The time is fast coming when we will all have to learn a little more about the geography of China. Most of us could probably locate Hong Kong and Beijing, give or take a few hundred miles, but what about Jiaxing in Zheijiang province? Do I see any hands raised? Well, it is on the coast not far from Shanghai (thank you, Google), and it is home to the Jiaxing Haoneng Packing Company. What’s more, this label converter has just broken into the European market, buying all three sites of the Illochroma Europe group.
As reported in the May/June issue of L&NW, Illochroma, a troubled sheet label converter, had sales of $26 million in 2009, when it ranked among the top 10 in Europe, with plants in France, Belgium and Poland. Officially declared bankrupt in May/June of this year, it was acquired by Haoneng in April. The French plant, the biggest of the three, has shed half its workforce, but is reported to be back in business already, and in the process of buying another press.
Illochroma has had its share of ups and downs in recent years. In 2003, US converter Spear formed a joint venture, and in 2005 the name of the company became Illospear. By mid-2006 Spear acquired 100 percent of the business. A management buyout followed in 2007, and the name reverted to Illochroma.
In November 2008 the company was placed under administration, then acquired by French investment group Green Recovery. Four out of seven European label plants closed. In January of this year the company again was placed under administration, and on April 1 the new entity, Illochroma Haoneng France acquired the assets. Haoneng has set up similar companies in Belgium and Poland to manage the Illochroma plants in those countries.
The long and the short of it
Bernhard Schreier, boss of Heidelberg, is a tall, solid gentleman. Pictures showing him sealing a deal with Ricoh’s Shiro Kondo cannot conceal the physical contrast between the two CEOs. The deal in question is “a global distribution contract whereby Heidelberg will sell and support the Ricoh Pro C901 Graphic Arts Edition machine and PxP Chemical toner.” It cane into force on the (one hopes, auspicious) date of April 1, and initially is limited to Germany and UK. A worldwide extension is penciled in for signing at next year’s Drupa show in Dusseldorf.
The strategy behind the Ricoh tie-up is not hard to discern. Heidelberg’s strength is manufacturing big, high quality (and expensive) offset presses, best suited to long runs. This is less and less in accord with what the market wants. The group has been hopping in and out of digital print technology for a decade, and is still developing its Linoprint roll-to-roll digital technology (which will be shown at Interpack, to “demonstrate the many options available for printing on aluminum foil and label material”). The present alliance with Ricoh nonetheless looks like an admission that Heidelberg needs to buy digital know-how. It would seem that there have been talks with several other potential partners, and that Ricoh was chosen “only in the last few months.” According to Schreier, “With this new partnership we will also address customer demands in the broad spectrum of hybrid print applications, i.e., the combination of offset and digital printing within a single print product.”
Another straw in the wind is Heidelberg’s recent acquisition of CERM, a small but highly specialized company which develops management information systems specially tailored to the PS label sector. With just 26 employees, this Belgian company has worked closely with fellow Belgian EskoArtwork to integrate its MIS software with the latter’s prepress systems. Exactly how CERM will fit into the Heidelberg empire will be an interesting saga to follow.
Finnish stoppages could start soon
Paper and pulp mills throughout the world were cutting back on production and closing plants during the 2008-09 downturn. Now suddenly there aren’t enough raw materials to go round and paper makers are reluctantly, but fervently, pushing up their prices. Stora Enso, for example, has just published better than expected first quarter results, with sales up 19 percent and profits soaring by over 50 percent. These happy events for shareholders have not been ignored by the unions: UPM Raflatac has just settled a two-week strike of some of its employees, and other Finnish mills including those of Stora Enso, Metsäliitto and Myllykoski are also likely to be the target of social unrest over the weeks to come.
Putting labels on bottles
Several recent studies have identified the beverage sector as one in which self-adhesive labels can gain market share at the expense of other forms of decoration. French, Italian and Spanish wine producers together make just under half of all the world’s wine, but they are the least likely to use self-adhesive labels. They are also the least likely to have a coherent marketing policy (many experts believe these two facts are related). Goaded by sluggish demand at home and fierce competition abroad, however, Europe’s wine producers are increasingly aware of the importance of the label in selling the product.
Innovative designs, colors and shapes not only make a wine stand out on the supermarket shelf, they also make it harder to counterfeit. Unsurprisingly, the French seem to be particularly active in devising ever more ingenious ways of defeating fraud in the wine industry. Florent Denjean of Arjo Wiggins Security explains the wine problem as follows: “Retailers, restaurants and consumers all need to be reassured on two questions: Is this label genuine, and does the label really describe what is in the bottle? We develop various tamper-proofing systems, together with, for example, 2D barcodes and other security devices which we don’t publicize.” GS1 France offers a system linking the bar code via cellphone to a website. This has the double advantage of protecting against counterfeiters and providing the consumer with useful information on how and when to drink the wine in question. This system has been test-marketed in several French supermarket chains, but so far, in France at least, has not won wide acceptance – maybe because the French all like to believe they are wine connoisseurs.
