Market Focus

Food Labeling

November 1, 2006

Competition is fierce and regulations are abundant when it comes to food. Labels offer brand owners a way to catch consumers’ eyes and comply with requirements while providing product information.

Food Labeling

Competition is fierce and regulations are abundant when it comes to food. Labels offer brand owners a way to catch consumers’ eyes and comply with requirements while providing product information.

By Michelle Sartor

Food labeling is a segment of the industry that is a constant because consumers need food every day, but it also changes with consumer demands and government regulations. With the increasingly large number of food products available to consumers, brand owners require their products to stand out on store shelves. Labeling is an important way to draw consumers to food products and influence their purchasing decisions.

Labeling food makes up a sizeable portion of the industry. According to William Llewellyn, senior consultant at AWA Alexander Watson Associates, Amsterdam, the Netherlands, “The percentage of prime labels of all types (pressure sensitive, glue applied, sleeves, IML, etc.) in North America used for food products is around 28 percent to 30 percent of the total prime label market.”

Several converters indicate that the food labeling segment of the industry is growing. Holly Hodge, account manager at Label World, Rochester, NY, USA, says, “Food in the US is in abundance and we import a lot of it. The choices out there and the demands of consumers are constantly changing. There’s always something new.” She believes that the food labeling portion of the industry is always growing and changing, but with repeat business, since food is “one of the best consumables out there.” She estimates that 40 percent of Label World’s business is for food labels.

Andy Farquharson, president of Dow Industries, Wilmington, MA, USA, also believes food labeling is on the rise. He says, “Everybody’s fighting for shelf space. They need to differentiate their products.” Labeling offers brand owners a way to do that.

John Kalkowski, North American marketing manager at Sun Chemical, Northlake, IL, USA, believes food labeling is growing very quickly. He explains, “One of the fastest growing applications in the market is rigid plastics. They commonly have labels applied to them.” In addition to the types of containers, he says, “As the consumer product companies try to make themselves more visible on the retail shelf, they’re frequently using labels to stand out. To do that, they’re using different types of inks and coatings to achieve special effects.”

Bill Orme, marketing communication manager at Smyth Companies, Minneapolis, MN, USA, says the market is growing, but admits, “There are some things that from our perspective are a little bit of a threat. For example, retort pouches replacing cans.” Although some reduction in labeling may be occurring, Orme adds, “Offsetting that is the growing number of store branded items that are helping the food sector to grow.” Food and beverage labeling together make up 60 percent of Smyth Companies’ printing.

For some, a question of growth in food labeling is not cut and dry. Thomas Dahbura, vice president of production at Hub Labels, Hagerstown, MD, USA, says it is a stable industry that is “definitely not shrinking” since food is something in constant demand. The food category, he adds, makes up about half of Hub Labels’ business.

Franklin Nice, president of Gintzler Graphics, Buffalo, NY, USA, doesn’t see food labeling as a growing market for his business as a custom label printer. He says, “Food labeling used to be more than one-third of our business. Today, it’s less than 20 percent.”

Major trends

Converters see a number of trends emerging in food labeling. Hodge sees the no-label look becoming more popular in food labeling. She also sees an increasing amount of color and graphics.

Use of clear labels is a trend that Rebecca Kerschinske, vice president of sales and marketing at the Lauterbach Group, Waukesha, WI, USA, also sees for food labeling. She says that companies also try to use 360 degrees of the label to create a design. Food labeling makes up about 40 percent of the Lauterbach Group’s business.

Farquharson says there are more SKUs, lower quantities and more frequent orders when it comes to food labels. One reason for this is the increase in varying flavors per brand. An example is with salad dressings. One brand of salad dressing has a number of different flavors. As far as the designs are concerned, Farquharson says, “People like metallics and like the hot stamp type look. I think it presents itself as an upscale look. It distinguishes them in the shelf space they’re allotted.

“One of the other trends that we’re seeing in food labeling in certain products where applicable is clear film,” Farquharson continues. “We’re seeing more and more of it versus putting a white label on or a white paper glue applied label on, that is actually hiding the product,” he says.

Orme agrees that having a more upscale look with more shelf appeal is the goal of brand owners. He says, “Anything to differentiate products on the shelf seems to be a trend.” According to Orme, point of purchase promotions, such as instantly redeemable coupons and other incentives that compel immediate consumer actions, are popular on food products.

Because of increasing pressure to stand out, changes in the production of labels have come about. Ed Kools, sales manager at Aladdin Label, Waukesha, WI, USA, says, “Over the past year, the movement has shifted back to a need for high end graphics and materials. The level of design sophistication has increased over the past few years. Aladdin has experienced a significant increase in the number of designs utilizing four-color process and gradients.” Kools says that food labeling accounts for more than 50 percent of Aladdin Label’s business.

Kalkowski has noticed some design trends, citing increased use of metallics, foils and specialty inks like thermochromics. He says, “You may see coatings that are being used in combination to achieve additional gloss, matte or combinations of both. You are often seeing labels produced with a combination of different print processes, which may include flexo, offset, UV, and cold foil stamping.”

Nice sees an increased use of color as a major design trend in food labeling. He also says, “Consolidated and commoditized purchasing are definitely trends that have been occurring for a few years now.” He cites brand fragmentation and private branding as reasons for that.

