Message in a bottle
HP Indigo organized a customer tour in Chile and Argentina for Mexican converters seeking to learn about the benefits of digital printing for the wine label sector. James Quirk reports
According to research firm Datamonitor International, the wine industry in Mexico is growing at three-to-four times faster than the country’s spirits industry; 20 times faster than the US wine market; and three times faster than the global average. The Mexican wine industry uses some 150 million labels a year, representing five million square meters of substrates annually. Yet just 30 percent of this figure is supplied by local converters, with imports from the United States and Europe taking the lion’s share.
With digital printing technology establishing an increasingly firm foothold in the wine labeling sector around the world, HP Indigo sees great potential for its Mexican customers in this burgeoning local market. With this in mind, the company recently organized a tour of digital wine label converters in Chile and Argentina, Latin America’s leading wine producing countries, to show some of its Mexican clients first hand the benefits and opportunities of digital technology for this sector.
Representatives from Mexican converters AGC Digital, Etiflex, Etiquetas Rodak, Flexoprint, Grupo Etimex, Grupo Industrial Artes Gráficos Hispano, Impresión y Diseño de México, La Etiqueta and Publigrafic International spent four days visiting HP Indigo customers and vineyards around Santiago and Valparaiso in Chile and Mendoza in Argentina. All bar one of the companies are users of HP Indigo digital presses.
They were joined by HP Indigo staff from the company’s Mexico, Chile and Argentina offices; Ecuadorian book and magazine printer Imprenta Mariscal – on board to explore the possibility of creating a dedicated label division; and Wausau Coated, a US-based material manufacturer and supplier of HP-certified substrates, which has recently begun to serve the Mexican market.
‘The wine market in Mexico is experiencing significant growth,’ says Ricardo Rodriguez, labels and packaging segment manager for HP Indigo in Mexico. ‘Most of the labels for this segment are not being produced in Mexico, so the principle objective of the trip is for our clients to gain awareness of the success users of our technology are experiencing in a part of the world where the wine label industry is highly developed, to help grow this market in Mexico.
‘It is a sector which demands very high print quality with different finishing options and in increasingly short runs. Here, the value offered by our technology is very clear.
‘It is undoubtedly a sector where the application of our technology has been very successful throughout the world, and particularly in the US, Europe and South America. This trend will continue to grow due to the needs of the wineries and brand owners, who will increasingly turn to short runs, personalization and demand for high print quality.’
Santiago and Valparaiso, Chile
The tour began in Chile’s capital, Santiago, with a visit to label converter Huberto Scott Höhne e Hijos, which installed an HP Indigo WS6000 in March 2010, two years after purchasing a ws4500. Founded in 1976, the company began installing letterpress machines in 1985 and now runs nine Iwasaki presses. A Nilpeter 6-color FA 3300 was installed in 2004, while finishing is handled by AB Graphic and Newfoil machines. Scott employs 70 people in its 3,000 square meter facility.
General manager Harry Scott, a Chilean of Scottish and German descent and son of the company’s founder Huberto Scott, reports that short runs are increasingly prevalent in the Chilean label market. ‘Digital technology has proved more cost-effective in serving the trends of the local industry,’ he says. ‘Our letterpress machines are still running very well, but gradually the digital machines are replacing them.’
Fifty percent of the company’s business is in the cosmetics and food industries. Twenty percent is for the wine sector, with pharmaceutical and electronic goods applications making up the remainder. ‘For wine labels, the print result is finer than flexo or letterpress,’ reports Harry Scott. ‘The quality is definitely there. And it is easier to reach that quality, because there is less pre-press work and no need for plates.’ He reports that around 35 percent of production is handled by the digital presses, and that figure is rising.
Eduardo Riady, operations manager at Multigrafica, an HP customer with 160 employees based in Santiago, tells a similar story. The company operates separate sheetfed offset and self-adhesive divisions, which make up 60 and 40 percent of the company’s production respectively. Ninety percent of the self-adhesive division, which runs a ws4000 and two ws4500s, is dedicated to the production of wine labels; 60 percent of that figure is handled by the HP Indigo digital presses, while an 8-color Nilpeter FA 3300 with two silkscreen units covers longer-run work. Three finishing machines from Cartes, two from Newfoil and one Rotoflex are accompanied by equipment from local manufacturers Ibirama and Etirama, which are used to prime materials for the HP Indigo digital presses.
