Welcome to the printconnect podcast. The podcast that explores all aspects of the specialist printing industry, whether it's digital screen or industrial printing. We discuss the latest technologies, trends and innovations shaping the future of print. Each episode will bring you insights from industry leaders and experts to keep you informed and ahead of the curve. On today's episode, we'll be discussing the rapid growth of digital printing. Framing this in the context of analog processes, particularly in this case offset lithography. We're going to dive into the factors driving these developments, the latest technological advancements, and how these two printing approaches are shaping the future of the industry. Joining us today is Jon Harper Smith, an associate consultant at Smithers Information. With an impressive career spanning over 40 years in the printing industry. Jon specializes in consultancy projects, offering data driven analysis and expert insights. He's also the author of several authoritative reports on both analogue and digital printing. With his extensive experience and deep understanding of the industry. Jon is the perfect guest to help us unpack today's topic. So welcome, Jon. Well thank you. Thank you very much for for the opportunity. You're very welcome. And if you could maybe just give us a just a brief kind of insight into your into your background in history. Yeah. And by all means. So, so as you said, I am now a associate consultant at Smithers Information. Prior to that, I worked, for Fujifilm for a number of years, and ended my career there as head of strategy. In their combined inkjet ink business. I had some responsibilities, within the wider inkjet business, division as well. Prior to that, I worked for Sericol a well known specialty ink manufacturer, where I, I started work, when when dinosaurs still roamed the Earth. So. So I work there, man and boy. Prior to their acquisition by Fujifilm in 2005. Excellent. Okay, so let's let's dive in. First, first question. What can you tell us about the overall growth of digital printing? Well, just a little bit of headline data. Now, just before I dive into the data, just, just to make it very clear what we're talking about. I'll talk a little bit about growth rates. These are all, going to be compound annual growth rates. And, anything related to pricing? Is at constant 2020 prices, excuse me, constant 2023 prices and exchange rates. So we always remove the effects of inflation and currency. So we're looking at true growth rates, that are not then distorted by some of those external factors. So analog analog printing as you would probably expect in the period 2019 to 23, value fell not very much, actually. About 0.4%, volume down by about 2.3%. In terms of the forecast for the 2024 to 29 period. We, forecast the value to actually increase. By 1.5% CAGR and volume by 0.2%. So sorry. Sorry for the, you know, the all the data. But it's very useful to kind of get that out there and, and understand what's going on throughout the period. So that's 2019 to 29. Value is actually a little bit up and volume a little bit down. Not that much in either. In either case. Now again, probably not huge surprise to learn that in the same, periods. Digital printing is doing rather better. So 3.4% up in value, 4.5% up in volume in the in the first half of the review period and actually accelerating a little bit, 4.8% value 5.5% volume. 2024 to 29. Now we say digital printing. But of course, there are two key technologies that we report on within that. So you have inkjet, which is actually growing at the fastest rate. 5.9% value, 9.3 for the first half of the review period and then accelerating a little bit to 6.9% value, 7.9% volume. Electro photography, which is the other, technology is actually and it will be somewhat surprising to a lot of people, I think is actually, a small decline throughout the Or over the review period. We'll get on to understand exactly why this is a little bit later on. In this in this discussion. Now, of course, those are all headline figures. I'm gonna try not to provide too many more. Of course, you know, long and extensive, you know, reviews of data that, you know, the people think she ought to try and write down. I'm sure you could. You. I'm sure you could really deep dive into this. I certainly could. And, it would take a very long time. And by the time we finished, you know, nobody, including myself, would probably be terribly interested. But anyway, there we are. Okay, so these are the headline figures. Maybe let's take a closer look at some of the factors driving this growth. Maybe you can talk about, global trends, regional trends and what's happening in the end use segments. So, combination of demand side and supply side factors. And now these some of these factors are factors that affect all of us affect our daily lives. And again, no huge surprise to learn that the, the biggest factor that had a seismic effect on the, on the whole of the printing industry and everything else for that matter, was the Covid 19, pandemic. And that, of course, had all the, all of the impacts that we, that we all know with, enforced lockdown. Leading directly and indirectly to, remote working and working from home, which is, which is still very much a part of, everybody's life for many people's lives now. Now, these had, all of these effects had a significant impact on print, mainly caused by the rise of digital communication in one sort and another. And also, through the growth of e-commerce. Now, on top of that, of