Erin Judge01.22.24
With the height of the pandemic seemingly years behind us, the aftershock of Covid-19 continues to impact our way of life and economic habits. It certainly changed the landscape for the consumer-packaged goods market as customers strained existing resources, driving demand for new brands and products.
Particularly in the beverage market, the pandemic led to increased sales across both alcoholic and non-alcoholic sectors. Growth has slowed in some areas, but popularity for spirits and “ready to drink” cocktails continues to soar. On the other end of the spectrum, the pandemic also gave rise to new functional, health-focused beverages as many consumers started becoming more acutely concerned about what they put in their bodies.
As a result, there continues to be an increasing number of SKUs hitting the market – meaning new opportunities for label converters. While growth is certainly a good thing, rising concerns for sustainable materials and practices, coupled with the impact of inflation on brands’ concerns for cost, present new challenges for converters as they help their customers’ labels stand out on the shelf.
Nicole Rogala, strategic account executive for Inland Packaging, says that across all segments of the beverage industry, “environmentally-conscious consumers will drive the need for brands to align their packaging to be more sustainable and recyclable.” Inland, which is one of the largest privately owned label and packaging printers in the US, is seeing increasing requests from its customers for lower gauge films, wash-away adhesives, and other materials that better align with the recycling process.
Andy Staib, CEO of DWS Printing & Packaging, adds that as sustainability continues to be an important topic, he sees a growing number of environmentally-friendly label substrates and shrink sleeves in the market, including those made with post-consumer recycled materials. Staib is the fourth-generation family owner of DWS, a printing company that specializes in labels for the beverage, craft beer and food markets. He says, “While this evolution toward greener labeling and packaging is critically important, it is also important for brand owners and packaging designers to understand that these initiatives take time to qualify at each stage of the process, specifically the co-packers.”
This means brand owners, especially those in the non-alcoholic sector, are finding creative ways to both save money and lessen their impact on the environment. Rogala says, “The primary focus of non-alcoholic beverage companies is on cost savings and sustainability. Desire for added label embellishments has taken a backseat as customers look to ways to reduce material.”
To decrease waste and produce more labels with less material, Inland is working with its customers to optimize label dimensions to best fit roll width or sheet size. Brand owners are also beginning to request downgauging for plastic films. By making films thinner, downgauging helps companies achieve their goals of using less material from both an ecological and economical perspective.
Staib says there is also a fast-growing trend toward matte finishes (like soft-touch coatings, as well as spot matte + gloss techniques) for brands still looking to maximize shelf appearance without great cost implications. He adds, “These finishes elevate the consumer experience when they feel a connection to the ‘touch and feel’ of the packaging.”
The demand for sustainable label materials and production processes, while just beginning to gain traction in other beverage segments, is already quite strong in the wine and spirits market. “Having sustainable product offerings and solutions for our customers is quickly moving from ‘nice to have’ to ‘need to have,’” says Charlie MacLean, president for ASL PrintFX, a producer of labels for the beverage, consumer packaged goods, envelope, and promotional markets. He adds, “Customers not only want sustainable materials and products; they also want to know that their suppliers have sound environmental manufacturing practices and a commitment to continuous improvement.”
Rogala and MacLean also note that given the supply chain challenges of recent years, brand owners in both the wine and beer segments are more willing to consolidate their material mix and open to looking at alternative materials to alleviate potential delays in production.
Unlike non-alcoholic brand owners, the wine and spirits markets are still demanding premium label materials and finishing like textured papers and specialty embellishments.
According to MacLean, spirits are experiencing a “renaissance” and growing faster compared to previous years. As such, spirits customers are requesting high-end substrates like cotton and metal, and intricate designs with an increase in decorations from multiple foils, sculpted embossing, debossing, and high-build screening.
James Stone, director of wine and spirits for Fortis Solutions Group, a provider of high impact printed packaging solutions, adds, “With the accelerated growth in the spirits category, we will see more highly decorated pressure sensitive labels than in previous years as marketing sees more challenges with new and emerging brands.”