Riady reports that the self-adhesive division is the fastest-growing part of the company’s business. ‘Runs have been getting shorter for the past decade,’ he says. ‘Clients are increasingly asking us for runs of 5,000 labels for specific markets, such as the US or UK. These jobs bring variable data requirements and are well suited to the HP Indigo digital presses.
‘The biggest challenges initially were convincing clients about the quality, and the lack of metallic printing, which is important for wine labels. But metallic printing can be achieved by hot stamping, and concerns about the quality of digitally printed labels are no longer an issue.’
The ws4000 was one of the first digital presses in the region when it was installed seven years ago. It has some 45 million clicks, which the company says is a record in Latin America.
Multigrafica’s offset division, meanwhile, is also active in the wine label market, with 60 percent of production dedicated to the sector. It runs machines from Heidelberg, Ryobi and Komori. Labels for conserves make up the remainder.
Also in Santiago, the group visited Chile’s leading converter, Cameo Marinetti, which has experienced 20 percent annual growth over the last three years. The company installed its first WS6000 early last year, with a second following just three months later. Material priming is carried out on an AB Graphic Digicoat, while finishing is handled by an AB Graphic Digicon Series 2 and Cartes laser die-cutting machines.
‘We made the investment in digital technology after carrying out various tests and analyses that showed the benefits it would bring us,’ says general manager Aldo Gonzalez. He spoke eloquently and honestly about the challenges of getting to grips with the digital presses, and took questions from the Mexican converters about the performance of different materials. ‘Finishing is the most important part of the process,’ he says. ‘Digital printing is a marriage between the press and the finishing equipment, and if you don’t pay attention it can become a nightmare.’
Since L&L’s last visit in 2008, a number of new machines have been installed aside from the HP Indigos, including two Nilpeter flexo presses and two Heidelberg offset machines.
After a tour of the House of Morandé vineyard outside Santiago, the group headed to the coastal town of Valparaiso to visit Imprenta Guerra, which has installed two ws4500s in the last two years. At the time of L&L’s visit, a WS6000 had been ordered and was to be installed a few months later with the idea of replacing the two ws4500s. The company uses a primer machine from Chilean manufacturer Inflexco; finishing is handled by four Newfoil machines, with an AB Graphic Digicon Series 2 planned for the near future.
Imprenta Guerra’s core business is forms, but it now also operates dedicated folding carton, flexo roll to roll and digital label divisions. The ws4500 presses print labels for the wine, household goods and food markets.
Mendoza is Argentina’s premier wine region, with over 1,000 vineyards producing 1,200 million bottles of wine every year. Palero Impresores estimates that it has some 50 percent of the region’s wine label market. A family owned company founded in 1939, it is now run by the third generation of the Palero family – siblings Jorge, Raúl and Virginia – whose father and grandfather were in charge before them. The fourth generation is also now working alongside them.
The company is a wine label specialist with an acute focus on offering excellent service to its clients. Mendoza is one of the world’s top eight wine producing regions, and the siblings have travelled to every one of the other seven on research missions. The company operates a separate division – called Label Solutions – which is solely dedicated to client service, and also works with local graphic designers and runs seminars to show what can be achieved with digital printing. ‘We are not just selling a label,’ confirms Jorge Palero. ‘We provide a complete service. The vineyards here don’t buy on price, but on quality, and the level of service we offer is an important part of that.’ Furthermore, he reports, in the three years since installing the digital presses, there has not been a single case of a quality problem from a customer.
Palero began as a letterpress house but has evolved to operate two divisions, offset and digital. The digital division specializes in short runs for boutique wine brands and operates two HP Indigo ws4500s. These are accompanied by two Cartes, one Rotoflex and one AB Graphic finishing machines, which bring hot stamping, varnishing, screen printing, embossing and die-cutting capabilities.
