The TLMI North American Digital Label Study 2015static.webfulfillment.com/tlmi/blogs.dir/31/files/2015/... · 2015-02-18 · 1 The TLMI North American Digital Label Study 2015 An

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The TLMI North American Digital Label Study 2015

An analysis of the North American narrow web digital printing industry.

Prepared exclusively for TLMI by:

LPC, Inc.

2307 Kinney Rd. Austin, TX 78704

www.lpcprint.com

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The TLMI North American Digital Label Study 2015

First Edition February 2015

©TLMI 2015. All rights reserved. No part of this market study may be reproduced

in any form or by any means without written permission from TLMI headquarters

located at 1 Blackburn Center, Gloucester, MA 01930, USA, tel: 978-282-1400,

fax: 978-282-3238, email: [email protected].

This market research study contains information, data, and analyses obtained

professionally from the marketplace. While every step has been taken to ensure

that the information presented is accurate, neither LPC, Inc. nor TLMI can accept

responsibility for any consequences arising from the application of information

contained herein.

The source of all graphs, tables and charts in the report is LPC, Inc.

(www.lpcprint.com) unless otherwise noted.

mailto:[email protected]

http://www.lpcprint.com/

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Table of Contents

I. Study Objectives and Acknowledgments................................................. 7

II. Introduction .................................................................................................. 9

III. North American Digital Label Market Sizing and Forecasts ................ 14

IV. The Digital Profit Curve and Migration of Conventional Applications to

Digital Presses ........................................................................................... 20

V. The TLMI Digital Converter Survey.......................................................... 25

VI. The TLMI Digital Brand Owner/Packaging Buyer Survey ..................... 36

VII. Digital Trending per End-Use Vertical Market........................................ 44

VIII. Implications & Conclusions for TLMI Members..................................... 45

A. Why some converters aren’t investing ................................................... 46

B. Does it really matter to brand owners and packaging buyers how a

label is printed?.......................................................................................... 47

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Table of Exhibits

Exhibit II-1: Total Press Installations in North America by Region .............. 10

Exhibit II-2: North American Quarterly Conventional Press Sales from

January 2011 to September 2014 ...................................................................... 11

Exhibit II-3: Total Press Sales in the North American Marketplace for 2011

and 2014 ................................................................................................................ 12

Exhibit II-4: Total Press Sales in the North American Marketplace for 2011

and Projections for 2020 ..................................................................................... 13

Exhibit III-1: Global and North American Digitally Printed Label Revenues

as a Percent of each Region’s Total Label Revenues .................................... 14

Exhibit III-2: North American Label Market Value for Conventionally Printed

Labels and Digital Labels by Primary Press Technology Type in 2014 ....... 15

Exhibit III-3: North American Label Market Growth and Value to 2020 by

Technology (in 000,000s) .................................................................................... 15

Exhibit III-4: Conventional and Digital Label Values per End-Use Sector in

2014........................................................................................................................ 17

Exhibit III-5: Key Findings for Market Sizing, Growth Forecasts and New

Press Installation Data ........................................................................................ 19

Exhibit IV-1: Percentage of Conventionally Printed Label Production that

Migrated to the First Digital Press One Year after Installation ...................... 20

Exhibit IV-2: Average % of Existing Conventional Production Migrating to

Digital: All Respondents ..................................................................................... 21

Exhibit IV-3: The Digital Profit Curve 1, 2 and 3 Years Post Installation: All

Respondents ........................................................................................................ 22

Exhibit IV-4: Average % of Overall Revenues First Digital Press’ Production

Represented: All Respondents .......................................................................... 23

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Exhibit IV-5: Key Findings for Digital Profitability Conventional Migration

Rates ...................................................................................................................... 24

Exhibit V-1: Breakdown of Participating Converters by Companies’ Annual

Revenues in 2014 ................................................................................................. 25

Exhibit V-2: Converters’ Aggregated Production in 2014 by End-Use

Vertical (Includes Conventional and Digital Production) ............................... 26

Exhibit V-3: Digital Press by Type for All Participating Converters ............. 27

Exhibit V-4: Average Number of Digital Jobs per Shift for All Participating

Converters ............................................................................................................ 28

Exhibit V-5: Average Number of Colors per Digital Job for All Participating

Converters ............................................................................................................ 29

Exhibit V-6: The Percentage of Jobs that Require More than One Pass On-

Press – All Converters ........................................................................................ 30

Exhibit V-7: The Most Significant Challenges of Digital Printing – Digital

Users’ Viewpoint .................................................................................................. 31

Exhibit V-8: What Non-Digital Users Perceive as the Most Significant

Challenges of Digital Printing ............................................................................ 33

Exhibit V-9: Average Run Sizes in Linear Feet for Digital and Conventional

Applications per End-Use Category .................................................................. 34

Exhibit V-10: Production Metrics Averages – All Surveyed Converters ...... 35

Exhibit VI-1: Job Functions of Surveyed Brand Owners and Packaging

Buyers ................................................................................................................... 36

Exhibit VI-2: End-Use Categories Served by Participating Brand Owners

and Packaging Buyers ........................................................................................ 37

Exhibit VI-3: Brand Owners/Packaging Buyers’ Preferences in Choosing

Label Vendors with Digital Presses .................................................................. 38

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Exhibit VI-4: How Brand Owners and Packaging Buyers Rank the

Advantages Digital Label Printing Offers ......................................................... 40

Exhibit VI-5: How Brand Owners and Packaging Buyers Rank the

Challenges Digital Label Printing Presents ..................................................... 41

Exhibit VI-6: Key Findings for Surveyed Brand Owners and Packaging

Buyers ................................................................................................................... 43

Exhibit VIII-1: Packaging Buyers Actual Digital Label Volumes in 2014 and

Projected Digital Label Procurement Volumes in 2020 .................................. 45

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I. Study Objectives and Acknowledgments

The TLMI North American Digital Market Study provides an assessment of

the market for digital label printing in North America. The research and content of

the study is based upon detailed feedback from four primary groups. These

include:

TLMI Converter Members

Non-TLMI Converters

Brand Owners and Packaging Buyers

Digital Press Suppliers

In the compilation of this research, LPC believes that the voice of the

brand owner and packaging buyer was critical in order to effectively gauge how

much pressure these companies are placing on their label vendors to obtain

digital printing capabilities. In our industry we frequently hear about ‘vertical pull-

through’ and how digital printing is enforced throughout the supply chain from the

top down. By qualitatively and quantitatively interviewing and surveying the

companies that procure and source printed labels, we have been able to identify

just how real this ‘pull-through’ is and what the current perceptions of packaging

buyers really are.

