“We have been hearing from the marketplace that even if a product gets down to the consumer, companies want to be able to to identify, to authenticate that product,” says John Rebecchi, senior vice president of marketing and new business development at Disc Graphics, a packaging and label converter in Hauppauge, NY, USA. “We’ve also looked at the marketplace and asked: What are the field-based rapid read controls, or even consumer-based or pharmacy-based controls out there that we could perhaps help incorporate into a package? We found a lot of discrete technology companies, each one trying to pitch their own stuff. This one wants to sell security foils or holograms. This one wants to sell pigments. This one wants to sell QR codes. Everyone has their own little piece, but no one’s pulling it all together and saying, Why don’t we become that company that can offer a multitude of services under one roof? Rather than a potential customer be confused about where to go and what direction to take, who’s the printer that can do this? We want to be that source. We want to offer people a really robust, fully integrated program of a variety of solutions that they can layer onto their packages.”
Disc Graphics took on the challenge, transforming itself into a full-service brand protection printer and converter. It has done so by joining forces with several companies to add different levels or layers of protection to cartons and labels. Its partners include Applied DNA Sciences, Honeywell, Agfa, and Kurz Transfer Products, and discussions with other potential partners continue today.
One fairly simple covert application involves invisible pigments. Honeywell manufactures fluorescent pigments that are neutral in color and not noticeable to the naked eye when they are added to inks and coatings. “With Honeywell, for example, we went through a variety of testing with their pigments,” Rebecchi recalls. “These pigments glow in different colors. Today we can create a mixture for you, custom designed for your requirements. Let’s say you have a brand security officer in the field who is looking for products meant for export. If he detects one with fluorescent green, for instance, he’ll know that that product was intended for Europe. Or if it’s red, it was meant to go to Asia. So what is it doing on a store shelf in the USA?”
Disc Graphics had its beginning in 1969 as an in-plant printing operation for a record pressing plant, hence the name. In the mid-1970s the pressing plant and the printer were purchased when American Can Company bought Pickwick International. A public company, American Can decided in the early 1980s to sell off its manufacturing operations and focus on financial services. “So in 1983 we did a leveraged buyout,” says Rebecchi, “and bought our humble little company. We had 19 employees, a couple of million dollars in sales, and one product: record labels. From that core we grew into a multi-faceted packaging business.”
The owners took the company public in 1995, but went private again just after the turn of the century. “We went public because we wanted to expand,” Rebecchi says. “When the market went down, especially during the dotcom bust, our stock was valued in such a way that it made sense for us to buy it back.”
Disc Graphics followed the migration of technology throughout the course of the music industry. “A lot of the folks who were distributing music went into the video business and then into the DVD business. We were always a recognized player with everyone in those market spaces, and today we enjoy having companies like Paramount Pictures as one of our largest customers,” says Rebecchi.
A little more than 20 years ago, Disc Graphics began to diversify, a necessary step in view of the dramatic changes in the consumption of entertainment, particularly music. “The music industry started to fragment, and we realized that we can’t just be providing one product,” Rebecchi says. “By the late ‘80s we were making folding boxes. When our clients in the music business began distributing videos, we wanted to make those little bottom-load video sleeves, and we made hundreds of millions of them.”
Over the next several years the company began working with manufacturers in the beauty products industries, then taking on pharmaceuticals, neutraceuticals, and other markets. Today private label cartons and labels are a strong part of the company’s output. “We grew our internal capabilities to marry up with the requirements of the marketplace. Having those internal capabilities allowed us to upsell into the DVD and video markets. So we were able to utilize the core competencies that we had been building in certain markets, and spread them into all sorts of markets,” says Rebecchi.
At around the same time as the product mix began to diversify, Disc Graphics launched its label division, producing one- and two-color labels at first, then shifting to a four-color CI press, and eventually to a Mark Andy 2200. Today the company prints its flexo products on two Mark Andy 2200 presses, one 7” with eight colors, the other 10” with 10 colors; and a Nilpeter 10¾“ 10-color press.
Disc Graphics is headed by Chairman and CEO Don Sinkin, President Margaret Krumholz, Stephen Frey, senior VP of sales, and Rebecchi. Angelo Quagliata manages the label division.
The company expects sales revenue for 2011 of about $50 million, and employs 225 people. “We started out on this street occupying 25,000 square feet, and now we occupy 140,000 square feet, in two buildings,” says John Rebecchi.
The company’s work with pharmaceutical and luxury brand packaging naturally evolved into discussions with customers about security, and this led to the creation at Disc Graphics of P.A.S.S. – Package Authentication Security Solutions – and the partnerships with companies that provide various covert and overt security methods for packaging.
Perhaps the most unusual security method, one that became available to customers Novemer 1 of this year, is the application of DNA markers to the boxes and labels. Disc has been working with Applied DNA Sciences of Stony Brook, NY, to come up with a procedure whereby plant DNA is added to the packaging products. If a product is thought to have been counterfeited, the package can be examined – just as it would be in a CSI television episode – and the presence of the DNA, if it’s there, will provide an unalterable identity.
