Unwrapping the Digital Packaging Opportunity in Commercial Print

As commercial printers seek new revenue sources, digital printing and an influx of small brands are attracting firms to pursue labels and packaging.

Commercial printers are diversifying with packaging. The “2020 Printing Impressions Top 350” list of the largest printing companies in North America reflects this expansion into the high-growth segment, made possible by innovations in digital printing. The list includes various types of printers, but 97 companies reported offering both commercial and package printing — seven more than on the 2019 list.

A recent NAPCO Research study provides additional compelling evidence on commercial printers’ migration into packaging. “Convergence in Print: A Shift to the New Normal” surveyed around 250 commercial printers and found that a significant percentage have either added or are considering adding the following packaging applications to their product offerings:

• 40% labels
• 37% folding cartons
• 32% flexible packaging
• 29% corrugated

While commercial printers recognize the opportunity in adding packaging to the product mix, the challenge is in successfully entering the market. Each packaging segment has its own distinct technologies, challenges, and best entry points. Below is some advice for commercial printers on the industry segments and packaging applications to consider exploring.

Industries With High Demand for Packaging

Food and Beverage

The food and beverage market provides a nearly perfect confluence of attributes for commercial printers looking to move into packaging. Repeat business is sure-fire, the segment uses all four packaging formats, and there is a growing appetite for digitally printed applications.

The best entry points for commercial printers are likely to be in the rapidly growing realm of boutique, artisan, and craft brands that serve a local clientele rather than in the major brands in the space. For example, craft breweries, distilleries, and wineries remain immensely popular among consumers and are all in need of labels. One of the primary advantages of these brands to commercial printers is that they are prime candidates for digital printing — technology that most commercial printers are accustomed to and likely already have in house.

A key selling point of digital printing for these brands is its ability to provide cost-effective short runs and maintain the flexibility in design and product offerings that make small brands so appealing to consumers. Additionally, because these brands often focus on healthier, locally produced and minimally processed products, today’s health-conscious consumers are leading to an increase in demand that commercial printers can capitalize on.

According to industry research firm Smithers, demand for healthy foods and beverages, along with non-prescription medical and nutritional supplements is increasing, leading to new opportunities for packaging production.

Health and Beauty

The health and beauty segment, which has long been dominated by major conglomerate brand owners, is seeing similar shifts toward local boutique brands and personalization in products and packaging. In a September 2021 report from e-commerce agency Common Thread Collective, one of the top trends in the beauty industry is a shift to a direct-to-consumer business model.

Rather than the traditional brick-and-mortar environment, this burgeoning model leverages the power of social media, with digital ads and influencers touting these brands’ products as consumers scroll through their social feeds. By engaging consumers in the virtual space, e-commerce opportunities in health and beauty have expanded, along with high-value personalization opportunities that can only be provided via digital printing. Personalization, meanwhile, is among the top trends in the beauty industry according to market intelligence analyst CB Insights, which reports that custom printing is a key component of this trend.

In addition to the personalization and e-commerce opportunities in the health and beauty segment, local brands in need of shorter runs and less packaging inventory than their big-brand competitors make for a great entry point for commercial printers. While these brands may not be as ubiquitous as craft brewers, they are on the rise. For example, a quick search for local beauty brands can lead to a list of ten in a single metro location.

Pharmaceutical and Nutraceutical

Digital printing has proven to be a major advantage for the pharmaceutical and nutraceutical (foods and supplements that provide health and medical benefits) segments due to its security and versioning capabilities. The pharmaceutical segment utilizes a variety of labels and folding cartons in its packaging strategy, and, with digital production technologies, printers can enhance these solutions with secure elements, such as track-and-trace, serialization, and invisible ink. With counterfeiting and product diversion a major concern of brand owners in these segments, printers that can provide sophisticated security solutions will be viewed as favourable partners.

While digital packaging opportunities in pharmaceutical and nutraceutical segments are plentiful, commercial printers may want to get their feet wet in other segments before expanding into these markets. With complex regulations to navigate and sophisticated structures and closures, the entry points in pharmaceutical packaging often require expertise and experience, best gained in adjacent markets.