It is the central goal of both LPC and the TLMI Board of Directors that this

study offers the association’s converters a detailed view of the North American

digital label market never before presented. The following are identified and

analyzed in this report:

Market Sizing: The report provides a breakdown of the North American

narrow web sector by conventional, electrophotography and digital inkjet

printing, and projected growth rates for each technology over the next five

years.

The Digital Profit Curve: Detailed data was obtained from converters

with digital press technology in order to report on the real value an

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installed digital press delivers over a one, two and three year time period

in addition to the percentage of total sales revenues a newly installed

digital press generates over the same timeframe.

Digital Trending and Run Sizes per End-Use Vertical: Average

conventional and digital run sizes are compared side by side in addition to

growth projections and the perceptions of brand owners and packaging

buyers when it comes to sourcing digitally printed labels.

As an industry association, TLMI is in a unique position to provide insight into

the current state of the North American digital label printing market. Over the past

six years, TLMI has been tracking conventional press sales in the association’s

Biannual Index & Trend Report. The report is published every year in June and

December, and contains a Conventional Press Installation Index that tracks non-

digital press sales on a quarterly basis. The index allows us to make educated

forecasts to 2020, the result of which is featured in this report alongside

installation forecasts for digital production presses. This type of forecasting has

never before been presented in industry research, and offers a unique glimpse at

the future growth and contraction rates of these two technologies.

LPC, Inc. would like to thank the following persons for their assistance and

guidance with this endeavor:

Doug Bartlett, Director of Graphics, Constantia Flexibles

Matt Bennett, Business Segment Manager, Label and Packaging, HP

Alex Elezaj, COO, Whitlam Group

Greg Jackson, President, Columbine Label Co., Inc.

Michael Ring, Past President, Xeikon America, Inc.

Nick Van Alstine, President, Macaran Printed Products

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II. Introduction

Over the past two decades the North American label printing industry has

witnessed the adoption and crescendo of digital full-color press installations onto

production floors throughout the United States, Canada and Mexico. As brand

owners and packaging buyers view digital label printing technology as a way to

order smaller quantities, expedite delivery and their products’ speed-to-market,

and decrease levels of inventoried printed packaging that has become obsolete;

digitally printed label volumes are growing across end-use categories in both the

prime and non-prime sectors.

The 2015 TLMI North American Digital Label Study (hereafter referred to

as the Digital Label Study) seeks to offer the association’s converter and supplier

members a synopsis of the current state of the market for digital labels in North

America, in addition to offering converters a series of metrics and analyses for

their own research, planning and benchmarking purposes. Digital press users

were surveyed at length for the compilation of the study. For companies that

have only recently invested in their first digital production press, or companies

that have not yet invested, some significant questions remain: On average, what

percentage of conventional business can be migrated to digital after the first

month post-production: After two months? Three months? One year? After the

installation of the first digital press, on average what percentage of a converter’s

total revenues does digital represent after the first year post installation? The

second year? The third year? The Digital Label Study can be used as a primer

for both converters and suppliers that are looking for quantifiable analyses

regarding the production of digital labels and their current position in the overall

North American narrow web marketplace.

In North America today there are an estimated 918 digital label production

presses installed1, and in 2014 the region’s digitally printed label revenues

1 This report focuses on the North American market for labels printed on digital label production presses.

The report does not analyze or include data for labels printed on digital tabletop printers.

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reached $1.037 billion. For many converters that have not yet installed a digital

press, the question has changed from if they will invest in their first digital press

to when as the technology continues to evolve in both the electrophotography

and inkjet space. The chart below indicates total digital press installations by

North American region.

Exhibit II-1: Total Press Installations in North America by Region

Source: LPC, Inc.

Research for the compilation of the Digital Label Study was primarily

channeled into three areas each with their own objectives:

Surveying existing users of digital press technology in order to

compile a series of metrics these companies can use for their own

benchmarking purposes, in addition to offering converters that have

not yet adopted digital press technology key data points to assist

them with their own ROI analyses and to provide a digital

installation roadmap.

Surveying non-users of digital press technology to probe these

companies’ primary concerns regarding digital adoption in addition

to projected digital press acquisition timeframes per press

technology type.

U.S. 84%

Canada 11%

Mexico 5%

Digital Press Installations by NA Region

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Surveying brand owners and packaging buyers to gain a sense

of current perceptions regarding digital press technology and its

capabilities and how these companies view digital label sourcing

within their own business strategies.

The North American landscape for conventional and digital press

installations is a rapidly shifting one. As digital print engine manufacturers

continue to pour resources into research and development, digital presses are

printing at increased widths and speeds enabling the technology to increasingly

capture conventionally printed marketshare. The graph below indicates

conventional press sales in North America from Q1 2011 to Q3 2014.2

Exhibit II-2: North American Quarterly Conventional Press Sales from January 2011 to September 2014

Source: LPC, Inc.

Over the four year period shown above, conventional printing press sales

decreased 29.7%. Over this same period however, conventional press

2 Data taken from the Conventional Press Index from the TLMI Biannual Index & Trend Report.

0

5

10

15

20

25

30

35

40

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Nu

mb

er

of

Pre

sse

s So

ld

North American Conventional Press Sales: Q1 2011-Q3 2014

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manufacturers have been far from idle. American and European-based press

suppliers have continuously raised the bar by introducing next generation

machines with minimal setup and changeover times and highest press efficiency

rates. The installation of digital machines however has continued to expand at

double-digit rates. The chart below shows new conventional and new digital

press installations for the year 2011 and the year 2014.

Exhibit II-3: Total Press Sales in the North American Marketplace for 2011 and 2014

Source: LPC, Inc.

For the first time, in 2014 the number of digital press installations

outpaced conventional machine installations in the North American marketplace.

In asking TLMI converter members about their capital equipment sales

projections for 2015, it is evident that this trend will continue. LPC, Inc. projects

that new conventional machine installations will continue to decline at an average

annual rate of around 7% per year, while new digital press installations will

increase at an average rate of 12.5% over the next five years.

Exhibit II-4 on the following page shows new conventional and digital

press installations for the year 2011 and projections for what installation

marketshare will be for each technology in the year 2020.

0% 20% 40% 60% 80% 100%

2011

2014

67%

48%

33%

52%

North American New Press Installations in 2011 & 2014

Digital

Conventional

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Exhibit II-4: Total Press Sales in the North American Marketplace for 2011 and Projections for 2020

Source: LPC, Inc.

