On the surface, the National Association of Printing Ink Manufacturers’ (NAPIM) survey of ink companies for the first half of 2003 confirms that despite the continued economic problems in the U.S., all is relatively fine in the packaging ink field. According to the survey, packaging ink sales have remained fairly steady, with the overall volume of ink sold year-to-date down 0.8 percent, and the dollar value of the inks decreasing 1.6 percent.
However, the packaging market is made up of many segments, and a closer look at the results shows dramatic differences. For example, the rapid gains being made by flexible packaging are being offset by the shift in overseas production in the corrugated market.
Ink manufacturers are seeing the same fluctuations. Sales of solvent-based flexo inks, which are strong in the flexible packaging segment, have risen 4 percent above 2002 levels, and volume has increased 3.7 percent year-to-date.
Meanwhile, water-based flexo, a mainstay of corrugators, has felt the economic effects of the loss of jobs in the U.S. The volume of water-based flexo inks are down 5.7 percent year-to-date, and sales are off 7 percent.
The packaging industry is changing rapidly, with flexible packaging making the most noticeable gains as consumer product companies find new ways to draw attention to their goods.
“The movement to film and flexible packaging continues as bags replace boxes, pouches replace cans and bottles and film labels replace paper ones,” said Joe Kelly, vice president and technical director, liquid division, paper products at INX International Ink Company.
For ink companies, meeting the demands for these unique products and developing new technologies will be the key to success in the marketplace.
|Flexible packages such as Ore-Ida’s Roasted Reds Garlic and Rosemary have the added advantage of being resealable. This package, printed by Pliant Corporation, received the Gold Award in the 2003 Flexible Packaging Achievement Awards. This eight-color flexo package was printed direct-to-plate. (Photo courtesy of the FPA).|
This is truly a growth area for printers and ink companies alike. Innovative inks, primarily flexo solvent, are ideal for use on film substrates. It is also likely that Americans will continue to select these sorts of packaging, as the freshness of a product in a pouch would appear more enticing than in a can – tuna fish, for example, comes to mind. That these packages are resealable is very much an added bonus.
“Converters are striving to meet the needs for the diversity of applications, such as printing eight or more colors on unique substrates,” said Bob Zaborowski, director, business and economic research for the Flexible Packaging Association (FPA). “Package construction continues to evolve, as does ink technology, and ink companies have become an important partner to converters.”
In particular, new technologies such as shrink sleeves, retort packages and stand-up pouches have driven growth in the flexible packaging segment.
|Shrink sleeves, such as this Pennzoil-Quaker State’s Gold Award winner in the 2003 Flexible Packaging Achievement Awards, as well as the 2003 Gravure Association of America Golden Cylinder Award for Technical Innovation, have become increasingly popular and high-tech. The above package, printed by the Sleeve Co., is a seven-color gravure label that wraps around a race car-shaped bottle. (Photo courtesy of the FPA).|
“Stand-up pouches, retort packages and shrink sleeve continue to come on strong in the packaging market,” said Bob Mullen, vice president, packaging sales, Sun Chemical. “Converters and package designers continue to develop new ways to use these types of packages, employing strong graphics to promote sales while emphasizing convenience and resealability.”
Kent Shah, chief technology officer for Color Converting Industries, discussed the wide variety of flexible packaging products that has already affected the consumer market and other ideas that are still in development.
“Several packaging trends in the global markets have been defined, such as retort, shrink bottle labels, stick packs, stand-up pouches, active packaging, security ID devices and biomonitoring systems,” said Mr. Shah. “Out of these, retort, shrink sleeve bottle labels and stand-up pouches have attained full commercial status and are forecast for rapid growth in every area of the packaging.
