Markem Imaje Bets on Growth in Color Digital Labels, Buys 'Linoprint L' from Heidelberg

On January 10, Markem Imaje announced it has purchased from Heidelberg that company’s Linoprint L business for an undisclosed price. The news puts an established CMYK label press under the wing of Markem Imaje, a global supplier of coding and marking systems, and a key competitor to companies such as Domino and Videojet. Before discussing strategic upshots, we first offer a few basic details:

• The Linoprint L is the former CSAT iTS600, the Kyocera-based, 600 dpi inkjet web press for labels that Heidelberg bought from CSAT and re-badged in mid-2011.
• CSAT, the German supplier of digital printers to pharma companies, had initially targeted the printer at the drug industry, but Heidelberg expanded its market focus to include label converters.
• After its 2011 purchase of the printer, Heidelberg modified it, renamed it Linoprint L, and handled its marketing to flexo label press manufacturer Gallus (Switzerland), which is 30% owned by Heidelberg.
• Per the most recent deal, while Markem Imaje becomes owner of the Linoprint L business, Gallus will stay as the main distributor for the printer in the label and converting space.

For its purchase price, whatever it was, Markem Imaje is getting a good start in a business that is essentially new to it. At the same time, Linoprint L is well suited for use in the pharmaceuticals industry, its original target and also a key market for Markem Imaje coding systems, one where the company can now also place CMYK label printers.

As to the label converting market, given Markem Imaje’s history the company is not steeped in fine color printing of labels, but rather in monochrome coding of products and packages. As a result, Markem Imaje’s hundreds of customers are overwhelmingly manufacturers of products, while few, if any, are converters. Through the Heidelberg deal, though, Markem Imaje has a stepping stone to new applications and new prospects, in an equipment market for which InfoTrends forecasts growth of nearly 20% annually. With the addition of the Linoprint L, Markem Imaje gains a full color press with over 20 installations globally, including some placed on-site with drug manufacturers. With Gallus as distributor, it gains one of the biggest flexo label press suppliers as a marketer, and a company with converter customers in all regions. According to Gallus, label converters and other prospects for Linoprint L will see no change in the product or its support in the near term. They look forward to working with Markem-Imaje going forward and continuing to offer a high-quality digital press as part of their portfolio.

Looking more broadly, the news story is another milestone for inkjet in the label and packaging market. This purchase is an example of another coding company that has inserted itself into the color digital label press field, a market for which InfoTrends maintains detailed forecasts and provides dedicated consulting. Markem Imaje, owned by Dover, a manufacturing conglomerate, is one the three (3) giants in product coding, with the others being Domino (U.K.) and Videojet (owned by Danaher, another conglomerate). The main mission of these companies, and their mostly much smaller competitors, is to enable manufacturers to use industrial marking to make their operations and logistics efficient and secure, using inkjet and other digital print technologies. Importantly, what their systems print is pretty much always monochrome images that track or identify products, not color images that enhance the appearance of products or help sell them.

Of these three companies, so far only Domino is established in the color digital label press market, through its N600i (2011) and N610i printers (2013), both of which use Kyocera inkjet heads. Domino has worked hard, since at least 2009, to build a role in the color label press market, and has itself made a big related investment, by purchasing Graph-Tech AG (Switzerland) in 2012, a major inkjet integrator and Domino’s manufacturing partner from early on for the N600i. As to Markem Imaje, it is a late entrant but an encouraging one—by joining the label printing market Markem Imaje and its parent, Dover, are showing confidence in inkjet’s role there, and the possible role there for major coder suppliers. So far there is no news of Videojet, the other top coder supplier, joining the market. That said, though, Videojet, through its parent, Danaher, has at least one sister company that is important to package and label printing, namely software and pre-press technology supplier Esko; Danaher acquired Esko in 2011. Overall, inkjet for packaging and labels is advancing, maturing, and based on last week’s news, still attracting investment from alert companies.

What of Heidelberg? While it is selling off a digital printing asset, the company is committed to digital printing for packaging and other applications, based on drupa and other tradeshow exhibits, also on announced partnerships, and published statements. At this point, three companies remain as partners or potential partners to Heidelberg for digital printing:

1. Heidelberg has an established relationship with Ricoh. As exhibited at drupa, another giant in  digital print technology. Heidelberg markets as “Linoprint C” a sheet fed electrophotographic (EP) printer from Ricoh.
2. In November 2013 Heidelberg made public a new partnership with a division of Fuji Film to jointly develop inkjet printing solutions; these could involve an existing Fuji product such as the sheet fed Fuji Film “JetPress F” for folding cartons, or some new one.
3. Finally, even Landa is still possible as a Heidelberg partner. Although the Fuji inkjet deal is most recent, Heidelberg and Landa announced an initial relationship at drupa in 2012. There has been no real news of it since then, but Landa may yet offer products with Heidelberg’s participation.

The clearest conclusion from this story is that color inkjet for labels and packaging is still growing and still pulling in new investment. That attraction is strong enough to draw print technology companies with no real experience in fine color printing, just as it is drawing digital technology suppliers who have long focused on commercial printing applications. The industrial coding applications, where Markem Imaje concentrates, are mature—not in decline like commercial printing, but far along in terms of market penetration—with mostly modest growth only, making the purchase of the Linoprint L business a promising bet.