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Converting Today: What changes are you seeing in the corrugated market, and what are their implications for corrugated converters?

Arzu Ilhan Babaoglu: Corrugated converters are under a number of pressures including diminishing margins on commodity converting jobs; requests for shorter run lengths, and changes in the products required. All this is happening against a background of economic challenges, market consolidation and changing retail strategies.

Retailers are looking for fast, efficient ways of displaying goods, while keeping their own costs to a minimum. Converters increasingly find themselves not only printing and converting FSDUs and POP/POS displays, but also assembling them and filling them with goods. This 'co-packing' is becoming increasingly common.

Another shift is that the transit packaging that was usually a plain and simple corrugated carton printed in only one or two colours, is giving way to 'retail ready' packaging with the product's display packaging being its transit packaging. For retailers, goods shipped this way can be placed on the shelves straight from the delivery vehicles. But for the converters, the additional demands of full colour printing and more elaborate die-cutting and finishing increases time and cost pressures.

What are the drivers for shorter run packaging and POP/displays?

Short runs are perfect for regions, special events and localised promotions utilising variable data printing, enabling better target and closer relationships between brands and their customers.

There has also been a rapid rise in private brands - those specific to a retailer - and they, in turn, may have several sub-brands for premium, standard and budget varieties.

Since the overall quantity of the product sold is not growing very significantly in the current climate, the packaging runs for each SKU are being driven down. This puts pressure on prepress and press time, as well as on distribution logistics.

What do corrugated converters need to do to meet these challenges?

While large-format digital presses can address important parts of these issues, converters are looking for an end-to-end converting solution that goes beyond printing and relates closely to their ways of working: a solution that can reduce the number of steps needed in production; is economically viable, offering high productivity; and delivers outstanding performance with minimal downtime.

It would also be a solution that helped them to deliver fast turnarounds. This is a challenge that converters haven't had to face that much before. Previously, packaging and display buying patterns had long lead-times; campaigns were planned well in advance and there was an established pattern of logistics.

This situation is changing fast: brand-owners and retailers are increasingly reactive to market conditions and will make fast decisions about new designs, new packaging and new promotions. Converters can get caught in a pinch here, too. If the creative parts of the process (including design and prepress) fall behind schedule, it is unlikely that delivery times will be similarly pushed back - and it will be up to the converter to deliver within the truncated time period. A solution that can deliver an accelerated turnaround time will find favour with converters.

How important is quality in corrugated packaging and promotional display work?

High print quality is expected; nothing else is acceptable. Unfortunately for converters, this means that print quality is no longer a differentiator. Print quality expectations are continuing to rise as well: accurate brand and special colours are very important, and the expectation is for colours to be consistent across printing methods, so the colours printed by litho, flexo or digital must be consistent. The rise of retail-ready packaging means that there are more colours and text on corrugated materials, and even the small print must be both legible and look good.

Given these challenges, is there a good future for corrugated converters?
Yes. Unlike other sectors in the graphic arts where digital media is reshaping the landscape, we do not see it having the same effect on packaging. Online purchasing is increasing, which presents more opportunities for corrugated packaging, and retail outlets will still compete, using more decorative packaging, promotions and displays.

That is not to say that there won't be changes for converters. Co-packing and other forms of preparation of displays will become more commonplace and converters may develop other services to add value and increase margins.

We also think that corrugated, as a material, will remain the substrate of choice for these applications. Usually made from recycled materials and itself recyclable, it is strong, light, inexpensive and well-suited to the functions it performs. Variations in flute size and liner characteristics mean that corrugated can be adapted for a very wide range of applications.

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