Will labelling and packaging see a rethink at Drupa 2024? - The Noel D'Cunha Sunday Column

Noel D’Cunha (ND): The rapid growth during 2021 and the first half of 2022 turned into softness in some markets and a sharp decline in others. What could be the reasons? What was the impact of digital printing?
Haim Levit (HL): This decline is attributed to multiple factors, including inventory destocking, food and 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.

ND: The uncertainties of growing geopolitical tensions have thrown the question of secure and stable supply chains once again into the spotlight. What does this mean for the local labels and packaging companies?
HL: As good supply has become less trustworthy and freight costs have continually spiralled, 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.

ND: For example?
HL: In addition to transport, sourcing 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 and 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.

ND: What is driving growth for HP Indigo’s customers in India?
HL: India is thriving economy, it has a large pool of young population. While our customers are catering to the large and medium brands for their short-run requirements, launching new campaigns etc we also see a huge trend of startups in India. These startups in food, beverage, personal care, pet care, nutrition etc have been struggling to get a short quantity and high quality packaging for their products. Indigo users are able to cater to these requirements and give these startups a level playing field to launch their product line. Both the trends have been giving Indigo users a good volume for past few years and we see this trend increasing going forward.

ND: The increase in energy prices and raw materials are driving cost increases not only for printers, but indirectly for customers. How does one deal with these changes?
HL: Implementing energy-saving solutions, from solar panels and UV LED lamps to ink mixing and, of course, realising 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 parallel to the energy crisis pressures, sustainability continues to climb the consumer and industry agenda. As organisations accelerate their sustainability initiatives, converters will look at their business and workflow processes holistically to ensure that they deliver end-to-end solutions with a lower environmental impact.

HP Indigo V12 Digital Press cut

ND: Can you share any examples?
HL: 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.

ND: There’s a thought that – digitisation of labelling is nothing new, players in the folding carton and flexible packaging are not yet convinced. Is that right?
HL: I agree. Digitalisation is a way to optimise an entire production floor and, ultimately a way to be more effective and more profitable. It’s in this context that digitalisation, standardisation and automation of processes are getting higher on agendas across all company sizes.

Anil Namugade, managing director, Trigon Digital, says, “We have been servicing our customers with print and packaging solutions since 2007. With the industry evolving and growing exponentially, we required a solution to add value to our business and support the increasing demand of small and medium quantity packaging runs with no MOQ. Today, the package is the messenger, the brand and storefront, all integrated into one. With our new HP Indigo 25K, we are ready to bring the power of the digital transformation to label and flexible packaging. Furthermore, we are on a mission to transform our business, achieving the most exceptional  standard of print quality, sustainability, and quick service experience to our customers, and the installation of the HP Indigo 25K is an important step in that journey.”

ND: What’s the update on HP Indigo 200K – any installations and successes?
HL: 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 that small improvements across the board have made a dramatic difference in the speed, performance, stability and reliability of the new press”.

ND: Will we see more data and AI in labels and packaging?
HL: Over the next year, we’ll increasingly see converters create connectivity between their systems 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.  

ND: In this scenario, what’s the importance of – adopting the right press for the job?
HL: That remains a critical aspect. 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.

ND: What are your beta customers of V12 informing you?
HL: 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”.

ND: Are brands using digital printed products better?
HL: 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 six years to initiate campaigns in more than 25 markets worldwide.

HP Indigo 200K

ND: How?
HL: Managing growth, addressing more complex and more demanding packaging formats, overcoming environmental constraints, optimising 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. 

ND: After decades of growth in a stable and predictable environment, the labels and packaging industry is at a major tipping point…
HL: For years and decades, market development has been 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.

ND: How is HP helping this move? Will we see these moves at Drupa?
HL: At HP, we are committed to not only adding value to the printing processes, but across the entire value chain. A full digitalisation 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.