Package Printing and Converting Report

Prepared for PMMIJuly 2009

Regis J. Delmontagne

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INTRODUCTION

This Report will explore the case to be made for including a large number of package printing and converting manufacturers in existing PMMI exhibitions. While there has been a limited number of products for package printing equipment and systems and converting type products in past and current events, there may be a need for more of those products in future exhibitions because of numerous factors. They would include the need for digital package printing equipment to be used in test marketing of products, personalization and individualization of packaged goods, and for anti counterfeiting purposes. Another factor is the cloudy economic climate in general, and trade shows in particular that could lead to the establishment of Pack Expo becoming even more fully representative of the industry.

A secondary issue is whether PMMI exhibitions can attract a sufficient number of exhibitors which manufacture these products. Respondents clearly indicated that sufficient dissatisfaction exists as to where package printing and converting equipment manufacturers can best display their offerings to the market. There was almost unanimous belief that CMM was held for the last time this year, many felt that the CPP pavilion with PACK EXPO did not fill the void, the PRINT exhibitions, while featuring package printing and converting products, basically attract commercial printers not known for being major providers of labels, printed packages, etc, was not the answer. INFOFLEX, produced by the Flexographic Technical Association, while pointed in the right direction, was known primarily for its education sessions, and not for its exhibitors’ display of equipment or technology. Finally, interesting enough, only a few respondents mentioned the every other year event, LABEL EXPO.

Therefore, a legitimate question can be raised about PMMI’s ability to attract exhibitors of package printing equipment, especially those manufacturing digital products, as well as converting products, i.e. folding box and carton products, die cutters and software systems. The second biggest question is whether or not PMMI can attract the attendees who can make the buying decision for these mentioned products and systems.These issues will be discussed further in the Report.

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METHODOLOGY

Respondents to both e mail questionnaires and phone interviews included editors of packaging and graphic arts magazines, on line news magazines, commercial printers, consultants and manufacturers of package printing equipment and systems, both traditional and digital.

Contacts were asked several questions such as: future growth of package printing, the impact of digital printing presses on package printing, impact of the new technologies and their usage in the packaging market.

They were asked for their opinion as to which current exhibitions featuring package printing equipment and systems, as well as converting products met their needs as both exhibitors as well as attendees.

The respondents were quite candid in their remarks and, as expected, the manufacturers were quite reluctant to discuss their future marketing plans but some indicated they would make various announcements at the PRINT exhibition scheduled for Chicago, September 11-16, 2009

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SUMMARY OF RESPONDENT’S COMMENTS

The one word that almost every respondent chanted in unison was GROWTH when discussing package printing. All indicated that around the world packaging, in general, was growing and specifically the need for quality printing methods for packaging was headed upwards.

Depending upon the audience, while individual companies’ responses reflected their company’s business, package printing was viewed as a growth business compared to the printing business, which is in decline. Therefore, a traditional provider of offset printing presses, such as Heidelberg, looked at growth opportunities in the packaging business to neutralize the losses in their previous dominant position in the graphic business. Heidelberg does not manufacture digital printing equipment which minimizes their position in the package printing market but does allow them to compete for the finishing equipment utilized in the process

This company, for example, exhibited finishing equipment at the most recent INTERPAK exhibition, will stress for the first time its offerings for the packaging market at PRINT 09 and will exhibit for the first time in LABEL EXPO.

Other traditional suppliers to the printing industry, such as Kodak, are planning a major initiative for the packaging industry and are presently planning to make this announcement at PRINT 09. As a supplier of digital printing equipment they believe the time is right to focus more attention on the packaging market.

Both Heidelberg and Kodak, both long time suppliers to the printing business are looking at the packaging market to replace their losses in the traditional commercial market. Many other companies are following suit as a visit to the PRINT exhibition will clearly demonstrate.

Some other companies, mostly in the digital arena, have made some inroads in the package printing market and will be featuring those products along with those intended for the commercial market. These companies believe this is the time to fully demonstrate those products albeit to mostly a

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commercial printing audience. This fact points out the dilemma manufacturers face when trying to reach the market for their package printing products which go far astride the commercial printing market. More about this situation further on in the Report.

