Narrow Web Europe

Narrow Web Europe

August 21, 2008

Europe's press makers: Under siege?

Narrow Web Europe

Europe's press makers: Under siege?

By John Penhallow

For many years, Heidelberg has been to the European printing industry what General Motors is to the US automobile business. Now that comparison looks too close for comfort as Heidelberg’s boss, Bernhard Schreier, announced to disgruntled shareholders that the fall in the company’s share price, which has gone from €40 to €11 over the past 12 months, has whetted the appetites of several potential bidders. Schreier denied rumors that Warren Buffet and “unnamed Russian interests” were among them. As well as having a minority (30 percent) stake in label press maker Gallus, Heidelberg also makes the Speedmaster format presses used all over the world to print sheet labels.

Europe is home to at least 20 narrow web press manufacturers, all facing up to the prospect of an economic downturn and rising imports of presses from manufacturers in lower-cost countries like China, India and the United States. So far this year only one press manufacturer has gone under (Imer, Spain), but rumors are circulating that at least one fast-expanding, highly leveraged press maker is having difficulties meeting its commitments.

Labelstock news: some good, some bad

On the label materials front, the news from Europe is mixed. Both UPM Raflatac and Herma have opened shiny new coating lines recently, in Finland and Germany respectively, but of course these investment decisions were made two to three years ago in a very different economic climate. In England, Scandstick UK, a labelstock manufacturer with a 200-year history, went the way of all flesh in the spring of this year. The Swedish owned company, formerly called SJP, installed a new high speed coater in 2006, but in April of this year the administrators were called in and over half of the 72 employees lost their jobs.

To add to the British paper manufacturing sector’s woes, another historic company, Scotland’s Curtis Fine Papers, also went into administration in July of this year, with a loss of 180 jobs. Both companies are currently on the market and looking for buyers.

Waste not, want not

A recent survey showed that Americans equate environmental issues mainly with energy saving, while European environmentalists (and the general public) are worked up about a wider range of eco-topics, not the least of which is packaging. Symptomatic of this are the bins which many German and Swiss supermarkets provide just outside the checkouts so customers can throw away any “unnecessary” packaging on the goods they have just bought.

Not to be outdone, the UK government has sought advice from the very official Waste and Resources Action Programme, WRAP (a handy acronym). This body is considering how the carbon impact of packaging and labeling can be measured, and how to make packaging easier to recycle. This impinges directly on label converters, who are being pressed by brand owners to state the “carbon content” of their products and to provide eco-friendly adhesives which do not inhibit recycling.

Differing styles for Europe’s national label conventions

While the international label association FINAT was holding its annual congress in Paris in June 2008, several other European label associations were also meeting in their respective countries. The French association UNFEA, co-hosting the FINAT event, presented the country’s label business through its chairman, Dominique Durant des Aulnois, who brandished baguettes, berets and bottles of wine to get his points across. With some 350 label converters and total annual sales of around $1.5 billion, the French label market is in pretty good shape, he told delegates. However, while volume sales continue to grow, average prices per square meter are declining slightly, and the structure of the industry is changing.

A study done by French label magazine Etiq & Pack has shown that while most French label converters remain small (60 percent of them employ fewer than 25 people), the big ones are getting bigger, mainly by acquisition. Belgium-based Bopack Group now holds around 11 percent of the total French pressure sensitive label market, with CCL and Stratus lying in second and third places with a 6 percent share each.

Meanwhile, over the Pyrenees (and a bit out to sea) the Spanish Label Association, ANFEC, was meeting in Palma de Majorca for its 10th annual conference. The association has 150 label converter members, according to its president, José Luis Mercé. The Spanish label sector employs over 5,000 and, like France’s, has total sales of some $1.5 billion.

At the same dates and in a town of similar name, the Italian label association met in Parma. Its president, Alberto Ghiotto, summarized the activities of the association under the headings Environment, Food Labeling and Communication/Marketing. Of the 107 companies currently members of GIPEA, 81 are label converters and 26 are “simpatizzanti.” Several papers presented at the meeting were on the problems of waste treatment.

The congress of the German label Association VskE, in Dresden, saw the association’s president, Helmut Schreiner, hand over day-to-day running of this very active association to journalist Klemens Ehrlitzer. As always, the speakers at this annual event took their duties very seriously, as did the 240 delegates present. The presentation by Klaus Sedlmayr of Chromos on comparative technico-economic merits of offset and flexo for narrow web applications was particularly informative and well-documented.

