Now that the world’s brewers have awoken from their “If we brew it they will drink it” mentality, the humble beer label has been transformed into a key marketing tool. Beer has been singled out by market researchers AWA Alexander Watson Associates as a growth opportunity for self-adhesive labels, and nowhere is this truer than in the rich countries of Western Europe, where falling beer sales are being compensated by a move to lower-volume premium beers. The German beer market, which produces 100 million hectoliters, dwarfs all others in Europe, with Britain, Spain and Poland occupying second, third and fourth places. (Just for the record, when it comes to beer consumption per capita, the Czech Republic beats all contestants by a very long margin.)
In Germany, as in Austria and Benelux, the non-returnable glass bottle is the preferred packaging unit (hence their need for wash-off labels), while the French, the Italians and the British are champions of the throw away beer bottle. From Russia comes the not unexpected news that the authorities, having for years increased taxes on vodka to discourage alcoholism, are now realizing that heavy drinkers are merely switching to beer. Russians now put away 80 liters of beer per head, not as much as the Czechs but still significant. While Russia’s beer excise duty rose 200 percent last year, the tax on vodka was raised by only 10 percent.
The Russian brewing industry also faces challenges from new initiatives to restrict alcohol consumption, such as banning beer sales from kiosks. Russia has also recently, for reasons best known to the Kremlin, forbidden the sale of beer in plastic bottles. Carlsberg’s Chief Executive Jorgen Buhl Rasmussen (Carlsberg owns Baltika, Russia’s biggest brewery group) laments, “We don’t understand the imbalance between restrictions on beer and on vodka.” It is just possible, though they would deny it and Carlsberg dare not whisper it, that the Russian authorities are swayed by the fact that Russian-owned companies dominate the vodka distilling business, while beer is in the hands of foreigners.
Also from Russia comes news that Kraft Foods, the world’s second biggest food manufacturing company, is to sell its huge cake and confectionery plants in Russia. Kraft, which entered the Russian market in 1994, acquired a controlling stake in the “Bolshevik” plantin 2007 when it took over Danone’s biscuit business. Kraft insists that it is not falling out of love with Russia but simply selling off businesses considered to be “non-core.”
Even after the sell-off, Kraft will remain one of the biggest end users of food and beverage labels in Russia.
The Sphinx’s inscrutable smile
It may be stretching geography a little to include Egypt under the Europe News headline, but Egypt, with its 80 million people and relatively developed industries, is a major market for label and packaging machinery. Trade statistics show that Italy is Egypt’s biggest supplier of such machinery, with Germany in second place. Gallus is present on the market, having sold several presses, including recently one to Cairo-based Metropack. As reported in March of this year in L&NW, CCL has taken a 50 percent holding in Dubai-based Pacman, a label converter with a plant in Cairo, and more recently the Uflexo Group (India) commissioned a 12 billion tons-per-year cast polypropylene (CPP) line at a plant near Cairo. The fact that Uflexo is expanding this plant underlines the importance of Egypt both as a producer of labels and as an importer of packaging-related equipment.
Although the unstable political future of Egypt (and of many North African and Middle Eastern countries) is a brake on development, its importance should not be overstated. When your correspondent was in Cairo in March of this year, just a few weeks after the overthrow of Mubarak, it was “business as usual” except that businessmen, and tourists, were remarkably thin on the ground.
The Turkish model
The geography of Turkey places it half in and half out of Europe. Culturally, and politically, it suffers from a similarly split personality. At present, however, the “Turkish Model” is being studied by reformists throughout the Arab world. As The Economist puts it, Turkey is “a unique phenomenon. A movement of moderate Islamists … has overseen an economic boom, boosted the country’s standing and shown that the coming to power of pious people need not mean a dramatic rupture in ties with the West.”
The Turkish GDP is scheduled to grow by 6 percent this year, its industrial production by 7 percent (the corresponding figures for the US are 2.3 percent and 3.7 percent, and for China … no, never mind, it would only upset you). All this makes Turkey one of the fastest growing label and packaging markets in Europe (half-in, if we are going to be pedantic).