With benefits ranging from immune and digestive health support to boosting energy to stress relief, functional beverages in North America are expected to be a $75 billion market by 2029, with growth of $20 billion over the next five years, according to a recent report from Mordor Intelligence. Rogala says, “For the foreseeable future, health-conscious consumers will drive growth with the ‘better for you’ brands.”
Within the functional category, Hub Labels’ Dahbura sees great opportunities particularly with nootropic and CBD beverages. Nootropic beverages incorporate natural (sometimes synthetic) supplements, outside of caffeine, to improve cognitive functions such as focus, attention, memory, and stress. Like other functional beverages, nootropics are expected to continue significant growth over the next 5-10 years. Dahbura notes, “A lot of indie brands are beginning to capitalize on this growth with new and exciting products.”
Popularity for all cannabis-related products is also continuing to grow as regulations ease throughout the US. Fortune Business Insights reports that beverages, in particular, are expected to grow at a CAGR of 55% through 2028 – four times the expected rate of alcoholic beverages. Kary Radestock, CEO of Hippo Packaging, a cannabis branding and packaging agency, says packaging for cannabis infused beverages still poses challenges in the marketplace, especially with regard to child-resistant closures. “As the price point of a single serve beverage must remain accessible, we are not seeing as much embellishing and decorating. Opportunites for more intricate label design, much akin to high-end spirits and wines, will begin to arise as the market continues to mature and brands can establish more secure closures,” says Radestock.
With an increasing number of emerging beverages and brands, education on substrates and printing techniques is key to those new to label production to help them differentiate their products on the shelf.
Dahbura explains, “Lack of knowledge from designers typically means they request standard substrates like white, clear or silver film. Hot stamping and embossing are all they know.” Hub Labels has a hands-on lab to introduce and educate designers and brand owners on the various material and printing technologies available to them, including digital options.
Staib adds that there are growth opportunities, especially for smaller brands, in digitally printed labels and shrink sleeves, which offer high-end graphics and finishes with low required minimum order quantities and quick turnaround times.
ASL PrintFX’s MacLean believes that digital, inkjet, and hybrid print technologies will also play a pivotal role in the wine and spirits sector as label and packaging converters see increased customization demands from brand owners due to the proliferation of SKUs in the market. Although, Stone adds, “Digital is acceptable with some wine and spirits brands, but many marketing teams still request custom spot colors instead of process builds.”
Lilly Blum, marketing and CRM manager for Inland Packaging, also adds, “While prices increase in stores, be on the lookout for more consumers switching to off brand/private label options.”
Looking ahead, converters can expect demand for sustainable substrates and production methods to continue to rise. While more options are becoming readily available, some obstacles for converters still remain. Stone cites needing a more efficient way to recycle PET liner, which is the backing for most wine and spirits stocks. Blum adds, “Companies will have to work harder to gain the trust of their customers by demonstrating they are truly working towards sustainability goals and not just greenwashing.”
One thing is clear, as the beverage market continues to expand – both in type and the number of SKUs in the market – there are equal parts exciting and challenging opportunities for label converters in the years ahead. Educating brand owners on the myriad available materials and print technologies will go far with helping customers improve their bottom line, stand out on the shelf, and ultimately succeed.
Particularly in the beverage market, the pandemic led to increased sales across both alcoholic and non-alcoholic sectors. Growth has slowed in some areas, but popularity for spirits and “ready to drink” cocktails continues to soar. On the other end of the spectrum, the pandemic also gave rise to new functional, health-focused beverages as many consumers started becoming more acutely concerned about what they put in their bodies.
As a result, there continues to be an increasing number of SKUs hitting the market – meaning new opportunities for label converters. While growth is certainly a good thing, rising concerns for sustainable materials and practices, coupled with the impact of inflation on brands’ concerns for cost, present new challenges for converters as they help their customers’ labels stand out on the shelf.
