Three of the top four economies in the world are in Asia – China, Japan and India. China is the second largest economy in the world after the United States. Another heavily populated area, India, is now the fourth biggest economy in the world, while relatively small Japan is the third. So, with three of the world's top four economies in Asia, along with a host of underdeveloped and developing nations, it stands to reason that the Asian label market presents its share of fascination and potential.
AWA Alexander Watson Associates, headquartered in Amsterdam, the Netherlands, is a global business-to-business market research, publishing, and advisory services company. The firm focuses on the specialty paper, film, packaging, coating, and converting industries, and last year released the Labeling Markets Asian Market Study and Sourcebook 2009, and earlier this year the Chinese Label Markets Product Decoration and Technology Study 2010. Thus, AWA is a resource for a look inside the Asian Label Markets.
AWA estimates the regional market at 13,500 million square meters of label material, or 33 percent of total global label demand. Glue applied and pressure sensitive labels together dominate the market with shares of 43 and 37 percent respectively. Sleeve labels at 12 percent of the market is a reflection on Japan's taking the lead in that sector, while in-mold is very much a niche at just 1 percent, according to AWA.
Not surprisingly, as their respective populations are enormous, AWA's analysis of per capita label demand confirms that despite China and India having a significant regional presence, there is even further potential for massive future growth when comparing label use in the more developed countries of Europe and North America as well as it's regional counterparts of Japan and Korea.
AWA, through its studies, has identified a number of trends within the region that are having an effect on the label industry. The studies show that although letterpress and offset litho remain the dominant print processes used for label converting, the market continues to invest in narrow web flexo technology, provided by imported presses and an increasing level of local, lower cost manufactured UV flexo machinery – which has become of interest to printers across the region.
Demographic and lifestyle changes are driving labeling in all sectors, AWA says, and this is due to the growing middle class consumers in China, India, and Southeast Asia. Also, continuing innovation in the development of application and end use segments for labels is being driven by global brand owners and retailers' investment in local operations. Major growth in packaged beverage and food sectors is also providing a major boost the label industry.
Mike Russell is the international sales manager for Mark Andy, the label press manufacturer headquartered in St. Louis, MO, USA. Russell has been traveling to Asia since 1995, helping Mark Andy establish a presence in the region, which, according to him, has presented a host of challenges, but, in some areas, are being overcome. With 15 years of narrow web experience in Asia, Russell provides some keen insight – and an insider's view – of Asia's label markets.
Russell talks about one of Asia's country's that has been a major influence on the region's label markets, and how it's created a challenge for flexo technology to take hold. "When we look at Asia, what we're finding is the 'Japanese letterpress mentality'. Less than 1 percent of the label presses in Japan are flexo – that's how few are there. The country is just totally dominated by letterpress. And if you look at Asia's first consumer products, they were all Japanese. And this has really influenced the rest of the region," he says.
There's another obstacle that's been in the way of flexo that Russell points to – offset printing. He says that companies that have wielded some influence on Asia's label markets – companies like Proctor & Gamble and CCL – have wanted to print labels using offset. "The reality is that offset is a very small percentage of the market. And I haven't seen anyone successfully making money with offset. So we're fighting the letterpress mentality on one side and offset on the other, but now people are coming to the reality that flexo can provide a reasonably good label that's going to satisfy the CPG companies (consumer products goods). There's still some demand for offset but it's lessening. So what we're seeing are more health and beauty companies and CPGs in the region, and they have brought in more labels that are more flexo-friendly. There's a little demand for gravure, because some people want to run the cheaper metallic ink," Russell says.
"Right now the flexo hotspots are Thailand and Indonesia – there's competition there for flexo projects," Russell points out, adding that while it appears that no one is buying offset, the decision-making process buyers have presents an obstacle. When it comes to offset, Russell says, "people think they want it, but when they see the price, they don't want it. Although it seems to be delaying the decision to buy."
A reason for offset's appeal is perhaps due to what Russell says is the Asian market's biggest driver – quality. "Cost is a big driver," he says, "but because of that Japanese letterpress mentality, quality demands are very big, especially in Southeast Asia. It's surprisingly strong, and I'd say quality demands are stronger in Asia than it is even in the US, particularly in regard to prime labels.
"The whole infrastructure is still letterpress dominated. It's cheaper right now to make letterpress plates and flatbed dies. So we're continuing to try and break that mold. That's the challenge," Russell says. "It's changing – we're starting to see to rotary and magnetic die companies in the region, and the ink companies are over there now too. We need the support structure – the flexo training, the dies, the inks – and that's what we've been doing since 1995, developing the flexo infrastructure."
China, with its massive population, perhaps holds some more potential than some of the other Asian countries when it comes to flexo. But China is notorious in the industry (any industry) for the ability of its engineers to expertly copy machinery, and it's not so much the flexo presses they're copying. "There are so many locally-made letterpress machines in China. They're not copying flexo presses, they're copying letterpress machines. And they're getting better all the time, following that Japanese mold," says Russell. "So in China, the challenge is not only letterpress, but cheap, locally-owned letterpress. But the nice thing about China is that they are a little more open-minded, and they have the volume to support flexo. For some, the light bulb goes off and they see the benefits that flexo can provide."
