Packaging and the Brand Owner: Europe A Report to Xerox. Bob Leahey Associate Director January 30, 2014

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1 Packaging and the Brand Owner: Europe A Report to Xerox Bob Leahey Associate Director January 30, InfoTrends 1

2 Objectives of the Report Gather insights into European brand owners thinking about packaging and labels, in particular about print What their priorities and sentiments are How and where they get their opinions What they want from converted packaging, and what they will want Role, outlook, and possibilities for digital printing Derive actionable recommendations for clients About design of digital presses for packaging and labels About marketing of such presses to converters and even manufacturers Ultimately, about how to sell more product 2

3 Methodology A structured telephone survey of 265 European brand owners, mainly makers of fast moving consumer goods A structured telephone survey of 100 European converters of packaging and labels Personal interviews with 11 brand owners and 10 converters in Europe Plus: Many short contacts at Label Expo (Brussels) and Drink Tec (Munich) with both converters and brand owners Desk research into trade press, company websites, similar reporting 3

4 Main Vertical Industry Q81: Which of the following best describes your company s main vertical industry? Pharmaceuticals 2% Durable goods 3% Beverage 12% Maintenance products 1% Other 3% Pharmaceuticals is a rich vertical for digital printing, but also one that restricts access by researchers Health and beauty 12% Food 67% N = 265 Respondents that are brand owners 4

5 Types of Packaging or Labels Required Q7: Which of the following types of packaging or labels do your products require? Product labels 89% Corrugated boxes 79% Folding cartons as primary packaging 76% Flexible packaging 71% Multiple Responses Permitted 0% 20% 40% 60% 80% 100% N = 265 Respondents that are brand owners 5

6 Main Print Application Q42: Which of the following is your company s MAIN print application? Flexible Packaging 26% Most converters print more than one application, some print multiple ones. Labels 43% Folding Cartons 31% N = 100 Respondents that are converters 6

7 Key Findings: Short Runs There is a big trend in Europe for brands to manufacture short runs of products, and that trend is growing Driving this trend is brand owners need to target markets and to be efficient in manufacturing and logistics Also driving this trend are Europe s languages, its changing populations, new rules about food and other packaging Short run package and label printing is growing as a result, allowing new versions of products, private label products Digital printing is an established tool in Europe to achieve short run packaging objective and other objectives. 7

8 Key Findings: Priorities Sustainability is high priority for most brand owners & a mandatory focus for converters and their suppliers Digital marketing strategies are also important, via FaceBook, , etc., to attract and engage consumers Brands want to do new things, often digital-related, such as Augmented Reality, Near Field Communications, QR codes Brand owners want packaging to cut their risks of counterfeiting, diversion, food contamination Brand owners will pay a premium to achieve their top priorities, such as sustainability, short runs, security 8

9 Needs Likely To Cause New Designs for Packaging, Labels Q12: Which of the following NEEDS are the most likely to cause your company to make new or different designs for packaging or labels? Create more environmentally friendly packaging 64% Target a new market segment 48% Comply with regulations of some type 33% Get the attention of busy consumers Fight counterfeiters or fraudulent distributors 11% 33% Certain brands regularly need to fight counterfeiters, particularly in pharmaceuticals, and somewhat in cosmetics 0% 20% 40% 60% 80% Multiple Responses Permitted N = 265 Respondents that are brand owners 9

10 Needs Most Likely To Cause New Packaging, Label Designs Q47: Which of the following NEEDS are the most likely to cause your customers to make new/different designs for packaging or labels? Q12: Which of the following NEEDS are the most likely to cause your company to make new or different designs for packaging or labels? Create more environmentally friendly packaging Target a new market segment 49% 48% 58% 64% Europe has more emphasis on sustainability than any other region Comply with regulations of some type Get the attention of busy consumers 38% 33% 30% 33% Converters Brand Owners Fight counterfeiters or fraudulent distributors 13% 11% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 100 Converters N = 265 Respondents that are brand owners 10

