Page 36 - FINAT Yearbook 2011

industry outlook
Global label and PackaGinG Markets and trends
Mike Fairley, Director of Strategic Development, and Roger Pellow, Managing Director Labels & Packaging share some of their Tarsus Group’s knowledge resource. An overview of the global label and packaging market developments and an outlook of the key drivers for the future, based on a presentation they gave at the Turkish Label Association symposium held on 14 January 2011.
globalization
Globalization can be described as an ongoing process in which tariffs and controls on capital are reduced or eliminated. Similarly, subsidies for local businesses are reduced, eliminated or harmonized, whereas subsidies for global corporations are created. Finally, harmonization of Intellectual property laws and restrictions takes place.
Globalization has opened up new emerging markets to foreign global competition, with global brand owners and retail groups taking market share from domestic ones. This in turn provides new opportunities for interna- tional as well as local label converters areas like health and beauty care, pharmaceutical products, food labelling, logistics and distribution labelling and retailer private labels. Local converters can benefit from the knowledge and skill transfer that helps them to invest and rise to international exporting standards.
A fundamental shift in global label industry growth patterns has therefore taken place over the past decade. Whereas North America and Europe continue to record the largest per capita consumption of self-adhesive materials, the annual growth rates in the developed markets have fallen below those of the emerging markets and double digit growth rates in the emerging markets are expected to fuel label and packaging markets in the decade to come. As this
chart shows, consumption patterns of self-adhesive materials differ substanti- ally between Europe and the emerging markets in Asia.
end user requirements
End-user requirements are changing drastically, as global brand owners like P&G and Unilever are looking at continuous reductions and down gauging of packaging materials. Run lengths are being decreased, lifecycles are becoming shorter and shorter, there are more and more variations and versions of labels, and the time to market is being minimized. End-users are outsourcing non core activities and competences and focusing on what adds value in their own R&D and Marketing and Sales departments. New supply chain business models are connecting global customer-supplier networks. What can go digital, will go digital in order to enable global consistency of product quality.
private labels on the rise
But global brands are facing increasing competition from private labels owned by the world’s largest retailers. Private labels have shown strong growth, now accounting for over 22 percent of all retail unit sales in North America. In addition, private label growth has been up 25 percent in the UK, Germany, France and Spain. In fact, in terms of sales worldwide, Wal-mart’s own private label now exceeds any of the world’s
Source: UPM Raflatac/SCA/AWA/FINAT
largest brand-owners total turnover, but also Aldi, Tesco, Ahold and Metro are now among the FMCG top 10 with their private labels. The competition between established brands and private labels has led to the launch of “premium”, “budget” and other types of products. As a result of the intensified competi- tion, companies seek to upgrade labels, shorten print runs and time to market, and reduce costs.
digital printing
Given these developments in end-user requirements, digital label printing will be the new growth technology. From rotary letterpress in the 1980s, flexo in the 1990s and UV flexo in the last decade, the next 10 years are likely to be characterised as the ‘digital decade’. Last year, more than 15 percent of all new roll- label presses installed worldwide were digital. This number is however accelerating drastically as the number of
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Finat Yearbook 2011 |