Growth patterns in Europe continue to show a migration from the established pressure sensitive and glue-applied label technologies – which still together represent the majority share of the global market – to sleeve label formats – particularly heat shrink TD labels. Reardon says sleeves account for around 17% of global label volumes, with the dominant heat shrink TD technology growing 5.8% annually.
A new report from Research and Markets, a research firm based in Dublin, Ireland, says the label market in Europe is expected to grow at a CAGR of 2.72% to 2019. Commenting on the report, an analyst from the firm says, “One key trend emerging in this market is the development of new products. Countries in Europe are currently experiencing increasing urbanization and economic development, which is leading to increasing demand. This motivates vendors to introduce innovative product portfolios to the market.” According to the report, one of the main drivers within Europe is the increase in demand for labeled and packaged food and beverage products, resulting from the increasing disposable income of consumers in Europe’s developing countries.
Europe, as a region, represents 25% of the world’s label market, and showed a 1.8% growth rate during 2014. All in all, the European label market can be characterized as healthy, with certain sectors and end use markets appearing stronger and more sustainable than others. There are areas, such as Southeastern Europe and Turkey, which are significantly outpacing the slower underlying regional market.
In 2014, demand for self-adhesive label materials in 30 European countries reached 6.4 billion square meters (roll and sheet materials combined), according to FINAT, the Europe-based association for manufacturers of self-adhesive labels and related products. The figure represents an increase of 5.7% compared to the previous year. In 2014, the volume of European label demand was 50% higher than in 2002 and more than 100% above the estimate for 1996. Since 2003, around 2.1 billion square meters of new self-adhesive business was created in Europe, and nearly 40% of that volume was generated by filmic roll label applications. Another fundamental driver of label material advancement has been the aforementioned growth in Eastern Europe. In 2014, Eastern European label demand increased by 8.7% over 2013, ahead of Southern Europe (6.3%), the UK and Ireland (5.6%), and Northern Europe (5.2%). Central Europe recorded a modest 2.6% growth rate.
On the RADAR
Last year, the FINAT RADAR was launched. Described by the association as providing a “360 degree tour of the European label market,” the RADAR is wide-ranging, biannual industry trends report, providing a recurring overview on the evolution of markets and market segments, employment, profit and loss, purchasing and investment. It is based on exclusive surveys among end users, converters, material suppliers and equipment suppliers to the label industry, to assess the trends and developments in the various segments of the label value chain.
A valuable tool for FINAT converter members and industry suppliers alike, it’s also a one-of-kind resource for those looking to take the pulse of the greater European label market.
Jules Lejeune, FINAT’s managing director, discusses some of the key insights gleaned from the RADAR’s most recent findings. “The latest report states the food and household chemicals label market saw significant growth in 2014 – both registering 5.3%. Beverage followed in third place with 4.9% growth. Office products, consumer durables and the pharmaceutical arena accounted for the bottom three,” he says.
Technology adoption rates among European converters remain highest in the sleeve sector. The RADAR reports 40% of surveyed label manufacturing companies are already active in sleeve printing while an additional 20% indicated they are “very interested” in entering the market. “Western Europe is the globe’s second largest consumer of sleeve labels after Asia, and the region’s projected growth rates over the next five years for sleeves is estimated at 2-3% per year,” Lejeune says.
Flexible packaging is another area that’s trending upwards. “About one quarter of participating label printers responded (to the RADAR) that they have successfully penetrated the flexible packaging market, with another 15% indicating they are very interested,” LeJeune says, adding that the region’s stand-up pouch market is forecast to grow at 5.5-6.5% annually over the next five years, more than twice the projected volume growth in the region’s flexible packaging sector as a whole.
In-mold labels (IML), though not exhibiting growth with the same fervor as shrink and flexible packaging, shows considerable potential. One out of five RADAR-surveyed converters are already active in IML printing. “While the technology only has an estimated 2% share of the labeling market worldwide, IML continues to be a technology that is growing as new opportunities open up in the food, beverage, personal care and nutraceutical sectors,” LeJeune says, adding the IML market is projected to grow 2.3% annually over the next five years.
Lejeune emphasizes that one of the most significant trends currently impacting the European narrow web converting industry is the pace at which consolidation is occurring. “Merger and acquisition activity is on the rise and this is impacting converting companies of every size and in every region. About 10% of respondents to the survey indicated that they will or are likely to sell their business over the next half decade, while nearly one out of four companies indicated that they were uncertain if their companies would be sold,” he says.
