Digital packaging company EPac is at first sight something of an odd business, not only because it is using only digital printing technology. The rapidly growing company has some of the characteristics of a private equity funded operation, reflecting the background of its founders, and it has some of the characteristics of a traditional high street franchise print chain.
It is a brand where the individual operations are at least part owned by their management teams and each is positioned to attract work from limited geographic areas. But EPac is far from a traditional franchise operation, where retired colonels, super salesmen and the entrepreneurially minded can sign up and become a printer, plumber or sign and graphics outlet.
The flexible packaging network business is not a walk up business and demands considerable expertise of those that work there, not least in the key area of lamination. Consequently EPac is very careful about who it partners with.
The partnership model does enable a rapid roll out. The first EPac opened in 2016 and by the end of last year there were 11 in operation, and more on the cusp of opening. This includes the first in the UK, an EPac in Vancouver and the first in Asia, close to Indonesia’s capital Jakarta. All are equipped with two or three HP Indigo 20000s, lamination, coating and finishing lines and are able to make stand up pouches. An initial order for 20 of the digital presses has been followed by an order for 24 more for this year. This is a company that is on the sort of growth path that private equity likes.
Jack Knott is CEO and with Virag Patel is cofounder and chief operating officer of the business. “We have watched over the years how the big global brands consolidate and push large flexible packaging producers to buy larger pieces of equipment and have been pushing smaller customers away. They can’t cope with Sku proliferation or when ingredients change,” says Knott.
Both are steeped in the flexible packaging sector and both have been deeply involved in arranging funding for mergers and acquisitions as part of Arion Partners and Coveris, for example.
The main target is the start up, often artisan companies, that offer regional foods with strong provenance in contrast to the industrialised mass production of the international food brands that deal with the equally international packaging groups. The kitchen table companies, in contrast, do not know who to turn to in order to have high quality packaging produced in the limited runs that they need. EPac is the answer.
Knott explains: “We wanted to bring that business back to the community and the way to do that was to create the EPac model of business based in the communities they serve and to supply the SME businesses in that region. In the US a lot of food is being imported from Asia or China with a lot of start up artisan businesses reacting against that by producing locally. We help them.”
The choice these snack, nutritional and health food companies faced has been either order in the sort of cash absorbing quantities that larger businesses demand, or apply labels to plain packaging. Alternately, they might buy from smaller poorly equipped providers which cannot provide the quality that digital printing can.
“Professional looking packaging can transform the way a business is seen,” says Knott, relating how one snack food producer experienced a tenfold sales growth in five months once it switched to well designed packaging and found its product positioned alongside the giants of the sector in vending machines at Miami airport. Without high quality packaging this could not have happened and the producer’s growth path would have been much slower.
And there are hundreds of companies like this dotted across the US and beyond. The UK, for example, shares in the same shifts that have nurtured start up food businesses in the US as a reaction against the industrialisation of food. Farmers markets can be found in almost every town. And more and more retailers are allocating shelf space in their supermarkets for local brands. What started with beer has flooded across all sectors of the food spectrum.
The strategy is to have EPac operations serving these local producers in the same way that high street print franchises serve a purely local market. Being sited in the same area encourages trust and enables the sales staff to build relationships with their clients. It is also about returning something to these communities, Knott points out, in the way of good quality jobs, working with schools to encourage youngsters to train in the industry. “Being in the community helps create the trust in the relationship,” says Knott.
It is working. Not only are there 11 sites and counting, the group can count on close to 6,000 active customers. It reckons on 300 employees across the operations.
Employees will not necessarily have a traditional print background, particularly in packaging. People with digital print experience from another discipline are welcome; people with process engineering experience are necessary, people with the ability to run the laminators are essential. Beyond this the sales staff are younger and work hand in hand with clients to come up with ways to enhance the packaging rather than always delivering the most competitive price. It is more of a customer relationship approach than a hard nosed negotiation.
And sales people are not encouraged to host customers when they visit the factories. It is the job of machinery operators to show off the technology, underlining that this is a complex process, not a green button technology, and that the investment has to be paid for. “Our employees need to understand ‘the plight of the customer’,” says Patel.
The HP Indigo was not the automatic choice, nor is it a commitment that excludes others. However, for the moment the Indigo 20000 serves the business very well. The 30 machines in operation are all profiled to the limited range of materials that EPac uses and are all fingerprinted to achieve identical results on those materials. As a result a job might be shared across a number of plants confident that every frame printed will be the same. In future, an EPac network will be able to continue to meet the needs of start up customers as they expand.
