The corrugated industry is booming. All the figures say so. And there’s an opportunity for wide-format players to get into the market – but only if they do so in the next 12 months. After that, it will be too late. So says Steve Wood, marketing manager, corrugated display and packaging, Fujifilm Speciality Ink Systems, who accepts that his focus is converting the packaging convertors from analogue to digital inkjet – or at least invest in the technology as a complementary process to fill a growing demand for shortrun, bespoke, retail ready packaging modules, quickly, efficiently and profitably. Sounds a no brainer – if you’re in the packaging game. Or, if you have brands as customers - ones you could offer such a service to. And therein lies the opportunity.
“There’s been a step change in how inkjet technology is viewed,” says Wood. “Packaging printers/converters see the scope for its use and once brands recognise the possibilities they will start demanding shorter runs, more personalised products etc. Who will deliver those?
“There is a chance for wide-format players who already understand inkjet to get into the corrugated market, but if they don’t do it in the next 12 months it will be too late – because vendors are developing technologies for what they see is a growth market, and there’s a lot of interest from the packaging/converting sector where it’s a relatively small investment and sensible ancillary option/service to their existing customers who are going to start demand shorter, more personalised runs once they know the technology is there that can do it. “And there’s also interest in inkjet solutions from operations that perhaps don’t have their own printing department right now, but see a chance of brining it inhouse - and even scope for taking other companies’ corrugated work.
“For wide-format printers I’d say the decision whether to invest in the inkjet solutions that can give them what is currently a real edge in the market, is about how much sway they have with the brands. Can they ‘sell’ the benefits of corrugated short runs to brands - that may already be their customers going to them for other work - in enough volume to make it worthwhile?
“Early adopters have a chance to make good money. When you look at the wide-format market it’s getting to a point of saturation in terms of high-end flatbeds. So in terms of growth opportunity it might well make sense for a wide-format inkjet company to look at corrugated.”
Wood of course flags up the Fuji ‘solution’ for the corrugated market – a combination of the Inca Onset flatbed platform, Uvijet inks dedicated to corrugated board applications, and an automated handling system that was introduced earlier this year. But what he has to say is no empty marketing spiel – the trend is clear to see from various pieces of research.
According to Smithers Pira Consultancy, demand for corrugated packaging material is expected to increase by more than 4% annually over the next five years. According to its ‘The Future of Digital Print for Packaging to 2018’ report, this will amount to almost 115 million tonnes of converted material, worth an estimated $176 billion by 2019. The reasons behind this trend vary, but are mainly connected with a change in consumers’ behaviour and consequently with the establishment of a different supply chain compared to what we see today.
The growth in internet shopping, for instance, stimulated by the popularity of smartphones and by a steady number of tech-savvy consumers, is having a strong impact on the demand for corrugated packaging. In traditional in-store retailing, one corrugated case would be used to transport several items to the retailer, whereas now each item has its own corrugated pack for distribution direct to the consumer. This is resulting in packaging diversification and personalisation.
In addition, the demand for retail-ready packaging is rising, driven by the influence of supermarket chains that are desperate to improve in-store and distribution efficiencies.
New analysis published by Smurfit Kappa has highlighted a significant opportunity, so far being largely missed by brands - shelf-ready packaging.
The white-paper report, ‘Marketing on the shelf – exactly how in control are you?’, reveals that up to 40% of a product viewed on-shelf can be made up of secondary packaging, a valuable marketing channel that so far often falls outside the radar of brand teams. But the message is “watch this space”.
Arco Berkenbosch, VP marketing, research and development, Smurfit Kappa, said: “Our analysis found that there is approximately 125m2 for brands to market to shoppers at the point of purchase in a typical European supermarket, through shelf-ready packaging. “That would normally be regarded as an important marketing channel with brands doing everything they can to take advantage of it. If compared to the cost of a typical six-sheet poster site, for example, in advertising terms that’s the equivalent of €424,320 of additional marketing per store every year. Across the whole of Europe this equates to a multi-million Euro channel available to brands.
“In a more complex retail world where marketers have to work even harder to compete for shopper attention, this represents a sizeable opportunity.” What’s more, the growing tendency to create shorter campaigns and refresh brand campaigns more frequently is having a knock-on effect on the manufacture and supply of packaging goods.
Digital print technology is playing a key role in this changing landscape. According to a press release issued in May 2014 by the European Federation of Corrugated Board Manufacturers (FEFCO), new printing techniques are transforming corrugated packaging into eye-catching uses beyond its traditional purpose. FEFCO’s secretary general, Angelika Christ, states that the corrugated industry is leading the way for packaging in the future. In her words, “Innovative technology is improving both supply chain and in-store performance. Corrugated has already been transformed from protective transit packaging into multi-functional, colourful shelf ready packaging, without compromising product integrity.”
The Confederation of Paper Industries (CPI) expressed a similar view in a recent statement, which explained how bespoke packaging is becoming increasingly popular and the corrugated industry is exploiting digital printing technology to give retailers and brand owners access to new business opportunities.
At the FEFCO’s Summit, which took place in London in June last year, CPI’s director of packaging affairs, Andy Barnetson, highlighted how personalisation facilitated by digital print technologies is injecting more creativity into the corrugated industry, while print-on-demand is offering retailers and brand owners cost-effective, customised marketing campaigns to boost sales.
According to the aforementioned Smithers Pira report, the conversion of corrugated board is expected to increase by over 22 million tonnes from last year to 2019. The highest growth rate will be in digital printing, which is expected to improve at an annual average of 7.4% up to 2019.
This prediction is also supported by packaging manufacturers, such as Proctor & Gamble (P&G), which is aided by a supplier base of over 400 printers. According to an interview published by ‘Packaging & Converting Intelligence’, P&G has long been a proponent of digital printing, and in 2009 its French subsidiary issued a warning to potential partners suggesting that those who didn't invest in digital technologies might find themselves at a disadvantage. The ability to create customised products for retailers and customers, as well as the opportunity to respond to individual market needs and create short runs to reduce stock holdings, were the key motivations put forward by the French branch of P&G to encourage the development of a more digital orientated supply chain.
This is not to say that brand owners are dismissing conventional print technologies and embracing digital. Litho and flexo print will coexist with inkjet technology, as they provide packaging printers and corrugated converters with the flexibility to decide which process suits them best based on the number of pieces to be produced - for run lengths of 2000m2 and below, potentially to run lengths of just one, the set-up times of traditional processes and the pre-press costs involved, are not commercially viable and there is an opportunity to exploit this production niche using digital print technologies. However, when volumes give way to the value of highly customised consumer packaging and displays, digital technology wins every time. The question for wide-format printers, is whether it makes financial and strategic sense to get involved in the corrugated market and be in play for what is expected to become a big focus for the brands.