Label it a Money-Making Opportunity

Bryon Beiler, owner of Denver, PA-based Beiler Printing, had been outsourcing label printing to subcontractors for some time when, in 2012, he decided to bring label printing in house. “We live in a large agricultural area; a lot of the food for New York City and Philadelphia comes from this region,” he said. Among those foods: meats, organic fruits and vegetables, salsa and hot sauce, and organic dairy products like goat milk and cheese. Much of it is made by Amish growers who have produced organic products for generations, and are happy to leverage surging interest in organic foods.

Four years ago, Beiler Printing started producing labels for the food products of those purveyors. The company launched that service with a small investment in an Allen Datagraph machine. Last November, company officials decided to upgrade to the Epson SurePress L-4033AW, a device that comes in at under $200,000.

The result? “There is much more consistent color quality,” Beiler said.

“That was an issue before we got it. And the SurePress provides a huge consumable savings. The ink is much cheaper, and we don't need any pre-coated paper, meaning we can run on inexpensive stocks. Since we got the SurePress, we've been able to move into silver foils, vinyls and BOPPs [bi-oriented polypropylenes].”

Observing that “we're extremely happy with” the move to the SurePress, Beiler said that reaction is based on the fact Beiler Printing's customers are happy.

“We have everything in house,” he noted. “We can receive something, print it and ship it the same day with the SurePress. [Customers] like that they don't have to keep nearly as much inventory of labels as before. That saves them space. But the biggest thing is consistency, and being able to match PMS colors exactly.”

A full-service, family-owned commercial printing company established in 2009, Beiler Printing is emblematic of the growing number of commercial printers dipping their toes into the label market to leverage the marketplace's shifting dynamics.

Behind the Numbers

As Beiler Printing learned, the label market is changing, and it's a metamorphosis that spells opportunity for print service providers.

According to the Print Industries Market Information and Research Organization (PRIMIR), package run lengths are falling an average of seven to nine percent annually, making improved digital technology a more viable label solution year by year.

Also according to PRIMIR, brand owners increasingly prefer to work with “one-stop shops.” Doing so enables them to purchase labels, flexible packaging and folding cartons from the same vendor.

More than 40 percent of brand owners report being more inclined to give one-stop shops additional printed packaging business. If anything, that should provide print service providers who don’t offer label printing reason to consider doing so.

“The digital label market is one of the industry’s fastest-growing segments,” said Yoav Lotan, manager of the label platform for HP Indigo.

“Consumer trends, economics and sustainability are pushing the label market toward shorter runs. And just-in-time production is becoming a critical capability.”

Commercial printers are currently fighting for differentiation in the market, Lotan observed. “Print service providers who already have digital at their core are leveraging the fact they understand digital and can apply it to expand their market offerings,” he said. “”This grasp of digital gives them a very big leg up in the market.”   

Many customers who go to one commercial printer for marketing collateral and point-of-sale are shopping other PSPs to get their labels. “There is potential for these PSPs to have a full-service offering to provide the same brand,” Lotan said.

Agreeing that the dynamics of the label and packaging industry are evolving is Randy Rickert, director of iSys Label, Calgary, AB, Canada, developers/manufacturers of short to mid-run digital label printers. “The lines between labels, packaging and product are blurring, and when your product is competing with hundreds of others for a customer’s attention, everything hinges on the overall visual appeal in order to stand out from the rest,” Rickert said. “Customers’ demands are turning to shorter runs, faster turnaround and greater variability in the labels, branding and packaging.”

The result, he added, is that commercial printers and brand owners are striving to be more responsive to the market changes.

By incorporating digital print technology into the existing workflow, independent brand owners and print providers are able to leverage the advantages of both while entering the digital label and packaging market with a low-capital investment.

Mike Pruitt, product manager for the SurePress digital label press with Long Beach, CA-based Epson, is yet another impressed by change in the label market.

“It is changing; it was pretty much analog, and now is moving more and more toward digital,” he said, citing equipment evolution as a key development. “There are very expensive digital presses of a million dollars and more. But now there are desktop label printers at the lower level of prime label quality . . . It’s an easy way to get in.”

Why Jump In?

