Justin Hayward Digital printing for the Labels Industry

Market study insights Q4 2015

Cambridge Investment Research 9 March 2016

FESPA 2016 Amsterdam www.cir-strategy.com

@haywardcir @hvmconference

Core question

What is the value of digital labeling product and service offering to customers?

28 interviews with labelling PSPs achieved by CIR Q4 2015

UK#41%#

Europe#non#UK#29%#

USA#30%#

Other#0%#

Geography

What end user markets does this sample of PSPs mainly sell to?

Ranking Importance of Aspects of Digital: unprompted*

Unprompted Importance Rankings N = 28State what

aspects you value most, in order of importance, about the digital labeling machines and services provided

Rank Aspect of digital % mentions 1st – 4th Total “on client mind” score

1st Print  quality   67%   53  2nd Turnaround  4me  for  delivery   41%   32  3rd Reliability   30%   23  4th Short  &  medium  runs   22%   20  5 Flexibility   26%   18  6 Cost  of  consumables   19%   16  7 More  variants  of  print   19%   13  8 Print  colour  matching   26%   13  9 Speed   15%   11  10 Technical  support   26%   11  11 Less  waste   15%   9  12 Set  up  &  changeover  4me   15%   9  13 Integra4on  with  customers   7%   8  14 Colour  management  &  workflow   4%   1  15 Opacity  via  white  ink   4%   1  

* Ranking analysis built from the phrases used by the customer PSPs

•  Print quality remains top of pile of factors

•  Promising fast turnaround confidently is key to them

•  Productivity is holistic

•  Speed | Uptime | Availability | Workflow with machines and customers

In the minds of customers: Summary

Ranking Importance of Aspects of Digital: Prompted

Prompted Importance Rankings N = 28Rank the 14 factors

Interview/survey verbal help used: 1 = Highest importance/value, 14 = Least importance / valueChart constructed by inverting the average scores as y = 14 / (avge score)

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Prompted Importance-to-customer score*

•  Faster safer turnaround times promised to customers

•  Higher uptime via reliability

•  Better software for customer integration & workflow

•  Faster preparation & finishing systems

•  Running costs

•  Printer grasp of inkjet ink costs vs reduced costs of plates and wastage vs

click charges

Principle factors for increase in utilisation of digital from customer interviews

•  Inkjet performs very well with customers against both flexo and toner

•  Colour digital labels is expanding so that an ever-higher % of printers will own it

•  the number of machine types and machines per printer is also increasing

•  Customers are demanding faster and more flexible turnaround

•  Shorter runs (more “SKUs”) are needed

•  This means more complexity in the workflow: which machine | when | when

ready?

•  Limiting factors for IJ not currently of line speed but of software & finishing

Observations from customer interviews

Cambridge Investment Research example clients

Cambridge Investment Research www.cir-strategy.com

jhayward@cir-strategy.com +441223303500