Predicting print-label trends in the packaging market7 September 2017
Changing needs of buyers, greater acceptance of colour digital printing and a demand for more personalised offerings are expected to be the key drivers in the global print-label market. Matthew Rogerson asks major players what their predicted trends are.
The global print-label market is predicted to see moderate growth to reach $43.57 billion by 2021, at a CAGR of 5.91%. The Asia- Pacific region is expected to dominate the market, followed by North America and Europe. Flexography is the most common print process; however, advanced digital methods are growing at a faster rate and are seizing market share. Print label use isn’t restricted to just one industry and includes the FMCG sector, healthcare, manufacturing, agriculture, fashion and apparels, and automotive. The integration of digital technology with existing label-printing techniques is bound to bring huge change to small-scale and large-scale sectors.
In advance of Labelexpo Europe 2017, Packaging & Converting Intelligence takes a closer look at some of the key market trends in labels by asking some of the world’s leading experts what to expect this year.
Security and safety
For Thomas Hagmaier and Jules Lejeune from Finat, speed, security and safety are all key watchwords for the market they monitor. “The label world is changing fast,” explains Hagmaier. “There are a number of key things to look out for this year. We are running out of skilled printers, with the age of printing staff in Europe over 50. The new generation of machines need different operating staff. Those who are coming in need to be able to pick up nuances in the systems quickly, whereas their predecessors had a lifetime to acquire their expertise.”
He says, “This will be a year of increased acquisition as the big companies with more capital are able to change markets, while the smaller companies will need to adapt, and become more specialised or be bought by the larger organisations. As the speed increases, it is becoming even more vital to intimately understand a company’s markets and machines to prevent a wrong investment or any type of manufacturing delay. This means any investment must have a clear short to long-term strategy.”
He concludes that as digital connectivity becomes more common, contact with the customer will be more web-based and personal connections will lose influence.
“Because of the transparency of the web, the knowledge gap between customer and production will continue to decrease, and everyone must be careful not to fall by the wayside,” he says.
Jules Lejeune agrees. “Today, a label encompasses not only product identification data, but also an increasing tranche of regulatory information, and delivers brand identity in ways we could not have imagined ten years ago through personalisation, tactile and colour-changing features, and devices such as QR codes,” he says. “Increasing sophistication in product authentication and security devices are an important additional feature, and sleeve labels, flexible packaging, in-mould labels and direct-to-container print will increasingly feature in label converters’ offer to brand-owners.”
Lejeune continues, “Our Finat Radar market research indicates that in the coming years, we expect to see ongoing refinements in digital capabilities and in hybrid analogue/digital presses, partnered with advanced ink formulations that deliver specific high-performance features; for example, for food-safe print without migration or set-off, and a range of print substrates to match. LED ink curing is set to grow substantially next year.”
Gains in digital print especially have made product multiversioning and label multilanguage versioning easy and quick. “Finat members confirm that print runs are now around just 1,500 linear metres a label; and the downward trend is forecast to continue,” Lejeune says. “In fact, only 55% of brand-owners predicted that label purchasing volumes would increase in 2017 – a slight downturn on 2016. While over 20% of brand-owners we surveyed said they do not currently source digital labels, they nevertheless say they want their label converters to have digital capability on their production floor.”
Like Hagmaier, Lejeune believes there will be a continuation of M&A activity, with local and regional label-converting companies joining together to form multinational and functional suppliers. He believes that as brand-owners continue to demand higher quality at lower prices, they are increasingly looking at developing economies in Central and Eastern Europe as viable label-sourcing channels. “Another interesting point raised by our research is that more than 70% of these brands will not be migrating from self-adhesive labelling technology to an alternative format in the next 12 months,” he says.
Lejeune concludes that sustainability will be a headline topic in the agenda of the entire supply chain. “Waste management will continue to be a core concern for Finat and its sister associations around the world in 2017. Spent release liner – a high-value, high-quality feature of the pressure-sensitive laminate – will be a particular focus for recycling efforts. And, at Finat, we are encouraging increasing formalisation in the relationship between label converters, co-packers and brand-owners to establish a formal release-liner collection and recycling system, since around 70% of the end users we surveyed indicated that they are not currently recycling any of their liner waste.”
Shortly after this interview, there was a change in structure at Finat with Chris Ellison, managing director of OPM Group, taking over from Thomas Hagmaier.
Sharing the thoughts and strategy set out by his predecessor, he adds, “Packaging and labelling production is one of the most sustainable industries of all because it continually replenishes itself; it always reflects changing market needs and fashion trends in a youthful way.
“As the founders of the original small, often family-owned, label companies are now beginning to take retirement, we’re facing a real skills shortage that we need to address right now. I know this is a great industry to work in, but I’m also well aware that today we’re competing with many other seductive ‘techno’ options, so it’s a top agenda item for me to have Finat promote the labels and printed packaging production sector as a clean, lean career choice today.”
He concludes, “The advent of new technology across the whole sector brings its own challenges, impacting the entire make-up of a participant company’s systems. I will be strongly supporting development of the excellent technology website Finat has recently created, which continually brings members up-to-the-minute expert information on key areas.
“It’s important to do this, because the pace of technology change in print is getting faster and faster, and equipment model cycles shorter. Not only that, leading-edge equipment today demands huge investment – yet margins are tighter, customers want extended payment lead times, and we need to think about changing direction with what we produce, from just a simple ‘label’ to including new offerings like shrink sleeves, in-mould labels and flexible packaging. That’s what brand owners want, and industry 4.0 means that we all have to become more competitive in our relations with our customers – to be able to keep, and grow, our business.”
