The writing is on the wall for many commercial printers unless they can diversify into new sectors that have better prospects for growth and margins than the increasingly squeezed commercial sheetfed print market.
There is no immediate likelihood that demand for pizza leaflets, take away menus, short run booklets, posters, sales catalogues and so on is going to disappear. But the figures do not lie.
These are sectors that are shrinking fast and that are expected to continues to diminish. Polestar, Alderson Brothers, Headley Brothers, Century Web Offset and Quebecor are all former web offset printers that have passed into memory.
The list of closed sheetfed printers is even longer and will surely grow as demand for this style of commodity print disappears.
By contrast demand for packaging appears to be on the up. Many commercial printers are using sheetfed litho presses to print cartons, perhaps to help out specialist packaging companies that would find short runs too disruptive otherwise, perhaps because existing customers also want boxes.
Then there are two further sectors: corrugated packaging and labels. The former can be an extension of large format inkjet printing and some display printers are also printing boxes. But digital printing is only effective to a limited point and flexo printing as part of as a rotary die cutter is both expensive and demands a lot of space.
In contrast the machinery to print labels may not be expensive per se, but printing is simply a part of a label converting operation. It is called converting for a reason, the aim being to convert a material, frequently a paper or film on a reel, into something that a customer will have no difficulty in applying to his or her final product.
Product specifications are a lot more precise than bundles of 250 folded leaflets held together by an elastic band and supplied in boxes of 1,000 delivered sometime next Tuesday – if possible. The SLAs for labels are far more precise because labels leaving the converter are still an industrial product that has to work seamlessly as part of another production line.
Labels have to be perfect because the cost of stopping the line if the labels have failed a quality check or arrived late might be atmospheric. And they have to perform their function – to promote a product and inform buyers what is inside the bottle or jar.
Add in the knowledge needed about the materials used for different labels and finishing requirements that can cover die cutting, coating, foiling or lamination and it becomes clear that starting a labels division from scratch will be a challenge. But with the advent of digital printing, the barriers are coming down. There are thousands of new businesses being formed in the wake of the pandemic – around 800,000 new businesses were registered at Companies House in 2021 – and many will need labels.
For example, those starting to distill gin will need a label to distinguish their product from something that is otherwise a clear liquid inside a bottle. The same applies to any business selling a product. The label carries information about the contents, conforms with regulations as well as sells the product. This offers opportunities for design as well as print. How else otherwise does another artisan ale entice purchasers?
These customers frequently require runs that are too small to be of interest to the bigger label printers. Small batch production can disrupt a contract led business which is too important and lucrative to put at risk.
The numbers required, however, might suit a small digital machine, a first investment for a commercial printer looking to diversify their product offering perhaps. There are many machines to choose from. These range from the large format press producing stickers, which barely qualify as labels, and those that are a step up from printing product tickets. The Epson Colorworkx inkjet range is typical, so too those printers that use a web feed with an Oki toner print engine. There will be a relatively low ceiling in terms of productivity, quality and repeatability with these machines, so are not suited when products need shelf appeal. But they can perhaps work for ecommerce applications or for industrial goods where printing finesse may not be necessary.
The competition at this end of the market comes from printers that use Memjet’s printheads. These offer fine resolution (1600dpi), are fast, and with the latest Duraflex printheads are far more resilient than the first generation of Memjet printheads. The first Colordyne or Affinia machines to use this technology appeared at Labelexpo in 2019 in concept form, so it is a pity that this year’s event has had to be cancelled. Their progress would have been worth watching.
The big drawbacks are the cost of the ink on one hand and the more limited choice of substrates it is possible to print on because this is a thermal inkjet technology running water based inks and needing suitable materials.
One of the reasons for the success of inkjet in label presses is that the area of a label is only a fraction of a conventional A4 page: the cost of the ink is less of a factor on unit price than say in corrugated or carton printing with large areas to cover in print.
Memjet lists 17 OEM partners in its website, many offering label presses. The Trojan T4 press for example includes Memjet Versapass printheads and integrated finishing section with semi rotary or full rotary die cutting, slitter, lamination and rewind for around £90,000.
Colordyne can provide roll to roll standalone presses, suited to a first time investment, or a retrofit to add digital label production to an existing label press.
The competitive cost is helped by the width of the Memjet printhead. At either 220mm or 324mm wide, there is no need to stitch together multiple print heads as is the case with a standard piezo head at 110mm wide. This reduces complexity and therefore costs.
Heads from Xaar, Fujifilm and Kyocera are in widespread use across a range of suppliers that fill the mainstream of digital label printing, and come with inline finishing or in hybrid configurations that can include a number of flexo units to apply a primer that some substrates may need, an opaque white base coat on films ahead of inkjet printing, coatings after printing. Inline options are endless from the likes of AB Graphics, GM, Daco, Prati and others. The inkjet and hybrid machines are eating into the narrow web flexo market and are rising in speed. Not a press for an entrant to label printing, but machines to aspire to. An entry level Durst, for example, comes with a price tag around £150,000. Most configurations will be upwards of this.
