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Digital Printing for the Packaging Industry by Justin Hayward CIR

Don't miss the boat - waves of digital innovation | market trends and drivers fishbone diagram | new survey data | patent holders | product tech suppliers | markets growth digital vs analogue | evidence for market pull & activity | perceived barriers to adoption relatives | Customer DMUs | Strategy Logic

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Digital Printing for the Packaging Industry by Justin Hayward CIR

  1. 1. Digital Printing for Packaging Industry Q1 2015 www.cir-strategy.com
  2. 2. Cambridge Investment Research consulting for strategy
  3. 3. Examples of relevant work done Tech roadmap for Xaar printheads back in 2004, successfully exploited High-Value Manufacturing Conference Series since 2002 (36 conferences delivered averaging 100 execs) Technology strategy for Domino in digital labels in 2009 PIRA Inkjet Inks for Packaging Report 2006, Digital Textiles Reports 2012 & 2014 Commercial Diligence for Domino plc just before they purchased PostJet in 2012 for GBP£6.5Mn with presentation to Board of Directors IP Strategy for Plastic Logic 2013 and... Market Entry Strategy for DP Start Ups/Spin-offs e.g. Inkski Work on labels for Epson “Beyond the Tech Enablers” - 2008 Reports on Global IIJ & Labels sold Globally, EU, APAC and NA - 2009 Mapped entire Cambridge High-tech Cluster (750 scaleable technology firms) 2 large recent & ongoing Direct-to-X digital printing in packaging clients
  4. 4. Workshop – Co-creation - Joint creation of a better plan with CIR proposals of contribution (workshop) - Separate client / CIR reflection on the joint creation - Joint conclusion of the results from the activities above and proposed next steps (what have we learnt and have we proven to be able to work together)
  5. 5. 1 • What is the nature of the opportunities from digital printing? 2 • How real is the interest from customers in the digital package printing opportunity? 3 • What is the competitive landscape & market potential? 4 How economic is digital for the packer or processing factory? Areas of focus: • Structural changes to market | their effects on the business • Market readiness, timing & growth rates • The use case & customer value-proposition • Business model concepts | Scenarios & options (via Route to Value) • Business propositions & validation • Routes to Market | Accessing technology • Recommendations to Board
  6. 6. Overestimating the Short Term, underestimating the Long Term: Digital printing waves* observed in last decade 2004 – signage & displays 2008 – labels 2010/12 – ceramics 2012/14 – textiles 2016/18 – packaging? …Wait and see or Don’t miss this boat? * Moving from unknown to an established or even saturated market in relatively short period of time, year given represents approximate “take-off”
  7. 7. Source: CIR Dec 2014
  8. 8. 42 interviews on digital for packaging achieved Aug-Sep 2014 Technology supplier - equipment (printers, print finishers and line machinery) 36% N=15 – Packaging (12) & Labelling (2) Converter 33% N=14 – Brand owner or retailer or packaging filler / food producer 29% N=12 – Consultant / Packaging Gurus 2% N=1