These providers include companies such as EFI-Jetrion, Xerox, EskoArtwork, Xeikon, and most definitely, HP Indigo. The latter company has been featuring its press designed for package printing around the world and is the unquestioned leader in that regard. The company had a good reception for this press at the recent CHINAPRINT this past May. There are many other companies, some digital, others traditional suppliers, seeking to do more business in the package printing market and represent a nucleus for a stronger presence in PMMI exhibitions. Companies such as Canon and Oce can not be ruled out as future providers of digital equipment for the packaging market

Why the sudden interest in digital printing. First of all, it eliminates many of the products and systems used in the traditional printing process; faster make ready time, the ability to personalize each and every product, and quality comparable to offset and flexo. It’s unlikely that digital will replace other processes such as offset, flexo and gravure because of their ability to produce huge quantities of high quality products at a reasonable cost. But their inability to produce short runs economically, and individualization, basically keep them out of those markets and that’s the niche the digital printing suppliers aim to fill. A digital press can produce 1, 100 or 1000 copies of a quality label; for example, changing colors, size and personalizing it while running, something another type of press can’t do at all and at a reasonable cost. According to some respondents, the biggest opportunity for digital press manufacturers is to print secure labels for high end luxury products such as wine and clothing. Their ability to print micro lines and utilize UV technology are ideal for anti-counterfeiting purposes according to one editor.

Between the traditional suppliers and the digital providers, there are a considerable number of companies seeking to enlarge their overall business by making serious attempts to serve the packaging industry.

Companies manufacturing converted products such as Bobst, Brandtjen and Kluge for foil stamping presses, Prime UV which manufacturers UV equipment, du Pont and its flexo plate making equipment are prime targets.

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Gravure press and offset press manufacturers are also important providers to the packaging industry.

EXHIBITIONS

If one were to ask 10 exhibitors in any exhibition in any industry if the show they recently participated in was a success, you may get as many as l0 different answers. Of course, the answers will depend upon the results and they may vary all over the lot. Some will say excellent, some might say it met expectations and others will say “time will tell”.

The question of which show best serves the overall interests of the package printing industry met with a more unified answer: None!

Comments ranged from: “CMM is dead…once and for all.”, “CPP is not a show but just a pavilion.” and, PRINT/GRAPH EXPO while good for commercial printers, “doesn’t attract the packaging and converting markets.”

According to the respondents all of the previously mentioned exhibitions were, in some way, good for the market, and at the same time did not deliver the critical mass required to establish them as “must exhibit…must attend”events.

What were the reasons cited? First of all, there was general agreement that at one time CMM was the show for converting and flexo printing. Today, that event was probably held for the last time in Chicago or elsewhere. CPP, while it attracted some new companies to the overall presentation offered by PACK EXPO, lacked the major suppliers to the converting and package printing businesses. PRINT is the largest exhibition for commercial printers, some of whom do package printing. The exhibitors of which many offer products for the converting and package printing sectors generally do not feature those products in their booths. These shows do offer a converting/package printing area but many companies which serve that market also are major suppliers to the commercial printing market so they have to make a difficult choice: display your packaging/converting products alongside commercial offerings or take another booth which will exclusively feature their packaging/converting products.

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Splitting a company’s presence at any exhibition poses difficult questions as to staffing and costs. For example at this year’s PRINT exhibition, major companies such as HP Indigo, Xerox, Xeikon, EFI-Jetrion, EskoArtwork will not have a booth in the PackPrint area but on the main floor. These companies will then have to display package printing equipment alongside those intended for the commercial market. This is not ideal for those attendees who have a major focus on products for the packaging market.

Another event mentioned was INFOFLEX, organized by the Flexographic Technical Association, and, it too, was cited as an event pointed in the right direction but for many reasons, failed to excite the industry. First of all, the exhibits have a size constraint, virtually no running equipment and the audience, too small, about 1000, includes many vendors. Further, the attendees spend most of their time at the technical sessions and time on the exhibit floor is limited.

Conclusion, at least among the editors, consultants, manufacturers and printers, is that there is a need for an exhibition which focuses on package printing and converting. Most stated that PACK EXPO would be the logical venue because of its long standing reputation in the U.S. and abroad, as the major packaging event held in this country. It was also noted that before the advent of the CMM show, converting was an important element of PACK EXPO.

