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Introduction: label printing and product packaging market demand trends
The labels and packaging industry has long enjoyed stable and healthy growth, supported by several megatrends. A recent IBISWorld report shows that the US packaging industry was valued at $11.6 billion in 2022, marking a 2.5% increase compared to 2021. Between 2017 and 2022, the industry has been growing steadily, averaging a 5.2% growth yearly.
But now the industry is at a major tipping point.
The rapid growth experienced during 2021 and the first half of 2022 turned into softness in some markets and a sharp decline in others, attributed to factors including inventory destocking, normalization of food and beverage consumption, and consumer fears of recession.
Major label and packaging media suppliers reported a up to 15 percent decline in sales for the first half of 2023, with digital print of labels and packaging also experiencing a moderate impact, turning the 10-15 percent annual print volume growth rate into a modest single-digit growth.
The global soft pack label market is also projected to exhibit gradual growth, with an anticipated 3.10 percent CAGR by 2034, surpassing US $671.6 million. Additionally, there are ongoing trends in label design and packaging, with a growing concern for sustainability reflected in the latest design trends, including the use of eco-friendly packaging and labels that use recyclable materials.
And with digital printing moving from various niches to the mainstream, companies are encouraged to stay inspired and on top of the latest trends to continue improving and delivering unique products and experiences.
A new barometer drives production reshoring
In the past year, growing geopolitical tensions disrupted the complex global supply chain as delivery reliability declined and freight costs spiked. In this turbulent climate, many label and packaging converters shifted production back closer to US and European end-markets. So companies have started looking into regionalizing their products, hoping to find more stability, faster turnarounds, and reduced transport expenses.
But even for companies reshoring production capacity, demand uncertainty abounded in the first half of 2023. Consumers reduced spending. Sales projections need to be more reliable. Packaging orders declined for non-essential categories, while essential staples saw trading down to value-oriented private labels or generic brands with lower margins.
These demand fluctuations make production planning and capacity optimization tricky–a line restored to circumvent overseas delays risks under-utilization if volumes sink.
That means the same macroeconomic turmoil enabling supply uncertainty also depresses end-market demand essential to justify reshoring. This twin squeeze introduces further hesitation for producers in identifying new regional hubs.
Sourcing packaging substrates has also posed difficulties, forcing converters to find new suppliers and adjust to new materials. This complicates supply chains already under strain.
A shrinking talent pool
The labels and packaging industry faces a concerning shortage of skilled labor, reflecting broader trends affecting the manufacturing sector. Challenging and demanding working conditions, including long hours, make recruiting frontline talent difficult, especially given competition from other industries that can offer more attractive compensation.
But the emergence of new digital and AI technologies presents opportunities to begin reversing this shortage. These advancements can create exciting new career opportunities in areas like automation and data analysis, helping attract tech-savvy younger workers. The technologies also enable the upskilling of current employees, helping them transition into these 21st-century roles.
The industry’s growing focus on sustainability and innovation also helps reframe its image. Paper and packaging companies that promote their environmentally conscious practices and cutting-edge technologies can appeal to younger workers’ values. The trend toward creating sustainable products that add value aligns with rising expectations among new talent pools.
Strong focus on waste reduction
Escalating energy and material prices is driving up costs for printer service providers and customers alike. Implementing energy-saving solutions can significantly mitigate these challenges. Solar panels, UV LED lamps, automated ink mixing systems, and transitioning from analog flexographic to digital printing deliver measurable impact.
Equally vital is implementing stricter quality standards using automation to help cut down on waste. Think of it this way–the more we catch defective print runs in progress with in-line checks, instead of after the fact, the less paper, ink, and other consumables get used on products that will just end up getting scrapped anyway.
Building print routines that machines can handle end-to-end without constant operator adjustments or intervention can have the same benefits. The fewer times there's a press stoppage that leads to make-ready again or material that can't get back up to spec after sitting idle, the less materials teams have to pull into production to replace what gets discarded.
Sustainability climbing the agenda
Sustainable printing practices continue to climb the consumer and corporate agendas. As organizations accelerate their sustainability initiatives, print converters will conduct holistic reviews of business and workflow processes to ensure they deliver end-to-end solutions with minimized environmental impact.
The ethos prompted Kindler Label Service's recent deployment of the HP Indigo 25K. By aligning with HP's commitments to sustainable technology, Kindler looks to fuse environmental stewardship with its corporate DNA in fulfillment of responsibilities to people and the planet.
Simultaneously, regulation will dictate heightened transparency across the industry. Substantive action towards circular economic models in the production sphere by 2025 seems highly probable. Governance shall compel engagement from companies lacking existing sustainability roadmaps, while proactive players stand ready to comply and lead peers.
The current climate makes clear that sustainability must form a core component of strategic planning rather than mere communications positioning. With market forces and regulatory bodies in chorus, vinyl and label converters must demonstrate tangible ecology-driven progress in their manufacturing, distribution, and supplier policies as a matter of reputational imperative and competitive advantage.
Digitalization and automation remains at the forefront
Companies across all sizes are prioritizing the digitization and standardization of processes to optimize production efficiency and profitability. As Saskia Reißner of Werbeideen und Etikettendruckerei Reissner GmbH says, "With the HP Indigo 6K, we are now taking the next step and will be able to benefit from even more automation options in the future and further expand our product portfolio."
We are already seeing converters create connectivity between systems and automate processes with cloud-based solutions and AI to dramatically improve speed, performance, stability, and reliability, as evidenced by Enplater's recent installation of the HP Indigo 200K. Enplater COO Marti Alaball noted that "small improvements across the board have made a dramatic difference."
Over the next year, data analysis and AI will increasingly help converters improve productivity. However, digital will complement rather than replace conventional technologies in a hybrid approach for years to come.
Adopting the "right press for the job" will be critical-digital presses like the HP Indigo 6K for high-value short runs, conventional presses like the new V12 for long runs, and wider presses like the 200K for large labels and sleeves.
As early adopter All4Labels Plant Manager Roger Gehrke has seen, the HP Indigo V12 is "closing the gap to conventional printing" with its speed, quality, versatility, and efficiency. Global brands like Nutella are also leveraging HP Indigo's unique AI solutions to initiate 25+ worldwide campaigns over 6+ years, transitioning from seasonal to always-on marketing strategies.
Closing thoughts
The new packaging landscape involves managing growth, addressing more complex and more demanding packaging formats, overcoming environmental constraints, optimizing brand owners' supply chain, implementing new regulations, attracting new talent to the industry, developing new business models like web-to-pack, and welcoming new entrants from the commercial printing world.
At HP, we are committed to adding value to the printing processes and across the entire value chain. With partners across inkjet and LEP printing technologies, adding intelligence to machines and processes, we will help converters to produce more effectively and sustainably.
A full digitalization journey is necessary to embrace the challenges ahead.