Digital printing for flexible packaging has been slow to take hold, but a start-up company in Madison, WI, says it is equipped and ready for a fast break into this potentially lucrative market.
By Patrick Henry | WhatTheyThink.com
Published: June 28, 2016
Digital printing’s share of packaging production remains small—a recent drupa report put it at only 7% of the total. Within that narrow slice is the still smaller subcategory of digitally printed flexible packaging. Machine limitations, substrate issues, and the iron grip of flexography have all played their parts in keeping digital printing processes mostly at the fringes of the film-based packaging market.
This doesn’t mean that the segment doesn’t have a digital future or that ambitious digital printing entrepreneurs don’t want to be in on it. Smithers Pira says that the global market for flexible packaging will grow by 3.4% per year through 2020, by which point it should be worth nearly $250 billion. Convinced that it has both the technology and the business model to seize some of the opportunity with digital production, a start-up printing company in Madison, WI, is going after a piece of the action.
Meet ePac LLC, a small but striving shop that opened its doors in May with one digital press, about 10 employees, and a strategic plan that already calls for more devices and additional locations. Carl Joachim, one of the founding partners, describes it as a greenfield operation built entirely from the ground up around wide-web digital printing for flexible packaging.
This means that the business has no legacy presses to support nor any analog production routines to adhere to—just a determination to do everything that can be done with the HP Indigo 20000 Digital Press on which all of ePac LLC’s flexible packaging jobs will be printed.
Greenfield and 100% digital though it may be, the company isn’t without roots in the mainstream flexible packaging printing industry. ePac LLC is an outgrowth of Emerald Packaging, a Union City, CA, converter that prints tens of billions of food bags, pouches, and other film-based products using high-volume flexo presses. When Emerald Packaging agreed to beta-test an HP Indigo 20000 for smaller runs, the possibility of starting an all-digital flexible packaging operation began to take shape.
It crystallized during an open-house event where Kevin Kelly, CEO of Emerald Packaging, first discussed launching ePac LLC as a joint venture with Joachim and his co-principals at Arion Partners LLC, a two-year-old strategic investment consultancy to the packaging industry.
Joachim has a 25-year background in digital printing with Xerox, Ocè, and Ricoh. Arion’s Jack Knott, serving as CEO of the new company, also has an extensive track record of building revenue in the sector, as does the third Arion partner, Virag Patel. Knott and Patel respectively are the former CEO and vice president – global market development of Coveris, the sixth largest global plastics packaging company.
The Arion trio provides management oversight for ePac LLC. Emerald Packaging contributed the HP Indigo 20000, which it transferred from Union City to Madison along with its key operator. Premedia, converting, laminating services were added, and the start-up was ready to find out how well digital printing could mesh with the demands of the flexible packaging market.
Joachim believes that with the right manufacturing approach in the appropriate run length ranges, the fit can be highly advantageous.
“All workflow and downstream processes are engineered around the HP 20000 platform for maximum efficiency and productivity,” he says. This includes optimizing not only internal procedures for printing and converting but also the channels through which customers do business with ePac LLC. To that end, the company is creating an automated web-to-print ordering system that will be phased in over the next six to 12 months.
As for quantities, Joachim says that he and his partners modeled digital and flexo run lengths “100 ways to Sunday” and found that the sweet spot—the range in which the HP Indigo 20000 prints most cost efficiently—lay between 1,000 and 25,000 copies. Produced in these volumes, and sometimes in batches as high as 75,000 units with multiple SKUs, are laminated roll-stock and multi-format pouches including those with three-side sealing; pillow and flat pouches; stand-up pouches with plowed-in bottom gussets; side gussets pouches; and zipper pouches.
ePac’s business model focuses solely on quick-turnaround, short-run flexible packaging for consumer product goods (CPG) suppliers. The product markets of primary interest are coffee, natural and organic foods, pet foods, lawn and garden supplies, snacks, and cheese. There is going to be plenty of work to do for these customers, says Kelly, because of three strong trends favoring an all-digital approach:
“First, the trend towards very short runs as SKUs explode. Second, the ability to exploit a web-to-print model thanks to the agility of the Internet and digital printing. Third, the desire of brands to reach out to their customers in ways that engage, for instance by personalizing packages with pictures consumers submit.” Joachim cites CPG producers’ increasing reliance on targeted product variations, promotions, and test marketing as additional factors that should drive business ePac LLC’s way.
Committing to digital printing for flexible packaging also means excluding things that don’t conform to the model that the company has adopted.
For example, there’s currently no room in the plan for labels (although Joachim sees variably printed shrink sleeves as a future opportunity). And, it definitely rules out having conventional equipment for long runs, an option that was considered but ultimately rejected as the model evolved. Joachim says that instead of trying to compete with large-scale producers in this space, “we are open to working with converters that see the benefits of working with ePac as their short-run, quick-turn partner.”
It’s uncommon for a printing business to stake its credentials wholly on a single piece of equipment, but that’s the degree of confidence that ePac LLC has in its HP Indigo 20000. Introduced four years ago, the device is a 30″ wide, electrophotographic web press designed specifically for printing flexible packaging, pressure-sensitive labels, shrink sleeves, wrap-around labels, and in-mold labeling. It can do so in up to seven colors at a top speed of 135 fpm.
HP says that with the help of an inline priming unit, the press can print nearly any standard flexible packaging substrate. This is the feature that aligns the HP Indigo 20000 most closely with ePac LLC’s business model.
The device is, according to Joachim, the only wide-web digital printing press capable of handling the full range of substrates used in flexible packaging. As a result, when it came to choosing a platform for ePac LLC, the HP Indigo 20000 was “the only game in town.” In the market space that the company occupies, he says, “you go HP, or you go home.”
Packaging films imaged on the device are sent to a Nordmeccanica Super Simplex SL solvent-less lamination system and Mamata Vega 410 servo-driven pouch maker for finishing. These machines, says Joachim, match the output of the digital printing platform and let ePac LLC offer customers complete one-stop-shopping for production services. Design and premedia services that optimize the capabilities of the HP Indigo 20000 are provided through a partnership with the Oshkosh, WI, branch of OEC Graphics, a multi-location firm that bills itself as the largest and oldest privately-held premedia company in North America.
Start-ups usually have to take tentative steps forward, but ePac LLC already appears to be pulling on its seven-league boots. Joachim says the company will put in a second HP Indigo 20000 in July and has two more on order for installation at sites to be announced. He believes that the success of the model in these locations eventually could lead to “a national footprint” for short-run flexible packaging printing the ePac LLC way.
Joachim says that for now, he and his team are happy to be getting the ball rolling in Madison, a university town that incubates a good supply of the kinds of technical talent that a business like ePac LLC will need to recruit as it expands. It’s inherently propitious to be a packaging printing company in the Midwest, he adds, because of the region’s strong infrastructure of CPG producers and the printers and converters that serve them.
“Operations are rapidly ramping up,” he reports. “We’re open, it’s focused, and it’s working.”