Global Label Market Overview

Global Label Markets, Industry

Trends, Challenges and

Opportunities

Roger Pellow

Managing Director

Labels & Packaging Group

Mike Fairley

Director of Strategic

Development

Global Label Market Trends

Key topics to be reviewed:

• Global trends

• End user trends and rise of ‘Own Brand’

• Rise of digital printing

• Brand protection opportunities

• Environment and sustainability challenges

• Adding value to grow

• What does the future hold

Global Label Trends

The label industry in perspective

• The label industry today is a totally global business

• It currently converts around 42 billion sq m of labelstock of all kinds each year

• And has a global sales value of around US $73 billion

• Labels are produced by more than 30,000 converters worldwide

Global Label Trends

• Pressure-sensitive labels are the dominant label

technology in developed markets

• And are growing rapidly in emerging markets

• Per capita consumption of pressure-sensitive

labels varies widely around the world

• Highest per capita usage is in the developed

markets

• Highest annual growth is in the emerging

markets

The global label market by region

North America

28.4%

Western Europe

27.1%China/Asia Pacific

21.9%

Japan 7.20%

Eastern Europe

7.80%

South America

5.6% India 1.4%

Rest of World

0.6%

Estimated breakdown of the global label market in 2009/10.

All kinds of labels now in excess of 42billion sq.m

Global Label Trends

Volume

Growth in

emerging

markets

Value

growth in

developed

markets

Global

challenges –

environment

and

sustainability

Global Label Trends

Global Markets Estimated per Capita Label Consumption

Global Markets Estimated per Capita Label Consumption

USA 15-16m2

Scandinavia17-18m2

W Europe12-15m2

E Europe/ME6-7m2

China 1.2m2

Brazil 2.2m2

India 0.9m2

SE Asia 2-3m2

PS Labelstock Consumption by End-Uses in Europe as % of Total Volume

%0 5 10 15 20 25 30 35

Other

Autom. & Cons. Durables

Wine

Office

Pharmaceutical

Oil & Ind. Chemical

Beverage

Home care

Personal care

Retail

Logistics & Transport

Food

PS Labelstock Consumption by End-Uses in USA as % of Total Volume

New emerging markets have been opened to foreign global competition in recent years

• Global brand owners and retail groups have started to take market share from domestic ones

• They have established manufacturing bases in the new markets, which then provide new opportunities for international and local label converters

• Knowledge and skills start to transfer and help local industry, which then also starts to invest and develop to international standards

• Export opportunities arise for local converters and these, in turn, also help local communities

Global Label Trends

Key Global Label Printing

Trends

Brand-owner requirements are

changing:

• Packaging reduction

• Further down-gauging

• Run lengths decreasing

• Pack rationalisation

Brand owner trends

• Shorter product lifecycles

• Ability to tap in to supplier

databases (with MIS)

• Environmental challenges

Key Label Printing Trends

Globally

End User Trends

• The rise of the private label

• What can go digital, will

• More brand protection solutions

required

• End users still looking for cost

reductions


Globally

End User Trends

• Wanting global launches (proofing

solutions)

• End users becoming pure marketing

and sales operations (technical

issues eg migration, fitness for use,

responsibility of printer)


Globally

End User Trends

• Global brands looking for one stop

shop

• Reducing time to market

• No inventory (total cost evaluation)


Globally

Global label market trends• Major growth opportunities for labels in

emerging markets are mainly related to:

• Manufacturing by global brands – particularly in

□ Health and personal care products

□ Pharmaceutical

• Development of organized retailing – particularly

for

□ Food labeling

□ Logistics and distribution labeling

• Private/own brand labeling

Global label market trends

Growth of private/own brand labels

• Private labels now account for over 22% of all

retail unit sales in North America

• Private label growth up 25% in UK, Germany,

France and Spain

• One in five items sold in U.S. supermarkets,

pharmacies is private label

• Store brand private label growth up 10% for 30

countries, 2008 surveySources: Private Label Manufacturers Association (PLMA), Nielsen

The Rise Of The Private LabelPrivate Label as a whole is the biggest brand in the

world

14

17

23

26

27

33

36

41

50

51

70

75

126

0 20 40 60 80 100 120 140

ITM (Intermarche) private label

Danone total company

Coca Cola total company

Metro Group private label

Royal Ahold private label

PepsiCo total company

Tesco private label

Aldi private label

Unilever total company

J&J total company

P&G total company

Nestle total company

Walmart private label

Worldwide sales $bn

Global label market trendsGrowth of digital label printing

15

130185

460

585

787

985

1169

1400

0

200

400

600

800

1000

1200

1400

1996 1999 2002 2005 2006 2007 2008 2009 2010

Total number of narrow-web digital color label

presses installed in roll-label industry 1996-2010


Growth of digital label

printing

• 15% of all new roll-

label presses

installed worldwide

in 2009/10 were

digital.

• 40% by 2020?

• Digital is the new

growth technology

Trend in key European label press

installations by technology 1980-2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

1980

1983

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Rotary letterpress Flexo UV flexo Digital


Now well over 30 digital

POD label press

suppliers

in the market – with

around

40 different models


Growth of digital label printing

presses by type to 2015

0

500

1000

1500

2000

2500

3000

2010 2015

Electrophotographic Inkjet

Regional distribution of installed base

of digital label presses

North America

34%

Asia Pacific

15%

Other

7%Europe, ME,

Africa

44%

Digital Label Printing

Brand protection

What is the global problem?