LPC projects that in 2020 one out of every four presses sold into the North

American marketplace will be a conventional press while three out of four new

presses installed in 2020 will be digital press systems. Even though speed, width

and workflow improvements continue with digital presses and overall digital label

production, niche areas will remain for the foreseeable future in which run size

specifications will continue to dictate these applications are printed on

conventional printing presses. These high-run size applications are and will

continue to be predominant in the food and beverage labeling sectors.

0% 20% 40% 60% 80% 100%

2011

2020

67%

23%

33%

77%

North American Total Press Sales 2011 & 2020 (Projected)

Digital

Conventional

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III. North American Digital Label Market Sizing

and Forecasts

The market for digitally printed labels in the North American marketplace

is estimated at $1.037 billion. The region’s digital label volume represents 8.5%

of North America’s total label market revenues. The graph below indicates the

total value of both the global and North American label sector, and the

percentage of each represented by digital label sales.3

Exhibit III-1: Global and North American Digitally Printed Label Revenues as a Percent of each Region’s Total Label Revenues

Source: LPC, Inc.

Note: As previously specified, this report does not analyze or include data

for labels printed on tabletop printers. This graph refers to the global and North

American market for applications printed on digital label production presses.

Of all electrophotography and inkjet production presses currently installed

in the North American labeling industry, approximately 85% of these presses are

electrophotography and 15% are digital inkjet. While electrophotography has long

3 “Digital label sales” denotes each region’s converter revenues of digitally printed labels.

$-

$10,000,000,000

$20,000,000,000

$30,000,000,000

$40,000,000,000

$50,000,000,000

$60,000,000,000

Global Market North America

6%

8.5% Sect

or

Val

ue

Total Digital Label Revenues as a % of Global and

North American Label Markets

Digital

Conventional

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held a dominant position in the market, inkjet’s continuous engine improvements

and capability advancements have recently positioned the technology as a viable

contender across end-use categories. The graph below shows values for the

total North American conventionally printed label market, and the market for each

primary digital technology format.

Exhibit III-2: North American Label Market Value for Conventionally Printed Labels and Digital Labels by Primary Press Technology Type in 2014

Source: LPC, Inc.

The table that follows forecasts growth rates and total value for each label

type (conventional, EP and inkjet) to the year 2020.

Exhibit III-3: North American Label Market Growth and Value to 2020 by Technology (in 000,000s)

Technology 2014 Value (000,000s)

Projected CAGR To 2020

2020 Projected Value (000,000s)

Conventional $ 11,100 2% $ 12,500

Electrophotography $ 881 10% $1,560

Inkjet $ 155 18% $ 420

Totals $ 12,136 $ 14,480

Source: LPC, Inc.

$-

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

Conventional EP Inkjet

$11.1 Billion

$881 Million $155 Million

NA Label Market Value by Conventional and Major Digital Technology Type: 2014

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Over the next five years, the label printing technology with highest

projected growth rates is digital inkjet. Inkjet technology’s projected high growth

rates are further reinforced by the TLMI Converter Survey that was distributed for

the compilation of this study. More than 100 converters, both TLMI members and

non-members, filled out a detailed survey that asked companies about current

production and operational trends. Nearly 40% of participating converters do not

currently have a digital press. These companies were asked to project when they

anticipated making their first digital press investment in addition to the type of

digital technology they anticipated they would purchase. Of those companies

indicating that they would be purchasing a digital press within the next two to

three years, more than 80% indicated they would be purchasing a digital inkjet

press system.

As Exhibit III-2 also indicates, electrophotography throughput is forecasted

to grow at a 10% CAGR to 2020 while the value of conventionally printed labels

is projected to grow at a rate of 2% annually over the next five years.

One of the most challenging market sizing data points to calculate is the

percentage that digital production printing makes up of each end-use sector’s

total label value. To do this, LPC has triangulated specific data the firm has been

collecting and collating for more than five years. The metrics involved in the

triangulation process included the following:

Extensively surveying very large samples of North American

converters to obtain end-use sector specific data regarding a

breakdown of conventional and digitally printed label production per

major end-use category.

Extensively surveying very large samples of North American brand

owners and packaging buyers to obtain end-use sector specific

data regarding a breakdown of the labels their companies source

and the percentages that are printed both conventionally and

digitally.

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Working closely with digital press manufacturers in sizing the

marketplace and quantifying digital production rates across end-use

categories.

Working closely with conventional press manufacturers in sizing the

market and quantifying conventional production rates across end-

use categories.

The chart below indicates the values for conventional and digitally printed

labels in each end-use sector and the percentage that digital label production

makes up of the total value of each category.

Exhibit III-4: Conventional and Digital Label Values per End-Use Sector in 2014

Source: LPC, Inc.

Note: The transportation/logistics sector has been omitted due to the high

volumes of labels printed on handheld and tabletop digital devices in this

category.

$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

$4,000,000,000

6.0% 3.5%

17.0% 13.4% 8.5% 5.7%

5.7% 13.6%

Sect

or

Val

ue

Digital Label Production as a % per End-Use Category in North America

Digital

Conventional

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Highest utilization rates of labels printed on digital production press

systems are found in the pharmaceutical, health and beauty aid/personal care,

and consumable durables sectors. As run sizes continue to decline in these

categories, digital will steadily capture conventional marketshare. While the

growth of digitally printed labels in these sectors isn’t surprising, converters and

digital press manufacturers are closely examining other additional end-use

vertical markets for growth over the next five years including food, beverage,

household chemicals and industrial chemicals. While the food and beverage

sectors are dominated by longer run sizes; seasonal promotions, private labeling

and the utilization of increased personalization as marketing campaigns will drive

the growth of digital labels in select food and beverage subcategories.

The table on the following page shows key findings for market sizing and

growth forecasts of the North American digital label market.

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Exhibit III-5: Key Findings for Market Sizing, Growth Forecasts and New Press Installation Data

KEY FINDINGS – Market Sizing & Growth

33% of new press sales in 2011

were digital.

In 2011, 33% of all new press installations in the North American market were digital presses and 67% of new installations were conventional machines.

52% of new press sales in 2014

were digital.

For the first time, in 2014 the number of digital press installations outpaced conventional machine installations in the North American marketplace.

77% of new press sales in 2020 are

projected to be digital systems.

LPC projects that in 2020 one out of every four presses sold into the North American marketplace will be a conventional press while three out of four new presses installed in 2020 will be digital press systems.

10% Projected CAGR of

electrophotography over the next five years.