Rising Sustainability Concerns
According to research done by Deloitte Consulting, by 2030, most consumers will consider sustainability a baseline requirement for purchase as younger, more environmentally-conscious generations gain control of buying power. Brand owners are, in turn, beginning to place more importance on how each aspect of their products are produced, including the label and packaging.Nicole Rogala, strategic account executive for Inland Packaging, says that across all segments of the beverage industry, “environmentally-conscious consumers will drive the need for brands to align their packaging to be more sustainable and recyclable.” Inland, which is one of the largest privately owned label and packaging printers in the US, is seeing increasing requests from its customers for lower gauge films, wash-away adhesives, and other materials that better align with the recycling process.
Andy Staib, CEO of DWS Printing & Packaging, adds that as sustainability continues to be an important topic, he sees a growing number of environmentally-friendly label substrates and shrink sleeves in the market, including those made with post-consumer recycled materials. Staib is the fourth-generation family owner of DWS, a printing company that specializes in labels for the beverage, craft beer and food markets. He says, “While this evolution toward greener labeling and packaging is critically important, it is also important for brand owners and packaging designers to understand that these initiatives take time to qualify at each stage of the process, specifically the co-packers.”
Economic Pressures
As the demand for sustainability begins to take shape in the industry, inflation and the current economic climate are putting tremendous pressure on trends in today’s beverage label market. Thomas Dahbura, president of Hub Labels, a family-owned and operated producer of pressure sensitive labels, cites that while his customers are interested in more sustainable materials, they are often leery of the price implications they present.This means brand owners, especially those in the non-alcoholic sector, are finding creative ways to both save money and lessen their impact on the environment. Rogala says, “The primary focus of non-alcoholic beverage companies is on cost savings and sustainability. Desire for added label embellishments has taken a backseat as customers look to ways to reduce material.”
To decrease waste and produce more labels with less material, Inland is working with its customers to optimize label dimensions to best fit roll width or sheet size. Brand owners are also beginning to request downgauging for plastic films. By making films thinner, downgauging helps companies achieve their goals of using less material from both an ecological and economical perspective.
Staib says there is also a fast-growing trend toward matte finishes (like soft-touch coatings, as well as spot matte + gloss techniques) for brands still looking to maximize shelf appearance without great cost implications. He adds, “These finishes elevate the consumer experience when they feel a connection to the ‘touch and feel’ of the packaging.”
Beer, Wine & Spirits
Outside of the non-alcoholic segment, beer brand owners, Rogala says, “are still focused on exploring innovation with cost savings as a secondary goal.” These innovations include finding ways for brands to interact and engage with consumers through the label, like thermochromic inks to indicate when a beverage is cold and ready to drink or peel away sweepstake promotions. From a cost savings and sustainability perspective, Inland is seeing more of its beer customers move away from metalized paper labels to white paper, and utilizing metallic inks in an effort to achieve a similar look for less money and better recyclability.The demand for sustainable label materials and production processes, while just beginning to gain traction in other beverage segments, is already quite strong in the wine and spirits market. “Having sustainable product offerings and solutions for our customers is quickly moving from ‘nice to have’ to ‘need to have,’” says Charlie MacLean, president for ASL PrintFX, a producer of labels for the beverage, consumer packaged goods, envelope, and promotional markets. He adds, “Customers not only want sustainable materials and products; they also want to know that their suppliers have sound environmental manufacturing practices and a commitment to continuous improvement.”
Rogala and MacLean also note that given the supply chain challenges of recent years, brand owners in both the wine and beer segments are more willing to consolidate their material mix and open to looking at alternative materials to alleviate potential delays in production.
Unlike non-alcoholic brand owners, the wine and spirits markets are still demanding premium label materials and finishing like textured papers and specialty embellishments.
According to MacLean, spirits are experiencing a “renaissance” and growing faster compared to previous years. As such, spirits customers are requesting high-end substrates like cotton and metal, and intricate designs with an increase in decorations from multiple foils, sculpted embossing, debossing, and high-build screening.
