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    Features

    Craft Beer Label Market

    Digital printing is playing a key role in creating these vibrant, eye-catching labels.

    Craft Beer Label Market
    Craft beer labels from Constantia Flexibles
    Craft Beer Label Market
    Mark Andy’s digital hybrid technology can be used to print a wide array of labels, especially of the short-run variety for craft beers.
    Craft Beer Label Market
    A beer label sample from UPM Raflatac
    Craft Beer Label Market
    Lefty’s Brewing Company gets an assist from Dion Label for its Wedding Daze Stout craft beer.
    Craft Beer Label Market
    Fort Hill Brewery’s Jigsaw Jazz Double IPA features a PS label from Dion Label.
    Greg Hrinya, Associate Editor05.30.17
    The proliferation of craft breweries in the United States has translated into big business for label converters. In a marketplace where the label on the outside of the bottle often means more than the liquid inside of it, creativity abounds. For craft brewers, standing out on crowded shelves is the name of the game.

    According to the Brewers Association, craft breweries comprise 5,234 of the 5,301 breweries in the US. The association reports that there are more than 10,000 such breweries globally. In 2015, craft brewers produced 24.5 million barrels, and saw a 13% rise in volume and a 16% increase in retail dollar value. Retail dollar value was estimated at $22.3 billion, representing 21% market share.

    “For the past decade, craft brewers have charged into the beer market, seeing double digit growth for eight of those years,” said Bart Watson, chief economist, Brewers Association. The Brewers Association adds that more than 800 craft breweries opened in 2016 alone.

    Jeff Greenlief, craft beer product and business development manager at Avery Dennison, says that there were 4,269 craft breweries in 2015, a jump from 3,722 in 2014. He adds that 75% of people of legal drinking age live within 10 miles of a craft brewery.

    The Demeter Group conducted a study that predicted that 15% of the beer market would be made up of craft beers by 2020. In 2014, craft beers grew by 18% in volume and 22% in retail, the study said.

    Leaders within the label industry have taken notice of the craft beer boom. “The craft beer market has been growing steadily in recent years and doesn’t seem to be slowing down, making it a prime market of interest for converters looking to diversify their portfolio,” says Nat Davis, product manager at Mark Andy. “Based on the market interest shown by our customers and prospects, the indication is that this growth trend in the segment will continue into the near future.”

    Based on the numbers, there is a huge opportunity for label printers to cash in on a thriving market. “The craft beer industry has exploded over the past few years, with new breweries opening each day, and there is a sizable portion of those in Massachusetts,” explains Ashley Obara, marketing manager at Westfield, MA-based Dion Label Printing. “Dion Label Printing has seen a rapid influx of craft breweries in need of labels and shrink sleeves for their bottles and cans.”

    “In the craft beer market, as with all markets, labels and packaging play a huge role in getting the consumer to make a purchase,” explains Jackie Kuehlmann, director of marketing at Inland, a Wisconsin-based label manufacturer. “Brand owners are finding themselves incorporating more and more specialty enhancements, personalization and connection to social to draw consumers in.”

    According to Jessica Johnson, sales and marketing coordinator at Constantia Flexibles, the surge in craft beer labels has brought labeling as a whole into the public eye. “The craft beer industry has been growing substantially over the past six years,” she says. “There have been a lot of craft beer companies who started up just a few years ago and have been beyond successful. This has really brought a lot of attention to the label market with the rise of more and more potential customers within the craft beer industry. Also, this market has been backed by the major macrobreweries investing in the craft beer market.”

    “Craft beer labels have evolved into an art form of sorts,” explains Chris Erbach, marketing communications manager, Weber Packaging Solutions. “The best way to differentiate your brand from the next one is to design a memorable label. Many of today’s craft beer labels are actually done by local artists and are just beautiful. Okay, some are funny and some are plain bizarre, but you remember them, right? The market keeps growing as new materials and ideas try to keep things fresh.”

    There are a plethora of materials that have enabled craft brands to stand out on the shelf, too.  According to Kuehlmann, craft paper stocks have always been popular, as graphics pop off the substrates. However, other materials, such as white paper and white film, can replicate the same kind of eye-popping graphics. “Films are becoming increasingly popular because they tend to allow for more options with specialty inks and coatings,” she adds.