According to Rickert, “huge opportunities” exist in label printing, and commercial printers should capitalize on them. “It’s very rare to find a product in any market that doesn’t require a label these days,” Rickert said. “Most printers typically have very large presses or deal with wide-format printing. It doesn’t make sense for most of these short runs to be put on a large press or for the customer to be tens of thousands.

“By adding digital label printing into their workflow, they will be able to accept the smaller jobs that come in. The automatic job costing and ease of printing allows customers to see proofs instantaneously. And turnaround times are greatly reduced, making for happier customers . . . Digital printing provides this.”

For his part, Pruitt offered a hypothetical scenario, reporting a PSP could purchase three of Epson’s ColorWorks C7500 label printers for under $27,000.

The ColorWorks C7500 is designed to increase productivity while reducing the cost of using pre-printed labels, leveraging bright, durable label media to give a premium appearance to professional branded products. The PSP could then add perhaps $40,000 to $45,000 in finishing equipment, and with this combination of technology be able to print 100,000 labels a day for less than a $75,000 investment.

“It really wasn’t possible five years ago at that price point to have a system that was reliable and prime label quality,” he said.

The label printer market is increasingly characterized by a large range of possible investment. Starting at the aforementioned $75,000 investment, PSPs can take their investments all the way to a range of $500,000 to more than $1 million, he said.

The upper end, he added, features printers that are “just becoming faster and more reliable, with higher levels of print quality.”

As for the market as a whole, there has been considerable consolidation over the last few years, with smaller label printers being gobbled up by the larger players, he asserted. “These companies have been in the market for years, have lots of experience,” he continued. “It is a profitable field, but competitive. And in the case of larger commercial printers [entering label printing] they have organization and web-to-print.

“That would help them, because they have the basics there.”

Some smaller label-printing PSPs have gone after local companies like craft breweries, and done very well, he said.

This type of client typically wants either more attention from the label printer, or wants less, seeking the lowest price and little argument on details.

“A smaller guy could do web-to-print, use two or three types of media, including gloss finish, make it simple – and succeed,” Pruitt asserted.

Keys to Success

Commercial printers who have not yet considered labels can take lessons from successful label converters, Lotan said. “A key lesson is placing particular focus on business development,” he observed. “Successful label converters have a very proactive approach, visiting brands, building relationships – particularly marketing relationships -- with them, brainstorming on concepts and creating mock-ups. Most ideas probably don’t come to market, at least not in the immediate future. [But] when they do, the impact is substantial and potentially game changing.”
Those who would like to enter the label printing marketplace would be best advised to find a friendly cohort in the business and speak to him or her, Pruitt said.

“We will sell you what we want to sell you, but from a business standpoint, it’s better to talk to someone else in that business,” he advised. “[Ask] ‘What’s your total investment, what’s your return, how easy is it to get employees and retain those employees, how easy is it to get accounts and do you specialize in one thing?’

“I know people who specialize just in flexible packaging for foods. Maybe they already have a lot of accounts in the pharmaceutical area. That could be a good fit. Some printers might actually sub out the label business to a label converter, and now want to capture that business themselves.

“And some are printing on wide-format and using table cutters to cut the labels, because they already use wide-format in other aspects of their business. They can switch over to a dedicated roll-to-roll label press for greater efficiency, and possibly handle more types of label media.”

The trends impacting the label market, such as shorter runs and local variations in packaging, don’t necessarily mean newcomers have it easier than before, Pruitt said. As in any business, newbies have to overcome the smart, capable people who are already in that market and have a clear toehold in the business, Pruitt said.

“Look at your strengths, and carefully analyze any weaknesses of the existing players,” he advised. “A lot of it is based on relationship. Say a large food processor wants to have multiple sources, and you the printer might already have their point of purchase display business. Capturing that account might not be all that difficult.”

Success Stories

Illustrations of the opportunity available to PSPs and brands abound. iSys reported that it has seen end users large and small, across many regions, incorporate short-run label printing into their workflows. “We have a large variety of customers, ranging from wineries to high-end cosmetics firms and electronics companies that use the iSys roll-to-roll desktop printer to print serialized labels for each of their lines.

“From 10 labels to a few thousand at a time, these printers make it easier to print what is needed as it arises,” Rickert said. “There’s a whole bunch of customers out there who don’t want or need a quantity of 10,000 labels for their project. Sometimes, they only want 100, and that is where our products fit.

“They allow a commercial printer to accept that job.”