Spotlight on India
In December of 2008, days before the India Label Show in the nation's capital of New Delhi, the country's commercial and economic center, Mumbai, was devastated by more than 10 coordinated shooting and bombing attacks across the city. The terrorist attacks, which drew widespread condemnation across the world, killed close to 200 people and wounded about 300.
Harveer Sahni is managing director for New Delhi-based Weldon Celloplast, a manufacturer of a wide variety of self-adhesive materials including labelstocks, tapes and silicone release liners. He says that the 2008 India Label Show – which went on as scheduled – served as a show of solidarity and fraternity among the Indian label industry in the face of terrorism. But, he says, "As is normal at shows, printers and suppliers were experiencing the togetherness and networking as usual, yet, a strange discomfort signaling the onset of an impending bad time was evident during the show. The economic slowdown was setting in! Though new label press installations were being reported, the fact remained that all these were against bookings made in and around the third quarter of 2008. The last quarter of 2008 had witnessed no conclusive bookings at all for branded international presses.
"It was the start of a time that would spoil the party; the reports coming in from the Western world on the economic front were disturbing, and the industry's leaders were worried. The recession, or better to call it a slowdown, did come, and is now on its way out in India. Looking back, we realize that we never got to witness the recession as the Western world did. We did not see many units closing down, selling out or going out of business. It was as if we were running and for some time we had started walking. What matters is that we were still moving ahead."
India's Gross Domestic Product, which grew by 9.4 percent in 2007, the highest growth rate in 18 years, had come down to 7.2 percent by the end of 2008 when the world was facing the onset of a downturn. The GDP further plunged in 2009 to 6.1 percent, and Sahni says that "fortunately India was still growing. By the year's end, signs of economic recovery were evident. It is estimated that by the end of 2010 India will achieve 7.7 percent to 8 percent growth in its GDP. The label industry, which saw a quieter time in 2009, is coming out of a slumber. Label printers are smiling once again and press installations are being reported," he says.
What follows is Harveer Sahni's account of the Indian label market – where it's been and where it is today:
"The Indian narrow web label industry has witnessed growth and is still predominantly growing in flexographic rotary printing. Most of the new investments that are being made are in this segment. It is interesting to note that while investing in new presses, the Indian printers have graduated from being users of basic Mark Andy presses to fully loaded models of internationally branded presses like Nilpeter, Omet, MPS, Gallus, Rotatek, Mark Andy, etc. They are now demanding all servo, all UV, multicolor presses with multiple decoration and converting capabilities. This sector is producing the biggest growth rate. As competition becomes the order of the day, printers are investing in or expressing their interest in other newer and diverse printing and converting technologies.
"Ajanta Packaging in Mumbai invested in a waterless offset press some years ago. Many in the industry deemed it as a poor decision. Ajanta proved them all wrong by buying two more such presses! Now, others are also investing or considering investments in this technology. However still, the offset printed label segment is minuscule as compared to the size of market in this country. Printers are also getting indulgent with combination presses and offering advanced printing capabilities to their demanding customers.
"Digital printing is catching up and as the technology gets more user-friendly and cost effective, it is likely to grow at a much faster pace. Until a couple of years ago you could easily tell where the first few HP Indigo presses were installed in the country. Now, slowly and steadily, the numbers continue to rise. Moser Baer, Janus, and SGRE are printing labels with their HP Indigo presses, and Webtech with its recently acquired Xeikon digital press, and these companies are proudly leading the growth of digital printing in India.
"RFID is one technology that still excites people and confuses the printers. It has not picked up despite the versatile nature of labels this technology can offer. The few printers who have made investments in this area are not satisfied as the expected returns have not come in. The fast changing nature of this segment and the cost of indulgence play a deterrent in its growth in the Indian market. Surprisingly, interest in this segment refuses to go away.
"The biggest challenge facing Indian label printers is the entry of international label printing companies. These companies, when they set up operations here, take away all the customers who they are servicing in their home markets, depriving the local players of a substantial market share. Shrink sleeves also remain an area of concern for the Indian pressure sensitive label industry. It has taken away a lot of the filmic label segment business. Label printers are attempting to regain market share by increasing their decorating capabilities in filmic labels. With a growing middle class having surplus disposable income, retailing is big business and with it comes a huge demand for bar code labels, price labels and plain labels. Unfortunately, small label printers with their locally built rotary presses, flatbed presses and Chinese built cheap presses, bring intense competition to this sector, aggravated by the fact that they use stock lots and reject materials flooding the market. This hampers the growth and progress of organized players in the label industry. The few printers who have grown big in size in this segment have done so by creating a pan-national marketing network.
"Indian label printers are going on the offensive. To meet the challenges, they are going global in their operations. Our Indian printers are not only making investments to enhance capabilities to world standards but also investing to set up manufacturing facilities in international markets like, UAE, UK, Africa, etc.
"I do admit that the Indian label industry at large is lacking in its contribution towards environmental issues. There is hardly any project worth mentioning that have taken steps in this direction. Waste management remains an area of interest, but when it comes to actual indulgence, our printers do shy away, more so due to cost implications. Most of the self-adhesive waste, whether it is edge trim or matrix or release liners, all ends up in landfills or is incinerated illegally. It is time the Indian label industry rises to the cause and starts to implement effective waste management practices, such that the impact of self adhesive waste on the environment is minimal. After all, we have to make way and leave the Earth a safer place to live in for the generations that follow."