Digital Printing for Packaging Industry
Q1 2015
www.cir-strategy.com
Cambridge Investment Research consulting for strategy
Examples of relevant work done
Tech roadmap for Xaar printheads back in 2004, successfully exploited High-Value Manufacturing Conference Series since 2002 (36 conferences delivered averaging 100 execs)
Technology strategy for Domino in digital labels in 2009 PIRA Inkjet Inks for Packaging Report 2006, Digital Textiles Reports 2012 & 2014
Commercial Diligence for Domino plc just before they purchased PostJet in 2012 for GBP£6.5Mn with presentation to Board of Directors IP Strategy for Plastic Logic 2013
and... Market Entry Strategy for DP Start Ups/Spin-offs e.g. Inkski
Work on labels for Epson “Beyond the Tech Enablers” - 2008 Reports on Global IIJ & Labels sold Globally, EU, APAC and NA - 2009
Mapped entire Cambridge High-tech Cluster (750 scaleable technology firms)
2 large recent & ongoing Direct-to-X digital printing in packaging clients
Workshop – Co-creation
- Joint creation of a better plan with CIR proposals of contribution (workshop) - Separate client / CIR reflection on the joint creation
- Joint conclusion of the results from the activities above and proposed next steps (what have we learnt and have we proven to be able to work together)
1 • What is the nature of the opportunities from digital printing?
2 • How real is the interest from customers in the digital package printing opportunity?
3 • What is the competitive landscape & market potential?
4 How economic is digital for the packer or processing factory?
Areas of focus:
• Structural changes to market | their effects on the business • Market readiness, timing & growth rates
• The use case & customer value-proposition • Business model concepts | Scenarios & options (via Route to Value)
• Business propositions & validation • Routes to Market | Accessing technology
• Recommendations to Board
Overestimating the Short Term, underestimating the Long Term:
Digital printing waves* observed in last decade
2004 – signage & displays
2008 – labels 2010/12 – ceramics
2012/14 – textiles 2016/18 – packaging?
…Wait and see or Don’t miss this boat?
* Moving from unknown to an established or even saturated market in relatively short period of time, year given represents approximate “take-off”
Source: CIR Dec 2014
42 interviews on digital for packaging achieved
Aug-Sep 2014 Technology supplier - equipment (printers, print finishers and line machinery)
36% N=15 –
Packaging (12) & Labelling (2) Converter 33% N=14
– Brand owner or retailer or packaging filler / food producer
29% N=12 –
Consultant / Packaging Gurus 2% N=1
Evidence of Related Patent Activity in last 5 years around
digital for packaging (CIR Patent Search Team)
Adverpack LLC Atlantic Zeiser GmbH (Germany)
Ball Packaging Europe Gmbh (Germany) Colgate-Palmolive Company
Cuch Simon R ( Us ), Cyan Tec Systems Ltd ( Gb )
DIC Corp Durst Phototech Digital Tech ( At )
Fuji Xerox Co Ltd Fujifilm Corporation (Japan)
Gizeh Verpackungen Gmbh & Co Kg ( De )
Graphic Packaging International, Inc. Guangdong Dongfang Jinggong
TechnologyCo
Heidelberger Druckmaschinen Ag Heineken Technical Services B.V. (Nl)
Hewlett-Packard Development Company, L.P.
Hitachi Ind Equipment System Co Ltd INX International Ink Company ( Us )
KHS GmbH (Germany) Kimberly-Clark Worldwide, Inc.
Konica Minolta Holdings Inc Krones AG ( De )
Machines Dubuit (France) Mars, Incorporated
Memjet Technology Limited (Ireland) Mimaki Eng Kk
Osiris Technology B V ( Nl ) Plastipak Packaging, Inc. Pressco Technology Inc. Primera Technology, Inc.
Procter & Gamble Company, The Reynders Etiketten N V ( Be )
Seiko Epson Corporation (Japan)
Smurfit Socar Packaging ( Fr ) Sun Automation, Inc.
Superfos Packaging As ( Dk ) Tetra Laval Holdings & Finance S.A.
(Switzerland) The Coca-Cola Company
Till GmbH (Germany) Toppan Printing Co Ltd
Toshiba Tec Europ Imaging Systems SA ( Fr ),
Toshiba Tec Kabushiki Kaisha (Japan) Videojet Technologies Inc.