RFID tags – slower growth

Proponents of RFID tags, who only a few years ago were shouting predictions of sky-high growth, have been keeping their heads below the parapet of late, but Europe’s RFID revolution is far from dead, especially in specialty areas like pharmaceuticals.

New European legislation requires not only traceability, but also, for temperature sensitive drugs, proof that temperature limits have not been exceeded during transport and storage. Major logistics company DHL Coldstream is reported to be studying the possible use of RFID to trace all such shipments.

A cluster of RF tag innovations will reportedly be unveiled at the annual RFID/Traceability Exhibition and Conference to be held in December 2008 in Paris. Around 100 exhibitors and 30 speakers will take part.

A think tank for ink

Another major eco-problem for European label converters is the de-inking of recycled labels and packaging. INGEDE is a Europe-wide research group composed of leading paper makers and laboratories set up to research better de-inking methods.

Label converters are particularly affected by this problem as the use of inkjet and digital label printing grows, since these inks cannot be removed using existing recycling technologies. It has even been suggested that in the future such labels and packaging should by law be marked “Non-recyclable” in order to keep them out of the recycling chain. This suggestion may seem far-fetched, but it is symptomatic of the pressures being felt by European label converters as a result of public enthusiasm for environmental issues.

A Bavarian success story

Any number of successful businesses were started in a garage, but Helmut Schreiner, head of the $150 million Schreiner Group, goes one better. He started off in the family washroom next to his father’s small print shop, mixing glue in the bathtub amid the ruins of post-war Germany. Taking over from his father in the 1960s, he built the company up to become one of Germany’s top label converters. Today the group has diversified into a wide range of technical and security labeling technologies, and just recently into light-emitting substrates used in automobile interiors, office buildings and even in the Shoah Memorial in Berlin.

This year the Schreiner Group won the prestigious Innovator of the Year Award (a German industry prize), and also opened its first plant outside Germany, in Blauvelt, NY, USA. The new 50,000 square foot US production line, part of Schreiner Group’s Medipharm Division, will make specialty peel-off labels, combination hanger labels, brand protection and RFID products, expanded content labels, and syringe labels. A significant proportion of the machinery for the new US plant was manufactured and delivered by French narrow web machinery manufacturer SMAG, one of the few European equipment makers successfully installing presses in North America despite adverse economic and exchange rate conditions. The equipment for this first phase of Schreiner’s international expansion comprises two-color, three-color and six-color roll-to-roll Galaxie screen presses, all in 350mm (14") web widths.

IML – doing nicely

More than 80 delegates from all over Europe attended the first-ever European Conference on In-Mold Labeling, IMLCON08, organized by AWA. Speakers reported that IML has only 3 percent of the total European label market, but is showing rapid growth, particularly for very long runs, e.g., for ice cream or margarine tubs.

In Europe, the preferred technology is injection molding, as opposed to blow molding and nearly all IML labels are synthetic, said AWA President Corey Reardon. Europe’s total market for IML is estimated at €180 million, or just under half of the total world market, with a respectable growth rate of 6 to 8 percent.

Beer and whisky

A short while ago, US based brewer Anheuser Busch sold its packaging unit – PPPI, which prints 28 billion labels per year – to Spear, which operates label plants in the US, UK and South Africa. Now, Anheuser Busch itself, as was widely reported in the press, has been acquired by Belgian-based Inbev, and the new entity has become the biggest brewer in the world with a whopping 25 percent of total world markets. While unions worry about jobs and drinkers worry about taste, label converters are also biting their nails as they wonder what the procurement and marketing policies of the new colossus will be.

Readers of this column might remember how digital label printing is making its mark in the malt whisky business. Now comes news of another spirited innovation: A well-known brand of Scotch whisky is marketing a magnum-sized whisky bottle called Mix Light for discotheques. The bottle has an electroluminescent sleeve label which shines in half-light.

In an entirely separate development, German label converter Doros now makes continuously printed 3D labels and logos. It is only a matter of time before someone puts the two together with a liquor label that shines in the dark and springs out at you.

Wine packaging innovations provokes Gallic grumblings

News just in from South Africa and America has had French wine lovers rioting up and down the Champs Elysées, while wine label printers from Alsace to Bordeaux have been seen, ashen-faced and tight lipped, predicting the end of civilization as we know it. The reason for these convulsions is first that a hitherto reputable South African winery is now exporting its premium wines in “resealable 1.5 liter lifestyle pouches”; and second, that an American film director of previously impeccable character has launched a brand of wine sold in red cans – with a straw – looking for all the world like another famous American drink.

It is true that French wine exporters have smartened up their marketing recently, but it might be a while before the American public is invited to “Come Alive with Château Yquem.”