2002 was another difficult year for the U.S. economy. Printers faced a year of disappointing sales, which translated into another challenging year for the ink industry. However, the flexo packaging ink market presented a fairly bright spot amid the economic gloom. Packaging is often thought of as being recession-proof, and overall packaging ink sales through the first three quarters of 2002 were off only slightly from 2001. According to statistics compiled by the National Association of Printing Ink Manufacturers (NAPIM), packaging ink sales were down by 1.8 percent during the first nine months of 2002, with volume decreasing by 2.7 percent. Flexo remains the dominant packaging process, particularly in label and narrow web, flexible packaging, folding carton and corrugated. Even during 2001, when flexo ink volume was down by more than 7 percent, water-based flexo’s volume rose more than 4 percent. Ink suppliers found that 2002 was, for the most part, a better year for the flexo industry. Innovative new packaging, in conjunction with growing market share in already dominant segments, have solidified flexo’s position in the marketplace. For ink manufacturers, flexo ink is a more than $1 billion business, and there are opportunities for ink companies to make further gains in the coming years. Flexo in 2002 While the flexo market was affected by the U.S. economy, many ink companies found that the impact was softened by flexo’s continued gains in the packaging field. “Everything being relative, the flexo market held its own in 2002, and fared much better than the other printing segments,” said Jim Freid, product manager, fluid inks and coatings for Wikoff Color. “Unlike a lot of offset printers, especially commercial printers, the vast majority of flexo printers survived even the worst of the economic times.” Flexo ink on press. (Photo courtesy of Akzo Nobel Inks) “In the U.S., flexographic printing has continued to gain share in the packaging industry,” said Chris Parrilli, vice president, packaging and branch operations, Sun Chemical Ink (GPI). “Overall, packaging grew slightly in 2002, and it appears that use of flexo increased, too. Many converters find that the costs of flexo package printing are lower, while quality gains continue to drive reproduction quality closer to that of gravure or offset.” “The flexo market has grown this past year,” said Charles Sagert, INX International Ink Company’s vice president, liquid sales and marketing. “Some specific segments such as packaging have grown faster than others. In general this market grew for INX International Ink Co. in 2002.” “The flexo market, like most markets, was affected in 2002,” said Mike Impastato, Flint Ink’s vice president, market development, packaging inks. “The general economy has been soft and growth has been flat to slightly negative in some parts of the market. Flexo has been more successful during this downturn due to its inherent efficiencies compared to other printing applications. When the economy slows down, run lengths decrease. This favors flexo.” Kent Shah, Color Converting Industries’ (CCI) vice president of technology, said his company found that sales for UV and solvent-based flexo were particularly strong. “Flexo printing had overall good gains in 2002,” said Mr. Shah. “Respectively, the ink sales also made some sizable gains in comparison to other categories of inks. The solvent-based and UV flexo ink market has grown more than the water-based inks. This may be related to switching narrow web label inks to UV and replacing film for paper on wide web where the water-based inks have been used. CCI has shown double-digit gains in flexo ink sales for 2002.” Deanna Whelan, marketing manager for Akzo Nobel Inks, said that UV and water-based flexo were strong areas for her company. “Akzo Nobel Inks has seen substantial market growth in UV flexo,” said Ms. Whelan. “Water-based film inks also showed considerable growth in 2002.” UV Flexo As both Mr. Shah and Ms. Whelan noted, UV flexo was another growth spot for flexo ink manufacturers. In particular, Ms. Whelan said that UV flexo is now gaining in the narrow web and folding carton markets. “UV flexo has proven itself in the marketplace and is showing organic growth as the new definitive choice for printers,” Ms. Whelan said. “Now we see UV flexo moving into more narrow web applications, such as folding carton and packaging applications. “As the industry begins to become more flexo-savvy, printers are pushing the limits of flexographic printing,” Ms. Whelan said. “The question, ‘What can we accomplish with UV flexo?’ will be replaced by ‘What can’t we accomplish with UV flexo?’” Mr. Parrilli said that certain segments of UV flexo are growing at rates that exceed the overall growth rate of the packaging market. The narrow web label market is a prime example, with estimates of its growth pegged at about 4 percent to 5 percent each year. He added that UV flexo on medium- and wide-web presses is growing, but not as quickly. “Due to the inherent durability UV technology offers packaging products, UV flexo has certainly found its place and will continue to grow in the market place,” Mr. Sagert said. Still, UV flexo inks are more expensive than conventional flexo inks, which will always be a limiting factor for the segment. “Although UV flexo continues to grow, the rate of growth is not as high as it has been in the last several years,” said Mr. Impastato. “UV flexo provides some unique properties, and where these properties are beneficial, UV will continue its penetration of the flexo market. There are, however, numerous segments of the flexo market that are not suitable for UV flexo. These are typically due to cost, processing concerns or compatibility.” Mr. Freid believes that UV flexo will continue to make gains at the expense of the other processes. “UV flexo is gaining market share with the advances in formulations for plastics, films and foil,” Mr. Freid said. “Some of this is actually at the expense of water-based flexo, especially in areas requiring certain attributes, such as chemical or soap resistance. But most of the gains continue to be at the expense of gravure and offset lithography.” Outside of North America, Flexo is Slowly Making Gains Flexography has had its strongest gains in North America, but that growth has yet to be replicated worldwide. Still, there are positive developments throughout the world. “Market demand is increasing globally and flexo continues to make inroads,” said Deanna Whalen, marketing manager for Akzo Nobel Inks. “Akzo Nobel Inks recently opened a new facility in China, and there is a growing demand for high quality flexo inks in this region. Another growing region is Latin America; Akzo Nobel Inks currently has distributors, with growing operations, in Chile, Costa Rica, Colombia, Venezuela and Mexico.” The Asia Pacific region is of particular interest to ink companies, as printing is growing rapidly in the area. Whether flexo can capture a sizable share of the packaging market remains to be seen. “In 2002 the flexo market has shown a modest growth of approximately 3 percent to 4 percent and continues to gain market against gravure and some litho areas,” said Angelo Spano, marketing manager, Flint Ink Asia/Pacific. “UV flexo continues to be the biggest growth market in both labels and some specialty packaging areas such as shrink sleeves. There has also been an increase in the use of UV OPV in the wide web carton market.” Mr. Spano attributed that growth to the shorter run lengths in the region. “As run lengths are generally quite short in the Asia Pacific region, with the exception of Asia, flexo is a lower-cost alternative that has been delivering improved graphics,” Mr. Spano said. “There has been some move on the litho market, particularly folding cartons such as cereal packaging and some micro and ‘e’ flute applications. Flexo has definitely been one segment that continues to fare better than the other segments locally, which I believe is mainly due to cost, flexibility of work able to be printed and converted and potential environmental impact of a ‘smaller’ package that will ultimately end up in landfill.” Still, gravure remains the most widely utilized printing process for packaging. “Asia is a fast developing packaging market but is still mainly gravure-focused due to historical reasons, cost of solvents and the types of ink used,” Mr. Spano said. “As environmental pressures increase on solvent emissions, I believe that we will see an increase in flexo type ink and applications.” “Flexography does not enjoy the same growth and dominance outside the U.S,” said Chris Parrilli, vice president, packaging and branch operations, Sun Chemical Ink (GPI). “In Japan, for instance, flexo is not growing the way it is in the U.S. There, gravure printing dominates package printing and it is expected to grow at 2 percent to 5 percent a year through 2005, according to industry estimates. The possible reasons might be quality demands and longer press runs designed for a more homogeneous audience.” – David Savastano Making Gains Against Offset, Gravure The growth of the flexo ink market has been sizable. In 1996, NAPIM reported that sales of flexo inks were approximately $831 million. By 2001, flexo ink sales broke the $1 billion mark, a more than 20 percent gain in sales. By contrast, during the same period, gravure’s sales have increased from $530 million to $630 million, and litho sales have declined from $2.04 billion to $1.84 billion. Flexo ink sales are virtually all in the more than $2 billion packaging ink segment. According to NAPIM, water-based flexo controls 42 percent of the packaging ink market and solvent-based flexo another 22 percent. Solvent-based gravure has the next largest share, at 12 percent. Ink makers believe that flexo’s share is growing relative to gravure and offset. Mr. Freid said that flexo has “absolutely” been making gains at the expense of offset and gravure. “The largest carton producers have either added or will add flexo capacity as their business grows,” Mr. Freid said. “The addition of flexo print capacity is far less capital intensive than gravure or offset.” “In the past several years there was a definite trend for switching many applications from offset and gravure to flexo,” Mr. Shah said. “We feel that such trends have become slower to stabilize.” “The gain of flexo in the traditional gravure and offset markets is slowing down,” said Mr. Impastato. “It appears the various processes are finding their niches and