James Stone, director of wine and spirits for Fortis Solutions Group, a provider of high impact printed packaging solutions, adds, “With the accelerated growth in the spirits category, we will see more highly decorated pressure sensitive labels than in previous years as marketing sees more challenges with new and emerging brands.”
Functional, Nootropic & CBD Beverages
Emerging brands will also create stiff competition in the non-alcoholic sector in the years to come, particularly as sales for functional beverages continue to grow. Functional beverages, defined as any beverage containing ingredients designed to promote health benefits, began to rise in popularity during the pandemic.With benefits ranging from immune and digestive health support to boosting energy to stress relief, functional beverages in North America are expected to be a $75 billion market by 2029, with growth of $20 billion over the next five years, according to a recent report from Mordor Intelligence. Rogala says, “For the foreseeable future, health-conscious consumers will drive growth with the ‘better for you’ brands.”
Within the functional category, Hub Labels’ Dahbura sees great opportunities particularly with nootropic and CBD beverages. Nootropic beverages incorporate natural (sometimes synthetic) supplements, outside of caffeine, to improve cognitive functions such as focus, attention, memory, and stress. Like other functional beverages, nootropics are expected to continue significant growth over the next 5-10 years. Dahbura notes, “A lot of indie brands are beginning to capitalize on this growth with new and exciting products.”
Popularity for all cannabis-related products is also continuing to grow as regulations ease throughout the US. Fortune Business Insights reports that beverages, in particular, are expected to grow at a CAGR of 55% through 2028 – four times the expected rate of alcoholic beverages. Kary Radestock, CEO of Hippo Packaging, a cannabis branding and packaging agency, says packaging for cannabis infused beverages still poses challenges in the marketplace, especially with regard to child-resistant closures. “As the price point of a single serve beverage must remain accessible, we are not seeing as much embellishing and decorating. Opportunites for more intricate label design, much akin to high-end spirits and wines, will begin to arise as the market continues to mature and brands can establish more secure closures,” says Radestock.
With an increasing number of emerging beverages and brands, education on substrates and printing techniques is key to those new to label production to help them differentiate their products on the shelf.
Dahbura explains, “Lack of knowledge from designers typically means they request standard substrates like white, clear or silver film. Hot stamping and embossing are all they know.” Hub Labels has a hands-on lab to introduce and educate designers and brand owners on the various material and printing technologies available to them, including digital options.
Staib adds that there are growth opportunities, especially for smaller brands, in digitally printed labels and shrink sleeves, which offer high-end graphics and finishes with low required minimum order quantities and quick turnaround times.
ASL PrintFX’s MacLean believes that digital, inkjet, and hybrid print technologies will also play a pivotal role in the wine and spirits sector as label and packaging converters see increased customization demands from brand owners due to the proliferation of SKUs in the market. Although, Stone adds, “Digital is acceptable with some wine and spirits brands, but many marketing teams still request custom spot colors instead of process builds.”
Looking Ahead
Outside of functional beverages and spirits, converters are seeing steady growth with cold brew coffee, bottled water, and “ready to drink” cocktails, spirits, and mocktails – a trend that has gained much traction since the pandemic.Lilly Blum, marketing and CRM manager for Inland Packaging, also adds, “While prices increase in stores, be on the lookout for more consumers switching to off brand/private label options.”
Looking ahead, converters can expect demand for sustainable substrates and production methods to continue to rise. While more options are becoming readily available, some obstacles for converters still remain. Stone cites needing a more efficient way to recycle PET liner, which is the backing for most wine and spirits stocks. Blum adds, “Companies will have to work harder to gain the trust of their customers by demonstrating they are truly working towards sustainability goals and not just greenwashing.”
One thing is clear, as the beverage market continues to expand – both in type and the number of SKUs in the market – there are equal parts exciting and challenging opportunities for label converters in the years ahead. Educating brand owners on the myriad available materials and print technologies will go far with helping customers improve their bottom line, stand out on the shelf, and ultimately succeed.