Haim Levit – Senior Vice President & Division President, HP Industrial Print Organization
Labels & Packaging, while being a resilient and stable industry, has been navigating a period of turbulence these past few years, and while persisting global pressures continue to pose challenges from disrupted supply chains and energy supply to the dwindling availability of talent, 2024 could be the tipping point for a new era to come.
The rapid growth during 2021 and the first half of 2022 turned into softness in some markets and sharp decline in others. This decline is attributed to multiple factors including inventory destocking, Food & Beverage consumption moving back to normal, and consumers fears from recession. Major label and packaging media suppliers reported a sharp 15%-20% decline in sales for the first half of 2023. Digital print of labels and packaging did not escape this softness; however, the impact was moderate. The 10-15% annual print volume growth rate turned into a modest single digit growth.
Global Supply Pressures Bring Local Opportunities
The uncertainties of growing geopolitical tensions have thrown the question of secure and stable supply chains once again into the spotlight. As good supply has become less trustworthy and freight costs have continually spiraled, much of production has shifted back to the US and Europe, enabling converters to take a more local approach to business, while slashing expensive and unsustainable transportation. The issue of good demand however is another concern, while today we can see evidence of recovery in some areas, the reality is the impact is still there.
In addition to transport, the sourcing of substrates generated tension in the overall supply chain. Converters had to find new suppliers and to adjust production lines to substrates not used before. All this created unexpected complexity in the supply chain.
It also goes without saying that as with many industries, the labels & packaging industry is no exception to the scarcity of skilled labor. For the majority, little is known about the packaging industry and the perception is that it’s an archaic and noisy sector that negatively impacts the environment. Today, the digital and AI boom presents opportunities for packaging manufacturers to offer new careers, up/re-skilling opportunities for existing employees, and to overall reshape the industry’s image to attract fresh talent.
HP Indigo 200k
Energy Crisis and Sustainability Pave the Way
The increase in energy prices and raw materials are driving cost increases not only for printers, but indirectly for customers. Implementing energy saving solutions, from solar panels and UV LED lamps to ink mixing and of course realizing the advantages of moving from flexo to digital print could have significant impact. Equally important of course is quality control and automation as it leads to waste reduction.
Running in parallel to the pressures of the energy crisis, sustainability continues to climb the consumer and industry agenda. As organizations accelerate their sustainability initiatives, converters will be looking at their business and workflow processes holistically to ensure that they're delivering end-to-end solutions with a lower environmental impact. That’s exactly why Kindler Label Service recently implemented the new HP Indigo 25K, aligning HP’s sustainable commitments and technology with its corporate DNA to deliver on its responsibility towards people and nature.
Regulation meanwhile will increasingly dictate more transparency from the industry. We can surely expect significant actions towards a more circular economy in the industry by 2025.
HP Indigo V12 Digital Press
Digital and Automation Shape the Future
While you might be thinking ‘the digitization of labelling is nothing new’, we see some sectors from the folding carton to flexible packaging are yet to be convinced to start. Digitalization is a way to optimize an entire production floor and ultimately a way to be more effective and more profitable. It’s in this context that digitalization, standardization and automation of processes are getting higher on agendas across all company sizes. Saskia Reißner, at Werbeideen und Etikettendruckerei Reissner GmbH underlines that “with the HP Indigo 6K, we are now taking the next step and will be able to benefit from even more automation options in the future and further expand our product portfolio”.
We’re already seeing that from our customers such as Enplater who recently installed the HP Indigo 200K. Chief Operating Officer Marti Alaball highlighted how impressed the company is to see that small improvements across the board have made a dramatic difference in the speed, performance, stability and reliability of the new press”.
Over the next year we’ll increasingly see converters create connectivity between their systems and automate their processes with cloud-based solutions and improve productivity through data analysis and AI. But digital isn’t going to be a rip out and replace for the industry, effective digital is not just a digital press. We’re convinced that digital technologies can intelligently complement conventional technologies, and we’ll continue to see a hybrid approach for some years to come.
Adopting the “right press for the job” will be critical. High value short runs delivered by digital presses such as the HP Indigo 6K, long runs to be produced on the new V12 and large labels and sleeves printed by wider press such as our HP Indigo 200K, Flexo used at its sweet spot - longer runs and jobs with complex converting.
One of our beta customers, Roger Gehrke Plant Manager – Trittau – All4Labels has already seen significant success with the recent implementation of the new HP Indigo V12 underlining that “the HP Indigo V12 is a game changer! We have the speed, we have the quality we have the versatility and the efficiency, that’s closing the gap to conventional printing”
We see big global brands such as Nutella, and major global brands, leveraging digital print and moving from seasonal campaigns to a worldwide strategy. Nutella has consistently leveraged HP Indigo technology and unique AI solutions for over 6 years, to initiate campaigns in more than 25 markets worldwide.
Managing growth, addressing more complex and more demanding packaging formats, overcoming environmental constraints, optimizing brand owners supply chain, implementing new regulations, attracting new talent to the industry, developing new business models like web-to-pack, and welcoming new entrants from the commercial printing world is the new packaging landscape.
After decades of growth in a stable and predictable environment, the labels & packaging industry is at a major tipping point. Market development has been, for years and decades, driven by technological developments, and we have now reached a point where the entire supply chain is at the core of future developments. Digital is moving from various niches to mainstream, changing the nature of the conversations.
At HP, we are committed to not only adding value into the printing processes, but across the entire value chain. A full digitalization journey is necessary to embrace the challenges ahead, and drupa 2024 will be a turnkey moment where automation will be a major element to watch. With partners, across inkjet and LEP printing technologies, adding intelligence to machines and processes, we will help converters to produce more effectively and sustainably.