the market is stabilizing to some extent. But, flexo will continue to gain some level of share against both gravure and offset based upon the economics and graphic expectations of individual markets.” Growth Areas for Flexo Flexo continues to grow in the packaging field, primarily due to gains being made in established segments and development of products such as flexible packaging and shrink sleeves. That innovation is providing flexo ink suppliers with excellent opportunities. “Both the label and narrow-web carton (less than 25-inch width) continue to show good growth, especially shrink-sleeve and in-mold labeling applications, and thermal inks (indirect, direct and thermal transfer),” Mr. Freid said. “Growth areas that show promise are UV flexo applications for tags and labels, and also for narrow web packaging applications and shrink sleeve,” Ms. Whelan said. “Converters have shown an increased interest in combination printing applications and alternative methods for achieving special effects in print, such as cold foiling.” Proofing a flexo run. (Photo courtesy of Sun Chemical) “We see that the packaging market is not only growing but continually bringing innovative products in the market,” Mr. Shah said. “Complementing these innovations, ink suppliers have been enjoying the growth and sustainability. In packaging, we foresee three major trends in the U.S. market that we believe will bring explosive growth for the ink suppliers in 2003 and beyond: retort pouches, stand-up pouches and the shrink sleeve label market.” Mr. Shah said that retort pouches have been well utilized in the Pacific region and Europe for quite some time, and the U.S. packaging market is finally catching up and recognize the advantages of Retort or Meal Ready to Eat (MRE) beyond the military rations. “In many cases, this multi-layer packaging has started replacing cans where it exhibits better taste, convenience as well as excellent graphics,” Mr. Shah said. Stand-up pouches are another area of growth, and it has shown enormous demand in the past couple of years. “Now, the next wave is that most of the converters and packagers alike in every area are looking at this innovative way to cater their products in the stand-up pouches,” Mr. Shah said. “Most of these packages are designed with Zipper-locks, which increases demand due to consumer convenience.” The third area is the shrink sleeve label market, which Mr. Shah said is taking off on high volume bottled beverage, water and specialty drinks markets over conventional pressure-sensitive labels. “These labels are printed with dynamic graphics and take the shape of the container, which makes it much more appealing to the consumers,” Mr. Shah said. UV and EB applications present further opportunities for growth in 2003. “2002 has been another good year for UV and EB products and applications,” Mr. Shah said. “Of course, the UV inks have dominated narrow web flexo and continue to pick-up remnants of water-based inks being used on a few applications. UV inks have made very good inroads into some of the folding carton areas for printing, especially for the mid-range flexo presses. Additionally, the packaging film market presents opportunities for a potential growth during the next few years. Many printers as well as the ink suppliers have a variety of in-house projects to capture this newly defined market that has traditionally used solvent-based inks. The outdoor application for fertilizer bags is one of the best success stories in 2002 for these products to be printed on films on the mid- to wide-web flexo applications.” Mr. Shah said that gains for UV and EB flexo for food packaging are slow. “However, the progress to print with UV/EB inks on films for food packaging is comparatively slower than non-food applications,” Mr. Shah said. “Once we overcome the fear of the odor and fully confident of government compliance for food applications, these inks will have much higher potential for growth replacing solvent based inks and adhesives.” Mr. Shah said that wide web and lamination are also good areas for growth for flexo. “Today, on the wide web, the UV/EB overprint varnishes probably contribute the largest volumes in the flexo market,” Mr. Shah said. “We also see a growing interest for using UV and EB adhesives for lamination. Many converters who currently laminate are exploring EB adhesive technologies that can help reduce processing time and waste. CCI has made a commitment to get in this high growth high tech market and have made tremendous progress considering the time we have been in this market.” Products such as shrink sleeves require new inks to meet their unique specifications, and ink manufacturers are working to meet these needs. “The high growth areas appear to be in the flexible packaging market,” said Mr. Impastato. “Shrink sleeves and extended shelf life packages are going to be the high growth areas. This is driving more and more innovation from the supplier base in the area of graphics, inks, and barrier films.” Traditional areas of strength for flexo, such as narrow web, corrugated and folding cartons and multiwall bags, remain mainstays. “It appears that much of flexo’s growth in 2003 should be in the area of flexible packaging and labels,” Mr. Parrilli said. “In