“The stick pack (a laminated tube) is used for dry foods (milk substitute, coffee powder) and wet foods (yogurt, lemon concentrates), as well as a single serving of small engine oil,” Mr. Shah said. “Stick pack’s convenience of use and popularity among youngsters will drive the growth. The estimated volume for such packaging is 180 million units. Packaging with an ability to control moisture, odor and gas and be an oxygen scavenger is called active packaging. Many of these packages are finding commercial success, while others are still in R&D stages.”
|This Safeway Vegetable Potstickers stand-up pouch was printed by Nordenia U.S.A., Inc., and received the Gold Award in the 2003 Flexible Packaging Achievement Awards. It was printed using gravure, and utilized six colors. (Photo courtesy of the FPA)|
“The growth of flexible packaging is impacting the traditional paperboard folding carton market,” Mr. Kelly said. “Without growth, printers appear to have slowed the movement away from offset printed cartons to flexo, but instead are utilizing the excess printing capacity they have. I expect that new press installations will trend over to flexo.”
“Flexo carton production is gaining share, but instead of new business, it’s taking that share away from more traditional offset and gravure production processes,” said Ed Dedman, market development manager, SICPA North America.
“Folding carton is holding its own with volume being flat to slightly up,” Mr. Impastato added. “Flexible packaging is still the big threat to folding cartons.”
On the packaging ink side, the corrugated business remains the largest segment. The corrugated printing business is a $23 billion industry, and accounts for a third of the inks used in the packaging market. Of this, approximately 75 percent of the inks are flexo, and are primarily water-based.
It also appears to be the area where the most significant changes will be occurring in the coming years, as the nature of the industry is evolving as a result of manufacturing moving overseas and the growth of digital technologies.
The loss of manufacturing jobs from the U.S. and Mexico to China and other overseas nations has been staggering. The National Association of Manufacturers places the job loss at two million in the past three years. As a result, manufacturers who have relocated and are looking to ship their goods are naturally packaging them close to the factory. That impacts ink consumption. In addition, the price of boxes shipped from China is so low that manufacturing companies in the U.S. can afford to maintain larger inventories, thus cutting the overall cost of transportation.
“The erosion of our customer base as manufacturing jobs move overseas is the number one challenge for all industries,” said Steve Young, president of Association of Independent Corrugated Converters (AICC), which has 717 boxmaking members and 373 supplier members. “Virtually every SIC code manufacturer uses corrugated, and as each one moves overseas, that’s one less customer for us.”
Mr. Young said that the corrugated industry will have to respond to these pressures in a number of ways.
“We have to understand the forces that are at work, and since we can’t buck economic forces, we have to become better suppliers,” Mr. Young said. “The better the printing job we do, the better the packaging. Our association and our members also have to become more politically active, and we have to let our representatives know how important manufacturing jobs are to our country.”
Ink manufacturers have seen the impact that the shift in manufacturing overseas has created on converters.
“It has been a tough year for the corrugated industry, and from my perspective, the corrugated industry is realizing that we have to differentiate ourselves in order to survive in the long term,” said David Callif, president of BCM Inks USA. “There have been losses to overseas markets, particularly China, and converters in Mexico have also been impacted. That’s why companies have to start looking at ways to provide better service, i.e. just-in-time. We’ve got to realize it is a global economy and to be aware of what’s happening everywhere, whether it’s in China, India, Africa or anywhere else.”
“There has been no growth in corrugated,” Mr. Kelly said. “There’s been a tremendous influx of manufactured goods coming in from China prepackaged in boxes not of U.S. origin. The trade deficit has impacted domestic corrugated as much as the overall slow economy. An example is the tremendous growth of low cost but high quality Australian wine sales in the states, where domestic wines had previously taken market share from European varieties and where there had been a corresponding increase in high graphics corrugated wine shipping and display boxes.”
“Corrugated has been slower than I have seen,” said George Sickinger, chairman, president and CEO of Color Resolutions International. “I have heard that a lot of companies on the West Coast lost business overseas last year. People across the board are complaining about both pricing and business being slow, and while the economy seems to have improved since the first quarter, it has yet to grab the paper and printing industries.”
The problems the U.S. corrugated market are suffering from are not likely to go away in the near future.
“The U.S. corrugated market, like other print markets, has been impacted by the economic slowdown over the last couple of years,” Mr. Impastato said. “But, while other markets may make a full recovery in better economic times, corrugated may suffer. As manufacturing moves offshore, so do the corrugated shipping containers.”
Mr. Impastato said that corrugated packaging has made gains in the fresh produce segment.
