Entering Digital Label Printing

Jon Robinson
January 16, 2018
By
Brett Kisiloski, PDS Sales Manager.
Brett Kisiloski, PDS Sales Manager.
Digital label printing is one of the most attractive segments for printing growth led by significant new demands from brand owners for short-run versioning and variable print work

The digitization of label production began years ago with bleeding-edge projects but only now is beginning take a foothold across the printing world, which is still dominated by flexography. Some of the globe’s largest brands are reinvesting in print with the shifts in advertising effectiveness to younger generations, who may never watch a television ad or block them entirely online.

A recent report by Future Market Insights estimates the demand for digital printing in packaging will grow at 15.3 percent to surpass US$52 billion in revenues by 2026. By product type, labels is currently the largest segment, accounting for over US$7.1 billion in revenues in 2016. Future Market Insights estimates demand for digital labels will increase at 16.7 percent CAGR to reach US$38.4 billion in revenues. The labels segment is estimated to hold the highest market share by the end of the projected period, accounting for more than 70 percent of the global market share by the end of 2027, up from 64.1 percent in 2016.

Consider for example, the money invested by Coca-Cola to produce its largest-ever personalized brand campaign, Share a Coca-Cola, launched in 2013 across 32 countries. Coke used printing operations with HP Indigo presses to digitally print labels with 150 of the most popular first names, nicknames and terms of affection – initially 800 million high-quality personalized labels.

The Share a Coca-Cola campaign became famous across the printing world because it signified a paradigm shift in what is effective marketing, leveraging print. It is an example of long-run versioning through digital, but the possibilities of digital labels burst open.

Commercial printers are certainly attracted to the potential of digital labels but without a large client base will find it hard to invest millions in capital equipment and workflow infrastructure. Instead, many will take the route of entry-level inkjet- or toner-based printing engines, which can be integrated with a range of finishing technologies to work with existing clients and build up a base before committing significant resources. PrintAction spoke with Brett Kisiloski, PDS Sales Manager, about the potential of digital label printing, as well as the challenges and opportunities of investing in entry-level digital printing systems.

What kind of systems do printers need to enter digital labels?
Kisiloski: cEssentially you need two machines for a full production label system. You have your roll-to-roll label printer and your label finisher, which will laminate, die cut custom shapes, waste matrix, and then you can slit into singles from a multiple-up format. We focus on toner-based printers rather than inkjet – roll-to-roll toner. For us specifically, we use the OKI engines. We carry a few different die cutters but essentially they do the same sort of thing.

When is a die-cutter not needed?
Kisiloski: The only time we ever suggest to a customer that it is okay for them just to purchase a label printer is if they are only doing one or two sizes of labels… then it is easy for them to print pre-die-cut and they only need to stock one or two sizes in their shop. If you have a lot of other custom sizes, you can’t just phone up your label material provider saying you need new shapes… it is going to cost you twice as much. The flexibility isn’t there.

Are more commercial printers looking into digital labels?
Kisiloski: A lot of printers like the idea of it. The problem is that even for an entry-level system it is fairly costly if you want to get into a new machine. You are looking at probably an entry cost of definitely no less than $50,000, between $50,000 and $60,000. So you have to think that these printers already have a built-up label business of some sort. I have seen the most random, small print shops that are looking for a label printer. They might be doing hundreds of thousands a month and they have been outsourcing it, because they just happened to stumble across these customers who want labels.

Another challenge with digital labels is finding that sweet spot… Is it going to be six cents a label, eight cents a label, because there is a difference when you have a trade printer quoting five cents a label. What really comes into play is that there is a lot of short-run or variable-data label printing.

How much work do you need for ROI on an entry-level system?
Kisiloski: You actually do not need that many jobs per month for this to make sense. It is likely you are selling that thousand let’s say for $300 and it is costing you maybe $80 to $100 to print. That’s printing, labour and everything, so let’s say $100, and you are making really good margin.

If you are making $200 on every order and you get two orders a week you can pay off the machine. So that is really not a ton of volume for someone to jump into it based on getting one or two orders per week.

What are the pros and cons of inkjet versus toner?
Kisiloski: We carry smaller systems so I do not want to compare too much to the bigger guys… Systems for under $100,000 let’s say. We still sell Memjet print-head [inkjet] systems for envelopes and labels. It is great in the sense that it is really fast and it is quite inexpensive to print in terms of the ink costs. You are printing 60 feet a minute which is two to three times as fast as you are going to get on a toner printer, so it was really interesting a few years ago.

The downfall is that you have to print on inkjet-coated material. About three or four years ago it was still cheaper when all was said and done to print on inkjet with the coated material. In the last two to three years, however, coated material prices have gone up big time, so it is very difficult. I would say it is 25 percent cheaper to print any size label using a toner printer rather than an inkjet just because of the material cost.

Inkjet is also very finicky. It might have 70,000 print nozzles in a tiny little bar stretching 8 1/2 inches wide, so those things clog easily, whereas toner is very consistent.

When does entry-level inkjet make sense today?
Kisiloski: I have a customer who prints post-it notes, for example, and because it is a paper you do not need inkjet coating… The paper stock will absorb the ink… an inkjet system is perfect for him, because it is super cheap. He is just paying for the ink and it is really fast. But most people print on gloss paper or polyesters or vinyl, which has to be inkjet coated and you are doubling or tripling your cost.

What is most exciting about digital label printing?
Kisiloski: The label business is huge. Packaging is a massive industry so it is very exciting to be able to offer that… it is nice to be able to provide different options for a customer when they walk in the door and open up their mind a little bit to other ways of making money

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