Cary Sherburne: Hi, I’m Cary Sherburne, Senior Editor at WhatTheyThink and I’m here with Kevin Karstedt who’s CEO of Karstedt Partners and you specialize in the packaging market.

Kevin Karstedt: Yes, I do.

Cary Sherburne: And I wanted to just chat with you a little bit about the digital transformation that may or may not be happening in packaging. Obviously in commercial print is pretty well down that path but still, you know, only 10, 15 – it depends on who you talk to – 10 or 15 percent of the images are digital and packaging is, you know…

Kevin Karstedt: Way behind that.

Cary Sherburne: Way behind that.

Kevin Karstedt: Yeah.

Cary Sherburne: So there have been a lot of announcements over the last several months of digital products relative to packaging from people like Benny Landa, like, you know, Indigo, Zycon, Fuji. I mean, they’ve all got entrance into the market. How fast do you think that transitions actually gonna happen?

Kevin Karstedt: Well, it depends on what you call fast and what your milestone is. If it’s volume of packaging, it’s gonna stay small for a very long time.

Cary Sherburne: But let’s say number of jobs.

Kevin Karstedt: That’s where it gets interesting because the number of jobs that they can do is becoming – that window is getting smaller as SKU proliferation is advancing and there have been – brand owners are increasingly introducing new products but they’re not taking old ones off the shelf. And we’ve got this interesting diagram in our product offering that shows the distribution of jobs and the distribution of work through the channels. And the conventional manufacturers have been very, very good at being able to do long runs very effectively and very quickly and being very profitable with that.

Cary Sherburne: Sure.

Kevin Karstedt: The tails of the distribution curve is where issues are arising. That’s where digital…

Cary Sherburne: So beginning of life or specialty niches and end of life.

Kevin Karstedt: And end of life. When they’re trying to ring every last dollar out of that product but they don’t need a lot of them.

Cary Sherburne: And there’s a lot happening in the label market and, you know, for example EFI’s Jetrion 4900 I think it’s called with the inline laser cut, die cutting so things like that.

Kevin Karstedt: Yeah, wonderful product.

Cary Sherburne: But, you know, so labels is really the most advanced right? In terms of digital and that’s still – what – one percent of volume.

Kevin Karstedt: Yes. Yeah. And the nice thing about the digital acceptance in the other genres – folding carton, corrugated and flexible packaging is there’s a lot of learnings that we can do or that they can do from the label sector.

Cary Sherburne: Right.

Kevin Karstedt: We’ve done a lot of work with helping label converters understand digital and see whether it makes sense for them and develop some tools for that. We’re taking those tools to the folding carton and corrugated sector as well over the next year or so. So, we gained a lot of intelligence about how it works and where it goes. So I see a bright future for digital packaging in general and it’s gonna continue. But again, it’s not gonna be huge volumes. It’s gonna be very focused efforts.

Cary Sherburne: Yeah and just real quickly – one thing. It seems like after labels the next logical growth area is folding carton. And what I’m hearing from a lot of people is like as many as 80 percent of the jobs – not the volume – are less than 10,000 and maybe 50 percent of the jobs are less than 5,000. That really brings those jobs clearly in the range of digital.

Kevin Karstedt: Right. And we also have to realize, too, that the conventional guys are not sitting still.

Cary Sherburne: Right, exactly.

Kevin Karstedt: You know, all the conventional offset press manufacturers have wonderful new systems that are geared at those short runs.

Cary Sherburne: Right.

Kevin Karstedt: And they’re all working on digital too. They’re not sitting in…

Cary Sherburne: Finishing is the bottleneck.

Kevin Karstedt: Yup and that’s what you’re gonna do is your gonna shift the bottleneck from one to another.

Cary Sherburne: Right. Great. Great insight. And people can get access to your reports by visiting?

Kevin Karstedt: Karstedt.com.

Cary Sherburne: K-A-R-S-T-E-D-T.

Kevin Karstedt: K-A-R-S-T-E-D-T. The German version.

Cary Sherburne: Alright. Okay, thank you very much.

Kevin Karstedt: Thank you.