The value of labels printed on electrophotography presses in North America is projected to increase at a CAGR of 10%. The total North American label value of electrophotography printed labels in 2020 is projected to be $ 1.5 billion.

18% Projected CAGR of inkjet over

the next five years.

The value of labels printed on digital inkjet production presses in North America is projected to increase at a CAGR of 18%. The total North American label value of inkjet printed labels in 2020 is projected to be $ 420 million.

81% of converters indicating they’ll

purchase a press within the next 3 years, indicated they

would be purchasing an inkjet press.

Nearly 40% of participating converters do not currently have a digital press. These companies were asked to project when they anticipated making their first digital press investment in addition to the type of digital technology they anticipated purchasing. Of those companies indicating they would be purchasing a digital press within the next 2-3 years, more than 80% indicated they would be purchasing an inkjet press.

Source: LPC, Inc./TLMI North American Digital Label Study

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IV. The Digital Profit Curve and Migration of

Conventional Applications to Digital Presses

There are two areas that create a significant challenge when attempting to

quantify the success, or otherwise, label converters have when purchasing a

digital production press for the first time. Those areas include quantifying the

portion of conventionally printed applications that are migrated to a company’s

first digital press purchase within a certain timeframe, and the ability to quantify

the ‘profit curve’ of a first-time digital press installation.

The Digital Label Study attempts to address both these areas and it is

important to note that this is the first time an association market research

endeavor has done so. The TLMI Converter Survey asked label converters to

indicate the percentage of conventional label production they were able to

migrate to their first installed digital production press. Converters were asked to

specify this information following the first month post-installation, the second

month, the third month, and one year post-installation. The graph below indicates

the percentage of conventionally printed labels that converters were able to

migrate to the first digital press they purchased, one year following installation.

Exhibit IV-1: Percentage of Conventionally Printed Label Production that Migrated to the First Digital Press One Year after Installation


0% 5% 10% 15% 20% 25% 30% 35%

>60% of conventional production

40-60% of conventional production




0% of conventional production

0%

8%

24%

28%

32%

8%

% Converters Responding

% of Converters' Conventional Production that Migrated to Digital 1 Year Following 1st Digital Press Installation

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Exhibit IV-1 shows a distinctive range of the percentages of conventionally

printed label production that first-time digital users are able to migrate to their

newly installed digital press. One year following installation, 8% of surveyed

converters were not printing any of their conventional labeling applications on

their new digital press while 24% of surveyed converters had migrated more than

20% of their conventionally printed production to the digital press system. Eight

percent of surveyed companies had migrated more than 40% of their

conventionally printed production to their first digital press after one year.

These results are wide ranging and assumptions can be drawn about the

extremes in calculated data. Looking at the data more closely, the majority of

companies that reported none of their conventionally printed throughput had

migrated to their first digital press following one year post installation primarily

serve the food and beverage sectors. Run sizes are highest in the food and

beverage categories and while converters and end-users forecast growth in

digital applications in these sectors; it is evident that for converters who primarily

serve these categories, conventional migration of these companies’ existing

application range to digital remains low. The table below shows average

conventional migration rates to digital after one, two and three months post digital

installation, in addition to one year post installation of companies’ first digital

press.

Exhibit IV-2: Average % of Existing Conventional Production Migrating to Digital: All Respondents

% of conventional production that migrated to first digital press 1 month

following completed installation 4%

% of conventional production that migrated to first digital press 2 months


% of conventional production that migrated to first digital press 3 months


% of conventional production that migrated to first digital press 1 year


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In addition to conventional-to-digital migration rates, the TLMI Converter

Survey sought to gauge the profitability levels of digital presses following

installation, and what the average curve for companies’ profitability levels were

after specific time periods following the installation of the first digital press. The

survey did not ask digital users to indicate specific profit margin data, rather an

indication of the percentage of their overall revenues their first digital press’

production volumes represented after one year, two years and three years.

The line graph below indicates the ‘digital profit curve’ for all converters

surveyed for each specific time period.

Exhibit IV-3: The Digital Profit Curve 1, 2 and 3 Years Post Installation: All Respondents

Source: LPC, Inc./TLMI Digital Label Study

In studying this graph we see that for 45% of the digital users surveyed,

after one year post-installation of their first digital press, revenues that were

generated from that press accounted for 1-5% of their companies’ total revenues.

After two years post-installation of their first digital press, 30% of companies

reported that digital label sales represented 6-10% of total company revenues.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1-5% 6-10% 11-20% 21-30% >30%

% C

on

vert

ers

Res

po

nd

ing

% Digital Labels Represented of Total Company Revenues

% of Converters' Total Overall Revenues the 1st Digital Press Represented after 1, 2 & 3 Years Post-Installation

After 1 year

After 2 years

After 3 years

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After three years post-installation of their first digital press, digital label revenues

accounted for 11-20% of total company revenues for more than 30% of surveyed

converters.

Exhibit IV-4: Average % of Overall Revenues First Digital Press’ Production Represented: All Respondents

% of overall revenues the first digital press’ production represented after 1 year

8%

% of overall revenues the first digital press’

production represented after 2 years 14%

% of overall revenues the first digital press ’ production represented after 3 years

19%

The table on the following page shows key findings for the digital profit

curve and for the migration of conventional applications to converters’ initial

digital press acquisition.

24

Exhibit IV-5: Key Findings for Digital Profitability Conventional Migration Rates

KEY FINDINGS – Profitability & Migration

15% Average conventional

production that migrated to digital 1 year following

digital press installation.

Converters with digital presses were asked to specify the percentage of their conventional production that they were able to migrate to their first digital press after it was installed. Converters were asked what percentages of conventional production migrated 1 month following installation of the digital press, 2 months, 3 months and 1 year.

8% of converters were able to

migrate 40% or more of their conventional production to

digital.

8% of surveyed converters with digital presses were able to migrate 40% or more of their conventional production to digital after their first digital had been installed for 1 year.

8% Average percentage digital label revenues represented

of converters’ total revenues 1 year following their first digital press installation.

Converters with digital press technology were asked to specify the percentage of their total revenues that digital label sales made up after their first digital press had been installed for 1 year, 2 years and 3 years.

19% Average percentage digital label revenues represented

of converters’ total revenues 3 years following their first

digital press installation.

After 3 years, the average percentage digital label sales made up of converters’ total revenues was 19%.


