India’s Label Market

By Catherine Diamond | April 19, 2012

India’s label market is growing every year, and shows no signs of slowing down.

Stories about today’s global economies often include information about China, and the seemingly endless power of its reach. Because it’s the world’s largest economy, its financial decisions have ripple effects around the globe. What many fail to realize, though, is that while China is the world’s largest economy, India has a distinct position of being one of the world’s largest, most stable and dynamic free market economies. In fact, a recent article in The Times of India said: “India is to beat China as the world’s largest economy by 2050...[with] a projected GDP of $86 trillion.” China, it would seem, has officially been put on notice.

According to a report by Naresh Khanna and Jaya Pathak of Indian Printer and Publisher magazine and IppStar, respectively, the Indian label market is growing fast and shows no signs of slowing down. Conversely, statistics on the Chinese label market indicate a recent decline in growth. IppStar, which tracks press installations in India as part of its ongoing research on the Indian print industry, has estimated that the base installation of digital production presses has grown year-to-year by more than 30 percent.

A recent study by AWA Alexander Watson Associates estimates the Indian label market has been growing by a strong 10 percent per year. Glue-applied labels still dominate the market, with a 57 percent share. Pressure sensitive labels account for approximately 31 percent, while sleeve labels and other, unidentified labels each take a 6 percent share. In-mold labeling makes up less than one percent of the market.

The AWA study notes that while glue-applied formats remain the dominant labeling technology in India, it is quickly losing share to the rapidly growing volumes of pressure sensitive labelstocks that are entering the market by companies such as Avery Dennison and UPM Raflatac. Additionally, cold (wet) glue-applied labels continue to show growth, but more significant growth can be seen in glue-applied label technologies in the wrap-around format. The pressure sensitive label market is also served by local laminators who may in turn be supplied with high-quality release liner base by international companies, such as Loparex.

According to Harveer Sahni, managing director of Weldon Celloplast in Delhi, India, the significant growth in India can be directly attributed to its growing middle class. “There has been significant and consistent double-digit growth in recent times, driven by the onset of a change in the pattern of retailing from the family-run stories to organized retail. A growing middle class and a growing, literate, young generation that is working more, earning more and spending more is driving the growth in the consumer product market. It brings growth to the label industry,” he says.

Though the growth of the Indian label market has exploded in recent years, Sahni says that there is significantly more to come. “Other markets, like North American, European and Chinese, are already mature and very focused. The Indian market is still in nascent stages. Most of the label printing is in the urban areas. The use of labels is still less than one square meter per capita, which is still a fraction of the usage patterns in the mature markets.”

Partnering for success
As American and European companies venture into this new territory, many have found success by partnering with local companies, forging relationships that are mutually beneficial. Rotocontrol, a manufacturer of high-speed cutting, and rewinding machines based in Ahrensburg, Germany, expanded into India in 2010. According to Heather Roth, marketing communications manager, the decision to expand was an easy one. “We felt there was a market in India for premium, quality machines and that progressive converters there would see the benefits of our machines as they did in other markets. We entered into an agent agreement with Weldon Celloplast, which gave us the local support needed for such a remote market.”

The staff of Flexo Graphics, New Dehli
The challenges of entering a new, foreign market are plenty, but Roth says that her company eases those challenges by reaching out to local experts.  “At Rotocontrol, we only approach a new regional market when we have the support of a local agent who can help us bridge any cultural or commercial issues specific to the area. We can’t build specific products for each region, but we do try to be sensitive to specific needs. For our move into India, we have relied on Harveer and Pawandeep Sahni at Weldon Celloplast for their expertise and customer relationships.”

Flexo Image Graphics (FIG), headquartered in New Delhi, has represented Mark Andy in India for 12 years  and recently expanded its operations to a larger facility.  According to Mike Russell, director of international sales for Mark Andy, the  move  was  necessary  in order to accommodate  the  existing and expanding Mark Andy and Rotoflex install base in the region. Russell says that FIG also has branch offices in Chennai and Mumbai to support the growing install base throughout the country.

“The Mark Andy and Rotoflex product lines have been very successful in India with the support of FIG,” Russell says. “There is a large potential for growth in the Indian label market. The country continues to change and evolve as they become more commercialized and retail-oriented. We have noticed differences in this growing region based on experience and knowledge of processes and applications. As an example, the Chinese market has been slower to adopt flexo because of its stronger presence of letterpress applications. Because letterpress didn’t have as strong of a loyalty or presence in India as in China and the rest of Asia, the India region has adopted flexo more quickly and the infrastructure of the flexo supply chain was more easily established. This has helped Indian converters to accept flexo and find success in its implementation.”

Flint Group, headquartered in Luxembourg, has been present in India since 2001, though the company says its ties to the country go back much further than that. The company announced in December 2010 its plans to build a new, state-of-the-art manufacturing site for packaging and narrow web inks in Savil, India. At the time, Upal Roy, general manager of Flint Group India, said:  “We already have an ISO 9001-2000 certified mother plant for packaging inks in Bangalore and blending units in Baroda, Noida and Savil, supported by depots at Pondicherry, Kolkata, Hyderabad and Navi Mumbai. We are proud to soon be in a position to support the market even further with our new plant.”

