Log In | Become a Member | Contact Us


Leading printing executives into the future

Connect on Twitter | Facebook | LinkedIn

Featured:   COVID-19 Coverage   Printing Outlook 2020   WhatTheyThink Magazine     Production Inkjet     Installations and Placements

Industry Insight

Is the Digital Label Market Growing and Why?

Last week Packaging News sent out this message,

By Howie Fenton
Published: December 17, 2010

Last week Packaging News sent out this message, “Voting is underway in this month’s reader poll – on digital printing for packaging. Following a series of investments by converters in digital printing equipment, we’re asking whether 2011 will be the breakthrough year for digitally-printed packaging.” This announcement as well as others by manufacturers like Xeikon, HP and Xerox suggests that the label market from digital presses is growing. The question is: is the digital label market growing and are digital labels an emerging opportunity?

The concept of digital labels is strange because the dominant label printing technology is flexography or flexo. Market research shows that 65 percent of printing for the packaging marketplace is done using flexo technology and 21 percent using offset, leaving 14% spread across screen, gravure, letterpress and digital presses. The latest report from Infotrends (Color Digital Printing in Packaging and Prime Labels: A Multi-Client Report, 2010) says that the 2009 market is about $1.8 billion with 90% from labels and 5% from folding carton and 5% flexible packaging. They also say that the market will grow to $3.8 billion by 2014.

Who are the leading players? At the Labelexpo Americas trade show in September HP said that its installed base for HP Indigo digital presses for the label and packaging converting industry has reached 1,000 presses (worldwide). Since most people calculate that the installed base is between 1,200-1,500 installed digital label presses, clearly HP is the dominant player. But the two digital press companies that start with the letter X, Xerox and Xeikon, are working to make inroads into the digital label market.

According to Xeikon:

Digital labels – can play a crucial role in increasing sales volumes. They are the ultimate and flexible tool to turn packaging into an attractive attention-getter that differentiates your manufactured goods. A short time-to-market and a targeted audience approach will add to your success, but requires short to medium runs. With Just-In-Time production and delivery you can evolve from printing labels to delivering a complete service that permits producers to reduce or eliminate inventories. It offers them the freedom to act and react more quickly to the changes in the market without economical impact.

Why is digital printing gaining momentum for label applications? I believe it is for shorter runs and growth of private labels. A shorter run in labels is typically defined as less than 10,000 labels. But the growth in private labels is controversial. Supporting this point is an article in Packaging Digest:
“A solid majority of retailers and manufacturers believe there’s more market share growth ahead for store brands even after the economy improves, according to a poll from the Deloitte consulting company.

A survey of top-level executives revealed 77% of CPG executives and 90% of retail executives believe private label sales will increase or even increase significantly in the U.S. by 2012. The findings are part of Deloitte's “The Battle for Brands in a World of Private Labels” study.

Deloitte sees “mounting evidence” that “national brands are losing their hold on the consumer. As a result, consumers are more willing to try new and different brands and believe they have more convenient access to a wider array of product choices.”


But an article in PerishableNews.com recently said that at the recent PLMA conference in Chicago presentations were made announcing that “after growing strongly in 2008 and 2009, sales of private label foods are flat in 2010 as brands counterattacked and increased trade and consumer promotion.”

Are digital labels on your radar screen? Do you think that it is a growing market?

Howard Fenton is a Senior Consultant at NAPL. Howie advises commercial printers, in-plants, and manufacturers on workflow management, operations, digital services, and customer research.

Howie Fenton is InfoTrends' Associate Director of Operational Consulting. For over 25 years, he has focused on benchmarking operational and financial performance in in-plants and commercial printers. He can be reached via e-mail at Howie.Fenton@infotrends.com.

 

Discussion

By Marco Boer on Dec 20, 2010

Dear Howie,

Glad to see awareness for digital printing in the one application that will never be replaced by electronic alternatives is gaining some visibility. Be careful with projections however about wide-spread adoption of digital printing in packaging. Yes, growth rates of digital printing are in the high-double digits, but we are starting from a small base.

Digital label printers have been around for more than 15 years, and it is only in the last three years that sales have really started to grow. In fact, it is the "newcomers" that are growing much faster than the incumbents. There are now over 15 companies claiming to sell ink jet label presses vs. the two toner-based manufacturers. The reality is that most of those ink jet offerings are just that, early offerings. However, one of the companies that is successful with ink jet label printers is selling nearly 50% of the unit volume of the leading toner-based manufacturer in this space (and twice as much as the other toner-based label printer manufacturer), only after three years after entering this space.

One core benefit of ink jet technology is that it has few limitations on print width unlike toner-based printers which are economically and perhaps technologically limited to 20" in print width. Outside of label printing, most packaging application tend to start at print widths greater than 26" wide. In label printing we believe both toner-based and ink jet technologies will co-exist since both technologies can meet the print widths required (usually 13" or smaller). But in flexible packaging, folding cartons, and corrugated toner-based printers will play a valuable but only niche role. We project that because of these inherent benefits and the large upside on print quality improvements expected in ink jet output quality (just wait until DRUPA 2012 - the ink jet print samples we've seen will knock your socks off), ink jet technology will in the not to distant future outpace toner-based digital printer offerings for package printing.

Marco Boer
Vice-President
IT Strategies, Inc.

 

Post a Comment

To post a comment Log In or Become a Member, doing so is simple and free

 





Become a Member

Join the thousands of printing executives who are already part of the WhatTheyThink Community.

Copyright © 2020 WhatTheyThink. All Rights Reserved