Identifying the Right Application Fit

Digital printing is a key catalyst for commercial printers to offer various packaging applications. While the technology evens the playing field for more providers to enter the packaging space, it is important for newcomers to target applications that complement their current capabilities and expertise.

Folding cartons and labels tend to be the best starting points for commercial printers on their packaging journeys. They tend to require less complex finishing processes than other packaging formats and can be printed on many of the same digital devices that print providers have already installed for their commercial work. However, in a bit of a Catch-22 for commercial printers, the flexible packaging and corrugated segments are experiencing significant increases in demand but remain the most challenging segments to access. For both segments, the high barriers to entry stem from the specialized equipment needed to produce these products and the comparatively limited digital printing options available.

Folding Cartons: A Popular Entry Point

• Opportunity: Folding cartons are one of the most common packaging applications for commercial printers to add to their menus. They are found across every market segment and can be utilized by existing commercial print customers. For example, customers who may want to elevate their document delivery can implement folding cartons as a high-end package for important certificates, forms, and communications. Commercial printers will also be familiar with the paperboard-based substrates used in folding carton production and can implement existing equipment to print them.
• The Digital Advantage: The growing adoption of sheetfed electrophotographic (EP) and inkjet digital presses, many of which are robust enough to process paperboard packaging substrates, gives commercial printers a tool that’s already on their shop floors to transition into packaging. The Ricoh Pro C9200 Graphic Arts Edition is an example. In addition, the availability of digital cutting and creasing systems that can efficiently finish the short print runs produced on these devices is leading to new opportunities.
• Key Considerations and Challenges: One of the benefits that adding folding carton production provides to commercial printers is the sales potential among existing and new customers. Commercial printers that produce promotional products or high-end mailings could offer customers custom folding cartons to package these items. Meanwhile, there are many new prospects with high demand for digitally printed, high-quality folding cartons, including those in the health and beauty, personal care, and nutraceutical markets. Folding carton finishing processes can be challenging for commercial printers, however. Folding and gluing cartons requires either specialized equipment or available staff to fold and glue by hand. Die cutting can lead to similar pain points.

Labels: A Market Familiar with Digital

• Opportunity: Label printing is another popular entry point into packaging for commercial printers. Of all the packaging segments, labels have seen the highest adoption of digital printing, and many digital presses currently found in commercial print are capable of printing short runs of labels. Labels are also an application found in every market segment, offering commercial printers a robust selection of prospects to showcase their label printing capabilities.
• The Digital Advantage: Labels were one of the first packaging applications to migrate from conventional presses to digital devices. An increasing number of small brands need high-quality labels, and the market segments most desirable for digital production are local artisan food and beverage, household products, and personal care items. These segments require short runs that cannot be cost-effectively printed on analog presses.
• Key Considerations and Challenges: While the label segment offers opportunities for digital printing, there are more complexities to label printing than meet the eye. There are several types of labels that brand owners implement onto their products, but the two most common styles are pressure-sensitive labels and cut-and-stack labels. Pressure-sensitive labels are like a sticker and are fixed to a surface by applying pressure to the label on the desired surface, which activates the adhesive and allows the label to stick to the product. Pressure-sensitive labels are found throughout every market segment and can be produced on both toner and inkjet devices. It’s important to keep in mind that pressure-sensitive labels are typically produced on roll-to-roll printers. Cut-and-stack labels, on the other hand, lend themselves better to sheetfed production. These labels are typically applied by wrapping the label around the desired surface — commonly a bottle or a can — and then adhering the label to itself to keep it in place. While commercial printers are likely to enter label production by printing cut-and-stack labels on digital devices, sheetfed offset presses are well suited to high-end cut-and-stack label production for customers that scale up to longer runs.

Corrugated: A Digital Segment on the Rise

• Opportunity: The corrugated segment is experiencing significant growth, largely because of the rapid rise of e-commerce. While it can be a challenging segment for commercial printers to gain traction due to the high volumes and gradual growth of digital, there are opportunities for commercial printers to explore. Many of the smaller brands discussed throughout this article are exploring e-commerce opportunities as consumer buying behavior continues to shift online. Digital equipment can provide high-graphic printing on shipping containers that these brands can use to enhance their connections with consumers when the product arrives at their doors.

