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Labels: The State of the Industry

While label market growth reflects the general economic sluggishness, it is a dynamic, healthy industry.

July 2012 By Corey M. Reardon
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Labels in every format continue to perform an essential function for product identification and various value-added functions: decoration, brand promotion, and security. As such, they represent a key element of the packaging, logistics, and brand promotional market in every segment, from food and beverages to electronics components, and pharmaceuticals, and are a key indicator of economic health around the globe.

Global economy

Despite the ongoing impacts of the global economic crisis, world GDP is set to grow this year at 2.4 percent, with much of that growth centered in the world's emerging economies, particularly China (7.5 percent), India (6.9 percent), and Brazil (3.3 percent). These are healthy growth rates—but they have slowed significantly over recent years, reflecting the slowdown in exports to the struggling developed markets of North America and Europe, as well as the implications of the lack of financial controls governing inflation in many 'young' economies.

North America and Europe—the world's most mature markets—cannot hope to match these growth rates; and in the U.S., GDP is forecast to reach 2.3 percent in 2012—slightly lower than the global average. This is still a better projection than that for Europe, where the IMF considers economic health to be weak, with concerns on a return to recession, sovereign debt, and high unemployment. The Euro zone is forecast at -0.6 percent growth, and countries outside the Euro, while not exhibiting negative growth, show limited possibilities.

Label market today

Label market growth is certain to reflect these economic growth patterns across all the technologies currently employed to decorate and identify products, including the 'non-labeling' technologies: flexible packaging; cartons; and direct-printed bottles and cans. 2011 evidenced an overall slowing of demand in the second half of the year because companies de-stocked, driving down costly inventory in the hope that 2012 would see reductions in some raw material prices—particularly paper pulp and PET film—and reductions in high energy costs which were impacting manufacturing, distribution, and converting.

While investment in additional capacity by raw material producers has result in some falling prices, concerns remain over the high price of oil, which impacts the prices for polymers for film manufacture, resins used in adhesives, inks, paper coatings, and varnishes. Additional pressures on raw materials usage are presented by health and safety legislation—particularly the European hazardous chemicals platform, REACH, which has global implications.

 

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