After printing comes lamination. At the Brackley plant in the UK this is provided by a Nordamerica Simplex SL Digital E800, in a version developed specifically to meet EPac's needs and using fast cure adhesives. Then there is coating, using an electron beam unit to dry the coating, slitting and pouch production.
Every aspect of production is tracked digitally using applications developed internally. This includes the MIS to schedule production and manage the costing. There is no paper job ticket in the business explaining details of the job.
The idea is to remove the bottlenecks in the production process that will slow the trajectory of a job from receipt of a file to delivery, says Johnny Hobeika, managing director of EPac Holdings Europe. The factory is laid out to achieve this. Visitors come into an open space with desks and shelving to hold samples. Beyond are the two presses, with floor marked out for a third if needed, then the laminator, coating and finishing. On a smallish rack are the films that the company uses. If is is expensive and wasteful for customers to store a lot of packaging material, EPac takes the same approach.
The company promises a ten-day turnaround from sign off on the digital artwork, and this includes 24-72 hours standing time after lamination to ensure a full cure. The majority of pouch types can be accommodated by duplex or triplex lamination. Hobeika points out that to a large extent film manufacturers have simplified the lamination task by creating multi-layer films so that the printer does not have to run films though the laminator on several passes. EPac aims to use only a limited range of films to cope with any product type. The first aim for customers is to have a product that works rather than involving themselves in the intricacies of the performance of each material, another difference from the approach many multinationals take.
Approving films, adhesives and so on is the task of the central team, likewise the colour management, MIS and workflow development. Now this team is also working on creating retort packaging that can be printed digitally. That will come this year he predicts. The head office team, fewer than 24 in all, is also designing a portal to enable customers to place orders online, initially for repeat jobs and slight amends. At a later date this will accept uploaded artwork and handle online approvals. This is scheduled to make its debut before the end of this year, ideally in Q3.
Many digital printers have taken the approach of designing their portal first without any consideration for the workflow behind it, says Patel. “We see the portal as the final piece. We have developed the automated process management system. Next comes the MIS to ensure we have the right technology behind any portal and the finally the cherry on top is the user interface.”
It already exists in some form for the sales people when talking to customers to help explain the implications of the options before them. This covers the selection of films and combinations of film, the format and style of the packaging. The company has managed to keep this down to 160 combinations by restricting the materials presented.
“The end customer doesn’t really care about these decisions, only about the sustainability issue,” says Patel. Plastic of all types is the bête noire of the industry, even though pouches offer greater protection than board, a huge area for marketing and legal messages and are lighter to transport than bottles or rigid plastic containers. And the materials that EPac uses are recyclable.
This is a better approach than trying to use materials that can be composted, says Hobeika. “There is a lot of discussion about mono-layer and single-polymer packaging rather than using PLA. This will result in more sustainable film structures we believe. And we are working with the suppliers on this.”
It is a better approach too than applying a self adhesive label to a plain package as this in itself makes the product almost impossible to recycle. Customers are increasingly interested in the sustainability issue, but have little interest in exactly how the packaging is produced. What is important is that it is delivered on time and to the expected quality. Software allows EPac and its customers to track a job at every stage in its journey.
“The materials we use are tried and tested,” says Knott, “so that whenever and wherever we print we know we will get the same result. This is the way we get control over the process.”
The standardisation means that as each site is opened the lessons learned can be applied to the next site, thus accelerating the process and generating a return faster.
Certainly the UK was ready to go ahead of schedule even considering the fitting out of administration areas. The second UK site, somewhere in the Leeds area, will in turn benefit from this approach. The target is to go from an empty factory unit to full operation in 90-120 days, the investment shared between the central company and the partners that have been carefully chosen. “We provide funding and we expect partners to do the same,” says Patel.
The UK business is jointly owned with John Peat who had sold a previous business New Era Packaging to MCC Label. He joined as the first site was already underway and is already talking about sites on the island of Ireland and elsewhere in Europe. Nick Monk completes the team as sales director.
“We are in full production here,” says Peat. “Now we are looking for a site in the north, with sales people already in these new regions. Then we start to look in Europe, servicing customers from locations here to start with.”
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