Future unlimited

Projections have the labelling market seeing steady growth, with linerless labelling in particular becoming more commonly used. Converting Today looks at what the experts think about labelling trends in 2017.

Economic and lifestyle changes and the focus on sustainable packaging will drive labelling market growth by 5.4% annually during the period 2016–2021 to $44.8 billion, according to a new report by Smithers Pira. The label market demand is being driven by the relatively low cost with which labelling can be replaced or changed, and a continuing need for barcodes and other secondary packaging applications that support food safety and pharmaceutical compliance issues.

In addition, the growing trend for sustainability in packaging and labelling means linerless labelling systems are gaining in popularity because they eliminate the need for non-recyclable release liners, and the absence of backing material means that reel changes are quicker and easier. Linerless technology also provides full-colour, high-end graphics, together with the option to print on the back of the label for promotional, coupon and instructional applications. Linerless labels eliminate waste and reduce cost associated with label production.

Major trends

For Thomas Hagmaier and Jules Lejeune, speed, security and safety are all key watchwords for the labelling market. “The label world is changing fast,” says 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 where their predecessors had a lifetime to acquire their expertise. 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 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 connectivity via digital becomes more commonplace, 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”.

Jules Lejeune agrees that the label world is growing in every facet: “Today, a label encompasses not only product identification data, but also an increasing tranche of regulatory information, and needs to deliver brand identity in ways we could not have imagined ten years ago through personalisation, tactile and colour-changing features, and QR codes, for example. Increasing sophistication in product authentication and security devices are an important additional feature. Sleeve labels, flexible packaging, in-mould labels and direct-to-container print will increasingly feature in a label converter’s offering to brand-owners.

 “Our Finat Radar market research indicates that in the coming years, we can expect to see ongoing refinements in digital capabilities and 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,” he continues.

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 1,500m a label, and the downward trend is forecast to continue. In fact, overall, only 55% of brand-owners predicted that label purchasing volumes would increase in 2017 – a slight downturn compared with the general sentiment in 2016. While more than 20% of brand-owners said that they did not currently source digital labels, they nevertheless claimed that 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. Furthermore, he believes that as brand-owners continue to demand higher quality at lower prices, they will increasingly look 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 adds.

Sustainability will be a headline topic on 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.”

 EFIA’s perspective

A further association that has a lot of expertise in labelling market activity and trends is the European Flexographic Industry Association (EFIA). Its director, Debbie Waldron-Hoines, also anticipates that the rate of change will not be slowing 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 shopping experience in order to drive longer-term consumer loyalty,” Waldron-Hoines explains.

Ultimately, 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.

“As a result of these trends, 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,” she concludes.

Economic growth

From the corporate finance perspective, Nicholas Mockett, head of packaging M&A at Moorgate Capital, provided his thoughts on the labelling market, considering the macroeconomic situation and growth opportunities.

“Packaging manufacturers of all shapes and sizes throughout Europe found periods of soft demand during 2016. This may have been down to some destocking in the supply chain, which can’t go on forever. If the European economy avoids a slowdown in 2017, there may be some catching up and, consequently, a good 2017 for labels and packaging. Within labels globally, we predict that in-mould labelling will be a key growth area and expect the leading players to 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.”

Finally, Dscoop board member Cees Schouten, technical director for a self-adhesive label manufacturer specialising in the chemical industry, offers his thoughts.

“The label market will continue to expand, with more automation in the workflow to support that growth. Web-to-print will also rise and printers will offer more services such as labels, sleeves and packaging, all under one roof,” Schouten says. “The effect of this will see some printers consolidating and growing, while smaller print houses may struggle to compete unless they can find a way to add value to their services. This is what we see within the Dscoop network: smaller businesses with their fingers on the pulse, sharing best practice, adopting the right technology early and working collaboratively to offer more services with added value in order to stay on top of the game.”