by Jules Lejeune, managing director FINAT
The evolution of supply and demand for self-adhesive labels is not just a matter of collecting and interpreting industry statistics and quantitative indicators. Especially in the last three to five years, macro-economic factors such as the twin crises of bank credit and sovereign debt, and the associated volatilities, have distorted the picture of underlying longer-term trends and developments. What are these underlying trends? How is the label industry positioned in the context of the broader packaging industry? What is driving demand for labels in comparison to alternative decoration technologies? What is the label printer’s share of the total added value created along the supply chain? How are continuous innovations in technology and materials helping label printers to claim a bigger share of the pie? What are the corporate strategic options to be pursued to ensure a sustainable company future?
In this article FINAT aims to address these questions and monitor relevant trends and developments.
The advent of the paper bag – the universal packaging in a 19th century grocer’s shop – created the need to identify the contents with some kind of ‘label’. This was, of course, really helpful for customers; and, since then, labels have been expanding their role in packaging, driven by legislative demands as well as the need to promote a particular brand, as the consumer society gained momentum after the Second World War.
Labels: adding convenience and versatility
Today, it is certainly true that a self-adhesive label adds value to a product’s packaging in a variety of ways: as a source of information on pack contents; as a location for barcodes and other track-and-trace and authentication devices; and as a promotion and decoration. In all these spheres, the convenience and versatility of the self-adhesive laminate have been key contributors to product packaging. They serve manufacturers across the whole spectrum of products, providing a valuable and easily-accessed tool for product development and marketing, particularly for direct-label goods – today the world’s dominant brand, and the leading driver for demand in packaging and labels.
Even in the 21st century, self-adhesive labels are adding value to products and brands in new and developing ways, around the world, in partnership with an ever-changing base of packaging materials. Label converters benefit -- almost uniquely in a manufacturing environment – from being part of a harmonised but complex value chain that embraces raw materials suppliers, self-adhesive laminators, ink, die, and other press consumables suppliers. All levels of this value chain are assisted and nurtured by the European association for self-adhesive labelling, FINAT, and its counterpart organisations around the world.
Trade associations – facilitators of global standards and best practice
As ‘umbrella’ organisations, trade associations create industry standards and drive ‘best practice’; facilitate networking, lobbying, and promotional opportunities; and provide technical and legislative updates. At a time when sustainability, food safety, and optimisation of the world’s natural resources are key criteria, uninterrupted status information on global and regional legislative issues such as REACH, is essential for everyone in the label supply chain.
After all, today’s self-adhesive label industry is increasingly global in its reach, serving the international brand owners and retailers across all their regional markets.
Global breakdown of label demand
Global label demand (across all technologies) is expected to reach over 50 billion m2 by 2015. World label demand growth for 2012/13 will be approximately 6-7%.
The prime volume markets are foods, beverages, personal care products, and pharmaceuticals. The world’s emerging economies – particularly the BRIC countries – are driving that growth. Self-adhesive labels, along with glue-applied labels, still represent together nearly four fifths of the total label market, but face competition today from sleeving and in-mould labels – both of which are exhibiting positive growth, particularly in the food and beverage markets.
In Europe, the dynamic development in recent years in the eastern countries has slowed somewhat, but remains a key factor in the region’s positive growth. North American self-adhesive label demand growth has been was driven primarily by VIP applications. Asia Pacific takes the largest global share of the overall label market today, and here self-adhesive labels demonstrate healthy growth, with new label laminating companies, as well as converters, proliferating. The newest label market, Africa and the Middle East, combines both mature and unstable economies, but is evidencing healthy overall growth for self-adhesive labels.
Raw materials inflation and sustainability: push for downgauging
With its complex make-up, the self-adhesive labelstock is particularly susceptible to raw material price increases – and these have characterised the market for nearly two years, creating margin pressures at every level of the value chain. Prices for platinum – the initiator for silicone release coatings – remain extremely high, and crude oil prices, fluctuating in response to world political issues, continue to be of high concern, particularly in relation to plastic films. While paper labels and release liners continue to dominate self-adhesive label use, film facestocks and release liners are gaining market share. Environmental concerns and the quest for sustainability are encouraging the use of ‘downgauged’ self-adhesive labelstocks – in order to reduce material usage; to save cost; to reduce inventory storage space; to save (thanks to lighter weight) on transport costs. Lower-gauge film facestocks and release liners are key players in this arena, with significant reductions in basis weight achieved.
Secondary use of label materials: towards commercially-viable solutions
In papers, the manufacturers have more limited opportunities to downgauge, but are concentrating on specialties, like wash-off labelstocks for bottles, security papers embedded with forensic and other taggants, and wine label laminates offering ‘ice bucket’ performance. The proven recyclability of glassine release liner is now beginning to encourage the continuing use of paper labelstocks.
At the same time, the skills of the papermaker are being increasingly employed in the ‘cradle to cradle’ repulping of glassine release liner. It is a sad fact of life, however, that the label industry and its customers have yet to fully take advantage of such schemes: their commercial capacity has not yet been filled. It is important to add that the remainder of the waste stream created by converting self-adhesive labels – namely the matrix waste – has yet to find a ‘cradle to cradle’ solution – although, as has been proven over a number of years, it can be successfully used in industrial incinerators for waste-to-energy recycling.
