Labels: Adding Value to Packaging
Global trends in product decoration provide challenges and opportunities for label printers around the world.September 2012 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?
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 greatly expanding their role in packaging.
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 bar codes and other track-and-trace and authentication devices; and for 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.
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 harmonized 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 self-adhesive labeling associations, such as Europe's FINAT, and other counterpart organizations around the world.
Global label demand (across all technologies) is expected to reach more than 50 billion square meters by 2015. World label demand growth for 2012/13 will be approximately 6-7 percent.
The prime volume markets are foods, beverages, personal care products, and pharmaceuticals. The world's emerging economies are driving much of 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-mold 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.
Downgauging and secondary use
With its complex make-up, the self-adhesive labelstock is particularly susceptible to raw material price increases—and these have characterized 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 and save cost. Lower-gauge film facestocks and release liners are key players in this arena, with significant reductions in basis weight achieved.
In papers, the manufacturers have more limited opportunities to downgauge, but are concentrating on specialties, such as 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' 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 labeling line, and therefore, significant time and cost savings.
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-mold labels are today enjoying faster growth rates. However, these technologies are opportunities as well as threats, and self-adhesive label converters are embracing the concept of 'one-stop shopping'—offering their customers not only the self-adhesive path, but also the non-adhesive technologies that can be profitably and ably printed on their narrow-web presses.
Label converters today are, indeed, at the center 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 offerings, and by mainstream packaging companies purchasing self-adhesive label converters to develop their capability to provide personalized packaging.
The narrow-web presses that characterize self-adhesive label production have in recent years mostly employed flexographic printing, recently coupled with speedy UV curing. However, the fast-developing narrow-web digital color 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, the speed, flexibility, and shorter-run capability of digital print is proving itself.
In an increasingly-global label market, there is a real need for an active 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—a global collective of label industry associations—has made enormous strides in this direction
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.
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 older, established industries like paper and board, and from new packaging formats like flexible packaging. Their successes can be analyzed and could indeed be replicated selectively in label converting businesses. Equally, there are lessons to be learned from other industries about what not to do. pP