Dahbura says food labels currently have a lot of pastel colors and use foils. He also says the DataMatrix 2D bar codes have become increasingly popular. The DataMatrix 2D bar code doesn’t look like a traditional bar code with thicker black lines. Instead it is made up of small dots. Dahbura says, “I see the DataMatrix 2D coming on board with so much potential. Now bar codes are huge, ugly and marketing people hate them. DataMatrix is one-quarter inch in size. It doesn’t affect the packaging at all.” Hub Labels currently uses DataMatrix 2D bar codes on Skinny Cow ice cream sandwiches.

FDA regulations

In the United States, Food and Drug Administration (FDA) has guidelines that must be followed with regard to food, whether packaged or not. Some regulations deal with what information needs to be included on labeled food, such as nutritional information. Others deal with the actual materials being used to produce the labels, such as inks and substrates.

The FDA enacted the Nutrition Labeling and Education Act in 1990 which required nutrition labeling for most foods. Since then, additional requirements have been added. The FDA required that saturated fat and dietary cholesterol be listed on food labels beginning in 1993. Starting January 1, 2006, foods were required to list trans fat information as well.

With the additional information requirements, brand owners needed additional labels to comply. Hodge says, “The single largest impact I’ve seen in my career was the requirement of nutritional panels. We had the single largest hit in sales that year gearing up for that.” In addition to the required ingredient statements, she cites allergy notices and warnings as taking up more label space.

Increased regulatory requirements can both help and hurt food label printers. Kools explains, “The trans fat and allergen regulations result in less and less room available for the labels’ main function. In many cases, manufacturers have been forced into adding additional labels to their package in order to make room for the changing regulations. This can result in added label business for printers, but could also lead to manufacturers looking for other non-label packaging methods.”

The FDA is requiring more label information than ever before, according to Kerschinske, which is taking up more space on products. She says, “The challenge is to take the space you have left and make it really attractive and eye catching. We try to maximize that space with different technologies and processes to make that label really pop.”

Dahbura believes information regulations have a positive effect on business. He says, “Since marketing people don’t want a label full of warnings, brands often use a two ply label on the bottom, which is more complex.” That, in turn, is better for business.

In addition to having an impact on the business aspect of food labeling, FDA information regulations can have an effect on the design. Orme believes, however, that the effect isn’t to a great degree. He says Smyth Companies works with its customers to rework labels so that the design elements are not lost in the parts of the labels with required information.

Food contact

Another type of FDA regulation when it comes to food labeling is with respect to the label’s contact with food. The two types of food contact are direct and indirect. With direct food contact, the material comes into contact with the food. An example would be an insert put into a package of hot dogs, chicken or cheese. Indirect food contact refers to labels that are located on the outside packaging of the food.

Mike Buystedt, director of  new market development at XSYS Print Solutions, Plymouth, MN, USA, says that the FDA does not allow UV inks to be used on food. He explains, “UV inks don’t fully cure. Free radicals still in the ink could migrate through the packaging and contaminate the food being packaged.” When using inserts, converters can use a standard water based ink with a coating as long as it creates a functional barrier, according to Buystedt.

Orme says that the ink regulations affect Smyth Companies the most when dealing with promotional components, such as inserts for packages, including cereal. He says, “We do overwrap with cellophane or we can take the next step and produce a piece that’s food safe. We never produce something where the actual ink will come in contact with food. We put a barrier up, such as a coating or laminate that is approved by the FDA as direct food contact material.”

Although food labels are often involved with indirect food contact, companies still take the regulations seriously. Kalkowski says, “We want to make sure we’re producing inks that are healthy and environmentally safe. Consequently, one thing we’re concerned about is if the container has barrier properties. We want inks that don’t have contaminants that might migrate into products or produce taint or odor in the product.”

Nice understands the FDA regulations, but wishes UV inks were safe to use. He says, “From my perspective, it’s unfortunate because UV is more durable, vibrant and a more flexible printing ink technology. Electron beam coatings are available to really big guys, but hardware costs are too much for narrow web.” Inks and coatings that are cured by an electron beam do not contain the chemistries that are present in UV curables which are subject to the government proscription.

The future

Many have predictions about where food labeling is heading in the future. Farquharson sees continued growth and a push to have more graphics. He believes more opportunities for digital printing will be available for food labeling in the future.

Kalkowski isn’t sure of the exact form food labeling will take in the future, but he says, “Label converters are among the most innovative printers of all. Consequently, they’re always pressing for new applications and innovative ways of making products stand out on the shelf.” He believes food labels will grow because rigid plastic is one of the fastest growing food packaging options.

Kerschinske agrees. “In our industry, there are always new and innovative ideas so I think food labeling is going to get more unique in terms of applications. The flexography industry is geared toward that,” she says.

Nice thinks technology may play a larger roll in food labels of the future. He talks about labels that might show shelf life, temperature changes or expirations. “I don’t think that the technology is available at our level, but I think it’s coming,” he says.

Not everyone thinks labels are completely secure in the future. Kools says, “The future for food labeling will continue to see improved graphics and materials, however the move towards printed film and other non-label packaging will definitely put a squeeze on the label industry.”

Hodge says that as the population grows, the food industry grows and therefore offers more labeling opportunities. Although other types of packaging may gain some attention and business, she says, “Labeling is one of the most cost effective methods of identifying products.” That coupled with greater FDA involvement that Hodge predicts are reasons why she believes food labeling “stands to do nothing but grow.”
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