In August 2011 Austrian packaging group Constantia Flexibles announced its acquisition of Asa Ambalaj Baski Sanayi ve Ticaret A., one of Turkey’s leading flexible food packaging companies. Asa, with 360 employees and sales of €63 million in 2010, (70 percent in Turkey, 30 percent in export markets), is a major producer and exporter to Europe and the Middle East, with plants in Ankara and in Romania. Behind its low profile, Constantia has crept its way into the heavyweight division in Europe. Its 2010 sales of €2 billion ($3 billion) were some 16 percent up on the previous year, with automotive, aircraft, food, beverage and pharmaceutical packaging predominating. Constantia’s label and label foil interests include Teich AG, Hueck Folien and Händler & Nattermann.
The Turkish Label Association under its founder and president Aydin Okay is going from strength to strength. A glance at FINAT’s membership list shows no fewer than 22 Turkish label converters (France, by way of comparison, has just 14). Most of those Turkish converters, however, are where the industry is – around Istanbul and the port city of Izmir. Despite the move of the capital to Ankara in Anatolia in 1923, Turkey remains “two nations”: a Western third which is industrial, Europeanized and mildly Islamic, and the Eastern two thirds, agricultural and deeply pious – with a grumbling civil war against Kurdish separatists to boot.
French label converters: “Yes we can can”
Budget deficit, austerity measures, presidential election looming – yes, that’s France. But it doesn’t seem to be reflected in the French label converting industry. A detailed study – carried out by your correspondent and his team, so it must be right – of the 100 leading French PS label converters shows that just 13 percent of them reported losses for 2010-11. A year ago the percentage was 27 percent. Nearly 80 percent increased their sales in the latest financial year, and for half of them the increase was in double figures. When starting this research, we had expected to see better results for the market leaders, and worse ones for the medium-sized label converters, this being the conventional wisdom. However no such pattern emerged. Among the 100 label plants covered by the study, both the top 20 and the bottom 20 included profit-makers and loss-makers in roughly equal proportions.
What is changing significantly in the French market is the concentration. The label division of market leader Autajon now has consolidated sales of more than €100 million ($140 million) at its 11 plants in France, giving it a market share of around 12 percent. The other market leaders are CCL, Stratus and JPL, each with 4 to 5 percent market share; hot on their heels come several more recently formed groups like Barat and Le Mee, with annual sales in the €20-25 million bracket. The French label scene is still a predominantly Franco-French affair, except for Canada-based CCL. However, Rako and Reynders, label market leaders in Germany and Benelux respectively, have both acquired plants in France. Monroe Etiquettes, recently bought by US-based Multi-Color, took the prize for biggest improvement for 2010, with a 12 percent rise in sales and nearly 16 percent pre-tax profit.
Ink mixing systems have an image problem: They are not sexy. They are nonetheless becoming a standard component for efficient label printing. As ink prices continue their rise, and end users demand more spot colors and more color accuracy across the board, ink mixing and dispensing systems come into their own. At Labelexpo 2009, for example, just one company (Graymills) listed itself as a supplier. This year at Labelexpo there will be 12 of them, including GSE Dispensing (Netherlands). This supplier recently installed its Colorsat Match system at German label converter H&P Etiketten. The company had hitherto been outsourcing its color preparation, but increasingly complex customer requirements plus the need to reduce lead times made H&P boss Norbert Hollermann decide to invest in ink mixing equipment. As a result, says Hollermann, ink wastage has been cut by 90 percent and ink inventories by one third. H&P runs three MPS flexo presses and will shortly take delivery of a fourth.
Of course, every exhibitor at a trade show wants to impress visitors, but sometimes when so many of them are all claiming the same thing the effect is lost. Look at the previews for Labelexpo Europe. Nothing but “leading” companies exhibiting (Where are the followers?), and all offering “leading edge” (or worse still “bleeding edge”) technology. Impossible to count the “breakthroughs” in “user-friendly” equipment, all of it “state of the art” (i.e. expensive) or “entry level” (cheap), and all designed to respect the environment. Sometimes one yearns for a little modesty, and even sincerity. Just think what that would give: “Bloggs and Co., makers of trailing edge narrow web machinery. We are followers, with nothing new, but our stuff is cheap and not much worse than the competition. It’s lousy for the environment, but who cares?”
You never know, it might even bring visitors flocking to their booth.