course, there are economic factors. So, we've had the, the war in Ukraine, in starting in, in 2022 that caused, as we all know, a shortage of energy that led to, the, inflation that we're all still suffering from, which is somewhat persistent, as we know. And that had an effect of denting, consumer confidence and indeed, business confidence. On top of that, just to make matters worse, we've got a turbulence in the Middle East. Delighted to say it looks like that starting to resolve itself. And on top of that, we've got the, unknown. And at the moment, unknowable impact of the, the US election, which will certainly have an impact on, on print, via, some very likely changes to, global supply chains. Now, of course, these are all huge factors, but they, they do have a, a major impact on print. Now, to understand then a little bit more about that. So talk talk very briefly about the key groupings that we use at Smithers. So the three groupings publication graphics and labels and packaging. So publication includes books, magazines, newspapers, catalogs, directories, graphics, advertising, commercial traction, transactional and security, print and labels and packaging, labels and packaging segments. Now publication has been hit really hard by, the rise of digital digital communication. Now, of course, this was this was already, a factor prior to the Covid 19 crisis. But has become know even more so, now, not all of the, the end use segments within publication have been hit, but but the big ones in terms of print volume, newspapers. There's a comment from, Rupert Murdoch he made in an interview in mid 2024. And, you know, one must assume that Rupert Murdoch knows a thing or two about newspapers. And he said that, printed newspapers most likely have 15 years left with a lot of luck. Now, I've not bought a printed newspaper for as long as I can remember. Why on earth would I. Why would I go out and spend, you know, hard earned coin of the realm on a copy of the Daily Telegraph or whatever it was? When I can pick up my phone or tablet and look at the BBC news. Yeah. You know, with almost live reporting. And it doesn't cost me a penny. And, you know, and that is, of course, that's a, that's a, a small example of what's going on, but that is absolutely a factor in, in publication. Not all of publication has been impacted so badly. Books is actually a bit of a success story And we'll get onto that a little bit a little bit later when we talk about, how digital print is, is impacting, the industry. Back to the end use segment was graphics. Is some parts that are doing better, better than others. So graphics just remained advertising commercial transactional and and security printing. You know, small decline, but nowhere near as bad as publication. And again, within that, some, some, some of the end use segments are doing better than the others. Labels and packaging, as you would expect, doing very well. Packaging products tend to be, heavily geared towards essential items. You know, again, we know that from our from our daily lives. And, you know, something like 50% of all packaging is related to food. We all need food. As populations increase, we need more food, do more packaging. I mean, of course, that's a that's a huge generalization, but in very broad terms, that's that's the sort of thing that's happening. So some other, some other factors. Sustainability is a major factor, that affects all of the process, all of the print processes and all of the end use segments. Of course, it's absolutely necessary that, that as a, as a race, we focus on sustainability. In the case of print. That means looking at energy use. It means looking at waste e-commerce. And, you know, is e-commerce good or is it not so good? It is very easy when looking at sustainability to, to make assumptions and to take actions or to try and take actions that are well-motivated and well intentioned, but not necessarily the best. And what, what we always say, and this is, this is an area where, Smith has done quite a lot of work. I've done quite a lot of work related to print and sustainability, of course. A little bit of a shout out for them that they run the the very good, suspect sustainability and packaging conferences. But what we always say to people is, carry out a proper lifecycle analysis or get somebody else with expertise to do it for you. Otherwise there's a there's a good chance, that you want to do something with perfectly noble intentions. And you have it has exactly the opposite impact to the one that you intend. The Trump presidency is likely to have an impact on sustainability. You know, there have already been comments about, what he said. Drill, baby. Drill. Yeah. Well, okay, I can understand. I can understand what he means. But, Yeah. Okay. On a on a global basis, though. Again, perhaps slightly counterintuitive, but, it is quite likely that, that China, which is becoming increasingly focused on sustainability, might pick up some of the slack there with sustainability being such a massive driver. Do you think you can talk about how, how this may be influencing, other consumer behavior or business strategy with regards to growth, sustainability? It's it's it's hugely important to everybody. There's a, there's a major focus by all machinery manufacturers, whether you're in analog or digital. Doesn't doesn't matter. Again, of course, talking about print here. So that's only that's on the, on the, on the supply side. From the, from the brands, who and all of the brands, all of the leading consumer brands