“One bright spot is the growth of corrugated in the area of fresh produce,” Mr. Impastato added. “For several years, corrugated was being replaced by reusable plastic containers (RPC). This trend appears to be reversing to some extent with projected RPCs to make up a smaller share of the produce shipper container market over the next few years and corrugated gaining share.”
Industry leaders say that in time, ink jet technology will have an impact on the corrugated market.
“Digital will have a place and will revolutionize short runs,” said Mr. Young. “There’s no question that they’ll get the speeds up.”
“Digital is coming along slowly, but it is progressing,” said Mr. Callif. “More companies are putting their toe in the water, and as they have success, ink jet will expand dramatically, as digital is profitable on short runs. UV digital may make the greatest impact, as it offers the advantage over water-based by eliminating the need to pretreat the substrates.”
Mr. Callif said that ink jet is particularly effective for mock-ups or short promotional runs.
“Digital will be an ancillary part of the print process in corrugated plants, as converters can provide mock-ups and get immediate approval, thus increasing sales,” Mr. Callif said.
While digital technologies are starting to appear in the corrugated segment, there are limitations.
“Some printers are experimenting with drop on demand printing, but the quality isn’t there yet,” Mr. Sickinger said. “The quality on piezo is impressive, but it remains slow and expensive.”
|Retort food packages, which allow consumers to heat up the food inside the package, are a growing business. Two of the most outstanding versions of these packages are the Sainsbury Rice retort stand-up pouch printed by CLP Industries Ltd., above, and the Gerber Lil’ Entrees printed by Pechiney Plastic Packaging, left, both of which received Gold Awards in the 2003 Flexible Packaging Achievement Awards. (Photos courtesy of the FPA).|
Flexo vs. Packaging Gravure
Flexo has long had the advantage of being less expensive to run than gravure or offset. As the quality of flexo has improved in recent years, it has made significant inroads in many of the packaging segments.
In 2002, NAPIM estimated that flexo inks accounted for nearly $950 million, or 67 percent of the packaging ink market, and the growth of flexible packaging is further spurring gains in flexo solvent. Water-based flexo maintains the largest share at approximately $570 million. Solvent-based flexo inks have 26 percent of the packaging ink market, with sales of approximately $365 million. Overall, flexo is likely to continue to grow in the near future.
“With the growth of flexible films, flexo printing is growing,” said Mr. Shah. “Also, the label and tag market is showing a significant growth where the preferred printing process is flexo.”
Mr. Dedman noted that flexo has been active in the “high end” label market. “There is continued slow, steady growth in ‘high end’ label applications – combination printing, increased graphics complexity, decorative features – and steady decline in ‘traditional’ general label applications,” Mr. Dedman said.
Printers are seeking even better quality from flexo, which is spurring ink manufacturers to formulate improved inks.
“The trend over the last couple of years has been toward making flexo more competitive with other printing methods,” Mr. Impastato said. “We have seen filmless plate making, finer aniloxes, higher strength inks and finer screens. All of these provide a higher quality product that is more capable of competing with litho and gravure.”
“In packaging, the use of flexo continues to grow,” said Mr. Mullen, who added that one trend in flexo-printed packaging is the use of finer aniloxes to achieve more detail in the printed product. In turn, Mr. Mullen added, this is forcing ink makers to develop inks with higher pigment strengths to maintain densities.
Much as is the case on the publication side of printing, gravure is seen as a high-quality, expensive process that works best for long-run applications. According to NAPIM, solvent-based gravure inks hold 13 percent of the packaging market, or approximately $180 million, while water-based gravure inks have a 6 percent share, or nearly $80 million.
As flexo has improved in quality, many packagers have switched from gravure, but those conversions have slowed in recent years as gravure has come down in cost.
“The focus in gravure has been mainly on cost,” Mr. Impastato said. “For years gravure has been identified as a high-quality, but high-cost, technology for short- and intermediate-length print runs. Over the last several years, gravure has focused on reducing its cost for intermediate-length runs. Now gravure is competitive in those areas.”
“Packaging gravure market has been holding pretty steady for the past year or so,” Mr. Shah said. “I believe the products that can be switched from gravure to flexo have taken place in the past few years.”
Still, companies are looking for ever-shorter runs to target specific regions or consumers, which plays against gravure.