• The Digital Advantage: Digital opportunities exist in the corrugated segment, many of which are accessible to commercial printers, especially those that already have wide-format printing capabilities. While much of the recent attention in digital corrugated printing has been focused on the influx of single-pass, direct-to-board inkjet presses that have hit the market, several more affordable multi-pass systems exist that commercial printers can implement with a minimal learning curve on the print side.
• Key Considerations and Challenges: Digital is still in its early days in the corrugated segment, and production-level presses tend to be costly and require a large physical footprint. Additionally, brand owners shifting to an e-commerce model are still learning about high-graphic digital printing for corrugated products, and it will take some time for their mindsets to shift from thinking about shipping containers as basic brown boxes to considering them an essential marketing tool.

Flexible Packaging: A Complex Application for Future Opportunities

• Opportunity: Flexible packaging is another segment undergoing rapid growth. Consumers and brands have come to appreciate the portable, lightweight, resealable packaging applications in this segment, and brand owners are taking notice. Most of the flexible packaging in North America is produced on wide-web central impression flexographic presses, but digital solutions are emerging, offering short-run solutions to smaller brands.
• The Digital Advantage: Digital printing is still in its early stages in flexible packaging, and only a small selection of presses is available to take on these jobs. For now, this has largely left commercial printers on the flexible packaging side-lines. But it is a segment to keep an eye on as digital press manufacturers seek to enter the space. When the technology does become as prevalent as in folding cartons and labels, commercial printers will be in a better position to enter the flexible packaging segment and offer it to a wider variety of customers.
• Key Considerations and Challenges: Specialized finishing equipment, such as laminators and form-fill-seal machines, are key components of producing a complete pouch, bag, or wrapper. This equipment is both costly and physically large, making for a difficult entry point for outsiders. Additionally, the specialized materials found in this segment include plastic films and metal foils, which have their own learning curves for newcomers.

Determining Whether Packaging Is the Right Fit

The label and packaging segment is packed with growth opportunities for commercial printers with solid market-entry strategies. Here are recommendations for getting started:

• Ask existing customers about their label and packaging needs. Is there an opportunity?
• Explore the local community. Find the small craft and artisan brand owners in the food and beverage, health and beauty, and personal care markets. Because these brand owners’ small quantities lend themselves to digital printing, commercial printers that have already made the leap into digital are well poised to capture some of this business.
• Review your current capabilities and expertise to determine the best applications to pursue. For example, folding cartons and labels may be the easiest to access due to the familiar technology and processes involved, which tend to be less complex than flexible and corrugated packaging.
• Seek assistance from vendors. While many digital presses currently in use in commercial printing can also be used for labels and packaging, there are certain factors commercial printers must consider. Which substrates can the press accommodate? Which finishing processes are required? Will the finished product be durable enough for its intended end use? Leveraging relationships with OEMs can give commercial printers a guide as they explore packaging opportunities.
• Scrutinize the business from top to bottom. With new skills and equipment needed in sales, workflow, production, and finishing, adding packaging to a commercial print operation can feel like adding on a whole new business. Take stock of the materials needed for the desired packaging applications and contact vendors. It’s important to ensure the materials needed to launch a packaging division are available, especially considering today’s supply chain issues.
• Utilize industry association resources. Membership in packaging industry associations can offer networking opportunities, exclusive industry content and analysis, and many other useful resources for printers new to packaging. TLMI in the label segment and the Paperboard Packaging Council for folding cartons are just two of the many specialized packaging associations to leverage.

For commercial printers, differentiating their businesses by offering labels and packaging can lead to significant business opportunities. These are high-growth segments that will continue to expand as digital printing becomes more common across all packaging formats and markets. With entry barriers to the lucrative packaging industry lower than ever before, the time is now for commercial printers to utilize their digital expertise and explore the potential that label, and packaging production has for their businesses.