areas such as paper bags and multiwall sacks, flexography already is used in 95 percent of the printing, while it enjoys about 75 percent of the printing for corrugated packaging.” “Clearly in packaging, paper and flexible show the most promise,” said Mr. Sagert. “As was the case in 2002, paper and flexible packaging continues to be the segment in the flexo marketplace that is growing in terms of volume. One visit to the grocery store will support this finding. Packaging designs seem to change on a weekly basis.” New Products To meet the demands of flexo converters, ink companies have been working on a variety of new products. “CCI has made tremendous progress in bringing innovative products to the market,” Mr. Shah said. “In 2002 we were very successful in bringing Sealtech, our versatile laminating inks for flexo and gravure market. The metallic inks and glow in the dark inks are gaining popularity for some of the specialty applications. For 2003, we have a heavy focus on the development of innovative UV/EB coatings and adhesives.” In 2002, Sun Chemical introduced its proprietary WetFlex EC, a new flexographic process that utilizes UniQure inks, Sun Chemical’s line of wet-trapping UV and EB inks for flexo printing on CI presses without interstation drying. “This pioneering system has created a lot of excitement in the market,” Mr. Parrilli said. “We are working with press manufacturers to design systems where printers can take full advantage of its cost-saving qualities and its environmental advantages. We’re optimistic that this new process will be an exciting commercial opportunity for flexo printers in 2003.” “INX’s low viscosity UV flexo product, Flexo Lamiall NS II, is meeting the needs of film converters utilizing the solvent-less adhesive lamination process,” Mr. Sagert said. “We launched a number of new products over the last year or so that have been met with a high level of customer enthusiasm,” Mr. Impastato said. “Our new UV and EB products are running well and have filled a specific need in the market. And our line of high strength inks have provided printers with the opportunity to print finer screens without compromising color and density.” “We have had quite some success with our Arrowflex inks for printing on corona treated polyesters,” said Angelo Spano, marketing manager, Flint Ink Asia/Pacific. “The benefit of the Arrowflex system has also been the ability to use the one ink system across a very wide range of substrates including some coated films. Besides this new development, we have had significant success with our process ink series, Sabre, Novatone and Traction.” Examining a flexo roll. (Photo courtesy of Sun Chemical) Ms. Whelan said that Akzo Nobel Inks has several new offerings in UV flexo, such as Flex-Onic for shrink sleeve applications and indirect packaging; CombiScreen, the first all silicone-free system, specifically designed for combination printing; and Flexocure Gemini, a new low odor UV flexo ink system. Improved raw materials are also helping ink manufacturers develop new products. “UV raw material suppliers are finally taking the UV flexo ink market more serious, and their efforts have helped put more formulating tools into the hands of our ink chemists,” Mr. Freid said. “This has enabled us to continue to make continuous improvements to our Photoflex ink system and associated manufacturing processes. Wikoff also successfully introduced Hi-Fi, a high strength series of water flexo inks that includes a 6-color process set.” Working with Customers Ink company leaders agree that it is absolutely essential to work closely with customers to best serve their needs. “We maintain close contact with our customers in order to understand their requirements, changes in these requirements and any new demands by their customers,” Mr. Freid said. “Based on this information, Wikoff firmly believes in being proactive in developing new products in anticipation of our customers’ needs and providing strong sales and service support, and customer training that will enable them to help themselves resolve minor day-to-day issues that can have a substantial impact on their production efficiency.” “The key is to understand your customer’s environment,” Mr. Impastato said. “At Flint Ink, we understand our customers’ operations and processes, as well as understanding the requirements of the packaging buyer. With this understanding, we can ensure the products we develop run well in our customers’ operations and provide the performance demanded by the packaging buyer. The secret of innovation is being able to understand how your product can positively impact the rest of the supply chain. We take this holistic view to dealing with our customers and their business.” “Any customer’s first and foremost need is product performance at competitive prices,” Mr. Shah said. “Once we start selling a product, a customer has a heavy reliance on our point of use services and technical assistance. CCI thrives and excels in these areas and will continue to improve.” “Our customers are willing to work together with us on new designs they need to print, new films they are considering printing or in some instances directions they are wishing to take and what we can offer them,” Mr. Spano said. Ink companies