Retailers mandating radio frequency identification (RFID) tagging on pallets are opening up new markets for labelmakers and converters. As the push for eventual item-level tagging continues, labelmakers and converters are finding ways to meet customer demands with lower costs and better quality.

"RFID is a label market," says Peter Harrop, IDTechEx chairman. "It is here, and it's going to be big business. Labelmakers can get premium pricing, and there are lots of large niches."

Harrop, along with other experts, discussed the future of packaging and RFID, as well as the problems plaguing the packaging industry at the Intelligent and Smart Packaging USA 2005 conference, held last month in Orlando, FL.

Many of the delegates took advantage of the masterclasses offered on the first day of the conference. Raghu Das, managing director of IDTechEx, and Harrop led an interactive class on RFID, smart packaging and electronic smart packaging.

The RFID masterclass gave an overview of how an RFID system works and the state of the industry today. An RFID system is comprised of a tag with or without a chip and an antennae that works with a reader that sends signals and "reads" the response of the tag. Ninety-eight percent of the market uses tags with chips, costing 10 cents to $1 a chip for short-range, passive tags and up to $5 for those with longer ranges.

"Today, no more than several hundred million RFID devices are sold yearly," Das says. "The potential is much larger. To get there, we need much lower-cost tags and software."

According to Procter & Gamble, tags need to cost only five cents in order for companies to get a "payback' on their investment. But, unlike bar codes and electronic article surveillance tags which are cheaper, RFID can do more than just track items, it can also gather data and no line of sight is needed to scan items.

"The bottom line is automation," Harrop says. "It's about getting rid of the human (error)."

The human error, he says, goes beyond the supply chain. Consumers themselves are making errors, bringing about the need for smart packaging. The smart packaging and electronic smart packaging masterclasses illustrated his point, with statistics and an array of products, like the KSW Microtec RFID tag that indicates the safety of drugs and foods, which aids consumers in selecting and using products.

During the rest of the conference, delegates listened and spoke with experts regarding integrating intelligence into packaging, innovations in anti-counterfeiting, supply chain intelligence and problems affecting RFID technology.

"RFID tags have poor performance with metals or liquids or other highly dense objects and can't be read if they are placed on those products," says Doug Schmuecker, regional manager for Visidot. "Their effectiveness drops to 25 percent."

Along with its effectiveness issues, customers get tags that are "dead" even before they are put on the pallet, RFID tag makers have to deal with the high cost of silicon chips and there is not one standard frequency for RFID tags. But despite all the problems, many presenters agreed that there is a need for RFID and similar technologies for brand protection and recognition.

According to a study done by DuPont, approximately $60 billion in revenue are lost yearly due to counterfeiting. Speakers suggested combining overt counterfeiting deterrents such as holograms and embossing with covert methods that include invisible inks and digital watermarks.

"The level of sophistication has increased rapidly because counterfeiters are much better funded and have better distribution channels," says Carolyn Burns, global marketing manager of DuPont Security & Solutions. "Don't limit your thinking to just the package and the product. Always think in layers."

Although counterfeiting may never be eliminated and the five-cent chip continues to elude labelmakers, the packaging and printing industries need to keep on working to meet security and brand enhancement demands. The conference exposed the attendees to many solutions available today and many more that will be available in the near future.