11 What New Things Do Brands Want to Do? 11

12 Features for Which Brand Owners Are Willing to Pay Extra Q72: For which of the following would your customers be willing to pay a premium? Q40. For which of the following would your company be willing to pay a premium? Environmentally friendly paper, film, or board media 64% 68% Variable data printing for track and trace codes 45% 57% Variable data printing for personalized print 36% 47% 1 print job with less than 200 labels or packages Electronic security features such as RFID 29% 45% 45% 41% Converters Brand Owners 1 print job for 50 or more product versions 36% 41% None of the above 11% 13% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 100 Converters N = 265 Brand Owners 12

13 Features for Which Brand Owners Are Willing to Pay Extra Q72: For which of the following would your customers be willing to pay a premium? Q40. For which of the following would your company be willing to pay a premium? Environmentally friendly paper, film, or board media 64% 68% Variable data printing for track and trace codes 45% 57% Variable data printing for personalized print 36% 47% 1 print job with less than 200 labels or packages Electronic security features such as RFID 29% 45% 45% 41% Converters Brand Owners 1 print job for 50 or more product versions 36% 41% None of the above 11% 13% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 100 Converters N = 265 Brand Owners 13

14 Features for Which Brand Owners Are Willing to Pay Extra Q72: For which of the following would your customers be willing to pay a premium? Q40. For which of the following would your company be willing to pay a premium? Environmentally friendly paper, film, or board media 64% 68% Variable data printing for track and trace codes 45% 57% Variable data printing for personalized print 36% 47% 1 print job with less than 200 labels or packages Electronic security features such as RFID 29% 45% 45% 41% Converters Brand Owners 1 print job for 50 or more product versions 36% 41% None of the above 11% 13% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 100 Converters N = 265 Brand Owners 14

15 Europe vs. North America: Some Comparative Notes InfoTrends did similar survey research about brand owners and packaging in 2011 in the U.S. and Canada Asking questions of brands and converters similar to the recent survey in Europe A key similarity between the two regions: Willingness to pay extra for many short runs, for variable data And two key differences: North American brands are less willing to pay a premium for anything European brands have far greater willingness to pay a premium for sustainability as a feature of packaging 15

16 Key Findings: Converter Concerns, Preferences Short run printing is growing for European converters of labels, folding cartons, flexible packaging Dealing with short runs, dealing with workflow issues are the biggest reasons for delays in production in Europe Most label converters are familiar with color digital presses, but most folding carton, flexible packaging converters are not 74% of folding carton converters have never considered digital presses 40% of label converters say the same For applications that are not labels, press vendors must increase converters awareness of digital options & benefits 16

17 Problems Most Likely to Slow Print Jobs on a Conventional Press Q60: Which of the following problems is the most likely to slow the execution of print jobs on a conventional press such as flexo or offset? Managing many small print jobs 61% Frequent media changes 39% Printing prototypes 34% Pre-press and make ready activities 26% Press unreliability 14% Other 1% Multiple Responses Permitted N = 88 Respondents that are converters that operate conventional presses 0% 20% 40% 60% 80% 17

18 Problems Most Likely to Slow Print Jobs on Different Presses Q59: Which of the following problems is the most likely to slow the execution of print jobs on a COLOR DIGITAL PRESS? Q60: Which of the following problems is the most likely to slow the execution of print jobs on a conventional press such as flexo or offset? Managing many small print jobs 61% 60% Frequent media changes 29% 39% Printing prototypes Pre-press and make ready activities 24% 26% 34% 44% Flexo/Offset Color Digital Press Press unreliability 14% 27% Other 1% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 88 Converters that operate conventional presses N = 45 Converters that operate color digital presses 18