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V. The TLMI Digital Converter Survey

More than 100 label converters participated in the survey for the

compilation of this study. Around 60% of participating converters currently have a

digital press installed on their production floor. Revenues of digitally printed

labels totaled more than $220 million for participants in 2014, a survey sample

that represents more than 20% of the total value of the North American digital

label market.

Label converters of all sizes participated in the research for the TLMI

North American Digital Label Study and the graph below indicates converter

participation by 2014 annual revenues.

Exhibit V-1: Breakdown of Participating Converters by Companies’ Annual Revenues in 2014


0% 5% 10% 15% 20% 25% 30%

>$125 million

$75-125 million

$50-75 million

$35-50 million

$25-35 million

$20-25 million

$15-20 million

$10-15 million

$5-10 million

$2-5 million

$1-2 million

<$1 million

3%

1%

5%

4%

3%

7%

8%

15%

20%

27%

4%

3%

% Participating Converters

Annual Revenues of Surveyed Converters

26

Twenty-three percent of survey participants had total revenues of $20

million or more in 2014 while 77% of surveyed companies had revenues of less

than $20 million.

Participating converters had an aggregated total of more than $2 billion in

annual revenues in 2014. Surveyed companies sell labels into every primary

end-use vertical and companies were asked to specify the percentage of their

total production that is sold into each of the categories they serve. The graph

below breaks down converters’ total aggregated production in 2014 by end-use

category.

Exhibit V-2: Converters’ Aggregated Production in 2014 by End-Use Vertical (Includes Conventional and Digital Production)


Of the total surveyed universe, just over 60% of participating converters

have a digital press on their production floor. Companies that are currently using

digital press technologies were asked to indicate the number of presses they

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Other

Retail

Transportation/Logistics

Consumer Durables (Includes Electronics)

Automotive

Household Chemicals

Industrial Chemicals

Health & Beauty/Cosmetics/Personal Care

Pharmaceutical

Beverage

Food

10%

6%

9%

7%

3%

3%

5%

7%

10%

17%

23%

% Category Represents of Converters' Total Aggregated Production

Breakdown of Aggregated Production for All Surveyed Converters

27

currently have per technology type. Exhibit V-3 shows a breakdown of digital

press technology for all participating converters.

Exhibit V-3: Digital Press Format by Type for All Participating Converters


Of the total number of digital production presses used by surveyed

converters, 61% of those presses are electrophotography and 36% are digital

inkjet.

The TLMI Converter Survey asked digital users a series of key production

questions in order to calculate industry averages and data ranges for each.

These production questions included:

Average number of jobs companies run on their digital press(es) per shift

Average number of colors per job in the production of digital labels

On average, the percentage of companies’ digital production that requires

more than one pass to convert (that is, it requires additional passes

through either a conventional or digital press to complete, including

diecutting)

Average run lengths of jobs produced on digital production presses per

end-use category

EP 61%

Inkjet 36%

Other 3%

Surveyed Converters' Digital Press Formats: 2014

28

The survey narrowed in on these specific metrics in an effort to

accomplish two things:

To assist current users of digital production presses by providing industry

averages they can use for benchmarking their own company’s

performance against

To assist non-users of digital press technology by providing industry

averages that will assist them in doing their own cost benefit analysis

regarding digital press technology and if, and when, this technology might

be a good fit for their own strategic objectives

To calculate average number of digital jobs per shift data, converters were

given ranges of numbers to choose from. These ranges were 1-5, 6-10, 11-20,

21-30, 31-40, 41-50, and >50 digital jobs per shift. The line graph below indicates

the percentage of companies that fall into each range.

Exhibit V-4: Average Number of Digital Jobs per Shift for All Participating Converters


As the graph shows, the largest percentage of converters are currently

running 11-20 jobs on their digital press/presses per shift. Two-thirds of

converters run between 6 and 20 jobs on their digital press/presses per shift.

0%

5%

10%

15%

20%

25%

30%

35%

40%

1-4 jobs 6-10 jobs 11-20 jobs 21-30 jobs 31-40 jobs 41-50 jobs 51-60 jobs

% C

on

vert

ers

Converters' Average Number of Digital Jobs per Shift

29

The next survey question asked converters to specify the average number of

colors per job for their digitally printed labels. Exhibit V-5 indicates converters’

responses.

Exhibit V-5: Average Number of Colors per Digital Job for All Participating Converters


More than 40% of converters currently average four colors per digital job. Half

of all participants print on average more than four colors per digital job while just

8% of respondents print on average fewer than four colors per digital job.

For converters that have not yet invested in digital press technology, the next

question in the survey was a critical one. Converters with digital presses were

asked to indicate on average, what percentage of their total digital production

requires more than one pass to convert. That is, the percentage of digital

production that requires an additional pass, or additional passes, through either a

conventional or digital press to complete, including diecutting and finishing.

Exhibit V-6 on the following page indicates converters’ responses.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 color 2 colors 3 colors 4 colors 5 colors 6 colors 7 colors >7 colors

% C

on

vert

ers

Converters' Average Number of Colors per Digital Job

30

Exhibit V-6: The Percentage of Jobs that Require More than One Pass On-Press – All Converters


While advances have been made in online finishing options for digital

production printing, this is clearly still an area where technological improvements

and system compatibility are essential. For more than 70% of all participating

converters, most or all of their digital production requires a second pass for

finishing and/or diecutting.

This is an important benchmark for converting companies considering buying

their first digital production press in the foreseeable future as it establishes a

reference point for what single-pass completion rates currently are in the North

American labeling sector.

The next question in the TLMI Converter Survey asked users of digital

production press technology to indicate what their most significant challenges

were with their digital presses. The objective in asking this question was to

provide a framework both for digital press users and non-users of the types of

issues companies that have digital presses installed on their production floors still

grapple with and how significant some of these issues are on a day to day basis.

0%

10%

20%

30%

40%

50%

60%

70%

80%

1-10% req.more than 1

pass


pass


pass


pass


pass


pass

% C

on

vert

ers

What % of Converters' Digital Jobs Requires More than 1 Press Pass?

31

Converters were given a set of specific criteria to rank from most to least

challenging:

Finding enough business to fill the digital press capacity I have

Printing high opacity whites

Color matching

Overall print quality

Press downtime due to service issues

My salesforce doesn’t know how to best sell the digital advantage yet

Internal process efficiencies (establishing an MIS for quoting, etc.)

Ink performance/ink integrity

Finishing requirements

The table below shows how digital users ranked these issues, from most to

least challenging.