  9. 9. Evidence of Related Patent Activity in last 5 years around digital for packaging (CIR Patent Search Team) Adverpack LLC Atlantic Zeiser GmbH (Germany) Ball Packaging Europe Gmbh (Germany) Colgate-Palmolive Company Cuch Simon R ( Us ), Cyan Tec Systems Ltd ( Gb ) DIC Corp Durst Phototech Digital Tech ( At ) Fuji Xerox Co Ltd Fujifilm Corporation (Japan) Gizeh Verpackungen Gmbh & Co Kg ( De ) Graphic Packaging International, Inc. Guangdong Dongfang Jinggong TechnologyCo Heidelberger Druckmaschinen Ag Heineken Technical Services B.V. (Nl) Hewlett-Packard Development Company, L.P. Hitachi Ind Equipment System Co Ltd INX International Ink Company ( Us ) KHS GmbH (Germany) Kimberly-Clark Worldwide, Inc. Konica Minolta Holdings Inc Krones AG ( De ) Machines Dubuit (France) Mars, Incorporated Memjet Technology Limited (Ireland) Mimaki Eng Kk Osiris Technology B V ( Nl ) Plastipak Packaging, Inc. Pressco Technology Inc. Primera Technology, Inc. Procter & Gamble Company, The Reynders Etiketten N V ( Be ) Seiko Epson Corporation (Japan) Smurfit Socar Packaging ( Fr ) Sun Automation, Inc. Superfos Packaging As ( Dk ) Tetra Laval Holdings & Finance S.A. (Switzerland) The Coca-Cola Company Till GmbH (Germany) Toppan Printing Co Ltd Toshiba Tec Europ Imaging Systems SA ( Fr ), Toshiba Tec Kabushiki Kaisha (Japan) Videojet Technologies Inc. Weng An Zhongya Color Printing Packaging Co Ltd Westvaco Packaging Group Inc (Us), WM. Wrigley Jr. Company Xeikon Ip Bv (Netherlands) Xennia Technology Limited (United Kingdom) Xerox Corporation Xinxieli Package Products Shenzhen Co Ltd
  10. 10. hp indigo (ep ip) ABG Intl (dfs w/ hp indigo) Xeikon (fn pkg fc iml, ep) KHS – d2s ij (pet) Krones – d2s ij (pet hclient) Till – d2s ij (any mat) ToneJet (w/ Ball) – d2 metal cans es FFEI – Graphium – h m prt ij flxo Sacmi Machines Dubuit d2s pet ij Hp scitex – d2 corrug ij efi (corrug fp fc) ij Durst (corrug) ij FujiFilm Screen (fc corrug) ij Sun Automation (d2 corrug) DPS (Brother?) ij VIPColor lbls fc fp por paper Primera lbls fc fp Cyan Tec rtr rts Heidelberger w/ Gallus, CSat (h m prt) mark andy (h m prt) Nilpeter (h m prt) lbls fc fp Colordyne lbls tags sheets Epson (lbls - fn pkg) INX Digital Edale (dfs) Atlantic Zeiser (ip) VideoJet ip d2p Uteco dfs flxo Spartanics dfs SEI dfs Hinterkopf aerosol metal cans Wifag Polytype ij Highcon (dfs fc w/ xeikon) Presstek fc Kodak (Prosper, Stream) w/ Bobst (dfs corrug) Xerox vdp rtr/sheet Canon Oce vdp rtr/ sheet Landa (nanog fc) Companies already developing & marketing digital packaging printing & finishing systems
  11. 11. Global Label & Packaging Market Growth Source: PIRA 2013 6.6% CAGR 4.2% 15.5% 22.7% fc and fp 40-45% CAGR forecast Global packaging will reach $1Tn by 2018 (PIRA) EuroBn 18.2% “Packaging has gone from an afterthought to an integral part of the product” - a packaging converter
  12. 12. Evidence for market pull How strong is your or your customers' interest in using direct-to-package digital printing? N = 30 Average = 3.50 or “Middling to Strong” (median / average) “Strong” (most common answer)
  13. 13. Other US research into packaging Q4 2013 Source: Karstedt Partners How Brand owners and retailers view the benefits of digital printing
  14. 14. Other US research into packaging Q4 2013 Source: Karstedt Partners Does interest level change with a premium level of 15% to 20%
  15. 15. Evidence for market activity If you may at some stage require to buy digital direct to pack printing equipment, which of the following would best describe your current position or approach to this: Median response & a surge in beta installations exp. Q4 2014 & 2015
  16. 16. Perceived barriers to adoption of digital direct packaging printing All barriers around technology, printing, finishing are thought to be solved within 4 years and then any delay to adoption is organisational
