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Commentary & Analysis

Digital Print for Packaging: The pace is steady and picking up with lots of room for growth

In this article, Sean Smyth – Print Consultant with Smithers Pira examines the results of a new report that looks at the growth of Digital Print for Packaging to 2022. This report breaks down the projected growth by packaging application, and shows some surprising results.

By Sean Smyth
Published: July 18, 2017

In 2016 Smithers Pira published the latest version of what has proved to be a well-received report: “The Future of Digital Print for Packaging to 2022”.  It looks at the trends, drivers, applications and new technology that is shaping the future production landscape of packaging and labels, with forecasts of the market development over the next five years.  These years will see major changes as digital production goes mainstream that will make many brands and retailers look at packaging in new ways, making converters do different things as new supply chains develop. 

In 2017 digitally printed labels and packaging add up to an overall $13.2 billion market globally.  The label sector was the early adopter and is pretty mature in most regions.  There is very strong growth in corrugated as very high performance single pass presses capable of tens of millions of square meters of output annually are snapped up by converters, cartons, flexible packaging and direct-to-shape, with developments in metal printing.  In 2022 the sector will grow to be worth $23.2 billion after five healthy years of growth averaging 11.2% in value terms.  Tonnage grows at an average CAGR of 28.1%, as cartons and the corrugated packaging comes on stream. So, no wonder you are reading the article – hopefully considering how your organization can take advantage of this growth. You are not alone. 

The $13.2 billion is big, but digital packaging is only 3.33% of printed packaging and perhaps a little over 2.0% of all packaging (as there is so much non-printed).  In terms of printed area the equivalent of 163 billion A4 prints is just 1.72% of the total, while the 1.7 million tons of products represents just under 1.03% of all packaging. By 2022 the $23.2 billion digital packaging sector will account for nearly 5.3% of packaging by value, the 334 billion A4 prints will be some 3.2% of the print area output while almost six million tons is also 3.2% of the total.  So even after five years of very strong growth digital will still be a tiny minority – hardly the major disruption predicted by some.  But it is a significant base that will set the stage for major changes in supply chains, and even the functions of packaging which are developing.

Growth is forecast in different applications and different regions at varying rates as shown in the figure, led by the small flexible packaging, metal and rigid plastics while corrugated, cartons and labels are the drivers of real volume growth.

 

Five-year growth rates in the value of digital packaging sectors from 2012 to 2022. Source: Smithers Pira

As more converters get involved and make investments they will find out how the technologies can be used to benefit their customers. There will be new campaigns and these will be copied, and converters will provide new services and response to their customers which will allow significant supply chain efficiencies, some of which are not clear in early 2017, but will open up over the next years to better suit the final packaging consumers.  Satisfying buyers is the goal for all parties.  

The digital packaging sector is maturing.  Around 2010 the big question for brands and converters was: "What can the technology do?", and what should it do.  After seven years of concentrated development the question has changed to: "Where is the application value?" as all parties across the supply chains realize that using digital printing can help make them money.  This is the case for brands/retailers (and their agencies including design), as well as for packaging and label converters, some of whom are really prospering.  It is also true for the equipment/consumable suppliers as well, although not all have succeeded.   

Drupa 2016 saw a real step-change in the quality and performance of digital printing, from established suppliers and newcomers into the digital arena who are experienced in packaging.  HP is the market leader with thousands of Indigo presses producing very high-quality labels, cartons and flexible packaging while its inkjet monster presses are making inroads into corrugated. But HP is by no means alone as others push their quality, productivity and improve their cost of production position.  There are important breakthroughs in new substrates and surface treatments, in finishing where digital methods are also making progress, and most importantly in workflow improvements.

It is in high volume corrugated where there is to be a real appetite for high volume liner and post-print, to offer new functions and gain plant efficiencies.  It is interesting that this is being led by some of the giants in the sector such as Georgia Pacific and DS Smith, as well as by more agile independents.  Over time the boost in quality from the latest inkjet, much on standard substrates, will prove to be a tipping point for high volume, mainstream production of inkjet printed packaging.

It is the arrival of new high speed single pass inkjet presses, liner and post-print, that can handle millions of square meters annually being adopted across the world.  These will allow new business models, giving secondary shelf-ready packs and transit packaging buyers new opportunities.  The tools now on the market are firmly aimed at offset and flexo alternatives, as these are taken up there will be significant change in the production equipment and methods driving new products and services to develop to make corrugated more relevant. Box makers are hoping that the commodity "Boring brown box", will be consigned to history, at least for some applications.

Digital printing will enable packaging supply chains to develop, providing advantages in cost, time and flexibility for buyers and final consumers.  In 2017 the great majority of packaging and labels is produced by specialist converters, delivering to fillers and packers.  These fill the packs and apply labels, adding any coding and complete packs are then delivered into the retail distribution chain.  The packaging has to perform across the supply chain, protecting the contents from the producer, through the distribution chain to the consumer.  Changing the location and timing of pack printing can deliver some of these benefits, at the pack/filling stage or in the retail distribution chains.  This could be new players, or more likely an experienced converter my set up a through-the-wall facility closer to its customer in partnership.

Fundamentally, using digital printing in packaging enables brands and retailers to make decisions later that are closer to the end consumer.  The result is making packaging and labels more relevant to the end consumer who ultimately determine the success or failure of brands and retailers.  This means new ways of delighting customers will be found, and many players will find how they can profit from this fast growing, fast changing marketplace.  Come and join!

The complete report can be found here: The future of digital print for packaging to 2022

More to Come …

I would like to address your interests and concerns in future articles as it relates to Packaging and Labels. Please feel free to contact me at david@zwang.com with any questions or suggestions.

Sean Smyth is print consultant at Smithers Pira, the worldwide authority on the packaging, paper and print industry supply chains. Sean has spent over 25 years in the industry in senior technology positions for a variety of print businesses across the supply chain, in hands on and consultancy roles. He helps companies make money through the appropriate use of technology.

 

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David Zwang, Editor/Analyst
David travels the globe helping companies increase their productivity, margins and market reach.

 

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