Exhibit V-7: The Most Significant Challenges of Digital Printing – Digital Users’ Viewpoint

Challenge How Digital Users Ranked

the Challenge

Finding enough business to fill digital press capacity

#1 (most significant)

Press downtime due to service issues #2

Color matching #3

Finishing requirements #4

Printing high opacity whites #5

Internal process efficiencies #6

Ink performance/ink integrity #7

My salesforce doesn’t know how to best sell the digital advantage

#8

Overall print quality #9

(least significant)

32

According to surveyed converters that have digital press technology, their

most significant issue is finding enough business to fill the digital press capacity

their companies currently have. It’s important to note here that of all the

companies surveyed that have digital press technology, 18% of those companies

have installed a digital press with the past year. Six percent of companies

surveyed have installed a digital press within the past two years. These

companies that have had their digital presses for two years or less were more

likely to rank finding enough business as their number one concern. The most

significant issues for digital users with their first press installed three or more

years ago included color matching, press downtime due to service issues, ink

performance/integrity and internal process efficiencies.

To compare and contrast existing issues for digital press users with perceived

issues among non-users, surveyed converters without digital presses were asked

what they perceived their most significant issues would be with digital by ranking

the same criteria from most to least significant. The table on the following page

shows how converters without digital press technology ranked their concerns

about purchasing digital presses, from most to least significant.

33

Exhibit V-8: What Non-Digital Users Perceive as the Most Significant Challenges of Digital Printing

Challenge How Non-Digital Users Ranked

the Challenge

Finding enough business to fill digital press capacity

#1 (most significant)

Color matching #2

Overall print quality #3

Internal process efficiencies #4

Finishing requirements #5

(Tied)

Ink performance/ink integrity #5

(Tied)

Press downtime due to service issues #6

Printing high opacity whites #7

My salesforce won’t know how to best sell

the digital advantage

#8

(least significant)

The table above demonstrates that non-users of digital are keenly aware of

the potential challenge in finding enough business to fill the capacity of a newly

installed digital press. Interestingly, press downtime due to service issues is

much lower on the list for non-digital press users versus companies that have

digital presses installed that rank it as a more serious concern. Another stark

contrast between how the two groups ranked these criteria was around overall

print quality. Digital press users ranked overall print quality as the lowest concern

while non-users believe it will be a more significant challenge.

34

The final question in the TLMI Converter Survey asked both users of digital

presses and non-users to indicate their average run sizes in linear feet per end-

use sector they serve. The table below shows both digital and conventional

average run sizes per major end-use category.

Exhibit V-9: Average Run Sizes in Linear Feet for Digital and Conventional Applications per End-Use Category

This table shows the wide swings between average digital and conventional

run sizes for each end-use category. On average, for all end-use categories

digital run sizes are less than one-tenth the size of label applications printed on a

conventional press. The greatest differences between digital and conventional

run sizes exist in the beverage, automotive, and household chemicals sectors.

End-Use Sector Average Digital Run

Size in Linear Feet

Average Conventional

Run Size in Linear Feet

Food 2,515 l/f 24,071 l/f

Beverage 1,721 l/f 53,017 l/f

Pharmaceuticals 2,194 l/f 19,295 l/f

Health & Beauty/Cosmetics

3,328 l/f 22,250 l/f

Industrial Chemicals 3,350 l/f 34,518 l/f

Household Chemicals 2,331 l/f 31,600 l/f

Automotive 750 l/f 12,188 l/f

Consumer

Durables/Electronics 1,883 l/f 12,563 l/f

Retail 2,321 l/f 34,964 l/f

Average Run Size –

All End-Use Sectors 2,267 27,163 l/f


35

Exhibit V-10: Production Metrics Averages – All Surveyed Converters

Benchmark Averages – All Surveyed Converters

13 jobs

Average number of jobs run on converters’ digital presses per shift.

73% of digital throughput requires second

pass through press

Converters were asked to indicate the percentage of their total digital jobs that require a second pass through a press for additional printing, finishing and/or diecutting. 73% of the total digital throughput for all converters requires more than one pass to complete.

5 colors Average number of colors converters’ run per job on their digital presses.

2,267 linear feet

Converters were asked to specify average digital run lengths per end-use sector they serve.

27,163 linear feet

Converters were asked to specify average conventional run lengths per end-use sector they serve.

< 1/10 size of conventional runs

On average, for all end-use categories, digital run sizes are less than 1/10 the size of conventional run sizes.


36

VI. The TLMI Digital Brand Owner/Packaging

Buyer Survey

In addition to a converter survey, the research methodology for the Digital

Label Study included surveying brand owners and packaging buyers across

primary end-use sectors where digital production label printing is being

employed. More than 60 brand owners and packaging buyers participated in the

TLMI Digital Brand Owner Survey, representing more than 50 companies.

The primary objective behind polling this universe was to ascertain the

current perceptions of brand owners and packaging buyers toward digitally

printed labels, perceived advantages and concerns when it comes to their labels

being printed digitally, and how much they project their sourcing of digitally

printed labels will increase over the next five years. Respondents were asked to

indicate their primary job function and the chart below breaks down the

percentage of participants for each function category.

Exhibit VI-1: Job Functions of Surveyed Brand Owners and Packaging Buyers

While survey respondents had a wide range of job functions, every

participant either directly influences the sourcing/procurement of labels or directly

influences the specifications and production parameters of printed labels.

0% 10% 20% 30% 40% 50%

Sourcing/procurement

Brand management

Marketing

R&D

Package engineering

Print production

24%

7%

14%

10%

41%

3%

% Brand Owners/Packaging Buyers

Job Functions of Participating Brand Owners and Packaging Buyers

37

In addition to indicating their job functions, survey respondents were

asked to indicate the end-use categories their companies serve. The graph

below breaks down brand owner/packaging buyer participation per end-use

sector.

Exhibit VI-2: End-Use Categories Served by Participating Brand Owners and Packaging Buyers

Just over one-third of participating companies serve the food and

beverage sectors while 19% of respondents serve the chemicals sectors. Forty-

two percent of polled end-users serve a single sector while 48% serve multiple

sectors. Some of the largest brand owners participated in the survey including

Kraft, Procter & Gamble, Unilever, Apple, General Electric, L’Oreal, Nestle and

Stanley Black & Decker.

It’s important to note that smaller, regional consumer packaged goods

companies also participated including companies that manufacture condiments

and sauces, processed meats, juices and ready-to-drink teas, cleaning products

and cosmetics.

