Harveer Sahni05.20.16
Population continues to grow at an enormous pace in the metropolitan cities of India, and infrastructure, despite the rapid growth, remains under intense pressure. The migration of the rural population to urban areas has made life in big metros extremely demanding and difficult. The Indian government, for many years, has been making efforts to stem this shift from rural to urban areas. The effects are now evident. Mobile telecommunications, television, the internet, better roads, employment-guarantee schemes and rail connectivity have largely been successful in bridging the gap and stemming the pace of migration. As a result, the smaller towns have experienced a spurt in demand for consumer goods in recent years. Decades ago, Mahatma Gandhi said, “India lives in its villages.” This is largely true even now, but gradually the villages are modernizing, owing to availability of all modern ameneties in nearby towns. They need not commute or shift to far away expensive metros to live a life that they watch on TV. This has resulted in steady growth in demand of consumer durables in the smaller towns of India, attracting investments from leading manufacturers to cash in on this change.
The Neilsen Company, in a report titled, “Emerging Consumer Demand: Rise of the Small Town Indian,” states, “Eight thousand towns, 630,000 villages, over eight million stores and 1.2 billion people! In such a diverse consumer universe, how do you measure demand, where is it strongest? North vs. South, the metros vs. rural - the choices are endless. Despite a current inflationary environment, Tier II and Tier III towns are showing strong momentum with an improved demand appetite. The smaller Indian towns are leading the demand surge and shopping like metros.”
The label printing industry has also been witness to this trend. In the past few years, we have seen investments being made to produce labels in smaller towns of India. An industry that originated and was predominantly located in the West gradually spread to the other metro cities and is now registering its presence in these smaller towns. In my effort to assess the impact, I asked printers in all zones of India, “The label industry is now expanding into smaller towns and cities. Do you agree?” The response was a unanimous YES! They all felt that it will impact label growth positively. LMAI (India’s label association) president Sandeep Zaveri stressed, “It is required to grow in smaller towns.”
In trying to assess the trends and growth of labels in India, I interviewed 12 established and leading label printers spread across different geographical zones of India. Ten respondents out of the 12 confirmed that there is definite growth in the country, while one was not sure and felt it may have grown at places and gone down elsewhere and the other one was emphatic in saying that the growth rate had decelerated. Anuj Bhargav of Kumar Labels, while being convinced that the label consumption graph is positive, cautions, “Growth exists, but increase in capacity is more than the demand escalation. This is leading to unhealthy competition.” So over 90% of printers interviewed say there is growth. When asked the rate at which they individually grew, 10 out of 12 reported double digit growth, three of them grew 20% and the topper Sanjeev Sondhi of Zircon reported a growth rate of a whopping 35-40%. Two reported 7-10% and one estimated 5-7% growth. Answering my question as to how they estimate the national growth rate of self adhesive labels in India, only nine responded and seven of those confirmed it includes double-digit growth between 10 and 20% and three out of these seven said the growth was actually 20%. Two of them said 7-10% and one said it was 5-7%. When I look at all three questions and the responses from printers, it is quite evident from the way printers have grown and the way they estimate the national growth rate, labels in India can safely be estimated to be growing in excess of 15% per annum.
Most of the organized Indian label industry belongs to the MSME sector (Micro, Small & Medium Enterprises) and they are predominantly family-owned businesses. A handful of them have been acquired by international companies, but they largely remain within the control of original promoters and their families. These units were largely initiated at a very small scale with a single label press. Until a few years ago, most of the good presses that contributed to the evolution of labels in India came from Europe, US and Japan. Gradually Taiwan started making presses, which was followed by Chinese-made equipment coming to India in big numbers due to the low prices of the equipment. Indian press manufacturers have also made a mark for themselves in recent times.
Today, label printers with Chinese and Indian presses have become a definite and identifiable segment of our label industry. I asked all the targeted label printers, “Chinese and Indigenous label press manufacturers have in recent times made many installations in India. This trend is creating a lot of capacity at the lower and middle segment of the market. What is your opinion?” All respondents agreed with this and feel there is enough for all at various levels of investments. Sanjeev Sondhi responded, “In my opinion, quality will finally decide who will remain in the game.”