He says, “To meet those challenging requirements, we’ve really got to become more competitive and customise our internal business systems to achieve optimal efficiencies.”
Another association that has a lot of expertise in labelling-market activity and trends is the European Flexographic Industry Association (EFIA). Director Debbie Waldron-Hoines also anticipates that the rate of change will not slow any time soon.
“Label and package-printing industries are challenged with the constant need to evolve, and meet emerging consumer trends and needs. Technology is changing the way consumers are shopping and the internet has opened up myriad ways for consumers to make informed decisions about what they buy. Google has called this the ‘zero moment of truth’ – the point in the buying cycle when the consumer researches a product, often before the seller even knows they exist. Competition to sell is therefore intense. Brands need to stand out in this new, crowded retail landscape – online and in store – and want to add value to the shopper experience to drive longerterm consumer loyalty.”
Ultimately, she explains, this is opening up a range of opportunities in pack and product personalisation, customisation and premiumisation. It’s no longer about ‘cost out’ for converters. Brands want to add value to their packs to create differentiation.
She concludes, “As a result of these trends, which have been confirmed by members and partners, EFIA is seeing a keen focus on stand-out graphic design using new tactile coatings and ink effects, as well as the use of complementary flexo and digital print systems to deliver short runs of customised packs. Pack designs will be tested more regularly with sophisticated variable data to connect to digital marketing campaigns that entice the consumer. Further growth in retail-ready or shelf-ready packaging will help to deliver the in-store stand-out as well.”
For Mike Fairley, director of strategic development at Labels & Labelling, and one of the world’s leading label experts, much of the technical innovation and production development taking place in label and package printing over the past ten years has been related to advances in digitised pre-press, colour management, digital printing technology, advances in flexo, and hybrid presses, as well as increasingly sophisticated finishing line solutions.
“These developments will continue to take place as run lengths decrease, more versions and variations are required, time to market decreases, and more complex and exciting label solutions are created,” he says. “On top of these changes can be added pressures relating to costs, investment, margins and profitability – and that’s without even looking at environment and sustainability issues, supply chain traceability demands, food contact challenges, and the ongoing trends in globalisation.”
Fairly says these changes are all increasing the complexity of label and package printing, and the demands made on today’s employees and print managements around the world to manage within a fast-evolving industry, yet remain profitable.
“It is these demands and pressures that will increasingly see label and package-printing companies move towards automation of their administration and production process workflows, using sophisticated management information systems that will be integrated with specialised inspection, and colourperformance software and technology, through to fully automated press and finishing line set-up,” he says.
“The target aim is now to work towards human-free, 24/7, completely automated and streamlined workflows that receive job orders by electronic data interchange (EDI), use the potential of cloud computing and the internet of things, fully automate production − even using Wi-Fi for remote access and control − liaise with shipping carriers, and invoice and receive payment advice through EDI.”
Jennifer Dochstader, managing director of LPC, says, “Last year was a pivotal year for the label-printing industry. During Labelexpo Americas, we witnessed the unveiling of a new generation of entry-level digital production presses that allow converters to move into the digital print space at viable price points. We also saw companies showcasing digital inkjet retrofit technology, turning conventional flexo presses into hybrid print systems.”
Looking forward, Dochstader says the digitisation of the industry will continue − 2014 marked the first year in the North American marketplace that digital production press sales outpaced sales of new conventional presses.
“This trend will persist, but not only at the converter level,” she says. “We speak with brand-owners on both sides of the Atlantic every day and, in the research work LPC does with industry associations, we are seeing a small number of consumer packaged-goods companies and contract packagers across North America and Europe buy digital presses to vertically integrate some or all of their label-printing requirements. Digital-press manufacturers foresee this trend growing in 2017.”
In an increasingly competitive landscape, Dochstader says the core challenge for label converters is to constantly find new ways to add value to the products and services they offer. “In North America and Europe, printed-packaging procurement is becoming more centralised,” she says. “Some of the avenues that used to offer prospecting opportunities are diminishing. R&D departments, marketing, brand management and package engineering have historically been channels where label converters have had success in securing new customers.
“These channels are closing as purchasing becomes more centralised, and new vendors are directed to deal solely with sourcing and procurement – personnel functions that are non-technical with high turnover rates. The future will demand label converters are more innovative; curating new marketing and business development strategies to approach prospects, while ensuring the equipment on their production floors meets the changing requirements of their existing customers.”
Nicholas Mockett, head of packaging M&A at Moorgate Capital, says packaging manufacturers in Europe saw periods of soft demand during 2016. “This may have been down to some destocking in the supply chain, which can’t go on forever,” he says. “If the European economy avoids a slowdown in 2017, there may be some catching up and consequently a good 2017 for labels and packaging. If sterling remains under pressure, the UK will suffer from cost-push inflation and possibly a recession. However, exports will be more competitive, which could be good news, for instance, for Scotch whisky, a major market for labels and printed packaging.”
He concludes, “We expect in-mould labelling to be a key growth area and the leading players will roll out their expertise to new territories, building on existing multinational relationships with FMCGs that are penetrating new markets with premium products. In 2016, the beer industry consolidated significantly, so that’s an end-use market to watch in 2017 and beyond.”