“More than ever, gravure is relegated to long runs as flexo continues to provide the flexibility to print more consumer-specific targeted packaging,” Mr. Kelly said. “This is nothing new but merely a continuation of a trend, although some customers report that the real cost considerations of plates, cushion back, mounting and replacement on wide web are approaching the cost of gravure.”
There are certain areas where gravure excels and is not likely to be replaced.
“The gravure printing process has maintained its position for the products and demand for certain applications that cannot be reproduced by flexo,” Mr. Shah said. “A good example is printing fluorescent inks. On flexo, achieving the quality and color strength of such ink is a challenge. Therefore, most of the soap and detergent packaging requiring fluorescent inks on films as well as on folding cartons have maintained gravure as their primary printing process.”
Mr. Dedman also sees an opportunity for gravure in the label area. “There’s a growing interest in the narrow web industry in adding gravure to the print processes available for label production,” he noted.
Radiation curing is doing well in packaging and is finding increasingly new opportunities.
“Sales of energy curable products – both UV and EB – are growing steadily, and continue to slowly gain market share from water-based and solvent-based technologies,” Mr. Dedman said.
“As the capital costs of EB curing units comes down, there is increased interest in the flexible packaging market,” said Mike McGovern, director of energy curing sales and marketing, Sun Chemical. “In addition, many converters are using EB top coats over conventional packaging inks to produce ‘laminated look’ packaging.”
“We have noticed that the demand for radiation curing ink is not growing as well as the industry predicted for wide web flexo,” Mr. Shah said. “On the other hand, the overprint varnish for flexo as well as the colored inks in narrow web flexo has shown most of the growth.”
Expectations in The Coming Years
Not so long ago, retort packages, stand-up pouches and complex shrink-wrapped labels were just new ideas. Today they are success stories. All of this goes to show that the packaging market is rapidly changing, and ink manufacturers have to be prepared to meet the needs of their customers, whether it is through innovative inks for flexible packaging or helping corrugators and folding carton printers remain competitive. Those companies that can rise to their respective challenges will be the ones that will succeed.
In recent years, there has been an added emphasis on security in all walks of life, and it has become of interest in the packaging industry.
“In order to prevent terrorists contaminating the package as well as counterfeiting the brand-name products, there has been a dramatic demand in security packaging in recent years,” Mr. Shah said. “For some companies, the authentication technology is of a prime value, which otherwise, would cost dearly in counterfeiting their goods. Most packaging houses are curious in evaluating and implementing some kind of security measure for packaging their products. These security features can be built into tamper-evident substrates, watermarks, microscopic words or images and holograms as well as specialty inks. The growth potential for such security packaging is phenomenal.”
“There is a great deal of interest in security features for labels, packages and documents, but for every 10 expressions of interest, there may be only one actual sale,” Mr. Dedman said. “My personal opinion is that the end-user still doesn’t want to pay for the added cost of these features.”
New Products for Packaging
Ink companies are continuing ot work on new products for the marketplace.
|Packaging continues to hold steady despite the economy. (Photo courtesy of Sun Chemical.)|
Sun Chemical created a new flexo ink series for the corrugated market.
“There are no significant indicators of growth in the corrugated segment for 2003,” said Jim Wegemer, Sun Chemical director, paper packaging sales and marketing. He added that the corrugated market’s overall sales seem to be holding firm, and could rise if the economy rebounds strongly. He said that Sun Chemical continues to work on new ink formulations to help corrugated converters gain efficiency and quality. For instance, Sun Chemical recently launched the Advantage series of inks. Advantage is a water-based flexographic ink formulated for pH stability during long press runs of mid to mid-high level corrugated and paper bag products. This creates consistent on-press performance, while reducing the need to constantly adjust pH in order to control viscosity and print characteristics.
Flint Ink is working on a litho ink that will eliminate the need for fountain solutions.
“A very interesting new product we are developing is a litho ink that will run with only water in the fountain,” said Mr. Impastato. “This new product will allow printers to discontinue the use of fountain solution. The elimination of fountain solution has numerous advantages, some of which are lower VOC emissions and the elimination of a waste stream from the printer’s plant.”