The transition into labels for a commercial printer can be easier with technologies that commercial printers will be familiar with. HP Indigo has carved out the leading position in the digital label market, partly of course owing to print quality, but also by being a first mover in the market and offering a fully integrated system with workflow, colour management through to finishing options that include metallics. Indigo offered a web fed press only a couple of years after the introduction of the first Indigo 1000 in 1993.
The beacon for this opportunity is Delga in the UK. The company has its roots in producing packaging for the media industry, starting with record sleeves in the 1970s and evolving into boxed sets and from there into luxury packaging. It was a natural move then into label printing for the same customers.
Another part of the group is printing commercial work and a third specialises in work for the health service. There is a requirement for labels for the medical sector which the company had been buying from outside to deliver the complete package for customers.
At the start of Delga Labels, it recruited an operations manager and a sales manger, both with experience in the labels sector. It retrained an operator from the Indigo 12000 HD to operate the W6900 and to learn about operating the Digicon 2 inline finishing system. In short it took steps to minimise the risk of the investment.
Xeikon has had less success in moving commercial printers into labels, but starts with a smaller commercial print base. Its share of the label market, however, is significant, and it offers inkjet as well as a variety of toner presses. The company argues that each technology has benefits: UV inkjet enables tactile effects and printing on a different range of substrates; toner offers higher quality and food safe colours.
Inkjet is also positioned as the technology that will challenge flexo on longer runs where the speed over toner is a key advantage. The alternate approach is to go wider which, with the CX500, the company is. This is a 520mm wide press that can also tackle sachets and pouch production.
Mark Andy also offers toner and inkjet printing as well as a wide installed base of flexo presses, which continue to be enhanced. Inkjet comes with its own HD series machines working with its own development around Ricoh printheads and the Digital IQ machines using the Cube print unit provided by Domino to a number of flexo press suppliers to enable digital printing. Mark Andy, thanks to its support network and experience of inkjet, is able to offer complete service and training packages for these machines, while others have split responsibilities.
Mark Andy also has a partnership with Konica Minolta over the machine that KM sells as the AccurioLabel 230 and which for Mark Andy is the Digital Pro 3. Midland Regional Printers has added one of these. The Nottingham company had started life as a commercial printer but has increasingly edged towards cartons and labels as these prove more lucrative and there is less competition.
It is not all labels and boxes, the company has an XL106 for commercial work or to produce the sheets that are laminated to corrugated. This is a strategy that means the company can produce all aspects of a marketing campaign, or anything that a client needs in print form.
The venture into label printing started with a pharmaceutical client who was dissatisfied with service from the existing supplier. “That prompted us to say ‘let’s look at it’ and work out if we can offer the service to other people,” says sales director Mark Seaford.
However, a step into labels will not be as straightforward, nor as easy as MRP seems have found it. Ian Pollock, sales manager for Mark Andy, has had a long career on the commercial sheetfed litho side of the fence, migrating into labels when American Industrial which owns Mark Andy, acquired Presstek where Pollock had been working. After three years exposure to the labels industry he appreciates the challenges that label production can throw up.
With the advent of digital printing technology to print labels, here was an opportunity for commercial printers that already understood digital print and workflows to exploit an opportunity with shorter runs.
Mark Andy has both inkjet and toner options for label presses, with the latest, the HD, a hybrid press with flexo units and a Domino Cube to provide the inkjet digital print element. Mark Andy can look after the entire set up without calling on Domino staff. There can be flexo before the inkjet, further flexo after inkjet and then embellishment.
“With three years involvement in labels, every day for me is a school day,” says Pollock. “While digital is strong, the last 12 months has been the best year for flexo.” He reckons that the switch to digital will reflect trends in commercial print. In other words flexo has adapted as litho did and will continue to exist for some years to come.
Workflows, however, are not as advanced because labels are more complex than A4 pages. “It depends on the size, the repeat lengths and so on making it a little more complicated than litho. However, over the last two or three years we can see huge advances in the label market.
“Print is the simplest part. With labels it’s not just about selling a machine. With labels it’s also about the anilox, the substrates, so when we train someone to use a machine it’s more than showing them how to push a button. It’s about how to turn a reel of material into fully finished labels and that’s our commitment to show people how to do that. We do this in stages. We do not walk away.”
Heidelberg also discovered that the crossover between sheetfed litho printing and narrow web labels is limited, underpinning decisions to sell the Gallus business which did not quite come off. Gallus is now firmly back inside Heidelberg, though as a distinct business.
However, this does not indicate that commercial printers should stay well away from labels. Clients buying brochures and catalogues are likely to need to specify labels and with the move towards shorter supply chains and a reduction in the numbers of suppliers, commercial printers need to respond – if only because the next company inline will be able to supply labels if asked.
