We recently had the pleasure to sit down with one of our own, Steve Kirchof. Steve's background is comprised of well over a decade of packaging, digital print production, sales, marketing, and branding. As an early adopter in digital print technology, he's worked along side industries such as cosmetics, craft beverage, nutritional, cannabis, CBD & specialty foods.
Sundance: What are some things that stand out to you about the labeling industry?
Steve: One thing that has really caught my attention, is that the label industry in 2018 was a $7.4 billion industry and they're projecting by 2023 for it to be $11.1 billion. That is a 9% growth!
Where I came from, I ran several digital presses that printed both labels and flexible packaging. Flexible packaging in 2018 was a $1.1 billion industry. In 2023 it's going to be $3.9 billion. So it's going to grow by 28%!
The growth in packaging is mind blowing.
SunDance: What are a couple things that jumped out at you as the Digital Packaging Summit? Did you get any feel for where the industry's going or any trends that you may see in 2020?
Steve: The big thing that jumped out at me was how quickly the crossover between digital and flexo jobs is closing. In the past, for a job to run digital, it had to be a small run with either variable data, or multiple skus. Now shop owners are running large quantities digitally, as well as their short runs. Everyone is trying to make the digital leap, it is just a huge investment at the start. The extremely large runs are still much more profitable on flexo presses, but I see digital catching up quick. I also see the brands changing their ordering methods to a digital model. Ordering what they need, when they need it, and not carry a huge label inventory is a big plus for digital. Being able to speak to your customer from the shelf is the second big selling point for digital that the big brands are really adapting to quickly. With custom digital prints, you can find ways to make your branding and your packaging unique to target certain demographics in certain markets to increase your sales. Digital is taking over the print market and print shops are catching up quickly.
SunDance: Are there a lot of opportunities to combine the two together? I've read a couple articles about how they may be supplementary to each other. Can you elaborate on that?
Steve: Yes, there are a couple of companies selling hybrid presses where it's a Flexo press with a digital unit added to print variable data or images. There are a lot of companies that have both technologies, but I don't believe it is by choice. Most traditional shops have had flexo units, and are debating whether or not to make the digital investment. Flexo units are messy, lots of set up time, mixing inks, building print plates...it cost a lot to set up a job. This is why you need a high volume for it to make sense. With digital, there is no plate set up on the print side. You can be printing your packaging in a matter of minutes. Just once you're running, you can't catch the flexo speeds, but as I mentioned before, that window on speed is closing quick. To answer your question, the hybrid presses offer the best of both worlds, but I think most shops that have both technologies is because they originally had flexo presses, and then made the move into digital.
SunDance: Have you seen any specific types of embellishments that may be more attractive than others or is it just kind of a use case that is case by case basis?
Steve: Specialty lamination and 3D UV is big right now. The soft touch lamination gives it the carton or label a really great feel, it is hard to not pick it up off the shelf. They say 20% of shoppers who pick up or touch a piece of packaging, end up purchasing that item. The 3D UV is popular because you can emphasize/highlight certain parts of your brand, literally make them jump off the printed piece. The embellishments is a big part of the process, and the only way to have your product stand out among the rest.
SunDance: Are there any industries you’ve seen doing cool things when it comes to packaging & labeling?
Steve: Right now, the CBD, cannabis, and craft beer/wine industry is booming when it comes to digital packaging. These companies are using short runs to make unique packaging, and tailor their brand to their customers wants. They do this by having a lot of flavor options, different dose options, etc. You couldn't do this kind of thing on your traditional presses at a reasonable cost. Next time you are shopping for craft beer or wine, check out how unique every single bottle or can have become. Even the cartons they are going in have become custom and in some cases very interactive. For cannabis and CBD, it is all about the embellishments. Sometimes less is better, but in this market, you want to stand out and add value using your packaging. The mark up on some of these products is so huge right now, it gives more room for companies to invest more money into the packaging. A lot of fun seeing these projects come in the door. on the packaging side of it makes you think more of it as a whole like the product and the packaging together.
SunDance: Whats the benefits of Flexo? Why would somebody really focus on that and stray away from digital technology?
Steve: That is a great question… At this point, if you're buying your first press, I would not advise going the flexo route. I think for most shops it is an issue of the initial capital investment, they definitely are not cheap, and a flexo unit is much cheaper. But, at the same time, you have to look at the overall investment. With all the ink mixing, plate making, and set up for Flexo, you can make your money back quicker with digital. The margins are huge. I believe the other big hurdle for traditional print shops is having someone that understands the digital technology. Someone that has been operating a flexo press for years, might be stuck in that way of thinking. To them it is an artform and in a lot of ways it really is art. It can take years for a flexo operator to learn and become a master of flexo printing. In the digital world, you can have someone trained on printing digitally in a matter of weeks. To me the biggest deterrent for flexo shops going digital is the unknown and not having the willingness to adapt to a technology that is slowly taking over the industry.
Now if I come across a brand that is stuck on flexo being the only way, my pitch to them is pretty simple. Stop storing your money in your packaging inventory, with digital order what you need, when you need it. You're taking a huge risk ordering months or even years worth of labels, things can change quickly in the marketplace today. The turn around with digital is lightning fast, the set up cost are all but eliminated, and the capabilities for variable data and images are endless.
SunDance: Labels and cartons are probably the most hot? Are those the most popular products or outcomes from a digital packaging press or is that just a drop in the bucket for what you could print on?
Steve: Those are definitely two of the biggest players in the digital packaging market. Flexible packaging is also growing like crazy and digital corrugated isn't far behind. Our focus here is going to be on labels, cartons and flexible packaging for now, but we are always trying to grow our digital arsenal.
Labels and cartons has a huge range of what can be printed on. I have seen labels made of actual wood, holographic labels, and all kinds of unique substrates. The print vendors have added to their technology allowing us, the print shop, to print on a WIDE range of materials. It makes our offerings more attractive for the big brands. Same thing goes for cartons. Everyone is trying to make their product stand out on the shelf. We work with our print hardware companies to come up with solutions that help our customers sell more product be adding value to their packaging, while at the same time, reducing their annual packaging cost.
SunDance: Well that's really great. I mean the flexibility seems like a really good benefit of digital and I could see how that would be very attractive to a lot of large companies out there. I think we're good, I think we have a lot of good stuff here.