19 Problems Most Likely to Slow Print Jobs on Different Presses Q59: Which of the following problems is the most likely to slow the execution of print jobs on a COLOR DIGITAL PRESS? Q60: Which of the following problems is the most likely to slow the execution of print jobs on a conventional press such as flexo or offset? Managing many small print jobs 61% 60% Frequent media changes 29% 39% Printing prototypes Pre-press and make ready activities 24% 26% 34% 44% Flexo/Offset Color Digital Press Press unreliability 14% 27% Other 1% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 88 Converters that operate conventional presses N = 45 Converters that operate color digital presses 19

20 Most Valuable Color Digital Printing Features Q53: What features or uses of color digital printing are most valuable? Printing multiple versions in 1 print job 53% Variable data printing, such as personalized print 38% Printing of prototypes or samples in very short runs 38% Rapid job changeover 28% Simple pre-press processes 26% Other 1% Multiple Responses Permitted N = 74 Respondents that are converters that operate digital printing equipment of some type 0% 20% 40% 60% 20

21 Improvements Needed in Color Digital Printing (Means) Q65: Regarding color digital printing, how much need is there to improve each of the following, in order to meet the needs of brand owners? % rating this at 4 or 5: Image quality, compared to conventional print % Ability to match specific corporate colors % Ability to print white % Inks or toners for food packaging % N = 100 Respondents that are converters No need A high need 21

22 Recommendations To penetrate the market in Europe, help your customers sell to their customers in that region Digital printing addresses basic brand owner needs Help converters spread that message Several points to emphasize to brand owners about digital: Short runs, multiple versions that are simpler and cheaper Green materials, less waste at all points, recycling More efficient, timely supply chains New packaging concepts that can be tested easily Variable data printing for security, tracking Security features such as microtext, embedded text 22

23 Recommendations For converters themselves, emphasize Workflow benefit, especially for plants with analog + digital presses The value of workflow & related tools such as Esko, Radius, LabelTraxx The share of Pantone colors digital can print High image quality, with offset-like being ideal The potential for variable data printing Robustness of a digital press designed for packaging If possible, the ability to upgrade the press in field 23

24 Recommendations Converters of folding cartons are less familiar with digital than label converters are, need more information about it Influence them in person, at trade shows, in visits to their offices and operations Influence them with other media, including company website, trade press, You Tube videos, customer testimonials Emphasize that digital: Opens opportunities, helps brands do new things Makes converters operations efficient Enhances sustainability because it cuts waste & uses green media 24

25 Selected Themes: Brand Owner Research 25

26 Greatest Brand Challenge Today Q13: Which of the following is the greatest challenge for your brand right now? Creating and managing many product versions 17% Color digital printing can help brand owners address each of these challenges. Making our manufacturing and supply chain more efficient 42% Developing truly innovative packaging that stands out 41% N = 265 Respondents that are brand owners 26

27 Level of Agreement with Statements About Company s Packaging Strategy Q15: How much would you agree or disagree with the following statements about your company: We are marketing more products or versions of products 3.7 % rating this at 4 or 5: 55% We are using lighter weight packaging materials % We are increasing our use of smaller size packages % N = 265 Respondents that are brand owners Strongly Disagree Strongly Agree 27

28 Importance of Print Capabilities When Choosing a Converter Q17: For decisions at your company about the printing of packaging or labels, how influential are the following: 1 - Not important Highly important Mean Ability to print many short production runs quickly and economically 6% 19% 34% 37% 3.9 Ability to create prototypes and test samples quickly and economically 9% 24% 30% 33% 3.8 Ability to print variable data, such as random codes or personalized messages 15% 14% 25% 25% 21% 3.2 Ability to print security features, such as holograms, microtext, or covert codes 28% 16% 22% 18% 16% 2.8 0% 20% 40% 60% 80% 100% N = 265 Respondents that are brand owners 28

29 Comparative Influence of Different Managers on Decisions About Packaging or Label Printing Q8: For decisions at your company about the printing of packaging or labels, how influential are the following: Product marketing/sales managers President/owner/other top managers Procurement/purchasing managers Typically more than one manager influences print buying Engineering or design manager 2.8 Logistics/supply chain manager 2.4 N = 265 Respondents that are brand owners No influence A high influence 29

