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The definition of primary product labeling now is much broader than ?glue-applied? and ?pressure-sensitive,? as these traditional formats compete increasingly with sleeving in all its forms ? heat shrink, stretch and wraparound; various in-mold technologies; and flexible packaging, directly printed, which removes the need for an additional label. Direct print to a product?s container is another ?label-less? choice.

Many companies specializing in label printing are today choosing to embrace an increasing range of formats to meet their brand owner customers? changing needs and grow their businesses. This has been made possible by the innovations in recent years in both analog and digital print technologies and related consumables.

Global market by region

We estimate that the global demand for labels in 2016 grew by a healthy 3.3 percent over the prior year, to 59 billion square meters. This reflects a stable global growth rate, following a return to historical growth levels after the global and regional recessions of 2008/2009. Growth in label demand varied, both by regional markets and by label format.

Global growth is mainly driven by China, India, Southeast Asia and Eastern Europe. With 43 percent of the world market, the Asian region represented the greatest demand for labels, but growth has slowed in recent years. In 2016, the Asian market grew 5.6 percent. The growing demand for VIP labels is driving the growing market, reflecting increased transport/logistics, e-commerce and retail activity.

The developed label markets of Europe and North America again showed positive and improving growth prospects in 2016. North America ? with 19 percent of the world market ? grew around 2 percent; and Europe, representing 25 percent of the world market, grew by 2.1 percent. South American demand decreased by an estimated -0.1 percent ? mainly as a result of economic issues across the region, especially in Brazil. Africa and the Middle East now figure in the world market, growing by around 3.2 percent in 2016 over the previous year.

Global market by technology

Globally, pressure-sensitive and glue-applied label formats continue to meet the majority of labeling needs, with a combined market share of ±76 percent, supported by the strong growth of pressure-sensitive labels. Pressure-sensitive labels strengthened their position, as they enjoy steady growth in Europe and North America and continue to show strong positive growth in developing markets.

In developed markets, glue-applied labels, a traditional application in beverages, continue to suffer from declining volumes because of lifestyle changes (consumption of beers; health concerns over consumption of sodas; bottled water labeling shifting to pressure-sensitive labels). Overall global volume growth for glue-applied labels is stimulated by the emerging geographic label markets.

Today, the sleeving technologies ? heat shrink TD; stretch; RFS/ROSO? MD ? account for around 18 percent of global label volumes and demonstrate the highest growth rates of all label technologies. Sleeve label markets continue to perform strongly in all regions, but growth has slowed from 2009-2013 levels through sustained competition from pressure-sensitive alternatives.

In-mold labels represent 2 percent of the global label market and are showing positive growth across all regions, but by format IML-EB continues to come under pressure from alternative methods of product decoration. Growth in 2016 was around 2.5 percent globally. Overall, the growth in ?Other? labeling formats is in decline, as the major label formats continue to gain share.

Price and other pressures

Pressure on cost and prices remains a significant factor across all label markets in 2016. Continued falling oil prices led to some relaxation in the cost of resins, films, energy and transport. However, such gains were offset by heightened levels of competition between converters in a slowing market, and by price pressure from end users.

Other pressures for label companies include the pressure to reduce delivery/lead times, competition from alternative packaging formats and the challenge to produce the quality of graphics required by the end user. Trends characterizing the market include ?downgauging? material caliper to create cost savings, reduce on-press downtime for reel changes, and deliver more labels per reel; increasing interest in the option of using linerless pressure-sensitive labels; and choosing lighter weight/higher-yield materials to contribute more positively to the sustainability agenda.

Material trends

In terms of material usage in the label market, film substrates are growing faster than paper substrates. Films are used in pressure-sensitive, wraparound glue-applied, sleeving and in-mold technologies. Biaxially oriented polypropylene (BOPP) film is the leading film substrate in label applications, driven by its use as the preferred material for hot melt (wraparound) glue-applied labels, as the leading film facestock for pressure-sensitive labels, and in IML-IM and IML-TF formats. In papers, cold glue labels continue to favor medium gloss C1S papers, particularly in alkali-resistant grades.

Printing trends

Flexo and UV-flexo print together continue to represent the largest installed base of narrow- and mid-web presses, but digital label presses are now attracting the greatest investment in the industry, and the addition of digital print units to analog presses is a popular feature enabling personalization ? a current feature of consumer product retailing. In AWA?s annual survey about the state of the label industry, nearly 90 percent of respondents indicated that they expected to invest in digital print technology in the next 18 months.

The environment

Sustainability/recyclability and environmental initiatives now have a more prominent role within the label industry value chain. Across the globe, several solutions are in place to deal with matrix and release liner waste.

Mergers and acquisitions

In AWA?s annual survey about the state of the label industry, a significant majority (73 percent) of respondents believe that merger and acquisition activity will increase in the label industry over the next five years. Fragmentation is highest at the printer/converter point of the value chain, and merger and acquisition has been a feature of this and other points over recent years.

The future?

Technology advances along the value chain are creating even more ways, in primary product labeling applications, to deliver higher impact on the retail shelf ? with inks, with substrates, with promotional/product authentication printed electronics and other on-pack data, for example ? and at the same time meet the need for sustainability and, where possible, recyclability. In variable data printing, development and use of advanced track-and-trace/security devices will continue to build a safer, trustworthy supply chain for goods ranging from ethical pharmaceuticals to automotive components.

AWA Alexander Watson Associates is a global business-to-business market research, publishing, events and advisory services company with a unique focus on the specialty packaging, coating, and converting industries. AWA offers a wide range of in-depth market and technology reports. AWA Labeling & Product Decoration Annual Review is published every year and provides an overview of the global and regional label markets. For more information, contact AWA Alexander Watson Associates by telephone: +31 (0)20 676 2069; email: reports@awa-bv.com; or website www.awa-bv.com.

» Author: AWA Alexander Watson Associates

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