0% 5% 10% 15% 20% 25%

Food

Beverage

Health & beauty/cosmetics

Pharmaceuticals/nutraceuticals

Household chemicals

Industrial chemicals

Consumer durables/electronics

21%

14%

19%

17%

12%

7%

10%


End-Use Categories Participating Brand Owners and Packaging Buyers Serve

38

One of the most important questions in the TLMI Brand Owner Survey

asked companies if they actively seek label vendors that have digital label

printing capabilities. Respondents were asked to select an answer to this

question from the list below:

We only source labels from vendors that have digital label printing

capabilities

We prefer label vendors that have digital label printing capabilities,

however it is not a requirement

We have no preference, as long as our label vendors can meet our

required quality and price points, we don’t care what technology

they use to print our labels

Exhibit VI-3 breaks down the percentage of participants that selected each

response.

Exhibit VI-3: Brand Owners/Packaging Buyers’ Preferences in Choosing Label Vendors with Digital Presses


One of the most critical issues in the North American label industry today

is the rate at which digital printing demands are vertically pushed through the

supply chain. In asking this question, one of the objectives of the research was to

0% 10% 20% 30% 40% 50% 60%

Only source labels from vendors withdigital

Prefer vendors with digital but it's nota requirement

Have no preference

7%

53%

40%


Are Brand Owners/Packaging Buyers Demanding Label Vendors have Digital Presses?

39

give TLMI supplier and converter members a clear perspective of how much

pressure label converters who have not yet purchased a digital press system are

receiving from their customers and prospects in being able to offer digital labels

as a part of their company’s overall capabilities.

More than half of all respondents stated that while they prefer label

vendors with digital capabilities, it is not a requirement. When these companies

were then asked if they actively used label suppliers without digital printing

capabilities, more than 70% responded that they are currently using label

vendors without digital label printing capabilities. For 7% of respondents, having

a digital label press on their production floor is a prerequisite for vendors while

40% of participating brand owners/packaging buyers indicated that they have no

preference – they just want their label vendors to meet required quality and price

points.

The next section of the questionnaire gauged brand owner and packaging

buyers’ perceptions as to the advantages digital label printing offers, in addition

to what the perceived challenges of digital printing might be to this universe. In

an effort to create a hierarchy of significance, participating companies were

asked to rank from most to least important, a defined set of criteria:

The print quality digital label printing offers

Digital technologies’ ability to produce shorter delivery times

enabling us to receive our printed labels faster

Digital technologies’ ability to print shortest run lengths and

smallest job sizes

The ability to do more promotions

Fewer dollars lost to packaging obsolescence as just-in-time

vendor channels mean we can inventory lower levels of printed

packaging

The table on the following page indicates how brand owners and

packaging buyers rank these criteria.

40

Exhibit VI-4: How Brand Owners and Packaging Buyers Rank the Advantages Digital Label Printing Offers

Shorter delivery times were ranked as the number one value proposition

digital label printing offers. In mining the data for patterns within particular end-

use sector preferences, it’s interesting to note that shorter delivery times was

ranked as the number one most significant advantage of digital label printing by

end-users across categories. Print quality was consistently ranked highest

among brand owners and packaging buyers that serve the health and

beauty/cosmetics and household chemicals categories. The ability to print

shortest run lengths was ranked highest among brand owners that serve the

health and beauty/cosmetics, household chemicals and, interestingly, the long-

run dominant beverage sector. When asked why they ranked the ability to print

shortest run lengths so high, a number of beverage companies responded that

the high level of new product launches created a growing small-run niche in

certain beverage categories.

Advantages of Digital Printing for End-Users/Packaging Buyers

How End-Users/Packaging Buyers Rank the Digital Advantages

Shorter delivery times #1

(most significant)

Print quality #2

Ability to print shortest run lengths #3

Less packaging obsolescence #4

More promotional packaging #5

(least significant)


41

In addition to gauging how brand owners view the most significant benefits

of digital printing, the survey additionally asked companies what they considered

to be the most significant challenges of digital label printing. Once again,

respondents were asked to rank a given set of criteria from most to least

significant:

Having to train our people because we are not well versed in digital

label printing

Having to reapprove each application due to the production

differences of digital printing versus conventional printing

Having to re-specify label materials

Potential increase in label pricing

Having to alter our sourcing logistics to accommodate digitally

printed products

The table below indicates how brand owners and packaging buyers

ranked what they perceive are the most significant challenges associated with

digital printing.

Exhibit VI-5: How Brand Owners and Packaging Buyers Rank the Challenges Digital Label Printing Presents

Perceived Challenges Associated with Digital Printing for

End-Users/Packaging Buyers

How End-Users/Packaging Buyers Rank the Challenges

Increase in pricing #1

(most significant)

Re-specifying label materials #2

Re-approval of applications #3

Altering sourcing logistics #4

Personnel training #5

(least significant)


42

Brand owners and packaging buyers perceive price increases as the

number one challenge when migrating from conventionally sourced labels to

digital. The categories that consistently ranked price increases as their primary

concern were food and beverage; long run categories sensitive to even the

slightest fluctuations in price points.

The categories in which companies ranked increases in pricing as a lower

concern primarily included the health and beauty/cosmetics and pharmaceutical

sectors. Out of all the major end-use categories that consume labels printed on

digital production presses, digital consumption is highest (as a percentage of

total category consumption) in the health and beauty/cosmetics and

pharmaceutical sectors. Companies in these markets have a keen awareness of

the cost increases sourcing digital labels incur, and continue to fine tune their

workflows to capitalize on the advantages digital production printing offers.

The table on the following page shows key findings from the brand

owner/packaging buyer survey.

43

Exhibit VI-6: Key Findings for Surveyed Brand Owners and Packaging Buyers

KEY FINDINGS – Brand Owners and Packaging Buyers

7% demand vendors have digital

presses.

Seven percent of surveyed brand owners and packaging buyers indicated that they will only source labels from vendors with digital production presses.

40% have no preference.

Forty percent of surveyed brand owners and packaging buyers indicated they have no preference when it comes to the technology used to print their labels as long as their label vendors can meet their required quality and price points.

#1 advantage: Shorter delivery times

The number one perceived advantage of digital label printing to surveyed brand owners and packaging buyers is the technology’s promise of shorter delivery times.

#1 challenge: Higher price points

The number one challenge of digital label printing to surveyed companies is that price points for digitally printed labels is higher for companies that source digital labels, and perceived to be higher for companies that do not yet source digitally printed labels.


