Narrow Web Europe

Narrow Web Europe

November 1, 2006

Private label brands set for even faster growth

Narrow Web Europe

Private label brands set for even faster growth

By Barry Hunt

Ongoing shifts in retail patterns naturally affect the way brand managers fulfill their label and packaging needs. One of the more notable of trends concerns the labeling of products manufactured or processed specifically as own label brands (private label in another hemisphere) for supermarkets and other retail groups. These brands now account for a growing and significant volume of the total self-adhesive consumption in most developed countries. Much of this stems from improvements to the quality, marketing and packaging of own label products, resulting in greater consumer acceptance of many ranges. Supermarkets’ versions of established brands are therefore no longer perceived as being downmarket. The added bonus for retailers is that they offer the prospect of higher margins, or at least certain goods can be sold as loss leaders to attract customers. Naturally this has tended to boost the bottom line of the major supermarket groups and by extension aid their unstoppable expansion.

Some idea of the size of the own label food and grocery sector in Europe comes from IGD, an international food and grocery consultancy in the UK. Based on 2005 figures, it estimates these products will account for more than a quarter of the market (26.8 percent) across Europe within four years. By 2010, Europeans will be spending around €430 billion ($539 billion) on supermarkets’ own brands, up 45 percent from €298 billion ($373.6 billion).

In the UK own brands already account for £2 of every £5 spent in supermarkets and other stores. In other words, some 40 percent of the total spend goes on own brands, compared with the European average of about 27 percent. The UK market for own brands is worth €72.1 billion ($90.3 billion), with Germany following at €63.6 billion ($79.7 billion), a market penetration of 35 percent, while the corresponding figures for France are €59 billion ($73.9 billion) and 26 percent.

“The UK currently leads the way in terms of food and grocery own label,” says Jonathan Gunz, senior international business analyst, IGD. “The future growth in Europe will come from Russia and the rest of Eastern and Central Europe, where penetration levels are currently fairly low despite a relatively large grocery market. Shoppers in Western Europe have seen for themselves how retailers’ own brands are taking up more and more shelf space. Categories like healthy eating, premium, value, organic, and lifestyle have helped retailers’ own brands become much stronger. The same is likely to happen in the emerging markets of Europe and beyond.”

IGD expects retailers to continue to diversify their own label proposition into categories beyond conventional food and grocery products. In fact, most large retail chains are already involved in selling items like financial services, electrical goods and communication technology as they respond to customers’ needs and new opportunities.

Jetrion purchase reflects growth of narrow web inkjet

Assuming it clears the legal hurdles, the purchase of Jetrion from the Flint Group by Electronics For Imaging (EFI) is being keenly watched among European OEM partners and other inkjet vendors. This attention reflects a wider interest in single-pass inkjet technology for labels and packaging, following some important technical developments with CMYK printheads and UV curable inks.

Jetrion becomes an independent division of EFI just at the time when the company introduced its full-color 4000 Series to the market. It’s the sort of product that EFI will want to exploit to fulfill its declared strategy to make a bigger splash in the industrial inkjet market. It is already known widely throughout the European graphics industry for its print servers and print management systems, as well as Vutek wide format inkjet printers and inks.

EFI’s entry into a specialized sector of the industrial inkjet market follows the earlier purchase by Fujifilm Dimatix of Spectra’s piezoelectric printhead business. The two events may not be entirely unconnected, given that Fuji and EFI compete in similar graphics markets. In themselves these deals reflect some large-scale activity in the UK, France and the USA involving companies like Domino-Amjet, Impeka, Konica-Minolta, Epson, Xaar, and HP. Each is busy rolling out new products or OEM ancillaries for full color labeling and packaging applications with variable content capability.

On-pack promotions that tempt fickle consumers

Brand owners like on-pack promotions because they can often tempt many consumers to favor one product brand over another. Of course, they also offer many added value opportunities for label converters. Make of it what you will that Alcan Packaging in the UK buttonholed people to ask them what they thought about on-pack promotions. Apparently the survey found that consumers’ perceptions of receiving an “added value bargain” would tend to overshadow any brand loyalty.