Not all French wine producers are gung-ho for change when it comes to label design. Listen, for example, to Alex Heinrich of the prestigious Château de Riquewihr in Alsace: “Yes, we modernize our bottles and change the label. But carefully, and not too often. If we started changing every five years we would upset our best customers, wouldn’t we?”
Moving from wine to beer, we find the game being played to different rules. In Europe, as elsewhere, brewers are looking to pressure sensitive labels for their premium beers. The latest to change is Spain’s Mahou Brewery, which has just started using clear-on-clear PS labels for its Mahou Cinco Estrellas brand. Label converter Spear says its designers worked closely with the brewery to ensure the aesthetic and technical success of the new label.
Label technology at Interpack
For the European packaging world, the Interpack exhibition May 12-18 in Dusseldorf, Germany, is the highlight of the year. HP Indigo will use the event to profile its digital label and packaging systems using a “Digital Supermarket” to show how branded goods of all kinds can benefit from digital print technology. The booth will also house HP Indigo’s latest narrow web press, the WS6000. “Today’s brand managers are looking for ways to add value and differentiate their brands,” said Alon Bar-Shany, VP of the HP Indigo division. “HP Indigo digital printing, with print quality as good as or better than flexo, enables brands to be quickly and easily refreshed and labels and packaging adapted quickly for seasonal promotions, special events or even language versions. Many brand managers have also discovered the benefits of using digital printing for prototyping and market trials, where cost-effective test products may be produced on final substrates.”
The HP booth at the show will also feature EskoArtwork prepress, AB Graphics finishing equipment, and a print and apply label dispenser from US-based HSA Systems.
Interpack will also feature a dozen or more manufacturers of labeling systems, including two US companies, Dispensamatic and Trine Labeling Systems, and the German subsidiary of Canada-based CCL. Innovia Films, the UK manufacturer of BOPP films widely used for label face materials, will be showing off its environmental virtues with its compostable cellulose-based label and packaging films. Avery Dennison will also exhibit, but in its less familiar role of a supplier of “smart” tabletop label printers.
UPM Raflatac is promoting the eco-friendliness of its ultra-thin synthetic liner PP30, described as 100 percent recyclable. While the reduced weight of this liner is a plus for converters and end-users alike, the recycling of used liner still runs up against two obstacles: One is the cost of getting rid of the silicone, the other the cost of sorting and collecting the used material. UPM itself has developed a process for turning used liner into decking planks. This is an imaginative answer to the problem. Several other solutions exist for glassine liners, including one in use at the Lenzing paper mill in Austria.
More recently a new process has been developed by France’s Vertaris and is now operating at a plant near Grenoble. Vertaris President François Vessiere believes this process “will work for the benefit of the whole labeling industry by offering a sustainable recycling solution for paper-based release liners.” Many label end users (who get landed with most of the used liner) are skeptical. One recently told your correspondent, “If you can provide lots of at least five tons, sorted to separate the glassine from the synthetic, and if your plant is conveniently sited, then yes, a recycler might come and take the stuff off your hands. Otherwise, no deal.”
National trade balances and exchange rates are probably not the first things US managers think about before breakfast; for their European counterparts macroeconomic imbalances are now near the top of the list of things to worry about. It is hard to remember that the euro started its life 10 years ago at around parity with the US dollar (which conveniently was worth two Deutschmarks). Today with the rate at $1.50 to the euro, Europe’s label machinery manufacturers, who rely heavily on overseas business, are feeling the pinch. With currency fluctuation there are always winners and losers, of course (ask any US exporter), but European equipment manufacturers are being squeezed out not only of US markets but of the many third world areas whose currencies are tied to the dollar.
Trade imbalances, and particularly China’s eye-watering surplus, make headlines worldwide. Not only are we seeing more and more Chinese-made label equipment in European markets, but (as we have seen with Illochroma), Chinese companies are also on the acquisition warpath. The Economist magazine points out that China’s foreign exchange reserves are approaching $3 trillion, a sum so huge that in theory at least China could use it to buy all the farmland in the United States and still have enough left over to acquire Manhattan and Washington, DC.
So remember, next time you go for a meal at your local Chinese takeaway, the next Chinese takeaway might be you.