have, well published, well understood sustainability, strategies and objectives to reduce waste to, you know, reduce energy consumption and so on with target set for particular dates, depending on what the, what the brand is. Okay. The, the big impact on, on packaging, of course, there's some legislation coming in, particularly in, in Europe with BWR and, single use Plastics Directive and so on. So what about on the on the supply side? You know, we're seeing competition between the processes. Can you kind of talk to the various benefits from digital and analog? Yes, by all means. So yes, there is, of course, some competition between print processes. It's important to recognize that digital printing is a, you know, it's not just another print process. It's not just another way of applying ink to a particular print medium. And, the companies, the print service providers and packaging converters that recognize this, tend to do very well. And they tend to be able to leverage the benefits of digital printing. And those and there have been some examples who just think, well, you know, we've got on and we've got that we've got a, an offset litho press. We the digital is good. Let's get a digital press and put the same type of work through it and do the same type of things they tend not to do so well. Now there are some, some good examples where, digital printing has been, a key enabler of a different way of working. Of course, digital printing by, by its very nature has, variable print capability kind of baked into the technology. You know, you hear about things like lot size one and so on, and, you know, which is all true, but it's a little bit of a cliche, digital print, by virtue of its lack of physical origination, can kind of and do things that analog printing, simply can't. So in the, in the salmon display market, digital printing allowed fast turnaround for last minute orders for, you know, for, for materials, you know, supermarket displays or whatever they might be. Now, this, this allowed, what it allowed the companies who had that capability, to be blunt, to make quite a lot of money from from fulfilling last minute crisis orders from, from people who, needed to to put up billboards for the following morning in the supermarket and had, had corporate bars breathing down their necks and that kind at that kind of thing. So that's that's one relatively early example. Now, book printing, I think I mentioned a little bit earlier in the context of publication print, but printing digital printing enabled a completely new way of working. Now, Amazon was one of the not not necessarily the first, but one of the, the early adopters of digital print. And they set up a number of, of their own, book manufacturing facilities in the US and elsewhere outside the US. Now, there were original, from what I gather, their original intention. And of course, they still do. This was to use digital printing to reduce book inventories so that instead of, printing large quantities of books, you know, some which were sold, some which weren't sold, but all of which sat in the warehouse. They would then be able to print books more or less on demand. And they did this, and they were very successful in doing this. I think for the, for some of the, the very large, long runs, there's a lot of analog printing still used, but then topped up with digital printing. Now, of course, having this capability and Amazon isn't the only company with this, this capability there. There are others that quite a lot of independent companies now doing this kind of thing. This then opened up the possibility of, self-publishing. So the same facilities, through a, an appropriate web portal will then allow people to, to self-publish. And there again, Amazon have their own, system for this Amazon KDP, the Lulu and the various others. Look, I think use, you subcontract all of the actual fulfillment. So digital printing, and it's mainly now, inkjet for content of books and, electro photography for, for color sections and, and covers. Very, very successful. Clearly, both processes are innovating. It seems digital, is gaining ground with, packaging, workflow integration and things like that. What are the technology developments and how are they affecting the growth of each process? So there is a, a general trend towards increased levels of automation. Now this is particularly seen in in analog. I mean, of course, of course the same in digital but particularly in analog, where the, the large suppliers are implementing a whole range of, of automated features. There are various reasons for doing this. One of them is the the lack of skilled, employees. Perhaps a side effect of the Covid 19 crisis. People of of a certain age, rather got used to sitting at home. And, you know, retired perhaps a little earlier than might otherwise have been the case. And, now, that wasn't the only cause, of course, but but but that, has led to a general lack of skilled employees, and inexperienced employees in a lot of industries. And the, the printing industry is certainly suffering from this. So automation, developed by the leading hardware manufacturers in order to address that particular issue. Of course. What it what what high levels of automation also do is they make systems much more efficient, efficient and cost effective at short run, therefore allowing some increased level of competition relative to digital printing. Now within analog presses. And this is kind of pretty much across the, across the board, whether in offset or flex or whatever. Automation, high