The desire for attractive, personalized packaging is fueling the digital-driven segment.
By Greg Hrinya
Published November 17, 2014
The growth of digital printing in the label industry has strongly influenced the short run market. As the demand for shorter runs increases, so too does the demand for digital print technology.
During the turn of the century, when flexo was king and digital was in its infancy, converters were hesitant to move away from conventional processes for a multitude of reasons. For starters, outside-the-box label creativity typically meant higher costs. If a brand owner wanted to run a number of shorter batches, it needed to invest in higher-cost plates. Additionally, smaller label markets did not seem as viable or profitable to make digital printing worthwhile.
Those concerns are dissipating by the day, however. As Coca-Cola illustrated with its “Share a Coke with…” campaign, unique and personalized designs generate a substantial buzz. According to Forbes, 61% of American consumers feel more positive about brand marketing when the messages are personalized.
Personalized messages would not be practical with conventional flexo printing because of the large costs associated with plate making, especially if an order only required a minimal amount of prints.
Many of the other fears associated with smaller digital runs have been put to rest, as well. Companies are no longer sacrificing quality when making the transition to digital, and the production occurs in a faster timeframe. Moreover, on-demand printing features less waste. There is no need to warehouse surplus stock, which often affects cost margins.
Accessibility is also a critical aspect of this market. Major brands like Coca-Cola are not the only ones that can benefit from short runs. Specialty foods, seasonal products, nutraceuticals, medical supplies, cosmetic and personal care products, water bottles, organic produce and craft beers are all taking advantage of digital’s capabilities. Many brands within these markets are avoiding setup fees and tooling charges with short run digital print.
A short run starts at one label, for prototyping, for example. And with enhancements in digital press technology, some converters today consider as many as 10,000 labels a short run.
According to The Freedonia Group, the demand for labels in the United States is expected to surpass $19 billion in 2017, with an annual growth rate of 4.2%. To further this, the demand for digitally produced material will increase some 375% by 2018, according to a report from Smithers Pira.
“There are three megatrends among brand owners that support the growth of color digital printing for packaging,” says Bob Leahey, associate director of InfoTrends’ Color Digital Label and Packaging Service, a market research firm that focuses on digital print technology. “One is the brand owners’ focus on target marketing; another is their intense focus on Lean Manufacturing. Together these influences have caused brand owners to order packaging and labels more frequently and in smaller amounts.” Leahey lists sustainability as the third major trend to affect digital printing.
Vedett, a Belgian lager produced by Duvel Moortgat, has attempted to capitalize on the same marketing tactics employed by Coca-Cola. Self-described as “quirky” and “modest,” the craft beer brand allows customers to personalize beverages with their own photographs.
In 2013, Vedett teamed with Fujifilm and utilized a Graphium digital inkjet press to produce personalized labels on UPM Raflabrite. The labels are inline-varnished, diecut, slit and then rewound on a multi-turret rewinder. An X-Rite i1 is subsequently used to sample red and black colors from the front label. LAB values are then used to make up color swatches in Illustrator, which are swapped out with RealPro Toolkit’s Ink tool.
Vedett’s production order features 375 labels across eight different SKUs. In an interview with the website howcoolbrandsstayhot.com, Duvel Moortgat CMO Anouk Lagae explains the brand’s rationale for a highly personalized short run. “The Moortgat family was open to strong ideas of entrepreneurs who feel what is alive in our society,” Lagae says. “At that moment, reality TV was gaining in success. Big Brother types of programs were becoming very popular; the idea that everybody was looking for their own five minutes of fame. (Hotel, restaurant and catering guru Frederic) Nicolay got the idea that a brand such as Vedett could turn anyone into a star by giving consumers the chance to put their own picture on the bottle. So we constantly changed the label on the back of the Vedett bottles with pictures sent in by people. Since then, such a co-creation or personalization campaign with consumers has become mainstream, but back then it was an ‘avant garde’ idea.”
At the current growth rates, craft beers are expected to eclipse 15% of the entire beer market in 2020. The Demeter Group reports that more millennials are choosing their beverage based on style. Several recent studies support that notion, too. According to Brandwerks, consumers will make their purchasing decision from a plethora of competing brands in just seven seconds.
Research group Mintel found that 66% of craft beer drinkers put as much stock into the style of the beer as anything else, and 70% added that the brand of beer says a lot about one’s personality. “The leading purchase driver among craft beer drinkers is style, pointing to a more discerning consumer base,” says Beth Bloom, a food and drink analyst for Mintel. “They may not be brand loyal in the strictest sense, but they enjoy supporting local breweries and sharing in that sense of community that the smaller brewers have instilled. This presents vast opportunity for product trial and customization, which will keep the market interesting in the near future. Craft beer allows for people to express their individual sense of style while also allowing for experimentation … and that’s a very exciting thing for a lot of people.”
Cider and flavored malt beverages join craft beers on the growing list of popular drinks to benefit from digital label printing.