A conclusion such as above does not immediately translate into a groundswell of support from manufacturers and attendees into inaugurating a new element into PACK EXPO. But, it does raise the question of organizing a more focused and widespread research project which would attempt to formalize a recommendation to PMMI’s Board and staff. I am not suggesting this approach with the thought of my conducting this program; an experienced individual or company would be better poised to undertake a study of this nature because of its wide implications.

I will however suggest in the next section some steps that PMMI staff could consider undertaking during the next several months to compile more information which might assist them in formalizing their presentation to the Board.

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RECOMMENDATIONS FOR ACTION

Suggest staff look into an opportunity to have gravure and flexo equipment manufacturers exhibit in Pack Expo. Gravure’s ability to print high impact graphics, color pictorial images and fine text copy are ideal for mainstream and upscale products. While offset and flexo are widely used for many products, gravure is chosen for many products in flexible packaging, from home and personal care items to beverages, packaged foods and tobacco. Some discussions with the Gravure Association of America and the Flexographic Technical Association should be undertaken to determine their interest in encouraging their members to exhibit. Both associations are headquartered in the U.S. with a large number of foreign members; both manufacturers as well as packaging companies and individuals.

While mentioning foreign companies, PMMI might consider exploring discussions with Chinese manufacturers of packaging and package printing equipment. Some of them will exhibit in PRINT and those which are absent could be contacted by PMMI’s Chinese representative.

Since the gravure and flexo manufacturing industry is significantly represented by foreign companies, additional groups to be contacted for support include both the Italian and German trade associations for the packaging and converting industries. These types of companies are not participating in large numbers at the upcoming PRINT exhibition.

Additionally, suggest PMMI staff attend PRINT and talk to companies, list attached to this Report, to discuss their thoughts about a focused event for the package printing and converting market. Point out that according to some data on the packaging industry, flexible packaging in the U. S. is estimated to be about $25.6 billion, two-thirds of which encompasses printed products. About 15% of that printing is done by gravure, and the balance is shared predominantly by flexo and offset. In addition to contacting companies, PMMI might consider having one of its staff members attend the several Technical Conference sessions dealing with package printing.

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I would recommend PMMI purchasing a market research study being produced by PRIMIR which is focused on the package printing market. Another study in this area is being produced by the firm INFOTRENDS.Both groups are considered highly reputable and producers of solid research based on data obtained by phone interviews and written questionnaires conducted by industry experts.

After these visits to the exhibition in September, PMMI might consider hosting an informal session with the key exhibitors and basically advise them that this is an opportunity to create an event which meets their needs as well as the attendees rather than the interests of exhibition organizers.

At the same time, careful attention must be paid to attracting the maximum number of qualified attendees to this proposed event. The common complaint among the respondents was that to truly cover the package printing and converting industry, one must attend events such as PRINT, CMM (in the past), INFOFLEX, LABEL EXPO, as well as international events held in Germany and Italy. The most asked question which will be raised from the manufacturers is “how are you going to identify the prospective attendees?” Careful thought must be given before automatically answering “we know how to do it.”

The struggling economies of the U.S. and Europe, while a possible hindrance to the possibility of another event, even if co located with a successful show such as Pack Expo, could present this concept as beneficial to companies seeking to maximize their participation either as an exhibitor or attendee. One show serving the spectrum of packaging, one trip to Chicago, and lower overall expenses might sound even more promising than first envisioned. With many experts pointing out that the U.S. economy will probably not return to past performance, a well designed exhibition for exhibitors and attendees alike, could be greeted favorably.

The time is right to carefully address the issue of what will replace CMM, CPP and other events struggling to present their version of an exhibition for the package printing and converting industries. A strategic plan for addressing those questions could provide the industry with one show which is a must event to exhibit in and attend.

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SUGGESTED COMPANIES TO CONTACT

AT PRINT 09 IN CHICAGO (Not in order of priority)

Advantage MachineryAmerican International MachineryBobstBrausseBrandtjen & KlugeE C H Will GmbH

EFI-JetrionHeidelbergGarridoKBAKerberKernKodakKomoriMGI Digital Graphic TechnologyPencoPrime UV

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Sealed Air Corp.TompkinsWestern Printing MachineryWinkWinkler+Dunnebier AGXi’an Aerospace Huaying Printing and Packaging Machinery

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