According to Rebecchi, Applied DNA Sciences takes a slice of botanical DNA and re-sequences its code to create a one-of-a-kind genetic product. “They cut it apart, and put it back together in a way that is impossible to duplicate,” he says.
Disc Graphics approach to making use of the DNA marker is simple. Every product they produce, from now on, will contain the DNA, whether or not the customer has any use for it.
“We started looking at it for application on a spot basis, but you can achieve no economy of scale that way. Doing it for one client doesn’t work, pricewise. So we are including it for all of our customers by adding it to our water-based coatings and our UV curable coatings,” says Rebecchi. “It’s the same identifying marker, so we have a unique DNA marker specific to us. We created a chain of custody program with our friends at Applied DNA Sciences, we sign in the DNA marker, we have our quality department – acting as our security officer with our accounting group – managing the inoculation of the totes of coatings, then we manage it through and send batches to Applied DNA to validate and verify that the DNA markers are present.
“What’s good about the product that we chose – unlike synthetic DNAs, which are not robust and do not have a long life in the field – the botanical DNA will be around for hundreds of years. It’s inert, nonreactive, but you can’t wash it off or otherwise get rid of it. You’re going to have to burn the box. It’s true science, not science fiction, because people have already prosecuted cases using their DNA markers. A lot of companies that claim to have the technology to make the markers don’t have the breadth and scope of prosecutions that Applied DNA Sciences has.”
Customers of Disc Graphics can license the use of the DNA logo for marketing and brand protection on the package.
The company also offers Fortuna, Agfa’s digital design and assembly system for security printing. It consists of modules that generate complex designs or text, virtually unnoticeable to the eye, and is used on such products as bank notes. Micro-patterns or text can be created that are nearly impossible to duplicate and can be seen only with a magnification device.
Covert markings on Kurz security foils is another level of brand protection offered by Disc. The printer has the capability to apply the specialized foils using either a cold foil method or hot stamping on both labels and cartons.
“Counterfeiters are fairly sophisticated, and what’s important to note is that one security device doesn’t cut it any more,” Rebecchi observes. “You have to layer on the security, both overt and covert devices. We worked with Applied DNA Sciences and came out with a program to put a QR code together with serialization, to serialize every drug package that goes out. They have a random number generator to develop an alphanumeric code that would go with a National Drug Code. We are making it easy for our customers to come up with this. Applied DNA has already made the investment on the front end, to distribute through us to sell to our clients. If you need serialization, we already have a solution for you. Do you anticipate putting a QR code on, which has e-pedigree track-and-trace capabilities? We can do that for you. Do you need to have rapid read technology in the market place, like these fluorescent pigments? We have it. We are not just in the packaging business, but in the packaging security business.
Disc Graphics implemented Lean Manufacturing principles five years ago, and has found that the resulting changes have been “measurable and absolutely necessary,” in Rebecchi’s view.
“Despite rising costs of energy, paper, films and everything else, our customers don’t want to pay a penny more. So you have to find savings somewhere if you want to be competitive in this marketplace. You have to look internally and you have to Lean everything up.
“The biggest thing you can do is to focus on the reduction of waste. We have put together a very critical and important waste reduction program. Everything from reducing the number of sheets to makeready to the amount of running waste that you have. We are cGMP compliant, so we have a very strong quality program also, where we are doing in-process monitoring, and minimizing the requirement to have to toss product out after putting all of that value into it. For us it’s critical to not miss a beat and to have in-process inspection, because the worst thing that could happen is coming off the folder or gluer or the back end of the label press is to have to toss out a finished product. So for us, it’s very important. That’s the only place we have in today’s environment to make our margin.
“We all know that there is still overcapacity in the marketplace, and that normally translates into lower prices. So those who covet what we have will do just about anything to get it, and the only way they can compete is on price. Because we do a very good job from a quality standpoint, and we do a very good job in terms of delivery. The only thing out there is price, and a lot of people in the marketplace compete on nothing but price.
“We stake our reputation on quality, especially as it relates to the pharmaceutical and beauty businesses,” says Rebecchi. “You have to be of the highest quality and consistency for the pharmaceutical industry. You might as well not be in the marketplace unless you have a very strong quality system.”
Another area of concern at Disc Graphics is the environment. Five years ago, the company established its environmental mission statement: “Moving eco-consciousness into action.” Four years ago it earned Chain of Custody certification from the Forest Stewardship Council. “We have worked closely with our customers on environmental issues,” says Rebecchi. “Which plastics are best to use? How can we down-gauge materials? We have put in high efficiency lamps in the plants, we turn off computers at night, we put in filtered water so people didn’t have to bring water from home.
The environmental conversation, he adds, is beginning to rise in level of importance. “Right before the recession hit, it was part of every conversation, and even though some of the things that were selected may cost a few pennies more, everyone said, ‘You know what? This is worth it.’ But once the recession hit, that’s off the table, and we were back to, ‘What’s the cheapest way I can make this?’ But it’s creeping back in. There have been a lot of studies done, lifestyle studies, about people who are eco-conscious, and anything they can do to help themselves and the environment they consider worth doing. It may cost a penny or two more. It’s all about value perception, and making sure people are educated and understand the things you are doing.”