In late 2017 and early 2018, Flexo & Gravure Global asked several package print shops and converters about their opinion on the past year and their estimations on trends and challenges for 2018. In the ninth and last part of this survey, Jens Adrio, head of corporate development at Siegwerk, talks about unstable supply situation triggered by heightened regulatory enforcement, weather disasters or fires, the growing short-run demand that is driven by brand owners desiring regionalization and personalization, and stricter environmental regulations and controls especially in China.
As you look back on 2017, were you able to meet your own expectations and what surprised you the most about the printing and packaging industry and markets?
Looking at the overall performance, 2017 has been a good year for us even with the challenges the whole industry had to deal with. An unstable supply situation triggered by heightened regulatory enforcement, weather disasters or fires have led to unexpected price hikes of different raw materials like titanium dioxide (TiO2), MEK, PU and others. This tense supply situation was a surprising challenge for the markets and definitely hampering the achievement of our goals for 2017.
Nevertheless, we’ve strongly continued with our portfolio transformation and focused our efforts on further expanding our market leadership in packaging and labels applications. We’ve achieved solid growth in both sales and volumes in the packaging segment and outperformed the overall market. We are now heading to one billion euros packaging ink sales. The strongest growth potential remains coming from our business units Flexible Packaging and Narrow Web. Growth here will continue to come primarily from emerging markets, mostly from Asia, where we’ve already invested a lot during the last years to specifically expand our local capacities and offerings.
As we move forward into 2018, what do you see as the largest trends or megatrends in the industry?
One of the leading trends is the growing short-run demand that is driven by brand owners desiring regionalization and personalization of their product packaging. This will further drive growth of digital printing technologies including both electrophotography and UV inkjet solutions. Packaging printing will gain further momentum with an increasing interest in innovative packaging materials and new requirements in packaging applications demanding new formulations and ink technologies. In the packaging market, there is a steady increase in regulatory efforts worldwide which will further increase the demand in food safe ink solutions fulfilling highest food safety standards. Low migration ink systems will remain one of the largest growing areas in this context.
The implementation of low energy curing will gain pace while LED UV curing will continue to be one of the growth drivers in the UV ink and printing industry. Furthermore, the growing focus of printers and brand owners on sustainable packaging solutions and the use of renewable materials in ink formulation will also drive the development activities in all ink technologies in line with the general market demand for sustainable solutions. When talking about general megatrends cost pressure will still dominate decision-making in the converter industry driving the demand for integrated ink and service solutions that help to increase efficiency and reduce customers’ Total Cost of Ownership.
Besides, we will see further growth in emerging markets due to urbanization, a mostly trend-based growth in mature markets and a persistent increase in solutions for food and general safety worldwide.
What do you feel the industry should be most prepared for dealing with over the next 12 months?
We expect remaining pressure due to the critical supply situation of raw materials and a high level of pricing for TiO2, organic pigments and other raw materials, at least through the first two quarters of 2018. The industry is changing: Stricter environmental regulations and controls especially in China are being implemented at high pace. Without meeting the new requirements plants will be closed and the supply will remain volatile. It’s a good movement towards more sustainability worldwide, but it’s rather the quite sudden change of direction. The high speed at which governments are acting that will remain a challenge for all market players. Over time, the markets will stabilize again. Until then the industry needs to get prepared for a “new normal” in the matter of raw material supply. At Siegwerk, we are constantly working on getting as many new sources of raw materials qualified as possible. We are looking for raw materials based on alternate feedstocks and origins to ensure our supply chain remains as stable as possible. It is always our objective to minimize the effect of potential supply shortages by having sufficient alternative suppliers and materials for the manufacture of our products and solutions.
With regard to printing technologies and packaging types, we expect to see a strong demand in the area of Flexible Packaging – especially in emerging countries – as well as for UV, EB and digital printing solutions. It’s all about innovative ink systems addressing upcoming trends while offering optimum performance and highest safety standards for the end-use applications.