water.
Consider the aisles in your favorite supermarket. From coffee, chips and other flexographic packaging to the labels on deodorant, juice bottles and laundry detergent, there are 40,000 SKUs in a typical supermarket, with brands and sub-brands in nearly every product category. The labeling must be identifiably different between brands and within each brand. Conventional label and package printing does this well, but for less popular products or regional brands that use less shelf space, shorter print runs increase set-up times and production costs or require maintaining inventories of printed materials that are subject to waste and obsolescence.
On conventional presses, changeover time between shorter run jobs can keep productivity per machine well below 50 percent. By comparison, digital presses like those used in the Coke project can produce labels in short and moderate run lengths—with virtually no on-press changeover time. This can fulfill the needs of big brands, niche products, local brands, regionalized offerings, different languages, test marketing and promotional offers. Digital labels and packaging are effective for virtually any opportunity where a shorter run can reduce the total cost of packaging, increase production efficiencies, take advantage of market opportunities, and enhance brand awareness.
The Coke project is just an example of what can be done. Think bigger. For instance, it’s not hard to envision a hair care products company offering shampoos and conditioners in seaside vacation areas that are formulated to combat the effects of sun and salt water. And having different labels for Florida, California, Hawaii, Cancun, Jamaica, and the Jersey Shore. Or labeling products for markets with richer ethnic mixes or vacation areas where some visitors speak a different language. This can certainly be done without digital print, but the cost associated with conventional printing makes it unaffordable.
The advantage is for brand owners eager to do anything they can to grow awareness and expand share by fractions of a point. If localizing packaging, targeting an audience, or having a personalized label as a promotion will help, many brand owners will listen eagerly to their ad agency and a capable print provider who can help give them an edge on retail shelves.
Advertising on TV, in print and online may help steer a consumer to a given brand, but it’s packaging and point-of-purchase displays that bear the iconic brand image that people reach for when walking the aisles of Publix, WalMart, Safeway and Target. The battle for consumers’ wallets is being fought on multiple fronts. Packaging and labeling are a critical way to underscore a brand promise, and can translate into opportunity for print providers.
Coming around again
Interestingly, this is pretty much the same story I was telling 13 years ago about the digital presses that were then targeting the production print market. Back then, the applications were books, marketing collateral, bills and statements, direct mail, and other documents that fit letter or tabloid-sized pages. Now most of those digital apps are mainstream while offset still handles the longer runs. Digital production is taking a larger share and the offset press vendors—and some of their customers—are scrambling for survival. Will the same be true for labels and packaging?
It’s a safe bet that the majority of consumer goods labels and packaging will continue to be produced using analog presses for at least another couple of decades. But presses like the HP Indigo WS 6600 and others will continue to up the ante, be more productive and carve out a larger share of the label market. Such machines—there are several on the market from different players—are not limited to thin label stocks. Most also produce folding cartons, enabling packaging printers to offer a wide range of options. These machines can be equipped with a host of inline or nearline finishing options for trimming, scoring, and die-cutting, often in highly automated workflows that further reduce costs and increase operational efficiency.
This is the new age of package and label printing. The long runs for many consumer products will shrink. Those print providers who remain enamored of analog systems will watch as an increasing range of new applications, shorter runs and customized jobs shift to digital presses—and take some of their business. It happened before, and it’s coming around again.