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UNDERLYING FUNDAMENTALS
The continuing story of the last two decades has been the rapid emergence of high-end, filmic roll label applications as vehicle for PDID applications. In 2014, filmic roll label materials volume demand was 8.4% above 2013. Since 1996, annual consumption of these materials quadrupled (with a duplication taking place over the past decade), and in 2014 filmic rolls represented about 25% of total self-adhesive materials consumed in Europe.
It should not be forgotten, however, that paper roll demand over that same period more than doubled, with paper rolls still holding a solid 70% share of total demand in 2014 and a solid increase of 5.1% over 2013. It can therefore be assumed that on-going growth in filmic label material demand was not generated by substitution of self-adhesive label types, but by the acquisition of new business generated by product development and process innovations.
Nevertheless, since 2003 about 2.1 billion square meters of new self-adhesive business was created in Europe, and nearly 40% of that volume was generated by filmic roll label applications.
Another fundamental driver of self-adhesive label materials growth has been the rapid emergence of Eastern Europe. In 2014, Eastern European label demand increased by 8.7% over 2013, ahead of Southern Europe (6.3%), UK and Ireland (5.6%), Northern Europe (5.2%) and Central Europe at the end of the line with a modest 2.6% growth rate.
Since 2003, the year that the FINAT labelstock statistics started, of the 2.1 billion square meters of new business mentioned earlier, almost 40% (830 million square meters) was generated in the Eastern European countries. Compared to this, Central Europe and Southern Europe were in a neck-and- neck race, each with around 25% of the total new business (544 and 526 million square meters respectively). When comparing this ‘photo finish’ for ‘silver’ and ‘bronze’ however, it should be taken into account that given the considerably smaller number of inhabitants, label materials demand per capita in Central Europe was considerably higher than anywhere else in Europe. This differential can be attributed to differentials in productivity, home market structures and differences in export profiles.
GROWING MARKET MATURITY IN EASTERN EUROPE
It is interesting to see that when comparing Eastern Europe with the other two regions, it appears that incremental growth in Eastern Europe since 2003 was more prominently driven by increased demand for paper roll label materials (70% of the incremental volume versus 30% for filmic materials), both other regions were on the 60-40% breakdown, in line with the European average described above.
Since 2010, however, this pattern appears to have been reversed. Of the 760 million square meters of new roll label business in Europe, ‘only’ one third was created in Eastern Europe, but the breakdown of the incremental volume in that region over the past 4 years (ca. 250 million square meters) was in line with the European average: 62.5% paper versus 37.5% non-paper. This could be interpreted as a sign of growing maturity of pre-packed and labeled FMCG product markets, and on-going installation of new, state of the art PDID technology in Eastern Europe.
Chart 3: Paper Roll Label Market Europe: 4.4 bln. m2 in 2014
Chart 4: Non-paper Roll Label Market Europe: 1.6 bln. m2 in 2014
CYCLICAL OR CONTRARY FACTORS
Data by Eurostat and other sources indicate that GDP growth rates in the countries under review are all well below the 5.7% demand growth recorded in Europe. Looking at the world
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FINAT YEARBOOK 2015 |