Traditionally, when the economy has suffered downturns, the packaging ink market has been more
Royco Sauce Pouch, printed by CLP Packaging Solutions, Inc., received the Flexible Packaging Association’s 2008 Highest Achievement Award for Packaging Excellence as well as a Gold Award in Packaging Excellence. The shaped retortable pouch protects its contents with outstanding barrier properties, offers a cost-effective alternative to rigid packaging, and functions beautifully during the heating and serving process – adding to its appeal and its consumer convenience.
“We see the packaging market globally and in North America continuing to show growth, but given the current economic climate, we expect the impact on future growth rates in packaging to be affected,” said Michelle Hearn, director of marketing, Packaging, North American Inks, Sun Chemical. “Growth in the packaging market is spurred primarily in the flexible packaging market segment. However, imports are outpacing exports and because business is being moved off shore to Asia and South America, the packaging ink market in North America is relatively flat.”
“This past year has been a difficult year relative to the historical performance of the packaging market,” said Michael Impastato, vice president, business development, Packaging Division for Flint Group. “Early in 2007, there were signs of strong growth and improved performance for companies involved in packaging. And it is true that packaging is somewhat more resilient than some other printing segments. But, beginning in mid-2007 and continuing through 2008, we have seen the package printing market slow down. The unprecedented cost increases for materials has everyone concerned and the resulting slow down in the general economy has impacted the market.”
Enno Urbeinz, manager external communications, corporate communications for Siegwerk, said that Siegwerk enjoyed growth in all regions, although North America and Europe were not as strong.
In both Europe and North America the economy is weak,” Mr. Urbeinz said. “That is why the European market is difficult. Siegwerk NAFTA has managed to grow organically mainly due to very good products for packaging applications including flexible packaging, labels, tobacco, paper and board and sheetfed UV. In addition, growth has come from our continued dedication to providing a quality product coupled with outstanding point-of-use service and technical support.”
For Siegwerk, Asia and Latin America were particularly strong markets.
“We especially experienced a strong increase in UV ink systems as well as interesting and promising results with water-based in Asia,” Mr. Urbeinz said. “The flexible packaging market has also shown positive development in Asia recently. All countries in the region have seen a growth that is slightly above the country GDP.
“For Siegwerk in South America, during 2007 the flexible packaging and self adhesive labels markets were the stars,” Mr. Urbeinz added. “Both segments received relevant amount of investments in presses and additional facilities, mainly in countries like Brazil, Argentina and Chile.”
“Siegwerk’s core competence lies especially in the high end packaging segments (food, pharma and luxury packaging). Despite all negative economical impacts, we believe that these segments are less touched by overall economic ups and downs,” Mr. Urbeinz added.
Avery Dennison Security Printing Division received Best of Show honors from the 2008 Packaging & Label Gravure Association Print Quality Awards for its Forever two-sided booklet, printed 10 colors using Siegwerk C Type solvent-based inks.
"We see more and more global converters moving into Asia and South America by building a presence to support the needs of global consumer packaged goods (CPGs) companies,” she said.
Joerg-O Seeger, president of Hostmann-Steinberg USA, also noted stronger growth in Asia. “The offset printing has seen very little growth while flexo and gravure printing market continued to grow 4 to 5 percent in North America and seen much higher growth in Asia,” said Mr. Seeger.
David Callif, president of BCM Inks U.S.A. Inc., a specialist in the corrugated market, focusing on high graphics packaging and POP displays, noted that BCM Inks has enjoyed growth this year, driven by such environmentally friendly products as its Eekoflex inks and varnishes. These inks and varnishes are made from paper residue.
“In terms of the packaging market, North America has been extremely challenging, while in Latin America, we are seeing our business improve,” said Mr. Callif.
“We have been able to grow our business by developing innovative products. You’ve always got to look at the future to see what the needs of the marketplace are, especially in terms of sustainability and green chemistries,” Mr. Callif said. “We’ve been going in that direction since day one, when we first modeled our plant, and we have continued to improve over the years. We were the only ink company invited to participate at Wal-Mart’s Sustainability Expo.”
Impact of Raw Materials
The dramatically higher costs of raw materials, which ink companies can no longer completely cover, are
Pulsate, printed by Gilbreth Packaging, received top honors in PLGA’s 2008 Print Quality Awards for the Heat Shrinkable, More Than 13% category. Pulsate was printed with 6 colors on PETG. The judges noted that the metallics are bright and the silver printing came out extremely well , which is not easy to print.
“Like our competitors, we are facing problems with rising prices for raw material which eventually ended up in a price increase during the second half of this year,” Mr. Urbeinz said.
“The continuous increase of raw material costs over the last couple of years has placed a tremendous strain on both the business and customer relationships,” Mr. Impastato said. “Over the last couple of years we have seen costs increase more than any time in recent history. Historically we have seen raw material costs go down more than they have gone up. When we have seen costs increase, the increase was single-digit increases. We were generally able to minimize the impact by reformulating our products, or find alternative materials.
“This hasn’t been the case with the increases we have seen in the last couple of years,” Mr. Impastato added. “First of all, there had been a ramp-up of cost prior to the major increases we have seen. During this ramp-up of costs, most ink companies absorbed these increases rather than pass them to their customers. So, when the major increases started coming through, there was no choice but to pass on price increases. But, even with price increases it has been difficult. Typically the industry does not move quickly and the delays in implementing pricing changes in the face of double-digit cost increases can generate challenges. Of course these resulting price increases puts pressure on your relationships with customers.”
