Package Design and IDC surveyed decision makers across the spectrum of the consumer packaged goods world, from designers to brand owners, from converters to retailers. We wanted to learn more about the awareness and adoption rates of digital technologies within the brand owner community, asking about current digital volumes and plans for adding digital in the future. From blister packs to folding carton, from labels to direct-to-shape, more manufacturers/brand owners are adding digital to their printing arsenal.
The key trend discovery from our survey is that the volume of printed packaging is on the increase: 73% of brand owners and design firm respondents say the amount of their package print is on the rise; 22% say that the volume of packaging has increased by over 20% in the last two years (a significant gain); and only 8% says their volume is decreasing. While volume is increasing, the mix and number of print runs is also increasing as packaging becomes more targeted. That creates a perfect storm of shorter runs mixed with higher demand, which is why we will see an increase in the use of digital print in the world of packaging.
While digital adoption in the realm of packaging is just in its infancy, the number of brand owners using digital in some stage of the process—whether it be in design, prototyping or final production—is quite high. And that helps them design, print and go to market faster. Only 10% of brand owners do not currently use digital printing at some point in project production, but we expect that number to fall to near zero in the future.
Digital opportunities and barriers
The opportunity to use digital to elevate brand marketing is large and the demand is there among the brands. Consumers have shown a propensity to engage with digitally printed packaging, especially as it enhances their experience. However, the technologies—both toner and inkjet—have barriers to deal with. When we asked, “Do you know or care whether the job is printed on a traditional flexographic press or a digital printer?” over 60% said, No. In theory, the printing process does not matter.
But not so fast. How it’s printed doesn’t matter as long as it meets the company requirements. And with company requirements—both real and perceived—come challenges that digital must overcome. Access to digital is not a problem. Buyers and brokers are juggling a complex equation that considers price, quality, speed, media/substrate options, and color matching. Hitting those brand colors within 1 Delta E has become the standard, and digital is getting better and better at covering more and more of the color gamut.
Pricing of digital output is still an impediment, as 45% of respondents say that digital is often too expensive. The industries that are least bothered by the price of digital are wine/spirits and automotive. Although price is a barrier, 52% of respondents believe that digital can reduce their overall plate and printing costs. The cost of plate making becomes a greater consideration as print runs gets shorter.
A little more than a third (35%) of respondents believe that digital doesn’t work well with their substrates. This problem with media tends to impact inkjet rather than toner-based technologies. Healthcare/pharmaceutical and beauty had the lowest.
Digital adoption will grow as prices come down, but the real story is about the value-add that digital brings. Consumers are demanding more personalized offerings, expecting more personalized products, targeting them directly. And the brands are also using customized messaging to their own marketing advantage, to grow brand awareness, gain new customers. The brand owners and manufacturers we spoke with in our survey conveyed how digital was helping their business. Most important, digital hits that sweet spot for brand owners need for short-run production and rapid prototyping/sample making. It also allows for faster time to market and the application of variable one-to-one data. Flexo and gravure can’t do one-to-one, on demand marketing in a cost-effective manner because you are still dealing with pre-printed shells and warehousing of excess print materials.
The investment in digital press purchases have been hampered by high costs that give pause to buyers often limited by centralized equipment purchasing rules at corporations or marketing demands, with both leading to much hampering in figuring out the logistics with purchasing a new printer and retain brand loyalty. Nearly a quarter (23%) of respondents believe that digital can help create stronger brand experiences with shoppers/ consumers, and as the use of Big Data increases, we expect that notion to grow.
The current state of print
What is the current rate of digital adoption? More than a third (35%) of brand owners have some sort of digital equipment in house, and 59% don’t have to seek out a printer/converter with digital print capabilities, i.e. it’s something they have easy access to. Bottle/can and folding carton application users have the easiest time locating a converter for their digital needs.
All printing processes have bottlenecks, the biggest ones being in distribution/logistics and issues in the supply chain. Another bottleneck is the proofing process, as anyone who has had to get multi-person buy-in and approval can attest.
About a fifth (20%) of manufacturers/brand owners are doing some sort—if not all—of their own production in-house; 2% of those are actually doing what we call “in-sourcing,” essentially running their brand’s own in-plant shop while taking on outside work. This is a new trend, which allows for a brand to utilize their own printing expertise and equipment to generate additional revenue streams. It can help a company quickly justify the expenses of investing in hardware and workflow software.
Not surprisingly, those that do have printing equipment in-house are primarily using it for prototyping. Having production equipment isn’t necessary, especially when you consider the ease of outsourcing coupled with the price of equipment—not to mention the additional labor costs. Demand from internal clients also remains inconsistent, that could change in the future as packaging become more targeted and personalized.
The future of digital
What is the demand for digital going forward? Nearly a third (31%) of brand owners and retailers say their business has plans to invest in digital equipment, and it’s interesting to point out that most are planning to use new equipment for short run production work, not just prototyping. Top applications that will drive the new digital equipment will be labels and folding carton, followed by flexible packaging.
Long runs continue to be most out of reach for digital, which is not surprising considering the cost-per-piece and speeds associated with flexo and gravure. Of course, this should change in the future as digital hardware vendors bring more robust products to the market and that has the potential to shift the performance/price sensitivity/sheet size equation in the favor of digital. This means that the value-add of digital—especially targeted marketing—will expand, no longer be limited to short print runs. One day a full production run could be fully variable without a great concern for cost.
In the converter space alone, 17% say that 100% of their volume is digital. Within two years, 44% of converters expect that at least 40% of their volume with be produced in digital. Most converters are making a big effort to help the brand owners understand the enhanced capabilities digital printing offers. When outsourcing their print, brands and retailers should seek out converters that take a highly consultative sales approach, ones that help you understand the need for good content, data, and design for digital applications.
Familiarity with the Coca-Cola’s Share a Coke campaign was high (76% of respondents had heard of it), and while many companies don’t have the need to produce a global campaign on that scale for their own customers, it does show great awareness of the value of variable data enabled by digital printing.
Digital printer purchases have been hampered by high costs that give pause to buyers often limited by centralized equipment purchasing rules or the lack of explicit marketing demands, with both leading to much hampering in figuring out the logistics with purchasing a new printer. Some of the transition to digital printing has been slow as brands owners, design firms and the converters have focused on immediate needs rather than integration into the production line that could make printing more efficient or add value to output.
So what does this all tell us? Awareness for digital and what it offers is high. Brand owners, retailers and designers are moving beyond “Why digital?” to “Yes, digital!” Right now and for some time to come, price sensitivity will be the main consideration, even as some converters we spoke to price digitally and flexo-printed packaging the same. Hardware vendors have gotten close to erasing the print quality issues. The brands embrace digital when they embrace the value-add of the technology. That includes shorter runs, lowered warehousing costs, one-to-one marketing, and a more meaningful customer experience. As volume is expected to rise by 10 to 20% in the next two years, this will translate into a boost in digital adoption as brands seek to have more active engagement with customers while enjoying the efficiencies it can drive in their supply chain.