Digital printing machines were introduced to the label industry by Indigo and Xeikon a little more than a decade ago. The technologies, involving the electrophotographic transfer of inks or toners to paper or film, fascinated the label industry. As with all digital printing technology, the challenge was identification of the right business opportunity and the right buyers. It’s high quality equipment that requires the addition of reliable finishing equipment, a proposition that might cost the printer up to a million dollars for the entire installation.
Slowly, over the years, Indigo presses were installed in label converting shops. When Hewlett-Packard (HP) acquired the company a few years back, printers felt that there was less risk involved with acquiring the equipment. HP offered financial stability to the technology.
According to new InfoTrends research, dedicated full-color print on demand (POD) label presses generated $246 million in label sales in 2005, a total that InfoTrends forecasts to be $393 million in 2006 and over $1.7 billion in 2011. InfoTrends further estimates that the installed base of POD presses is currently less than two percent of all label presses, but that this share will grow to seven percent by 2011.
Bob Leahy, associate director at InfoTrends says, "Ten years after the first POD label press was introduced, this category of digital printers has hit its stride. Right now, enhanced products from experienced vendors are meeting markets hungry for equipment to print short runs of high-quality labels."
POD label presses are full-color digital print systems built for printing labels in particular, but also capable of printing tickets, tags, and even folding cartons. They offer greater flexibility than conventional label presses, especially in terms of job setup and changeover times.
Richard Spencer, president of Label World, Inc., recently shared his perspective on the on demand label market opportunity. With over 20 years experience in the printing industry, Label World has had significant growth throughout its history and currently employs almost 60 people, has six presses, and over 400 active customers. It is a manufacturer of custom die cut pressure-sensitive labels and recently installed an HP Indigo ws4050.
When asked how he decided on the label converting business, Spencer states, "In the cluttered world of consumer choice, the label is the most important component of the package. Done right, you can help your customers be successful."
Spencer spent much of his time in the supply chain management practice and sees labels as an integral component. According to Spencer, "Clients have a need to reduce lead times and improve supply chain management. Quicker time to market, exact quantities, minimal stock holding, production on demand, and quick response to special offers are critical to our customer’s business."
Spencer also recognizes the importance of the label on overall branding. As a consumer looks at a label, he or she can be positively or negatively persuaded to judge in a particular manner. On demand solutions let firms like Label World do test runs, private branding, and customize labels for local markets.
Security and anti-counterfeiting are critical in industries like pharmaceuticals. According to Spencer, "Security played a role in choosing the HP Indigo technology. The press offers the option to incorporate covert security features such as invisible ink, alphanumeric codes, barcodes, microtext, and digital watermarks into the label printing process." Using special HP Indigo inks, print and graphics experts design secure algorithms known as covert or invisible images that can only be detected by ultraviolet light. Different covert techniques include magnetic printing, encrypted codes, hidden overprints, microdisplacement of glyphs (graphic characters), and metal fibers. Most covert printing is done with invisible inks and only is detected by machines. Overt printing, which can be seen, is also available by creating holograms, colorshifting inks, difficult-to-replicate alignments, microtext printing, and visible watermarks.
Label World leverages digital print technology in a number of critical applications to address client needs. The pharmaceutical market is an especially time sensitive segment. After waiting months for FDA approvals, these companies are driven to get products in the hands of sales people as quickly as possible.
A major food chain client is using Label World’s digital print capabilities for unique labels for in-store products. They have a number of different varieties of cheese spreads and digitally produced labels are the answer for their packaging requirements.
And Label World is also working with customers on innovative new label-based products. With its unique die-cutting capability and the array of substrate materials that can run on the Indigo ws4050, Label World is helping Caboom decorate rooms of young children everywhere. Caboom is precut peel and stick wall décor that looks like it is painted on the walls, but is easy to remove and reapply.
Spencer’s message was clear. It is an exciting time to be part of the label printing business. With more versioning and brand variation, more personalization and product differentiation, and customers that need good supply chain management support, the stars are properly aligned for business growth.
Andy Farquharson, president of Dow Industries, sees digital press technology as a complement to his flexographic printing operation. Dow Industries is one of the largest privately held roll label converters in the U.S., focused on the health and beauty, cosmetic, and fragrance markets. The company has seventeen conventional presses as well as two HP Indigo 4000 units and provides service to companies like L’Oreal, Avon, and Victoria’s Secret.
Dow was an early adopter of digital label technology and installed an Indigo Omnius press back in 1997. According to Farquharson, several of his customers are migrating to more and more versions and variations of popular brands. A major cosmetics manufacturer recently launched an all-natural line of products and needed varying label quantities by geographic market. As opposed to using traditional technology, Dow Industries migrated the application to digital print. Farquharson says, "The savings in plates alone was substantial."
Farquharson adds, "In the packaging industry, like the traditional printing industry, success is frequently at a higher level in the organization. You need to sell the client on re-engineering the way that he packages a product. As opposed to having the client inventory pre-decorated containers, we sell the ability to provide high quality labels on demand. The benefit to the client is a reduction in the total packaging cost."
Dow Industries has seen steady growth in digital print technology. According to Farquharson, "Digital print could not stand alone and generate an ROI, but it closes the loop for our business. It augments our offering to clients and complements our flexo capabilities."
Based on both statistics and user perspectives, it appears the POD label market is hitting its stride. There are now a few excellent label press options available that can profitably print in runs of up to 40,000 labels. According to InfoTrends, this overlaps with at least 40 percent of the print runs normally handled by conventional presses.
The bigger driver, however, is user demand. Manufacturers of consumer goods, from food and beverages to health and beauty, household cleaners, consumer electronics, and pharmaceuticals, want product packaging with greater flexibility. They want more versions, sizes, shapes, and formats with special offers by geographic location. That means dedicated labels printed in shorter rather than longer runs. That means labels on demand.