Industry leader and veteran Narendra Paruchuri, heading Pragati Pack, Hyderabad, stated, “This is a quintessential question like the chicken and egg syndrome. The markets in the smaller towns cannot afford or break even on the high tech machines. So they will opt for the cheaper ones from China. Quality will not be very good but that may be what is needed in that market. We are no judge for this, and if they can sell and make it a success, good for them.”
Pragatai Pack has invested in some of the most advanced equipment to enhance its printing, converting and decorating capabilities. On my question, “What is your mantra for growth, higher volumes or highly technical and innovative products?” he added.“We have to keep on at the technology and see what we can do and do that better than others. This is a quest for all businesses and only in the answer to this question lies your success. So if you come out with a unique/innovative product, your sales will rise. Also maybe the growth rate of the country itself will give you an opportunity to grow your business. Progress is relentless and technology a great leveler. So what we thought was exclusive a few years ago is a common occurrence now. So the quest has to continue. Always.”
All the respondents agree that it is time to take stock of the situation, shift focus and innovate. They have similar answers to my query on their “Mantra for growth.” Mahendra Shah of Manohar Packaging said, “Higher volumes have not paid off to anyone, and I guess we label printers have gone beyond the lower limit, so it would be best to divert on to innovations and get into more technical products.” Himanshu Kapur of J K Fine Prints Mumbai, stated, “Higher volumes and lower margins is a wrong growth trend, so we prefer technically innovative products.” Dinesh Mahajan of Prakash Labels, Noida, said, “It has to be a mix of high volume and innovations.”
The trend of combination printing that helps employ diverse printing and converting technologies in a single pass has become synonymous with innovation and secure printed products. To my question, “Combination or hybrid printing is attracting lot of investment. Do you see this as an emerging trend?” Eight out of 12 printers feel that combination printing is necessary to create innovations, and it is the emerging trend. Three did not respond to this statement and only one said it is not the emerging trend.
Many offset printers have started to invest in combination label printing equipment as a part of their expansion into packaging. Label printers contrarily would not really invest in offset printing. A few years ago, I remember Amar Chhajed of Webtech answered this question for me. He said we are so used to doing all printing, decoration and finishing of products inline in a single pass, it is difficult for us to imagine moving stacks of sheets around the huge shop floor with a massive workforce. Ahmedabad-based Mahrishi Labels had forayed into offset printing, and the company did not find comfort with its decision. As per Jigesh Dani, “Having entered into sheetfed business, we have realized that it’s not just simply printing but a different ballgame. In my opinion, it may be easier for sheetfed offset printers to enter inline converting but it’s difficult the other way.”
With the advent of combination presses going wider and able to handle a wide array of substrates and thicknesses, producing folding cartons inline has also become a reality. Many label printers feel this is the time to move in that direction. Raveendran of Seljegat feels it is time for combination printing, and said, “Yes, we need to invest in the production of functional packaging.” Gururaj Ballarwad of Wintek Bangalore, which is a part of the Signode India Group, feels not many label printers will move into packaging, yet, he says, “Investment in combination printing is necessary to sustain, maintain and enhance the capabilities.”
Digital printing in India still remains a taboo with Indian label printers due to the high cost of operation and consumables. However, as a slight change in their thought process, the higher end printers say it is time to consider digital printing as a complementary part in a combination press. So while they invest in a press that has offset, flexo, gravure and screen printing capabilities, they will probably also opt for a digital printing station, and that will add to their capabilities. This will also help them in proofing, as well as catering to an increasing number of short run customers.
India is a large and diverse country with multiplicity of cultures, food, language, dress habits, different festivals and lifestyles. As literacy enhances and the pockets of the middle class start to bulge, it becomes imperative for the marketers to focus on individual segments of the society. Innovation at this time becomes crucial also, as there are capabilities to produce segment specific short runs. Just-in-time deliveries are another demand coming for end users due to the short run jobs. The result is larger label companies considering multi-locational production facilities. The response on this is quite divided within the industry. Many printers feel that one centralized facility is better for quality production and control. With better logistics, it is possible to deliver anywhere in the country in reasonable time. Yet there are others who feel a locational advantage is necessary to service and retain large clients. Some large printers already have invested in multiple facilities, not just within India but also outside India. Ajanta Packaging has units in Daman in the West and Baddi in the North of India. They also have units in Ajman UAE and Bangkok Thailand. The Indian label industry continues to grow at a steady pace and is also attracting international attention. However, it has still not yet grown to the level of large international label companies. There is still room for much more but it should grow steadily, as the demand grows.