• Global annual losses due to counterfeiting have

recently been estimated at $600bn

• Over 200,000 jobs are lost worldwide each year

because of counterfeiting

• 100s of people die or are injured each year

through using counterfeiting products

Protecting your brand

What can the label industry and brand

owners do to help authenticate

products, reduce counterfeiting,

enhance brand security and minimise

theft or product tampering?

Protecting your brand

Answer:

• Wherever possible, build counterfeit deterrence,

product authentication and brand protection

technologies into the design of the label or pack

• Combine technologies to provide the most

effective overall solutions

• If possible, make each label/pack unique

• Keep ahead of the counterfeiters by changing

the solutions used on a frequent basis

Brand protection solutions


Environment and sustainability

• Label industry environment and sustainability pressures being driven by governments, international and national standards, consumer groups - and global brand owners and international retail groups, particularly

- Unilever - Marks & Spencer

- Proctor & Gamble - Tesco

- Johnson & Johnson - Walmart

Spear Earth®

Some of the key environmental schemes and logos now found in the

global label industry


The key aims of the environmental and sustainability requirements now being placed on the label industry are to:

• Use more sustainable materials

• Reduce materials usage

• Reduce and eventually eliminate waste to landfill

• Reduce energy consumption

• Reduce the converter carbon footprint

Global label market trendsSustainable and environmentally friendly label materials

Sustainable,

green and

environmentally

friendly label

paper solutions

Paper sourced

from trees in

sustainable and

managed

forests

Paper made

from or

including

recycled paper

fibers

Thinner, lighter

and reduced

basis weight

papers

Specific

chemical,

chlorine or acid-

free papers

Bio-degradable

and

compostable

papers

Paper made

from other

cellulose and/or

tree-free fibers

Options for disposal or reduction of edge trim

and matrix waste from self-adhesive label

converting plants.

Options for

disposal or

reduction of

edge trim

and matrix

waste

Dispose in

landfill

Mixed

incineration

Energy from

fuel pellets

and

briquettes

Industrial

composting

Recycling

into new

paper or film

products

Making

building,

decking,

agricultural,

packaging

products

Reduce or

prevent the

waste –

linerless,

down-

gauging

No special requirements Requires separating into paper, film or compostable

Need to become greener

• Environment and sustainability will become the biggest issue for the label industry over the next few years

• Need for better guidelines for converters on meeting environment and sustainability issues

• More work to resolve end-user challenges –standards, rationalization of logos/schemes, etc

• Greater involvement/liaison by industry in global and national groups working on environmental and sustainability issues

What Are The Environmental

Challenges?

Adding Value and Growth to the

Label Business Becoming more sustainable also improves the

bottom line and profitability by:

• Reducing materials wastage

- substrates

- inks/varnishes

• Improving production times in:

- pre-production

- presses, particularly downtime

- finishing

• Optimising workflow and handling

• Reducing energy usage

Add Value and Growth to the Label

BusinessNew markets IMPROVING MARGINS

New products

Existing markets & products

Analyse existing

markets and

products by revenue

and profitability.

Target new markets

and new products

New products into

existing markets

Existing products into

new markets

Improve quality

and service to

existing

customers

Adding Value and Growth to the Label

Business

Strategy for

growth, added-

value

diversification and

improved

profitability

Production of

other types

of labels and

products

Production using

other related

printing

technologies

Production of

other added-

value narrow

web products

Production of

other narrow

web

converting

Sleeve labels,

in-mold labels,

cut-and-stack film

labels, patch

film labels

High performance

industrial labels,

e.g. electronics,

automotive,

electrical,

aeronautics, etc

Digital label

printing,

including ink jet

Supply of

ancillary products

Swing tickets

and tags, hang

tags, garment tags,

booklets,

leaflets

Smart, smart active,

and intelligent

labels – including

brand protection

and security

printing.

Membrane switches

And keypads

Flexible packaging,

sachets, pouches,

etc

Sheet-fed label

printing –

including in-mold,

patch film,

swing tickets,

etc

Table-top printers,

applicators, bar

code scanners,

readers, hand

guns, etc

Growth Opportunities for the Label Converter (survival)

• Use new technology to keep ahead

• Become customer focused service driven operations

• MIS systems to link printer and customer

• Web to print portals

Growth Opportunities

• Converters must become one stop shops

• Global standards required by global brands

• Sales and marketing organisation not just printing

• Creating partnerships with brands and the supply chain incl contract packers

• Acquisition/greenfield/global partners?

• Short run in-line printing and converting is hot and the right place to be

• Marketing using social media and packaging combined

• Smart labels

• New label regulations – food/pharma

What Does The Future Hold?


• Increasing use of sophisticated pre press

software (and MIS systems)

• More products going to short run in line

printing i.e. package printing, flexibles,

carton and card

• Environmental solutions


• Increasing use of brand protection and

anti-counterfeit solutions

• Smart labels

• Nano technology

Global Label Market Overview

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