The division has around 350 clients, 95 percent of whom are local vineyards; the remainder being olive oil, beverage and cosmetics brands. Digital division production manager Leonardo Murgo reports that the large client roster and trend towards shorter, more personalized runs means that much of its work contains ‘jobs within a job’. ‘We produce many runs that, though they are for the same client, have many different versions of the label,’ he says. ‘Wine labels need strong black printing. This is difficult to achieve, but even harder to repeat on a conventional press. But digital technology allows for easy repeatability.’
Murgo reveals that a big initial challenge was printing on the textured substrates desired by clients, and which make up between 60 and 70 percent of materials used by the company. The addition of an in-house primer, plus support from HP Indigo, overcame these issues.
Palero’s offset division, meanwhile, is dedicated to labels for wine and conserves, producing around two million units every day. It operates three Man Roland presses, a Polar slitter and Steinemann inline varnishing equipment. A Heidelberg letterpress machine, which used to produce receipts and bills, has been converted into a finishing machine with hot stamping, embossing and die-cutting capabilities.
‘The Man Roland machines are extremely fast, producing around 15,000 sheets an hour,’ says Jorge Eduardo Salvo, production manager of the offset division. He reports that the Mendoza wine market is still growing rapidly, and that the offset division – as well as, of course, the digital division – are growing alongside it. ‘The creation of the digital division has complemented the offset division,’ he says. ‘There is a synergy between them. For example, clients are able to test out a label by having a short run produced digitally, before returning for a longer run printed by offset.’
After the visit to Palero Impresores, the group toured nearby vineyard Bodega Salentein.
Chile – a digital paradise
The Chilean label market is highly developed and extremely competitive. With a population of just 15 million people and 22 installations of machines from HP Indigo’s ws range, the country has the highest number of installations per capita of digital roll to roll presses in Latin America. The number of HP Indigo installations rises to more than 40 when its digital sheetfed presses – many of which, of course, are also producing labels – are taken into account.
‘Chile has a heightened focus on premium labels because of its highly developed export market,’ explains Miguel Leiva, digital press sales and channel manager for HP Indigo in Chile. ‘This leads to the need for variable data and multiple runs, because products are sent to many parts of the world and need diverse information on their labels, such as different languages and legal information.’
Digital technology, therefore, is well-suited to the specific needs of the market. This also explains the high number of WS6000 installations – nine – compared to zero in neighboring Argentina, which, despite its larger population of 48 million people, has a smaller export market of premium packaged goods.
The local market in Chile is also experiencing significant growth. In the last five years, says Leiva, Chileans have begun to drink more quality wine at the expense of traditional local beverage Pisco. This in turn has lead Pisco brands to use premium labels to raise their image and fight against rising wine consumption.
Mexican converter case study
Mexican converter Etimex installed a WS6000 in December 2009 and is contemplating a second, according to CEO Jorge Martinez, whose father Jorge Sr founded the company in 1972. Its highly diversified production includes digital, flexo, offset and shrink sleeve capabilities and the company produces tickets for travel and entertainment and prime labels for the health and beauty and industrial sectors, the latter being its fastest-growing and consistently strongest market.
Aside from the HP Indigo, Etimex runs flexo presses from Nilpeter, Mark Andy and Ekofa, offset machines from Heidelberg, finishing equipment from AB Graphic and a Karville machines for shrink sleeve production.
Martinez says the HP Indigo’s breakeven point was reached within 12 months – significantly quicker than the usual 18 – and cites the company’s wide diversification of products as the reason for the speed. Fifteen percent of production is being handled by the WS6000, and Martinez reports that the figure is rising.
‘We’re excited about the possibilities for the wine market in Mexico,’ he says, ‘but ultimately we have our sights set on the North American wine market in Baja California. With the level of quality and production we can achieve, along with lower production costs and short distance, we can compete.’
Pictured: Aldo Gonzalez of Cameo Marinetti, seated at the head of the table, talks to the group of Mexican converters
This article was published in L&L issue 3, 2011