    UPM Raflatac finds that its most popular materials for this market include 2.6 mil to 2.4 mil PP, 50# 100% PCW wet strength paper. The company has noticed that its craft beer portfolio has improved in several ways. For starters, there are targeted applications for wet and dry processes. “There are some very demanding brewery processes that require quick stick adhesives for both film and paper labels,” says Jean Willson, segment manager, Wine, Spirits, & Craft Beverages at UPM Raflatac Americas. “Other breweries require a permanent adhesive for dry labeling, and we want to support the different applications as needed.”

    UPM Raflatac also presents its customers with the option of a down-gauging portfolio, which allows for greater manufacturing efficiencies. “Customers can go from 2.6 mil to 2.4 mil to 2.0 mil and then on down to ultra-thin clear materials like 1.2 mil Vanish and 0.92 mil Vanish,” adds Willson. “Down-gauged materials are also available for metalized films and white PP.”

    “Due to variety and smaller volumes, a lot of craft brewers start off using cut and stack because – from a startup cost standpoint – it is more affordable,” explains Johnson. “Pressure sensitive is becoming more popular, as well as digital printing. Digital is starting to infiltrate more into this space by offering more variety for all of the craft beers’ small volumes and SKUs.” 

    In order to stand out on the shelf, many craft brewers are relying on label design and shape. “Bright, vibrant colors or designs that play-off pop culture instantly draw customer interest,” says Obara. “In regards to shape, the rectangular label is quite popular, so utilizing a custom shape, such as a diamond shape or a cutout, can be a great distinguishing factor.”

    Big brands vs. craft beer
    In order to flesh out the characteristics of a successful craft beer label, it is important to note the difference between craft beers and those of major retailers. “Craft beer” generally refers to four types of brewers that manufacture less than six million barrels of beer per year: microbrewery, brewpub, contract brewing company and regional craft beer.

    Craft beer labels differentiate themselves from major beer vendors and other drink labels in several ways, and it is an industry that relies on visual appeal just as much as product quality.

    Constantia Flexibles’ Johnson describes craft beer as a different category from the rest of the beer market. Craft breweries are often unique to regions, styles and flavors that rely on various SKUs. These beers will also feature creative names, branding and experimental flavors to make their label stand out on shelf against the biggest names in the greater beer market.

    “In general, craft beer is a more specialty and freeform industry than the major players in the beer market,” explains Dion Label’s Obara. “The product is crafted in smaller batches, with more daring flavor combinations, and sold at a higher price point. The labels need to fit in with all of those elements to make the product look visually as good as it tastes. Graphically, labels often push the envelope using bold patterns, hand drawn or custom designed images and a material that embodies a high-end product such as a label with a smooth matte finish.”

    According to Kuehlmann, the label’s design is one of the biggest differentiators. “Craft beer labels have always been a bit more ‘fun’ in terms of creative designs and the use of specialty papers,” she says. “We are seeing even more now with specialty inks, coatings and other effects that make these labels really stand out.”

    Kuehlmann also cites a recent Nielsen “Craft Beer Category Design Audit,” which states that the appearance of a craft beer label goes a long way in the purchasing decision. The study says that 66% of craft beer buyers say that a beer’s package/label design is “very” or “extremely” important for getting them to notice it in the first place, and 60% say that a beer’s package/label design is “very” or “extremely” important in convincing them to give it a try.  Another 71% will experiment with a craft brand that features bold or interesting packaging.

    Weber Packaging’s Erbach adds that materials and speed serve as key differentiators, as well. “Craft beer isn’t produced at the quantity and speed of the major breweries. The big guys usually use glue-on paper labels applied using sophisticated equipment at high speeds. These labels generally loosen up when exposed to water – say in a cooler for a few hours – but they get the job done, and cheaply. Some companies are experimenting and starting to use film labels, but that is still the exception. Craft beer companies usually use laminated paper labels or film labels that are waterproof. They can be applied using modest equipment at slower speeds. This is more cost-effective for startup breweries and small brewers. And the labels look much better. Many are diecut to shapes, use clear film for effects or even use metallic materials to create highlights.”