30 Level of Agreement With Statements About Sustainability Q14: How much do you agree or disagree with the following statements: All the packaging and label materials that we use are easy to recycle 3.9 % rating this at 4 or 5: 66% We require most packaging and label materials to have some recycled content % Our company should do more than it does now to be environmentally friendly % N = 265 Respondents that are brand owners Strongly Disagree Strongly Agree 30

31 About Packaging and Labels Designed to Support Online Marketing Activities Q19: Does your company design or plan to design any of its packaging or labels specifically to support your marketing online, or through mobile phones? Don t know 3% Many channels for messaging exist, packaging is just one. Packaging that connects to online content is helpful. Yes, we do this now 38% No, and no plans to do this 52% We plan to do this in the future 7% N = 265 Respondents that are brand owners 31

32 About Advanced Technologies Incorporated Into Packaging Q20: Does your company incorporate or plan to incorporate any of the following (technologies) into its packaging? Yes, we do this now We plan to do this in the future No, and no plans to do this Near Field Communications 24% 8% 69% RFID 14% 12% 74% Augmented Reality 11% 12% 77% 0% 20% 40% 60% 80% 100% N = 265 Respondents that are brand owners 32

33 Example, Interactive Features for Packaging 33

34 Security Features Printed on Packaging or Labels Q21: Does your company print any of the following special security features on its packaging or labels? Special codes of some type 55% Foiling of some type 34% Special markers of some type 33% Microtext printing Holograms 19% 24% Nearly 80% of brands have use some kind of printed security feature. Other 2% None 21% Multiple Responses Permitted N = 265 Respondents that are brand owners 0% 20% 40% 60% 34

35 Use of Color Printing to Decorate Corrugated Boxes or Displays Q22: Some brands use color printing to decorate boxes or displays made from corrugated board. Does your company use or plan to use any of the following (color printing of corrugated)? 1, 2, or 3 color printing directly onto corrugated board 51% Full color printing of media that is laminated onto corrugated board 42% No, and no plans to use any No color printing on corrugated at all, but we plan to use some 8% 30% Of brand owners who use some color printed corrugated, 76% use it for secondary packaging, 60% use it for primary packaging. Multiple Responses Permitted 0% 20% 40% 60% N = 265 Respondents that are brand owners 35

36 Expected Growth of Color Printing of Corrugated in Next Two Years Q24: For your brand, how much do you think the color printing of corrugated will grow over the next two years, for: 0% 1% to 9% 10% to 19% 20% to 29% 30% to 49% 50% or more Mean Primary packaging 10% 27% 23% 16% 9% 16% 21% Secondary packaging for shelf display, etc. 8% 29% 24% 21% 6% 12% 20% Retail displays of some type 14% 28% 23% 22% 6% 8% 17% 0% 20% 40% 60% 80% 100% N = Varies Base: Respondents that use color printing of corrugated board for primary or secondary packaging or for displays 36

37 Awareness of Full Color Digital Press Technology Q25: Are you aware of the full color digital press technology that is now used by many converters to print labels or packaging? Nearly half of brand owners have some awareness of digital print for packaging. No 53% Yes 47% N = 265 Respondents that are brand owners 37

38 Best Description of Use of Color Digital Presses Q26: Which statement best describes your own label and packaging converters use of full color digital presses? The never use color digital presses to print jobs for us, and they likely never will 26% About 24% of all brand owners surveyed say their companies have some use of full color digital print for packaging. They sometimes use color digital presses to print jobs for us 50% They never use color digital presses to print jobs for us, but they likely will some day 24% N = 126 Brand owners that are aware of color digital press technology 38

39 Converter Use of Color Digital Presses Q28: Do your converters use color digital presses to print (1) just prototypes or free samples, (2) just short production runs for use with products that your company markets or (3) both? Just prototypes and free samples 18% They do both 52% Just short production runs 30% N = 63 Brand owners that sometimes use full color digital press technology on labels or packaging 39