“The current economic situation, coupled with tight raw material supply, has affected everyone – printer, supplier, end-use consumer – both at work and home,” added Susan Kuchta, vice president/general manager of Flint Group’s North American Packaging Inks Division. “Unfortunately, there is no significant change in sight. We do our best to optimize every process, policy and supplier contract, but Flint Group, like all industry suppliers, is not immune from the market conditions. We do our best to help customers plan for, and deal with, the economic realities of this time.”
“Like our competitors, we are facing problems with rising prices for raw material which eventually ended up in a price increase during the second half of this year,” Mr. Urbeinz noted.
Mr. Seeger said that printers are doing what they can to make ends meet, most notably by trying to improve productivity.
“This market is seeing higher productivity as the means of counterbalancing the cost increase in the raw materials,” Mr. Seeger said. “High speed presses require improved inks for productivity. In addition, competition in consumer marketing is leading to some changes in packaging design – more UV printing will be seen in the future.”
Mr. Callif said that with Eekoflex, BCM Inks is creating an ecologically friendly product using after-products of the pulp making process, which is really a different approach.
Hershey’s Bliss-Dark Chocolate Bliss, printed by Bemis Flexible Packaging, received top honors in the Film/Film Lamination-Process category in the 2008 PLGA Print Quality Awards. This package is printed in 8-colors with registered white with three ply in-line adhesive lamination consisting of OPP/Ink/Adhesive/Metalized OPP/ Adhesive/PE using solvent-based inks and solvent-based and water-based adhesive.
There are particular niches in packaging that are enjoying excellent growth.
Mr. Impastato noted that shrink sleeves continue to outpace other segments for growth, but the rate of growth for shrink sleeves has tapered off over this last year.
“This was not unexpected since this technology is beginning to mature and all the early adopters have already converted their products to shrink sleeves,” Mr. Impastato said. “But shrink sleeve offers a unique look and capability, which will continue to support higher than average growth over the upcoming years.
“Another area of higher growth is ‘stick packs,’” Mr. Impastato added. “We have seen a broader use for this package type during this last year. It represents an easy-to-use package which is very economical. I think we will see stick packs growing in use as a wider variety of products see its advantages.”
Mr. Impastato said he has not seen any significant shift in market share between the various package printing application methods.
“Flexo continuous to dominate the package printing market, but sheetfed dominates the folding carton portion,” Mr. Impastato noted. “Gravure has a solid hold on a minority part of the market, mostly in flexible packaging, and will likely hold its share because gravure offers unique capabilities which can not be duplicated by other print methods.”
Mr. Urbeinz said that significant gains were mostly made in the sleeve technology for flexo and in-mould labels. “Water-based technology has also shown promising results in gravure for tobacco market and we still have great success in flexo,” he added. “By working together, all graphic arts partners have proven that flexo can be competitive in cost and quality vs. all other technologies.”
Ms. Hearn noted that Sun Chemical has seen its greatest growth in the flexible packaging segment and some growth in the corrugated segment.
“The paper and board and corrugated segments will also experience some growth,” Ms. Hearn said. “We expect increased sales in the flexible, paper and board, and corrugated segments will come at the expense of rigid plastic and metal packaging. Despite flat or limited growth in the overall packaging ink segment, we believe innovation and Sun Chemical’s global presence position us well to serve these customers and generate solid growth.”
Ms. Hearn said there are several exciting growth areas for the coming years.
“We see continued opportunities in the flexible packaging market,” Ms. Hearn said. “We also see the need for introducing new technologies that offers the converter improved productivity. The benefits seen in cure time coupled with the improved runnability with energy curable (EC) inks, specifically electron-beam cured inks, place these inks in the opportunity window.
“Offering the converter the ability to improve its color matching capabilities with new tools is another
SleeveCo, Inc.’s Noble 100% Pure Tangerine Cranberry received top honors from the PLGA in the Composite Substrate division. This is printed 8-colors printed on a PLA substrate (corn-based film). The judges commented that this was a nice bright sample reflecting the orange in the tangerine in contrast with the red in the cranberries.
drupa 2008 gave attendees a glimpse into that future.
Ms. Hearn noted that digital inkjet developments were one of the key themes at drupa this year. Ms. Hearn noted that in addition to digital technology, brand protection products for converters and brand owners had a strong presence at drupa this year. For brand owners and suppliers, counterfeiting is on the top of their minds, and at drupa attendees saw security products ranging from relatively low-cost entry-level features to very high-level proprietary technologies.
Mr. Impastato noted that drupa showcased some interesting new technologies for packaging.
“In general, two areas caught my attention,” Mr. Impastato said. “The first was the improvements the wide web flexo press manufacturers have made in the speed of change-overs and the reduction in waste. The new technologies and processes being put into place allow extremely fast job change-overs while minimizing waste to levels we never thought possible just a few years ago.
“The second area was the increasing use of mid-web size presses for packaging,” Mr. Impastato added. “In the past, most packaging was printed on wide web presses. The industry was interested in printing three or four images wide to increase the through-put of the press. Now we are seeing presses which have been designed to print one wide. These presses are designed to fill a niche in the market for short run jobs. As personalization increases and product modifications (flavor, color, etc.) increase, shorter runs become more demanded. These mid-web presses may fill an important role in future package printing.”
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