also emphasize training in order to better serve their customers. “By increasing the training and technological level of all of our employees at INX International Ink Co. we will be in a position to better serve and help implement process improvement changes at specific customer locations,” Mr. Sagert said. “We have found that in addition to supplying ink, an added advantage that we offer is our technical support either at the press or via a technical meeting forum,” Mr. Spano said. “The market needs an ink supplier who can provide them with unmatched service, solutions, and support,” Ms. Whelan said. “Akzo Nobel Inks will be addressing these needs through specific programs and through continued and focused support to our customers.” Creating new products is also essential. Mr. Parrilli said Sun Chemical takes a two-pronged approach to meeting increasing customer requirements for inks. “First, we look for the incremental improvements we can make to a formulation that meet specific customer needs,” Mr. Parrilli said. “At the same time, we continue to seek breakthrough changes in such areas as resins that could result in vastly improved printing on a variety of substrates.” “Akzo Nobel Inks understands market demands for stronger, high performance inks with unmatched quality; all inks are developed with converters’ needs in mind,” Ms. Whelan said. “We plan to keep improving upon a wide product portfolio with inks to meet all application needs.” Outlook for Flexo in 2003 Flexo continues to move forward due in large part to innovative products and smaller press runs. These gains are likely to continue in the future. As ink manufacturers look ahead to 2003 and beyond, developing innovative products to meet these needs and providing the service that converters require will be essential to succeeding in the marketplace. Flexo Process Makes Gains Leaders in the flexo industry point to the fact that there is an almost unprecedented cooperation between suppliers and converters to improve the process. There is a working relationship between equipment and anilox manufacturers, ink and chemical suppliers and flexo printers to develop new technologies to help flexo compete against other processes. That collaboration has been a successful one. In the past decade alone, flexo has surpassed gravure and offset in major segments of the packaging markets. While initially flexo's main benefit was being much quicker and less expensive than the other processes, the quality of flexo printing is now practically the equivalent of gravure and offset. Flexo is ideal for short-run projects, and with the emphasis on Just In Time packaging and limited runs for individual markets, flexo is benefiting from the new press technologies. "As the food market continues its demand for JIT (just in time) inventory levels resulting in lower inventory levels together with quick turn-around design changes, flexo has and will continue to gain on gravure," said Charles Sagert, INX International Ink Company's vice president, liquid sales and marketing. "Prepress digital technology continues to increase the speed at which customers can have their ideas converted into reality faster than ever." Equipment producers have also made their contributions, both in terms of increased productivity and creating energy-curing equipment whose cost is less prohibitive than previously. "Equipment and material suppliers continue to make incremental improvements to their products," said Chris Parrilli, vice president, packaging and branch operations, Sun Chemical Ink (GPI). "This adds up to a significant effort from all sides to increase productivity, quality, and user friendliness of the products and processes in the pressroom. With each new improvement, flexography becomes more appealing to converters." For instance, Mr. Parrilli said that the cost of electron beam curing equipment has moderated to the point where it might be viable for more printers. Each time a printer decides to install an EB curing unit, that decision spurs further development in inks, plates or other materials used in the converting process. "The main advantages being seen in the market have been digital plates and finer aniloxes," said Angelo Spano, marketing manager, Flint Ink Asia/Pacific. "Equipment manufacturers are adding more and more one-pass options, such as a rotary screen unit, foil stamping and embossing," ," said Jim Freid, product manager, fluid inks and coatings for Wikoff Color. "Presses can be easily modified to run either water or UV flexo, sometimes with a combination on the same press. Six or seven-color process work is being used to achieve the full color depth of litho when used in conjunction with 800 to 1200 line anilox rollers." Of course, ink companies are doing their part to provide stronger inks. "Ink and equipment suppliers have worked hand in hand with converters to improve the flexo printing process," said Deanna Whelan, marketing manager for Akzo Nobel Inks. "We've created better inks, which are strong, more robust, for use with finer line/lower volume anilox. Other factors such as heat management on press, improvements in plate material and alternative printing methodologies (such as cold foiling) have also given a boost to the process." – David Savastano