The continuing popularity of the ‘no label look’, created using clear film label facestocks, is not the only driver for film usage in self-adhesive labels today. Film release liner, PET or PP, is increasingly a choice today. The combination of film facestock and film liner enables serious downgauging of label laminate, to deliver more labels per reel, fewer roll changes on press and on the labelling line, and therefore significant time and cost savings. Cost savings are additionally enhanced by recycling the film release liner: world shortages of PE granulate and high demand have made recycled liner a financially viable commodity.
Film-based labels: where decoration technologies meet in narrow webspace
However, it is in the realms of film that self-adhesive labels today see their greatest competition. As stated, film-based shrink sleeve labels, stretch and wrap-around sleeves, and in-mould labels are today enjoying faster growth rates. However, these technologies are opportunities as well as threats, and self-adhesive label converters today are embracing the concept of ‘one-stop shopping’ – offering their customers not only the self-adhesive path, but also the non-adhesive technologies which can be profitably and ably printed on their narrow-web presses.
Broadening the agenda
Label converters today are, indeed, at the centre of an intermingling of technologies in the packaging chain, offering both web-fed self-adhesive labels and sheet-fed wet glue labels, as well as flexible packaging and tube laminate. They are also experiencing, in the M&A arena, buyouts by flexible packaging companies wishing to expand their offering, and also mainstream packaging companies purchasing self-adhesive label converters to develop their capability to provide perosnalised packaging.
Digital: shorter runs, higher break-even point
The narrow-web presses that characterise self-adhesive label production have in recent years mostly employed the flexographic print process, most recently coupled with speedy UV curing. However, the fast-developing narrow-web digital colour print options – particularly the HP Indigo and Xeikon – are dramatically changing the face of label print today. As brand owners and retailers opt for shorter production runs of their products, delivered more often, as well as multi-versioning of products using the same basic packaging, so the speed, flexibility, and shorter-run capability of digital print is proving itself.
Linerless: a revival of interest for special applications
Linerless self-adhesive labels – which briefly enjoyed popularity in the 1980s – are enjoying a resurgence of interest; and technology advances have made them a real success currently for supermarket catchweigh food pre-packs in particular. Limitations on label shape have held this format back, but developments are ongoing and this is an area to watch.
Technology advances: enhancing the brand experience
On-press trends include an ever-broader toolcase of special finishes for labels, such as photochromic and high-gloss metallic inks; time-temperature indicators; holograms; and tactile varnishes. Designed to enhance the consumer’s experience of a product’s packaging and create shelf ‘stand-out’, they partner highly-engineered permanent and removable adhesives to deliver the perfect performance for the brand owner’s needs.
Connecting the global label industry network
In an increasingly-global label market, there is a real need for a ‘living’ network for the whole base of industry players, sharing information and knowledge, transcending the boundaries of countries and languages. Within less than three years, the L9 – the global collective of label industry associations, of which FINAT is a founder member – has made enormous strides in this direction, sharing knowledge and experience on sustainability and recycling; jointly promoting the label industry’s ‘best-in-class’ at the World Label Awards; introducing benchmarking and standardised best practices; And thus bringing benefits for all members and their end-user customers.
Labels: the interactive medium connecting product and consumer
Label content is becoming increasingly an issue as the requirements of brand owner and retailer are transcended by the requirements of legislation on information and food safety, security and logistics input, and customer-accessible additional information via QR codes and similar devices. As a result of this broader agenda for label content, label size has increased; and leaflet label usage has grown considerably – particularly for pharmaceuticals. In the pharmaceutical field in particular, in the face of growing instances of counterfeiting, the addition of Braille content, and overt and covert security and track-and-trace devices is extensive.
In this context, there are real opportunities for label printers to engage with commercial packaging companies – in cartons, for example – to add value in terms of enhanced customer experience and engagement with a particular brand. Self-adhesive labels can certainly enable mainstream sectors of the packaging industry to benefit from 21st century brand identification strategies, without the need to change their core technology base.
Corporate strategies for the label printer
The self-adhesive label converting industry came into existence very much as a family concern, based on small businesses, initially serving regional or specialist markets. The international nature of today’s leading brands and growing globalization have necessarily changed the face of the industry via a continuing stream of mergers and acquisitions. However, the industry values its origins, and there is a strong desire to retain the ‘family’ aspects of the business, even in the context of ‘growing’ the company.
As a relatively young industry in the context of printing, and a downstream user of a variety of raw materials, there are many things label converters can learn from old-established industries like paper and board, and from new packaging formats like flexible packaging. Their successes can be analysed, and could indeed be replicated in part in label converting businesses. Equally, there are lessons to be learned from other industries about what NOT to do.
A dynamic and creative sector of the packaging chain
Packaging has come a long way since the original paper bag – and labeling has had to move with the times to embrace developments that have encompassed tin cans, plastic bottles, and flexible packaging. Self-adhesive labels have proved themselves perfect, innovative partners in all these developments. They continue to represent a dynamic and creative sector of the packaging chain, offering unparalleled flexibility and versatility. What is more, they are the product of a value chain that is deeply committed to sustainability, lean manufacturing, and – above all – meeting the buyers’ needs in terms of aesthetics, applied performance, and price.