Sophisticated label substrates have experienced
exponential growth due to demand for high-end applications according Finat’s
latest findings. Since 2010 demand for PP-based materials has grown 78%, direct
thermal papers are up 51% and white coated papers enjoyed a 24% increase. The
figures show that while paper based materials continue to dominate label
materials demand, there has been a shift from basic primary and VIP labels
towards more sophisticated, high-end applications.
Jules Lejeune, Finat Managing Director, comments:
“The continued growth in demand for packaged consumer goods, especially in
emerging economies, has increased the need for white, coated materials as
end-users are looking to differentiate their branded products on the shelf.
Labels containing variable product data in sectors like retail, logistics,
process automation and inventory management demand an ever growing volume of
direct thermal papers. But above all, the need for high quality (transparent)
product decoration in high speed, high volumes sectors like food, health and
beauty care and premium beverages is driving the surge in the consumption of
PP-based labels.”
The trend is encouraging self-adhesive label
producers to offer adjacent high-end packaging solutions like pouches, sleeves
and other flexible packaging items. They are also investing in the corresponding
knowledge, facilities and accreditation programmes like in the case of food
safety.
These findings are based on the backdrop of a 4.7%
European growth rate in total consumption of self-adhesive label materials, up
to 7.45 million m2 in 2017, slightly below the 5.4% average over the preceding
four years.
Eastern
Europe Drives Growth
The continued evolution of Eastern European markets
also remains a key growth driver and has helped European label companies on
aggregate record an increase of almost 1.7 billion m2 in their annual demand
since 2010.
Geographically, established markets Germany, UK,
Italy, France and Spain, still account for 58% of the total European market
size with emerging Poland and Turkey catching up. They are expected to
challenge the top five in the next few years.
There are, however, significant European
disparities when comparing demand in terms of consumption per capita. While the
European average of 9.7 m2 is approaching the 10 m2 benchmark, Denmark,
Lithuania and The Netherlands (all small, export oriented countries) consumed
almost 17.5 m2 per capita. The bottom 10 countries recorded consumption less
than 5 m2 per capita.
Among these are Romania, Russia and Turkey, between
them representing almost 250 million inhabitants or one-fifth of the total
population in the countries under review. This indicates there is still a huge
potential for future structural growth. This potential does not consider the
continuously widening scope of the labels sector into short term flexible
packaging.
Short term
outlook: signs of economic slowdown?
There is a clear statistical correlation between
roll labelstock demand and the general economic climate according to Finat’s
statistical agency Panteia. Unsurprising is the fact that labels are an
essential enabler in a wide variety of sectors of the business community.
Looking back, general economic cycle change in the EU28 countries over the past
15 years was ‘announced’ by a reversal of labelstock demand in the previous
quarters.
Lejeune states: “Given the present uncertainties
associated with Brexit, escalating trade wars between the EU and the US,
continued trade sanctions against Russia and, finally, re-emerging concerns
about the euro following the installation of the new Italian government, it
should come as no surprise that the gap between annualised growth rates in the
label industry and GDP has been shrinking in recent quarters after five years
of continued well above GPP growth rates.”
Radar
Signals Buoyant Markets
Finat’s other market research partners, LPC Inc.
completed technical surveys and one-on-one interviews with brands across Europe
for the spring 2018 edition of Finat Radar. It confirms the buoyant state of
the label industry. Average annual sales growth over the past five years was
7.1%, although this slowed in 2017 compared to previous years. Interestingly
the highest growth rates were recorded in non-prime markets like automotive,
consumer durables and industrial chemicals while the largest labelling sectors
of food and beverages continue to be among the top five growth markets.
It gives Finat members a unique perspective on the
European labelling sector, and on the trends and forces that are driving brands
to adopt and implement specific labelling technologies and decoration formats.
Two trends dominate: prime labels are becoming increasingly complex and
non-prime labels are becoming increasingly functional.
The Eurozone economy’s robust performance thanks to
a recovering labour market and healthy external demand supports ongoing label
sector growth. As a result, brands are persistently seeking ways to connect
with their customers. One method is through package decoration. As brands
strive to achieve a market-specific approach late in the supply chain they
require shorter runs and fast turnaround to accommodate late-stage design and
label functionality requirements. This is driving digital press adoption and
shapes how marketing and R&D departments create consumer captivating
campaigns.
Lejeune concludes: “The future remains bright for
labels. When asked which printed packaging sector delivers the most innovation,
again and again brands claim their label suppliers offer more innovation and
agility over their flexible packaging, carton and corrugated suppliers.”
