Analysis: HP shows how small packs are driving digital print demand

Digital print specialist HP believes that change is in the air and that its technology chimes with today’s consumer. Waqas Qureshi finds out more from Israel.

Consumer habits and product packaging changes are fuelling digital requirements in the packaging sector, according to HP. In February, the digital press giant outlined its strategy at the HP Indigo Worldwide VIP event in Israel. Packaging News was given the opportunity to discover the trends that it believes will shape the future of digital print.
While sizes are decreasing, brands can charge more for the same product and smaller packages mean shorter runs, which are better suited for digital printing.
Globally, life is changing in many ways. Smartphones and social media are completely changing the way business is being carried out.
The most successful global companies lack physical assets. Air BnB, for example, is the world’s largest accommodation provider – and yet it does not own a single hotel room. Uber is the world’s largest transportation provide but it doesn’t own a single car. Ali Baba and Amazon are the world’s largest retailers, but they do not hold inventory.
What these companies do is connect people and business online/digitally.
Demographics are changing. Single parent and small houses are more common and require smaller quantities when out for their weekly shop.
In response, brands need more sizes, more SKUs, and shorter runs – which leads to digital printing for packaging.

Market breakdown
Around 25% of HP business is high value pharmacy, 25% is high value personal care and the remainder is a mixture of food and beverages, confectionery, and speciality applications.
Amir Raziel, HP Indigo flexible packaging segment manager, says the number of product labels and private labels has accelerated, leading to a ‘digital transformation’ – changing the way we consume and do business.
“Packaging demands are changing – decrease in life cycle of products/packs, decrease in run sizes, decrease in the turnaround times required,” which he says was fuelling digital printing.
“Additionally, an increase in personalisation, additions, and varieties, print production becomes more complex. As you start having more jobs per day, planning becomes more complex, run sizes go down and turnaround goes down, here is where digital printing can come in – it offers you the ability to print what you need, when you need it, how you need it.”
HP says both flexible packaging and folding cartons are actually doubling their volume, each year from a smaller base. Can it sustain that for the next five to 10 years? It is hard to predict.
It intends to oversee the same revolution with packaging as it did with labels. David Leshem, vice president, worldwide strategic business, Indigo Digital Press at HP, says: “We hope the world is changing faster and the brands are changing faster, for it to take less time than 25 years to make an impact on the market.”

Packaging designs
Brand strategy is changing; brands cannot keep a design and packaging the same for four years.
“For packaging, this is amazing,” says Alon Bar-Shany, general manager at HP Indigo. “Advertising dollars have shifted to digital. Google and Facebook have taken advertising dollars from print – which is an opportunity for packaging.”
He said packaging is part of the marketing strategy – an example is Oreo; the product remained the same, but Oreo kept changing the packs and made it more interactive.
Additionally, the lifecycle of packaging has reduced from two years to six months.
Santi Morera, general manager and global head of graphics solutions business at HP, says digital packaging exploded on to the scene around four years ago – a significant change to the industry with new technologies.
“We expect the labels market to continue to grow with much opportunity for digital printing. And now we are seeing corrugated packaging grow. We are excited about almost every application we are in. Around two years ago we said packaging is the next big application for us, and it is true, it is a segment that is growing a lot. Packaging is definitely a big market for us.”
With a corrugated market worth $3.5bn in 2017, which is set to grow to $5.5bn by 2022, HP has been preparing itself.
In the corrugated world, for many years, the industry adopted Ford’s early 20th century slogan – ‘You can get any colour, so long as it’s black.’ For corrugated boxes, it was any colour so long as it’s brown.
David Tomer, general manager, HP Scitex, says: “Maybe this was good enough when the only purpose of a box was to contain, to protect and to ship. This is not good enough for today’s consumer.”
Corrugated boxes are not just about functionality today. It’s about communicating a message with the consumer.
Brands are hungry to use the outer surface of the box to deliver messages and promote themselves. With online shopping this becomes more important because anytime you get a box or open a box it is an opportunity to reinforce the brand message.

Grab the consumer
Brands usually have one chance to grab consumer attention, and it all rides on the packaging.
So what do brands do? They can innovate, they can put on more graphics, they can change versions, they can use personalisation, and dedicated event marketing along with special editions.
Morera says that with flexible packaging there’s much movement in the market – there is demand, and growth is expected.
“I think we will see growth. On corrugated packaging we are just starting – we are creating technology for pre-print and post print. When you look at the fundamentals of the technology, and the disruption in the market, flexible packaging is pushing more – but folding and corrugated will grow fast. Based on what we are doing, I think corrugated we will see more growth.”
Niv Ishay, HP PageWide C500 product manager, adds: “A tidal wave is coming to corrugated, and we are ready.”
Tomer insists converters need to decide if they want to stay as a heavy, slow mover – “like a container ship” – when everything around them moves so fast.
“They need to be flexible and agile. Corrugated packaging has changed so fast that being agile is necessary. Over the last four years we have developed the speed boat for corrugated packaging.
“There are two types of companies out there – those that are already in digital, and those that will need to be. There is no question today whether digital printing is the future of corrugated. The only question is how fast.”