QuickLabel Systems, a brand of AstroMed, Inc., has continued the trend of personalized, digital label printing. Its customer JO Spice Company expanded its line of custom label spices and seafood seasonings, which are designed for restaurants, parties, and even wedding favors.
“We’ve always offered custom labeled seasoning and spices, but as technology has advanced, so has the demand for custom labels,” says Kathleen Duncan, JO Spice’s graphic designer. “Our QuickLabel printers have proved to be a great business investment, allowing us to print a quality label at an affordable price, which allows us to offer custom labeling with a smaller minimum requirement.”
Duncan adds, “It’s amazing how much personality you can bring out in a label by the use of design and color.”
Beyond the beverage
UK-based Colorscan not only supplies short run beer labels, but its digitally-crafted pump badges appear in pubs, clubs, bars and restaurants across Britain. The labels destined for beer bottles average 800 per order, but the badges average around 60. It is, however, not unusual to fulfill a single-item order. Their maximum orders reach about 2,000.
Colorscan’s success with beer labels and badges has them pondering expansion. The company could explore product decals, including domed versions, and items for the gift market such as refrigerator magnets and promotional items.
Flexible packaging is also being influenced by the digital printing’s short run advantages, even within the wine market. AstraPouch, an innovator in “soft” packaging for the wine industry, has announced the digitally printed AstroPaq pouch at minimum quantities of 1,000 per SKU. The company had previously been limited to 25,000 order minimums when using flexo printing.
While AstraPouch will continue to offer its label-ready white and full-color flexo pouches for higher runs, it is eagerly anticipating the possibilities with a new technology. “We’re excited that even more of our clients can now reap the benefits of full-color, fully branded pouches,” says Erica Graham, director of marketing and finance at AstraPouch. “With the lower minimum, the cost of entry is significantly reduced – but there’s nothing sacrificed either, because the print quality is superb.”
Demand drove AstraPouch to seek an alternative to its larger run prints, says president Dave Moynihan: “Since the day we introduced the AstroPaq pouch, wineries have repeatedly asked if we could lower our minimums. Now, thanks to this technology and the flexibility afforded by digital printing, we’re finally able to oblige. It’s very exciting.”
Healthy shelf appeal
Much like millennials choosing their beverages based on style, specialty food companies rely on labels to promote their brand. These retailers, who are not purchasing in larger quantities compared to chain supermarkets, specialize in shorter-run items like olive oil, juice, honey, sauces and water.
The specialty and natural foods markets are on the rise. According to The Specialty Food Association, specialty food sales eclipsed $88.3 billion in 2013. Some of these fast growing products include nut and seed butters, eggs and frozen desserts. The average specialty food store will stock 1,877 SKUs. Between 2011 and 2013, the specialty foods industry experienced a sales increase of 42.4% while mainstream supermarkets noticed a -0.8% change.
Meanwhile, the nutraceutical industry is no longer just about reading the label. Global Industry Analysts, Inc. say that the global market is expected to reach $250 billion by 2015, which is causing companies to look for ways to strengthen their shelf appeal. Sports drinks and nutritional bars accounted for an estimated $10 billion in 2013.
The population is growing evermore health-conscious, and this has led to the increased popularity of nutraceuticals. They refer to food products or dietary supplements that provide health benefits along with basic nutritional value. Some of their most common functional remedies include weight loss, anti-aging, muscle building, improved immunity and heart health, among others.
Several trends are enhancing the industry’s proliferation across the global market. Inflated health care, a rising baby boomer population, consumer demand for alternative products, and skepticism in traditional Western methods are all fueling nutraceuticals’ rise.
“US supplement sales have closed in on $30 billion, according to Nutrition Business Journal, and are growing at a strong rate. Meanwhile, consumer confidence has been steady at around 85% in recent years, according to the Council for Responsible Nutrition,” says Sean Moloughney, editor of Nutraceuticals World. “Consumers of all backgrounds and demographics are thirsty for health products.”
As this market experiences continued growth, the demand has increased for custom-printed labels. Labels are crucial not only for shelf appeal but practicality. The industry faces different regulations depending on how the item is classified, which can be either as a dietary supplement, functional food or functional beverage. Since “nutraceutical” is not a legal term, product labeling is critical when dealing with governmental regulations. In addition, label design can highlight important terms or ingredients that are likely to catch a customer’s eye.
Eye-catching qualities are not limited to nutraceuticals and craft beers, though. Seasonal products, especially those seen during the holidays, are also driving the short run market.
From summer ales to holiday candies, brand owners are increasingly turning to short runs to reach their customers and grow their businesses. And as more label manufacturers realize the benefits of digital and adopt the technology, the trend will only continue to increase.
Written for: Label and Narrow Web Magazine
See more at: http://www.labelandnarrowweb.com/contents/view_features/2014-11-17/short-run-markets/#sthash.E2eAi7oG.dpuf