the tlmi north american digital label study...
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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.
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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
18
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.
19
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
20
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
Source: LPC, Inc./TLMI North American Digital Label Study
0% 5% 10% 15% 20% 25% 30% 35%
>60% of conventional production
40-60% of conventional production
20-40% of conventional production
11-20% of conventional production
1-10% 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
21
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
following completed installation 7%
% of conventional production that migrated to first digital press 3 months
following completed installation 11%
% of conventional production that migrated to first digital press 1 year
following completed installation 15%
22
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
23
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%.
Source: LPC, Inc./TLMI North American Digital Label Study
25
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
Source: LPC, Inc./TLMI North American Digital Label Study
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)
Source: LPC, Inc./TLMI North American Digital Label Study
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
Source: LPC, Inc./TLMI North American Digital Label Study
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
Source: LPC, Inc./TLMI North American Digital Label Study
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
Source: LPC, Inc./TLMI North American Digital Label Study
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
Source: LPC, Inc./TLMI North American Digital Label Study
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
11-30% req.more than 1
pass
30-50% req.more than 1
pass
50-70% req.more than 1
pass
70-90% req.more than 1
pass
90-100% req.more than 1
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
Source: LPC, Inc./TLMI North American Digital Label Study
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.
Source: LPC, Inc./TLMI North American Digital Label Study
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%
% Brand Owners/Packaging Buyers
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
Source: LPC, Inc./TLMI North American Digital Label Study
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%
% Brand Owners/Packaging Buyers
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)
Source: LPC, Inc./TLMI North American Digital Label Study
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)
Source: LPC, Inc./TLMI North American Digital Label Study
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.
Source: LPC, Inc./TLMI North American Digital Label Study
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.
Source: LPC, Inc./TLMI North American Digital Label Study
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
Source: LPC, Inc./TLMI North American Digital Label Study
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.