- November 01, 2002, Corey Reardon, AWA Alexander Watson Assoc.
With an adhesive “coater” made out of a cigar box and a simple die punch, R. Stanton Avery, founder of Avery Dennison Corp., pioneered a production technique that gave life to the self-adhesives industry. That was in 1934. Today, the concept of the self-adhesive laminate is the same, but the years have brought changes in terms of printing, application, and laminate construction.
The success of the technology was contingent upon the ability to supply labels on a roll, so specialized web-fed presses were developed that could print, die-cut, matrix-strip, and rewind in-line. Early label presses were based on the letterpress process. Multi-process printing lines followed, combining letterpress, screen, hot foil blocking, and even embossing, and lately they have been joined by flexography, UV (ultraviolet) flexo, and rotary offset narrow web presses.
Single-color direct thermal and thermal transfer print were the first “digital” print methods used for functional variable information printing — bar codes and other tracking data — on labels for logistics and transportation. More recently, they were joined by digital color print — featuring digital print “engines” integrated into label converting lines — for applications such as short-run, limited-edition primary product labels.
The dynamic growth of self-adhesive labeling largely was fueled by the rise of the supermarket in the 1950s. Wet-glue labels were inexpensive and easy to apply, but the application equipment was expensive and messy. In the 1940s the concept of automatic self-adhesive label dispensing was introduced. Application lines proved to be clean, easy to use, flexible, and — because they were technically less complicated — had lower downtime.
In its developing years, self-adhesive labeling was used for small- to medium-sized print runs, but as production speeds rose and costs fell, these labels took market share from wet glue in the higher-volume areas of packaged foods and health and beauty products. This trend was aided by the development, in the late 1970s, of the first film label stocks, which — when used on squeezable plastic packaging — created a fully flexible package with the added benefit of water- and grease-resistance.
Today, leading self-adhesive label stock manufacturers can bring together virtually any imaginable type of facestock with any adhesive and liner to create a laminate that will give the user the desired performance in terms of printing, converting, high-speed application, and esthetics.
The current status of the market is documented in the first edition of “Self-Adhesive Labelstock 2001: North & South American Market Update.” It provides an analysis of opportunities for labelstock producers and material suppliers.
To put the market into context, world demand for self-adhesive labelstock in 2001 was around 13,300 million sq m. Of this total, North America accounted for 36% and South America for just 4%.
The past 12 to 18 months have seen a dramatic slowdown in growth and an equally dramatic increase in margin pressures. Consolidation is occurring throughout the value chain, and material suppliers and self-adhesive laminators are redefining their value propositions as a consequence of additional pressure on margins and end-users' reluctance to accept price increases.
Globalization is having a profound effect: the power of multinational brands, and the impact of e-commerce, are changing the business emphasis across the world.
The US commands the bulk of the North American market, with 86% of the total. Mexico and Canada represent 6% and 8% respectively. In North America, the demand situation is relatively flat, reflecting historically low growth rates. Demand in 2002 is expected to expand about 4%.
Of all the markets, the strongest is variable information printing/business systems labeling, which accounts for 52% of all production. This growth is driven by bar code-led logistics and product tracking, by the proliferation of courier mail services, and by business-to-consumer Internet sales.
Primary product labels today command 43% of the North American self-adhesive labelstock market. Food and beverage labeling represents a large sector, with prospects for growth identified in niche markets such as wine labeling. Film labels now dominate primary product labeling, at 60%, with papers (mostly coated grades) at 40%.
With capacity use in North America at around 65%, the heavy investments made by labelstock manufacturers in the 1990s have not been maintained, and pressures on selling prices and profitability continue.
Prospects for self-adhesive labelstock are encouraging, but there are some threats.
At all levels of the value chain, competition is intensifying, and the rationalization already seen across the Americas is expected to continue. End-users are buying more aggressively but still expect premium product performance, high print standards, and enhanced levels of service.
Niche products — functional labelstocks, security/product authentication, and customer-unique laminates — could represent the most profitable sector and are creating new links between raw material suppliers, label stock producers, and label printers to serve the end-users' needs better and more profitably. They offer real opportunities. Multi-layer leaflet labels, reclosures, time-temperature indicators, and specialty form/label combinations are good examples. Anti-counterfeiting, tamper-evidence, and anti-pilferage labels will challenge the labelstock manufacturer and printer to develop innovative, customer-specific solutions, with film label stocks and optically variable devices attracting particular interest. AWA predicts a 10% average growth in these applications to 2004, with some growing faster.
Sleeving technologies — particularly shrink-sleeving in the beverage market — will continue to take market share as prices become more competitive.
Overall, the future of the self-adhesive labeling market looks reasonably secure: no other technology offers the same degree of variability and flexibility, and there are still plenty of opportunities for innovation.
“Self-Adhesive Labelstock 2001: North & South American Market Update” is available from AWA Alexander Watson Associates (AWA), Box 69035, 1060 CA Amsterdam, The Netherlands; +31 20 676 2069; awa-bv.com.
Corey M. Reardon is a principal of international market research and consulting firm AWA Alexander Watson Assoc.