40 Applications That Use Full Color Digital Presses Q27: For which of the following do your converters at least sometimes use full color digital presses to print jobs for your company? Product labels 81% Folding cartons 57% Flexible packaging 46% 0% 20% 40% 60% 80% 100% N = 63 Brand owners that sometimes use full color digital press technology on labels and packaging Multiple Responses Permitted 40

41 Use of Personalization for Labels and Packaging Q36: Does your company EVER use any personalization for labels or packaging to support your marketing in some way? Don t know 2% Yes 36% No, and no plans to do so 54% No, but we will likely do so in the future 8% N = 265 Respondents that are brand owners 41

42 Frequency of the Use of Personalization for Packaging or Labels Q37: How often do you think your company uses personalization of packaging or labels in a year, for any purpose? 100 or more times per year 12% Once per year 18% 50 to 99 times 9% 25 to 49 times 2% Mean: 26.3 times per year Median: 5.5 times per year 10 to 24 times 17% 2 to 9 times 42% N = 95 Respondents that have some use of personalization for packaging or labels 42

43 Selected Themes: Converter Research 43

44 Printing Equipment Used Q43: Which of the following types of printing equipment do you use? Conventional press 90% Wide format inkjet printer 32% Toner-based color digital press 32% Inkjet color digital press 22% Small, tabletop color label printer 21% Multiple Responses Permitted 0% 20% 40% 60% 80% 100% N = 100 Respondents that are converters 44

45 Contributors to Slowdowns of Print Processes Q44: For any slowdown your company may experience in its print processes, how much of a contributor is each of the following? 1 - Not a contributor A big contributor Mean Workflow management 9% 14% 38% 28% 11% 3.2 High numbers of short run print jobs 16% 11% 29% 25% 19% 3.2 Printing prototypes or test versions 36% 22% 27% 11% 2.3 0% 20% 40% 60% 80% 100% N = 100 Respondents that are converters 45

46 Label/Packaging Applications Printed on Color Digital Presses Q55: Which of the following label or packaging applications do you print or plan to print with a color digital press? Product labels 67% Folding cartons 34% Flexible packaging Shrink or stretch sleeves 19% 30% Shrink sleeve printing is growing as more brands use special shapes to make packaging stand out Other 4% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 70 Respondents that are converters that operate digital color presses or buy digital printing on the outside 46

47 Use of Color Digital Presses Q56: Do you use color digital presses to print just prototypes or free samples/just short production runs for use with products that customers market? We do both 36% Just prototypes and samples 20% Just short production runs 44% N = 70 Respondents that are converters that operate digital color presses or that buy digital print outside 47

48 Short Run Applications Printed on Color Digital Presses Q57: For which applications do you use color digital presses to print short production runs for use with products that your customers market? Product labels 64% Folding cartons 29% Flexible packaging 25% Shrink or stretch sleeves 9% Other 2% Multiple Responses Permitted 0% 20% 40% 60% 80% N = 56 Respondents that are converters that operate digital color presses or that buy digital print outside 48

49 Prototype Applications Printed on Color Digital Presses Q58: For which applications do you use color digital presses to print prototypes or free samples? Product labels 49% Flexible packaging 36% Folding cartons 28% Shrink or stretch sleeves 15% Other 8% Multiple Responses Permitted 0% 20% 40% 60% N = 39 Respondents that are converters that operate digital color presses or that buy digital print outside 49

50 Biggest Source of Short Print Runs in Next Twelve Months Q64: Which of the following industries will be the biggest sources of short print runs for your company over the next twelve months? Gourmet or specialized food 51% Health and beauty All other foods 32% 30% Beverages Household chemicals Pharmaceuticals 22% 22% 25% Durable goods Other consumer electronics Nutritional supplements 12% 11% 15% Software, DVDs, video games, electronic media 5% Other 13% Multiple Responses Permitted 0% 20% 40% 60% N = 100 Respondents that are converters 50

51 Thank You! 51

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