George Lyle, vice president of packaging and narrow web Asia, added: “Thanks to strong and long-term partnerships with our customers, Flint Group can look back on decades of innovations and leading product developments. Investing into a new site in India was the next logical step to prepare the grounds for continuous growth over the next few years.”

Skanem Group, a European supplier of self-adhesive labels, announced in February of this year that they were partnering with Indian label company Interlabels in order to take part in the growing market. Skanem already has a presence in Asia – their Bangkok, Thailand location opened in 2007 – but this is the company’s first establishment in India. Skanem purchased 51 percent of Interlabel’s shares.

Owner and CEO of Skanem, Ole Rugland, says, “India is a market with a great potential and rapid consumption growth. Through this partnership, we get access to this exciting market.” Rugland further explains that, during the process of finding a partner in India, the importance of the company culture was emphasized. “By partnering with a company that matches Skanem’s corporate culture, we will strengthen the Group’s overall vision and strategy.”

Sticker shock
While the growth of the label market in India has been extraordinary, the country’s economic stability is relatively recent – as is its entrance into the market. As a result, some converters and other customers have had a hard time adjusting to the price of more sophisticated equipment. 
“Education of the market is one of the largest challenges we face as an OEM selling into India,” says Russell of Mark Andy. “While the market has been quick in its adoption of flexo, there is still a significant focus for Indian converters placed on initial cost of equipment, versus the total cost of ownership over the product life cycle. Mark Andy has built its 65-year reputation on producing a durable, flexible, innovative products in the US. The core knowledge and experience that resides in our US manufacturing allows us to produce the best quality equipment at the most economical price. While local manufacturers may present an alternative at a reduced price, it could come at a higher cost over the life of the equipment.”

Roth, of Rotocontrol, says that her company has experienced the same cost resistance, though as the industry has grown and become more competitive, converters have seen the value in higher-priced equipment. “The market has traditionally been very price-sensitive but we are seeing that in India, as in other territories, the converter’s need to deliver improved quality and more capability to their own customers is increasing,” she says. “Converters who can differentiate themselves and deliver this can generate a healthy ROI even on larger capital investments.”

According to Sahni, of Weldon Celloplast, a major difference between the Indian label market and the label markets in other, more established economies is diversity. “Being concentrated in ‘A’ grade cities and metros, the Indian printers cater to a very diverse client base. A single printer may be supplying everything from plain labels to product labels,” he says. “This is in contrast to label printers in mature economies who are getting more and more specialized, depending on the type of clientele that they have. The label printing companies need to accept the challenges of diverse demands coming from some very focused customers. Specializing in niche areas is a major challenge for printing companies.”

A bright future
As many have observed over the last few years, these challenges are not keeping anyone away from the Indian market. Labelexpo India 2010, which took place in New Delhi, featured 150 international and local exhibitors. There were also more than 6,000 visitor’s at the show, up 27 percent from 2008. Exhibitors took notice. Gallus showed its ECS 340 granite press for the first time in India. Nilpeter also showed its FB-3300 servo press for the first time there. Xeikon introduced its new 3000 Series, Gerhardt unveiled the High Blade Flexi, and Mark Andy debuted the latest model from its Performance Series, the P3.

At the time, Jakob Landberg, sales and marketing director at Nilpeter, said: “This activity at Labelexpo India has improved considerably since the first show in 2008. The number of visitors was undoubtedly up, but more important, the quality and seniority of the attendees was very high. It is evident that the growth in India is strong and stable. Labelexpo India will become a strategic show for many exhibitors in the near future – and it already is for Nilpeter.”

Sahni, of Weldon Celloplast, added: “As visitors entered Labelexpo India 2010, good vibes were evident. The show has attained the international quality that the Labelexpo Global Series is known for. Visitor quality was superb.”

The future of the Indian label market is certainly bright, and shows no signs of slowing down. According to Russell of Mark Andy, other industries have also taken notice. “Expansion into India is positive across a variety of industries. The growth in the international business sector in India is more than 7 percent annually. India definitely stands as an opportune place to explore business possibilities with its highly skilled, increasingly educated manpower and a budding middle class. Recently we have seen many international retail brands coming into the Indian market like Walmart, Ikea, Carrefour, etc. and we expect many more to come in the future.”

“Any growing economy would attract investments from companies that have attained specialization and finesse in their respective fields and need to expand once they find saturation creeping in their existing markets,” adds Harveer Sahni. “India provides a perfect base for investments and markets that are hungry for innovations and better products. With demand of labels growing at a rapid pace, there is space for many of those who have the technology and resources to cater to a demanding consumer oriented market.”

Roth concludes, “With a population of more than 1.2 billion people, it is a market that cannot be ignored.”
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