Harveer Sahni is Managing Director of Weldon Celloplast Limited based New Delhi, India.
The Neilsen Company, in a report titled, “Emerging Consumer Demand: Rise of the Small Town Indian,” states, “Eight thousand towns, 630,000 villages, over eight million stores and 1.2 billion people! In such a diverse consumer universe, how do you measure demand, where is it strongest? North vs. South, the metros vs. rural - the choices are endless. Despite a current inflationary environment, Tier II and Tier III towns are showing strong momentum with an improved demand appetite. The smaller Indian towns are leading the demand surge and shopping like metros.”
The label printing industry has also been witness to this trend. In the past few years, we have seen investments being made to produce labels in smaller towns of India. An industry that originated and was predominantly located in the West gradually spread to the other metro cities and is now registering its presence in these smaller towns. In my effort to assess the impact, I asked printers in all zones of India, “The label industry is now expanding into smaller towns and cities. Do you agree?” The response was a unanimous YES! They all felt that it will impact label growth positively. LMAI (India’s label association) president Sandeep Zaveri stressed, “It is required to grow in smaller towns.”
In trying to assess the trends and growth of labels in India, I interviewed 12 established and leading label printers spread across different geographical zones of India. Ten respondents out of the 12 confirmed that there is definite growth in the country, while one was not sure and felt it may have grown at places and gone down elsewhere and the other one was emphatic in saying that the growth rate had decelerated. Anuj Bhargav of Kumar Labels, while being convinced that the label consumption graph is positive, cautions, “Growth exists, but increase in capacity is more than the demand escalation. This is leading to unhealthy competition.” So over 90% of printers interviewed say there is growth. When asked the rate at which they individually grew, 10 out of 12 reported double digit growth, three of them grew 20% and the topper Sanjeev Sondhi of Zircon reported a growth rate of a whopping 35-40%. Two reported 7-10% and one estimated 5-7% growth. Answering my question as to how they estimate the national growth rate of self adhesive labels in India, only nine responded and seven of those confirmed it includes double-digit growth between 10 and 20% and three out of these seven said the growth was actually 20%. Two of them said 7-10% and one said it was 5-7%. When I look at all three questions and the responses from printers, it is quite evident from the way printers have grown and the way they estimate the national growth rate, labels in India can safely be estimated to be growing in excess of 15% per annum.
Most of the organized Indian label industry belongs to the MSME sector (Micro, Small & Medium Enterprises) and they are predominantly family-owned businesses. A handful of them have been acquired by international companies, but they largely remain within the control of original promoters and their families. These units were largely initiated at a very small scale with a single label press. Until a few years ago, most of the good presses that contributed to the evolution of labels in India came from Europe, US and Japan. Gradually Taiwan started making presses, which was followed by Chinese-made equipment coming to India in big numbers due to the low prices of the equipment. Indian press manufacturers have also made a mark for themselves in recent times.
Today, label printers with Chinese and Indian presses have become a definite and identifiable segment of our label industry. I asked all the targeted label printers, “Chinese and Indigenous label press manufacturers have in recent times made many installations in India. This trend is creating a lot of capacity at the lower and middle segment of the market. What is your opinion?” All respondents agreed with this and feel there is enough for all at various levels of investments. Sanjeev Sondhi responded, “In my opinion, quality will finally decide who will remain in the game.”
Industry leader and veteran Narendra Paruchuri, heading Pragati Pack, Hyderabad, stated, “This is a quintessential question like the chicken and egg syndrome. The markets in the smaller towns cannot afford or break even on the high tech machines. So they will opt for the cheaper ones from China. Quality will not be very good but that may be what is needed in that market. We are no judge for this, and if they can sell and make it a success, good for them.”