44

VII. Digital Trending per End-Use Vertical Market

Digital Label Trends per End-Use Vertical

Average Conventional Run Size l/f

Average Digital

Run Size l/f

Digital Label

Production as a % of

Total Category

Value

Brand Owners’

Perception of #1 Digital Challenge

Brand Owner Growth

Projections of Digital

Label Sourcing Growth to

2020*

Food 24,071 l/f 2,515 l/f 6.0% Increase in

pricing High

Beverage 53,017 l/f 1,721 l/f 3.5% Increase in

pricing High

Pharma 19,295 l/f 2,194 l/f 17.0% Re-specifying

materials Medium

Health & Beauty 22,250 l/f 3,328 l/f 13.4%

Re-specifying materials

High

Industrial Chemicals 34,518 l/f 3,350 l/f 8.5%

Increase in pricing

Medium

Household Chemicals 31,600 l/f 2,331 l/f 5.7%

Re-specifying materials

High

Automotive 12,188 l/f 750 l/f 5.7%

Having to reapprove

each application

Medium

Consumer Durables / Electronics

12,563 l/f 1,883 l/f 13.6% Increase in

pricing Medium

*For projected growth projections low = 1 to 4% average annual growth, medium = 5 to 8%

average annual growth and high = more than 8% average growth.


45

VIII. Implications & Conclusions for TLMI

Members

Annual digital label consumption is projected to grow at six to seven times

the rate of conventional label growth. Highest digital label growth rates are

forecasted for the food, beverage, health and beauty/cosmetics and household

chemicals sectors. More than 60 brand owners and packaging buyers

participated in the TLMI Digital Label Study and these companies represent an

aggregate label spend of more than $1 billion in 2014. Participants were asked to

indicate the percentage that digital labels made up of their total label

procurement volume in 2014, and to then predict what the percentage of digital

labels would make up of their total label procurement volume in 2020. Exhibit

VIII-1 shows the average percentage that digital label procurement makes up of

surveyed companies’ total label volumes in 2014 versus forecasted digital label

procurement as a percentage of total label sourcing volumes in 2020.

Exhibit VIII-1: Packaging Buyers Actual Digital Label Volumes in 2014 and Projected Digital Label Procurement Volumes in 2020


0%

5%

10%

15%

20%

25%

2014 2020

10.2%

22.7%

% of Labels Sourced that are Digital:

2014 (Actual) vs. 2020 (Projected)

46

In five years, the average percentage of digitally sourced label volumes

more than doubles. By 2020 the projected average of digital label volumes jumps

from 10.2% to 22.7%.

While double digit growth is projected to continue for digital label demand

in the North American market, production concerns still exist for both converters

that have digital presses on their production floors, in addition to converters that

have not yet invested in digital press technology.

Converters that have digital presses report finding enough business to fill

their digital press capacity is their most significant challenge associated with

digital press technology. Other issues they report as significant include digital

press downtime due to service issues, color matching issues and the multiple-

pass demands of finishing requirements. For more than 70% of all participating

converters, most or all of their digital production requires a second pass for

finishing and/or diecutting. It’s evident that finishing remains a major issue for

companies with digital production presses. While digital press manufacturers

have concentrated their R&D resources on print engine improvement, finishing is

still an area where more development is required in order to maximize the

flexibility and just-in-time production capabilities digital label printing offers.

A. Why some converters aren’t investing

When examining the North American digital label printing industry, a

central question remains: Why haven’t some sizable converters invested in a

digital press yet? We asked this question of non-digital users and the answers

companies provided repeated the same factors. Those include:

Companies are making money now and they do not have digital

press technology, so what is the compelling business reason to

purchase a digital press?

Conventional press manufacturers have raised the bar high when it

comes to fast set-ups and changeovers, enabling companies to

print smaller run sizes more economically.

47

The fear of implementing an invasive technology that can

potentially change the production culture of a company significantly.

Participating digital press users produce an average of 13 digital

jobs per day per shift. This is on average three to four times the

number of jobs companies produce conventionally per shift.

Converters that have not yet invested in digital presses are

concerned about what it would take to alter their existing production

infrastructures to accommodate the demands of digital printing

including customer service, estimating, the purchasing of supplies

and digital production’s finishing demands they would have to move

to their existing conventional presses.

B. Does it really matter to brand owners and packaging

buyers how a label is printed?

The percentage of brand owners and packaging buyers that demand their

label vendors have digital press technology is still low; 7% of companies

participating in the TLMI Brand Owner Survey indicated that they will only buy

labels from converters that have digital production printing capabilities. While that

is a small number, it’s important to note that 53% of participating brand owners

and packaging buyers indicated they prefer that their label vendors have digital

press capabilities but it’s not a requirement.

When does a preference become a requirement? This is precisely where

the digital printing industry is today in North America. The vast majority of brand

owners are not yet requiring that their converters have digital production presses

because while they say they prioritize fastest delivery times and the ability to print

shortest run lengths, their underlying concern related to digital is that they are

going to have to pay more for their digital labels.

Digital press manufacturers have come to realize that in order to

effectively talk about the advantages of digital label production printing, the

conversation needs to be steered away from a strictly cost-per-unit argument to

48

one that truly addresses value. While there is likely a higher price for this

technology on a cost-per-unit basis, the ability to change graphics quickly and to

print on demand yield other financial advantages stemming from growing

brand’s identity and in some cases increasing marketshare.

Both converters with digital technology and digital press manufacturers

report that selling the advantages of digital label printing must go beyond the

sourcing and procurement level. Sourcing and procurement personnel remain

fixated on price-per-unit changes however R&D and marketing departments are

looking for ways to better communicate with consumers and the final end-user of

a digitally printed label.

Consumer behavioral shifts continue to push printed packaging into new

frontiers and this is true for both the prime and non-prime label space. While

brand owners and packaging buyers report that being able to quantify the

advantage of migrating to digitally printed labels remains a challenge the ability to

personalize, customize and regionalize a printed label is a reality that will

continue to drive the growth of this technology.

The current landscape for the North American digital label printing industry

can be summed up in one word: growth. For the conventional label printer

however, digital production printing isn’t just a technology shift. It shifts a

company’s entire culture including the sales approach in front of packaging

buyers, production logistics and MIS management, customer service, and

marketing.

This is an industry where taking an evolutionary step toward efficiency

gains for most converting companies has historically meant purchasing a next-

generation conventional press system. For the first time however we are

witnessing higher numbers of digital press installations compared to conventional

machines and as time marches on, the gap between the two will only become

wider. As part of the association’s ongoing commitment to deliver members real-

time resources and research, TLMI will continue to track the growth and

development of digital production printing and its impact on both TLMI members

and the greater industry.

Documents

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