speeds, increased reliability, remote service and support. And I driven, preventive maintenance, are all features that are being introduced. The net result of this, is that there are fewer analog presses being sold, but the ones that are being sold, are much faster, much more productive. They need fewer skilled staff, and they're much more cost effective. Now within digital printing. There's a general trend towards faster production speeds, higher print resolutions. Although there is an argument to say that, the resolution print resolution that, the, the latest presses are capable of is, is actually good enough and probably not much need to go too much further on that. And there is, an increased focus on the use of water based inks. I was left, visited, as you probably saw the drew per show. In, in my last year and, I was left with a, an overwhelming impression for reasons I can't quite put my finger on that. Water based inks are going to be a necessary part of digital growth, particularly into packaging. Markets in in the future. Prior to that, I would probably have argued that there's going to be some water based, some movie. I don't think that's going to happen. I think I think the packaging business will demand water based inks, and if it can't get them, it won't use digital printing or it'll use and it'll use electric photography or something. Rather than inkjet. There is within again within digital there is increasing focus on, on packaging. Not really surprising because packaging, of course, is a huge opportunity. It's a huge segment and it's, you know, it's growing. It's very difficult, of course, with a, a large and confusing array of, end use specifications that the, the package itself must comply with. And the printing, of course, is part of that. There is increasing focus on flexible packaging, with several manufacturers introducing new presses, new digital presses. Again, this is a personal opinion. I think that the, the most interesting presses for that market have not yet been introduced. I think that, the, you know, although the, there are a number of inkjet systems, that, that, that are commercially available. Fujifilm has one, screen has one and so on. There are HP with Indigo. Now, 200 K platform is the market leader. I think that what what is going to happen, is that we're going to see, lander with within and then a graphic press move into flexible packaging. They said that they showed some samples at Cooper and they looked excellent. And I think HP will move into flexible packaging in a big way with their, apex that, that high space, that electric photography platform. I think those two areas are works really going to start to, to gel. That's a personal opinion. Of course, I could be wrong on that. Now, the third area where we're, we're there is a lot of important work. Is on software, with, I mean, I use the term workflow. Of course, these days, the software systems are a lot more than just workflow. And they are the, the, you know, the key to to to unlocking profit within a printing operation with, online, web to print portals, driving orders, software controlling everything from origination. If it's an analog process, and in image formation and image manipulation and digital presses and so on, all the way to, to, to printing, to finishing and to to dispatch. And there are some very good examples of, of companies who who've understood this and, and implemented some very good software systems. It's very interesting to note that, there was a comment by, Jean Pascal, Bob's toes, the, the the head of, Bob's very large and very, very profitable, very good. Packaging machinery company, who said at the trooper show that and I've got a quote here, Bob's tool will become a software company because data is becoming so integral to our industry. In the future, everything will be driven by data and using data require software. So that's somebody who, you know very much has an analog, conversion, an, a packaging conversion, pedigree recognizing the importance of, of software going forward. And, I mean, you've kind of spoken about this already a little bit, but, you know, what are the key print process trends? If you can kind of give us an overview and then maybe just kind of briefly speak to maybe regional variation. Yeah. Beaumont's so, sheet fed off, set up overall throughout the review period. And again, where we're looking, 2019 all the way through to 2029. It's not far off level. So so is actually and again, this course we're, we're looking at in terms of value, we're looking in in real terms. So it's not far off level. Bit of a decline in the first half with some turbulence around the the world events that we discussed. And then the small increase in the second half. So pretty much level, all the way through now. That doesn't mean that, that everything in the golden is rosy. Some bits are rosier than others to to extend the, you know, the metaphor, much of the growth is driven within for the offset is driven by, an increasing move towards packaging, particularly, folding carton and to some extent within labels, wet glue labels. There is some growth or at the very least stability in book printing. So that's traditional book printing manufacturer. But the traditional markets for sheet feed offset, so the bits that are in publication and commercial print and so on, are in decline. So within that overall, sort of level, volumes and values, there's some movement with, with movement away from traditional markets and towards, towards packaging. Web fit offset. Well, the to