Pragatai Pack has invested in some of the most advanced equipment to enhance its printing, converting and decorating capabilities. On my question, “What is your mantra for growth, higher volumes or highly technical and innovative products?” he added.“We have to keep on at the technology and see what we can do and do that better than others. This is a quest for all businesses and only in the answer to this question lies your success. So if you come out with a unique/innovative product, your sales will rise. Also maybe the growth rate of the country itself will give you an opportunity to grow your business. Progress is relentless and technology a great leveler. So what we thought was exclusive a few years ago is a common occurrence now. So the quest has to continue. Always.”
All the respondents agree that it is time to take stock of the situation, shift focus and innovate. They have similar answers to my query on their “Mantra for growth.” Mahendra Shah of Manohar Packaging said, “Higher volumes have not paid off to anyone, and I guess we label printers have gone beyond the lower limit, so it would be best to divert on to innovations and get into more technical products.” Himanshu Kapur of J K Fine Prints Mumbai, stated, “Higher volumes and lower margins is a wrong growth trend, so we prefer technically innovative products.” Dinesh Mahajan of Prakash Labels, Noida, said, “It has to be a mix of high volume and innovations.”
The trend of combination printing that helps employ diverse printing and converting technologies in a single pass has become synonymous with innovation and secure printed products. To my question, “Combination or hybrid printing is attracting lot of investment. Do you see this as an emerging trend?” Eight out of 12 printers feel that combination printing is necessary to create innovations, and it is the emerging trend. Three did not respond to this statement and only one said it is not the emerging trend.
Many offset printers have started to invest in combination label printing equipment as a part of their expansion into packaging. Label printers contrarily would not really invest in offset printing. A few years ago, I remember Amar Chhajed of Webtech answered this question for me. He said we are so used to doing all printing, decoration and finishing of products inline in a single pass, it is difficult for us to imagine moving stacks of sheets around the huge shop floor with a massive workforce. Ahmedabad-based Mahrishi Labels had forayed into offset printing, and the company did not find comfort with its decision. As per Jigesh Dani, “Having entered into sheetfed business, we have realized that it’s not just simply printing but a different ballgame. In my opinion, it may be easier for sheetfed offset printers to enter inline converting but it’s difficult the other way.”
With the advent of combination presses going wider and able to handle a wide array of substrates and thicknesses, producing folding cartons inline has also become a reality. Many label printers feel this is the time to move in that direction. Raveendran of Seljegat feels it is time for combination printing, and said, “Yes, we need to invest in the production of functional packaging.” Gururaj Ballarwad of Wintek Bangalore, which is a part of the Signode India Group, feels not many label printers will move into packaging, yet, he says, “Investment in combination printing is necessary to sustain, maintain and enhance the capabilities.”
Digital printing in India still remains a taboo with Indian label printers due to the high cost of operation and consumables. However, as a slight change in their thought process, the higher end printers say it is time to consider digital printing as a complementary part in a combination press. So while they invest in a press that has offset, flexo, gravure and screen printing capabilities, they will probably also opt for a digital printing station, and that will add to their capabilities. This will also help them in proofing, as well as catering to an increasing number of short run customers.
India is a large and diverse country with multiplicity of cultures, food, language, dress habits, different festivals and lifestyles. As literacy enhances and the pockets of the middle class start to bulge, it becomes imperative for the marketers to focus on individual segments of the society. Innovation at this time becomes crucial also, as there are capabilities to produce segment specific short runs. Just-in-time deliveries are another demand coming for end users due to the short run jobs. The result is larger label companies considering multi-locational production facilities. The response on this is quite divided within the industry. Many printers feel that one centralized facility is better for quality production and control. With better logistics, it is possible to deliver anywhere in the country in reasonable time. Yet there are others who feel a locational advantage is necessary to service and retain large clients. Some large printers already have invested in multiple facilities, not just within India but also outside India. Ajanta Packaging has units in Daman in the West and Baddi in the North of India. They also have units in Ajman UAE and Bangkok Thailand. The Indian label industry continues to grow at a steady pace and is also attracting international attention. However, it has still not yet grown to the level of large international label companies. There is still room for much more but it should grow steadily, as the demand grows.
Harveer Sahni is Managing Director of Weldon Celloplast Limited based New Delhi, India.