This can be done by channelling work through trade printers. Baker Labels is perhaps the best known of these businesses. Steve Baker says: “Commercial printers that are considering taking the leap into labels should always use a trade label printer first. They should never turn a label enquiry away because it’s not something they do, or because they don’t know the variables involved or what questions to ask. That customer could end up taking all their work away to another printer that will not only outsource the label work but will also take their commercial work.
“We work with commercial printers a lot and encourage them to develop their label work, using us as their supplier until they’ve gained better understanding and knowledge of the label printing processes. Only then should they take the plunge and invest in label printing and finishing presses. We support that journey and ‘hand hold’ some commercial customers through the jobs, seeing ourselves as their skilled, diverse, reliable and fast production arm.
“We know that even once that commercial printer has invested in printing labels, they will continue to need us as a label supplier. Either as a backup when their presses are out of action, or when there’s a more complicated job and a tight turnaround. Outsourcing will always give them a known cost, particularly for the trickier jobs that could easily lose margins as they fix things that have gone wrong.”
There is an increasing number of online trade suppliers able to supply the simpler labels, on a limited range of materials, which can also address the issue. These can be a first step into supplying customers with labels, even before the complexity leads to working with companies like Baker Labels. The step beyond this is an interesting one – how should printers respond? Some like Delga will invest in the technology and recruit a team, others will invest through acquisition. Integrity Group took this route.
The Midsomer Norton company had always been a trade print supplier, though had built a £50 million business through forms. With an awareness that forms are shrinking, it has planned to replace lost turnover in new areas. Labels is one of them.
It acquired the business and assets of Topflite, comprising two Xeikons and flexo presses. It has added an HP Indigo W6900 along with further finishing to develop the operation into a £10 million business.
Group sales director Andrew Law believes that further consolidation makes it difficult for others to emulate what Integrity has done. “You have to have the people, the equipment and the routes to market. And then the credibility in the sector.” Integrity had a number of print management customers that bought labels along with styles of print that Integrity already provided. In turn the label customers have been buying Integrity’s other services.
Martin Clissold is in charge of the labels operation and repeats that a combination of the right equipment and the right people is a necessity. “When you make an acquisition, you are taking on a lot of knowledge as well as the kit. Anyone can go and buy a new machine, but unless you know how to run it, you will struggle.”
The new HP runs roll to roll with a separate finishing line for the die cutting, slitting and embellishment that labels need. “It has given us a quality we didn’t have before along with consistency. We do a lot of sequential numbering and barcodes.”
One of the reasons for the interest in labels is that in the pandemic, demand for packaging of all kinds held up. Indeed with the growth of ecommerce demand for labels increased, a shipping label as well as the primary label. Says Clissold: “Packaging and labels will always hold up.”
Consolidation is underway and not just with companies making their first move into labels. At the end of last year a fast growing Belgian group Arcadia acquired CS Labels while this year, CCL has added Scottish specialist labels and touch panels printer McGavigan, while rival MCC Labels completed the acquisition of Skanem’s European and Thailand businesses, including sites in the UK.
There are still numerous acquisition opportunities of businesses that have been highly traditional in outlook and technology and where a shot of digital expertise can benefit both a label printer and a commercial printer.
This is one of the reasons that a sideways step into labels is to be a target for Venn Holdings following its purchase of similar commercial printers John Dollin and Culverlands.
This opportunity contrasts with the disappointment that Labelexpo, due to take place at the end of April, has been cancelled. For those that have never been, it is an extensive show, perhaps the second largest printing industry show in Europe after Drupa. This year it had failed to attract a number of the industry giants that have attended previous shows and the Russian invasion of Ukraine proved the final confidence sapping straw. It will now take place 18 months from now.
For a company investigating the scope of the labels sector, the show has been a logical destination. Now instead, Durst has been swift to promise an open house at its Austrian headquarters supported by as yet unnamed partners, for the same dates.
Xeikon put together its Xeikon Cafe event for the same dates. And it too promises the support of industry partners. VP marketing Filip Weymans says: “Each event is structured to give the visitor insight into the latest trends in digitalising print production, discover new printing applications, watch live demonstrations of different digital production setups and reconnect with other printers and converters.
“At the event, visitors have the opportunity to see in action latest technological advancements, which we are sure will be of great interest.”
Mark Andy will also stage an event to address the gap caused by the absence of Labelexpo. Its European showroom is in Warsaw and the local situation will have an impact on the timing of this event.
There will also be a labels presence at the Packaging Innovations show in Birmingham at the end of May. This will combine both label printers hawking their services to corporates and brands walking the aisles and some machinery suppliers.
Among these are Oki, Bobst, Agfa, Screen and MIS supplier Cerm. As a snapshot of the types of label, the trends driving the sector and the equipment, a day at the NEC (25-26 May) could pay off. J
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