Historically, the European label market always had a high adoption rate when it comes to digital presses. With the global label industry seeing a steady decline in average run sizes, there is strong interest in digital printing technologies. RADAR findings show that more than 30% of converters surveyed are planning investment in at least one press or other form of equipment this year, with more than 50% of respondents that have planned digital press investment looking at inkjet solutions. The report also shows the difference between planned digital technology investment in inkjet (54%) and toner-based (46%) is quite small.
Filip Weymans, Belgian-based digital press manufacturer Xeikon’s director of segment marketing and business development, Labels and Packaging, says, “Compared to the US, the fragmentation of the market and printers has been a driver for Europe’s high rate of digital adoption. Today, Europe remains the biggest market for digital presses, representing about 40% of all digital presses sold annually worldwide.”
Xeikon has been experiencing tremendous growth recently. The company’s year-to-date 2015 print volume has grown 50% compared to 2014, with machine sales up 30% over the same timeframe. “So we’re seeing great confidence from both new customers and existing customers to keep investing into the dry toner presses based on the value and differentiation they provide.” Weymans says. “Label printers are looking to diversify their offering beyond self-adhesive labels,” he adds. “This is where we are experiencing an interest in the Xeikon 3500. Due to its print width of 20.3", it can give printers that edge moving into IML, folding carton or even heat transfer labels.”
Throughout Europe, Weymans says, a large number of smaller printers are facing challenges in setting their businesses up for the future. “The flexibility of their current equipment, oftentimes old flexo and letterpress technology, is not providing them the capability to stand out and maintain a profitable business or even grow it,” he says, recognizing that cost can be a prohibitive factor in determining whether a printer opts for a digital press. “Hence, there is also a strong demand for affordable investments in digital presses that can range from €10k up to €300k. Our Xeikon 3030 plays in the higher end of this market and what we’ve seen is that after 2-3 years, this kind of printer eventually turns 100% digital.”
Jeff Stoffels, director of corporate marketing for prepress specialist Esko, says that in terms of label printing processes, there is strong growth and interest in digital printing as a cost and time effective way to produce short runs of custom labels. “We also see a flat trend in the adoption of variable data printing (VDP),” Stoffels says. “While digital press vendors are increasingly focusing on uniquely digital applications – and of course VDP is a good example of that, we do not (yet) see a growing adoption of VDP in label applications. On the other hand, more versioning or serializing of products is a growing trend.”
Adding to the digital conversation, Stoffels notices a trend where printers and converters develop a web store that facilitates ordering and re-ordering. “Overall, the main investment driver is shorter print runs and tighter deadlines – and we see no indication that this trend will stop any time soon. This means investments need to go to those applications and devices that are able to effectively handle the increased job load,” Stoffels says. “This explains not only the growth and interest in digital presses, but the growth in expanded gamut printing on conventional presses, which results in less wash ups, ganging jobs, higher press uptime and lower ink inventory. There is also strong growth in automated workflows and integration with MIS and other upstream systems.”
Efficiency, functionality and versatility
Though digital is growing rapidly, FINAT’s research shows that last year, with 60% of installations, flexo remains the “work horse” of the industry. To support the overall growth in Europe, Mark Andy recently opened a showroom and sales office in Warsaw, Poland, where the company showcases the latest in Mark Andy and Rotoflex technologies. The location is ideal, as it’s convenient for many travelers while also a growing city. “We see the European market as dominated by conventional UV flexo when it comes to overall label print production,” says Mike Russell, Mark Andy’s director of international sales. “The ability to incorporate multiple processes – such as screen and foil – into a single inline workflow makes flexo a smart option for converters looking to expand their capabilities.” Mark Andy recently introduced the Digital Series press to support the trend toward digital, while keeping the productivity, flexibility and configurability of the flexo process firmly in the hands of the converter. “We also are seeing more multi-layer, extended content labels, as brand owners are encouraged to include more information on labels but do not want to give up any of the limited space for branding on the label face. Printing and converting specialized substrates including aluminum and laminated tube materials is also garnering interest,” Russell adds.
Equipment that produces high quality product as efficiently as possible is extremely appealing to Europe’s converters, adds Russell. “As competition for print jobs intensifies, converters are finding that offering a high quality product at a competitive price point is more critical than ever, which means their equipment needs to support the fundamentals of productivity – short web paths, quick set up times, less running waste, higher speeds. This is not only in the printing process but also in the offline finishing area, where advanced offerings like the Rotoflex VLI are running at speeds of 2000fpm (610m/min), producing high quality, consistent and accurate rolls for delivery to the labeling equipment,” Russell continues. “European converters are also seeing an increase in costs of raw materials, leading them to need these production efficiencies to stay competitive.”