But as fickle consumers, many of us are reluctant to admit to responding to such promotions. After all, choosing a product on a whim because it contains an “instant win — inside wrapper” type of promotion, or some kind of scratch-card option, is something most people keep to themselves. But while both these examples appeal strongly to many consumers, online gaming promotions and token save-and-bid gimmicks are far less popular. Apparently we want promotions that offer us instant gratification. We are less keen on the more complex, interactive options. “It’s a factor that brand owners may wish to consider when planning promotions,” says Lynne Quincey, UK communications manager of Alcan Packaging.

Predictably, men respond well to topical promotions linked to current or sporting events, but women are more attracted to general promotions, such as winning a holiday or securing “buy one, get one free” offers. Quincey concludes that on-pack promotions remain a key marketing tool in attracting consumers, encouraging product selection over a competitor product and promoting added value. However, she thinks brand owners must strive to target the appropriate audience, enhance brand appeal and keep the consumer (that’s us) engaged beyond the initial purchase selection. Some of us just want to pay and get out quick.

Loparex opens liner facility in Poland

Despite the political uncertainty in Poland, vast amounts of development money is currently being poured into the country by global investors and manufacturers. It also appears to be among Europe’s leading destination for investment by label press manufacturers, converting groups and materials suppliers. They include Loparex, a global manufacturer of siliconized release liners, which has commissioned a new printing and slitting terminal in Warsaw. The aim is to strengthen its operations in central Europe and increase converting capacity.

The plant consists of two slitting machines and a two-color flexo press. It also houses the company’s Polish sales office. The unit will mainly convert siliconized ESP release liners manufactured on Loparex’s PM1 located in Lohja, Finland. In Poland, release liners are printed according to customers’ needs and slit to requested dimensions. Formerly part of UPM’s Converting Division, Loparex was bought in late 2005 by an investment company belonging to ABN AMRO Capital Group.

RAKO adds more Nilpeter flexo units

RAKO Etiketten has increased the flexo capacity of its Witzhave plant near Hamburg, Germany, by installing two Nilpeter UV flexo presses. Both are the recently-introduced FA-4 models each with a 13" web width. The first press has 10 print units, combining flexo with rotary screen, and was installed in October. The second with eight units is scheduled for installation later in November. It will have a non-stop unwind and rewind unit from Martin Automatic for producing label jobs in longer runs.

The group was founded in 1969 and today comprises 20 companies throughout Europe, mostly in Germany, but also in France, Croatia and Ukraine. It currently has around 720 employees. Besides self-adhesive labels, RAKO produces security products, flexible packaging, holograms, and RFID inlay inserting systems. It also has a mechanical engineering business which manufactures and distributes LeoMat finishing lines for narrow web reel products. The RAKO Group operates more than 60 flexo, screen, offset, and letterpress machines. It also has four HP Indigo digital color presses.

Speeding the supply of Toshiba computers in Europe

Toshiba Europe is employing UPM Raflatac to develop one of the largest Gen2 RFID supply chain systems in Europe. The deal includes Toshiba TEC, a supplier of RFID label printers, and ADT Security/Tyco the provider of the RFID reader hardware. The chain covers the customer-specific configuration of every Toshiba laptop destined for European and Middle East countries. Using Rafsec tags, the system is designed to avoid warehouse bottlenecks and increase worker productivity at its plant in Regensburg, Germany, by an estimated 57 percent.

Previously, when the pallets with 36 laptop PCs arrived at Toshiba’s warehouse for storage, handling staff would book in the delivery by scanning the bar codes on each box individually. Only then could the pallet move on. By fitting each boxed laptop with a Rafsec G2 ShortDipole tag, the entire pallet can be processed instantly by passing it through an RFID reader gate at the entrance. When fully implemented, Toshiba expects its warehouse to handle 15,000 PCs a day compared with the current 9,500, rising to an expected peak capacity of up to 30,000 units a day. With one RFID label for every laptop, that means nearly applying four million RFID tags per year.

Baldwin Germany moves into new premises

Baldwin Germany GmbH is now located in a new production facility and administrative building in Friedberg Business Park, near Augsburg. The new premises will serve as Baldwin’s global Competence Centre for commercial sheetfed and web products. The Friedberg factory brings together the development, production and administration units that were previously spread across five different buildings at the old Augsburg location. The company has 200 employees and is part of Baldwin Technology.