Weng An Zhongya Color Printing Packaging Co Ltd
Westvaco Packaging Group Inc (Us), WM. Wrigley Jr. Company Xeikon Ip Bv (Netherlands)
Xennia Technology Limited (United Kingdom)
Xerox Corporation Xinxieli Package Products Shenzhen Co
Ltd
hp indigo (ep ip) ABG Intl (dfs w/ hp indigo) Xeikon (fn pkg fc iml, ep) KHS – d2s ij (pet) Krones – d2s ij (pet hclient) Till – d2s ij (any mat) ToneJet (w/ Ball) – d2 metal cans es FFEI – Graphium – h m prt ij flxo Sacmi Machines Dubuit d2s pet ij Hp scitex – d2 corrug ij efi (corrug fp fc) ij
Durst (corrug) ij FujiFilm Screen (fc corrug) ij Sun Automation (d2 corrug) DPS (Brother?) ij VIPColor lbls fc fp por paper Primera lbls fc fp Cyan Tec rtr rts Heidelberger w/ Gallus, CSat (h m prt) mark andy (h m prt) Nilpeter (h m prt) lbls fc fp Colordyne lbls tags sheets Epson (lbls - fn pkg) INX Digital Edale (dfs)
Atlantic Zeiser (ip) VideoJet ip d2p Uteco dfs flxo Spartanics dfs SEI dfs Hinterkopf aerosol metal cans Wifag Polytype ij Highcon (dfs fc w/ xeikon) Presstek fc Kodak (Prosper, Stream) w/ Bobst (dfs corrug) Xerox vdp rtr/sheet Canon Oce vdp rtr/sheet Landa (nanog fc)
Companies already developing & marketing digital packaging printing & finishing systems
Global Label & Packaging Market Growth
Source: PIRA 2013
6.6% CAGR
4.2%
15.5%
22.7%
fc and fp 40-45% CAGR forecast
Global packaging will reach $1Tn by 2018 (PIRA)
Euro
Bn
18.2%
“Packaging has gone from an afterthought to an integral part of the product”
- a packaging converter
Evidence for market pull How strong is your or your customers' interest in using direct-to-package digital printing?
N = 30
Average = 3.50 or
“Middling to Strong” (median / average) “Strong” (most common answer)
Other US research into packaging Q4 2013
Source: Karstedt Partners
How Brand owners and retailers view the benefits of digital printing
Other US research into packaging Q4 2013
Source: Karstedt Partners
Does interest level change with a premium level of 15% to 20%
Evidence for market activity If you may at some stage require to buy digital direct to pack printing equipment,
which of the following would best describe your current position or approach to this:
Median response
& a surge in beta installations exp. Q4 2014 & 2015
Perceived barriers to adoption of digital direct packaging printing
All barriers around technology, printing, finishing are thought to be solved within 4 years and then any delay to adoption is organisational
1st= Consumer engagement 1st= Faster turnarounds “Time to mkt segment” 3rd Advertising promotions: Limited editions 4th Advertising promotions: Local events 5th Regionalisation 6th Seasonal information 7th Languages
Customer drivers & Decision-Making Units
Marketing dept
Production/logistics
Regulatory/ICT
Order of importance from survey:
OtherUS: commercial printers in maturing market
seeking new segments e.g. packaging
“profitable short-runs segment”
high
• Key to marketing and sales strategy for digital direct to packaging will be accessing all 3 depts at brands
Strategy
Source: Harvard Business Essentials Series: strategy (generic aspects)
connect projects to changes, objectives,
goal, values
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Towards a better plan…
CIR roles
1. Methods 2. Validation – hands on
3. Assurance – independent review
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Towards a better plan
METHODSDesign structure
SegmentationConfidence
Value network & key case sub-networkImpact assessment
Opportunity prioritisation & OptionsBusiness Proposition, Value Proposition
Service designYour route to value
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Value network and dynamics
Steps for Value Network Analysis Set-Up
1. Identify Participants (all stakeholders) – NODES
Upstream and downstream External & internal
Complementary Assets
2. Identify Expectations – FLOW LINKS Tangible & Intangible
3. Define scope and boundary, context and purpose – UNIVERSE
Primary & Secondary Stakeholders
4. Validate participants, expectations & sequencing – LOGIC Propensity to change of stakeholders
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Confidence
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Confidence table
Example
NOTES
1 Sources of confidence are adapted for each client and project.
2 We do not use 100% confidence, as this is usually impossible to
achieve.
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Routes to Value
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Routes to Value
The RtV View* explicitly links planning with execution.Allows for impact of any decision to be understood.
StrategyTactics
*The RtV Map is a directed graph.
Our method ensures that everything aligns to a strategic goal and that the impact of decisions is clear
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Structuring the decision context
Routes to Value – visible strategy
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Routes to Value – visible strategy
Identify emerging user need
Option 2
Option 3
PROJECT – choosing options
Analyse discourse stream
Cost Conf. Time Conf.
£20K 70% 6 wks. 60%
Dependencies
Agree license
Competencies
Ontologies and target users
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Routes to Value – visible strategy
Increase number and length of accounts
CHANGE – making it explicit
RESP. Ed
Meter
Revenue as % of total revenue :
C F A T
15% <=25% 50% <=66
% Current Fail Acceptable Target
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Routes to Value – visible strategy
E.g. Increase the lifetime value of customer
OBJECTIVE – Clarify goals
RESP. Ed
Meter
Annual spend over 5yrs £K pa
C F A T
55 70 100 250
Scale of measure
Metrics of measure
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Tracking confidence in outcomes
Uncertainty is the best predictor of outcomes.
Gollet. C., University of Toulouse
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Impact assessment
Customer lifetime value and impact assessment
LifeTimeValue function Life Time )-(( )Transactions
number of, Average
Transaction Value,
Cost of Acquisition+Cost of
RetentionNumber of
Transactions in a period, e.g. a
year
i.e. number of periods
(number of years, when year = period
LTV f LT ) - (( )Tn, ATV, CoA + CoRimpact: l = low m = medium h = high 0 = no impact © Nicholas Coutts 2011 – 2014 All Rights Reserved
OPTION TIME COST IMPACT IMPACT IMPACT IMPACT IMPACT
Reduce price
l l h h h o o
Improve web site
m h m m h h h
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Towards a better plan
VALIDATION
Specific market and customer dataInterviews; Research; Intelligence; Insight