  17. 17. 1st= Consumer engagement 1st= Faster turnarounds “Time to mkt segment” 3rd Advertising promotions: Limited editions 4th Advertising promotions: Local events 5th Regionalisation 6th Seasonal information 7th Languages Customer drivers & Decision-Making Units Marketing dept Production/logistics Regulatory/ICT Order of importance from survey: Other US: commercial printers in maturing market seeking new segments e.g. packaging “profitable short-runs segment” high •  Key to marketing and sales strategy for digital direct to packaging will be accessing all 3 depts at brands
  18. 18. Strategy
  19. 19. Source: Harvard Business Essentials Series: strategy (generic aspects)
  20. 20. connect projects to changes, objectives, goal, values
  21. 21. Confidential 21 Towards a better plan… CIR roles 1. Methods 2. Validation – hands on 3. Assurance – independent review
  22. 22. Confidential 22 Towards a better plan METHODS Design structure Segmentation Confidence Value network & key case sub-network Impact assessment Opportunity prioritisation & Options Business Proposition,Value Proposition Service design Your route to value
  23. 23. Confidential 23 Value network and dynamics
  24. 24. Steps for Value Network Analysis Set-Up 1.  Identify Participants (all stakeholders) – NODES Upstream and downstream External & internal Complementary Assets 2. Identify Expectations – FLOW LINKS Tangible & Intangible 3. Define scope and boundary, context and purpose – UNIVERSE Primary & Secondary Stakeholders 4. Validate participants, expectations & sequencing – LOGIC Propensity to change of stakeholders
  25. 25. Confidential 25
  26. 26. Confidential 26
  27. 27. Confidential 27 Confidence
  28. 28. Confidential 28 Confidence table Example NOTES 1 Sources of confidence are adapted for each client and project. 2 We do not use 100% confidence, as this is usually impossible to achieve.
  29. 29. Confidential 29 Routes toValue
  30. 30. Confidential 30 Routes to Value The RtV View* explicitly links planning with execution. Allows for impact of any decision to be understood. StrategyTactics *The RtV Map is a directed graph. Our method ensures that everything aligns to a strategic goal and that the impact of decisions is clear
  31. 31. Confidential 31 Structuring the decision context Routes to Value – visible strategy
  32. 32. Confidential 32 Routes to Value – visible strategy Identify emerging user need Option 2 Option 3 PROJECT – choosing options Analyse discourse stream Cost Conf. Time Conf. £20K 70% 6 wks. 60% Dependencies Agree license Competencies Ontologies and target users
  33. 33. Confidential 33 Routes to Value – visible strategy Increase number and length of accounts CHANGE – making it explicit RESP. Ed Meter Revenue as % of total revenue : C F A T 15% <=25 % 50% <=66 % Current Fail Acceptable Target
  34. 34. Confidential 34 Routes to Value – visible strategy E.g. Increase the lifetime value of customer OBJECTIVE – Clarify goals RESP. Ed Meter Annual spend over 5yrs £K pa C F A T 55 70 100 250 Scale of measure Metrics of measure
  35. 35. Confidential 35 Tracking confidence in outcomes Uncertainty is the best predictor of outcomes. Gollet. C., University of Toulouse
  36. 36. Confidential 36 Impact assessment
  37. 37. Customer lifetime value and impact assessment LifeTimeValue function Life Time )-(( )Transactions number of, Average Transaction Value, Cost of Acquisition+Cost of Retention Number of Transactions in a period, e.g. a year i.e. number of periods (number of years, when year = period LTV f LT ) - (( )Tn,ATV, CoA + CoR impact: l = low m = medium h = high 0 = no impact © Nicholas Coutts 2011 – 2014 All Rights Reserved OPTION TIME COST IMPACT IMPACT IMPACT IMPACT IMPACT Reduce price l l h h h o o Improve web site m h m m h h h
  38. 38. Confidential 38 Towards a better plan VALIDATION Specific market and customer data Interviews; Research; Intelligence; Insight

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