two technologies, a heat set and cold set. Really the only difference is the draw that's used. But they tend to be used for different, different applications. To be blunt, neither of them is doing very well, and that's a bit of an understatement. So heat set is around, 25% reduction, over the review period. Coal set, but more than that. So by just over a third coal set in particular is linked very closely to newspaper production, where I have discussed before, and it's fairly obvious, volumes are are dropping very drastically. And, that situation is not going to, not going to resolve itself, not in a positive way. At any rate. Fleck so not spoken very much about flex. So flex out tends to be, closely linked to labels and packaging, particularly corrugated flexible, and some parts of the folding carton market. So liquid food packaging, that kind of stuff. And that's that's doing very well. So flex so growing by around about 2% in both volume and value in, in the first half the review period and acceleration a little bit to around 3%, CAGR in the second half. Not huge numbers but flex. So is a it's a big business. So it's it's small growth. Cool. Yeah. Reasonable growth. But from a very large base. To just call overall, as we discussed doing doing quite well. Value increasing by just over 3% in the first half of the review period. Volume close to five. And again accelerating slightly. So 5% CAGR value and 5.5% in, in in volume in the second half a reading Paris. And our forecast. Digital is growing pretty much across the board apart from transactional print. Now transactional print is it's things like bank statements, invoices, credit card statements, that kind of stuff. It's always been a digital market because of course, you know, there has to be variable data has to be your or data on your bank statement. So it's always been a digital digital market. And again, it doesn't take much working out to realize that the issue that that particular, digital print segment is facing is one of declining demand for the, the for the printed product, like the long people. Now, I don't get physical bank statements coming through the post. I get something on my phone. On your phone. Yeah. And in a and it's very much more convenient. So so transactional is the is a sector that, that, that, that, you know, that is going backwards. But everything else is, is very positive. Electro photography, I think they said right at the start there is some decline in volume. Slightly surprising now that's due to, some fall in, advertising and transactional just just mentioned, and there is. Some reduction in the use of, cut sheet electric photography. So this would be, something that looks a bit like a photocopier, which is used for, for, shrinks for a B and smaller, printing. And the reason for, for that is quite simply because there is competition from inkjet. An ink jet, offers a number of key benefits, not least being being lower cost relative to, to some parts of electro photography. Electro photography is growing in commercial, particularly in labels and packaging. And, we see a recovery in, in, in overall electric photography, volume and value in the second half of the review period. And I would expect that to, to that that growth to, to continue particularly with HP leveraging that technology where they've launched systems for label printing, and I'd expect them to extend that beyond that, as I mentioned earlier, into flexible packaging and perhaps pat beyond that, into, into other segments. Inkjet, very strong across the board. First half, 6% value increase, close to 10% in volume. In the second half value going up by 7%. Volume by, around about 8%. Inkjet is competing with electric photography as as I mentioned, a key segment is, is books where, inkjet is it's very widely used for printing the, the black and white sections and has taken over from any, you know, on almost completely taken over from electric photography in that part of the book printing business, also competing very effectively with advertising commercial, and labels and packaging. I think I mentioned increasing focus on water based inks and, I would expect water based inks to be the go to technology for packaging. We're starting to see water based inks, inkjet inks being used, more widely in labels, with, excellent. We've had a system for quite some time, and it's a comparatively slow machine. But canon are in the process of launching their, late 2000, water based label printing machine, which is, you know, looks looks quite interesting. And there's quite a quite novel in that market, UV technology will continue in labels to a significant degree. Usually technologies used in, flex and label printing and. There are some key advantages to, to that technology in labels. And I see UV continuing to be used widely, in the white from a graphics business as well. Well, Jon, thank you very much. That's been fascinating. That's all for, this episode. You know, we've we've covered some incredible insights into the evolving technologies driving the industry and some of the exciting opportunities in packaging labels. Huge thank you to you, Jon, for sharing your expertise. If you're interested in reading any of Jon's reports, head over to smithers.com. There's also lots of other great resources there, so be sure to go and have a look. As always, the key takeaway is staying ahead by understanding your market and adapting to change. Don't forget to subscribe to the podcast for more industry insights, and we'll see you next time on the Printconnect podcast.