    From 2012 to 2016, the number of breweries in the US has doubled. According to Mark Andy, microbreweries (production of 15,000 barrels or less per year) make up most of that growth. “These entrepreneurs are willing to take risks and see opportunity but also tend to rely heavily on partners to help guide them in ways to differentiate their product,” says Mark Andy’s Davis. “This is a paradigm shift from the major brewers who strictly define the look of the label and are shopping for the best price. So for the converter, the challenge is to remain flexible to support the changing designs and run sizes. Converters need to leverage their ability to add value to the label or packaging for the craft beer, otherwise they may be left behind as the brewer looks for another partner who can better serve them.”

    The digital advantage
    Craft beers are built on short run labels. Unlike Budweiser or Coors Light, a small craft brewery in Vermont will not run off millions of labels. The demand for customized short runs is particularly high for this industry.

    “Digital printing is the most popular print method for our craft beer customers,” says Dion Label’s Obara. “Craft breweries often brew in small batches and require short-run label jobs with multiple SKUs and a quick turnaround time. Dion Label Printing’s HP Indigo WS6800 presses are ideal for short run labels as they require less setup, keeping costs lower.”

    New customers will typically enter the marketplace printing digitally, but there is a scenario where they could move some of their work to flexo. If a beer gains popularity and turns into a year-round offering, some jobs might move to more traditional printing methods. In the case of Dion Label, the converter prides itself on the ability to offer both solutions, allowing its customers to grow and develop with them.

    Weber Packaging also relies on digital technology, printing many of its craft beer labels on HP Indigo presses. “Digital printing is more cost-effective for breweries doing small batch runs of less than 5,000 labels,” explains Erbach. “When you need more than 5,000, we usually use flexo label presses, especially if printing white ink on clear film for the no-label look.”

    According to Mark Andy, digital hybrid technology presents converters with an opportunity that was not available years ago. Label printers can utilize digital printers or presses for these short run jobs, but they can also turn to retrofit technologies or hybrid presses, especially to incorporate decorating and converting options. Historically, this has required the converter to invest in an offline finishing solution, adding steps to the label production workflow.

    “With the emergence of digital hybrid technology, bringing printing, decorating and converting into a single pass process is a fitting response to the market’s needs,” says Mark Andy’s Davis. “With digital hybrid technologies becoming more popular and available in different formats – from entry level to production level, and even as a retrofit to existing flexo solutions – converters now have the tools they need to best support these brewers.”

    Mark Andy is offering these solutions in the form of the Digital Series and Digital One presses. The Digital Series prints at speeds up to 240 fpm, combined with single pass inline converting. Meanwhile, Digital One is a compact solution designed for short run prime labels. It combines 4-color digital printing with inline converting and finishing. In addition, Digital One is available at a low investment level.

    “One of the big problems is that many craft beer companies are just starting up with limited funds,” adds Erbach. “Label and labeling systems can be a fairly large investment. The craft brewers have to find that sweet spot between value, their budget limitations and getting the most for their dollar. This is why digital labels can be a cost-effective way for them to get amazing labels without breaking the bank.”

    Trending upward
    Craft beer has become a cottage industry, and there is no sign of a slowdown. If anything, the market is expected to expand – great news for label converters.

    “We see continued growth in the craft beer industry based on growth percentages since 2015,” says Dion Label’s Obara. “A small number of craft breweries will inevitably grow rapidly enough that they are purchased by the larger players in the beer industry. However, based on demand for these unique specialty craft brews, we estimate those players being replaced with new and upcoming craft breweries.”

    According to Weber Packaging’s Erbach, many craft brands are taking advantage of white or bright colored inks on clear labels to make their images look  sharp against a dark beer bottle. “It is close to the effect you get when you have your label silk screened on a bottle but much cheaper,” he says.

    Obara adds that customers are favoring labels with a matte finish for a more natural yet high-end look. The labeling of beer cans is another trend that has impacted the craft beer market. Pressure sensitive labels and shrink sleeves for beer cans provide a lower cost option to pre-printed cans.

    Since craft brewers often experiment with product information and flavors, it is a lot easier to adjust a label rather than a printed can.

    Constantia Flexibles sees several trends emerging in the future. “There are certainly two trends that we have been seeing in craft beer labeling. The first is the use of pressure sensitive labels on bottles,” explains Johnson. “As more craft beer brands consider their future labeling needs, they are moving toward pressure sensitive. We have also seen some pressure sensitive use on a pre-designed can. The second trend we have noticed is shrink on cans. Both of these methods are great ways for craft beer suppliers to meet minimum order quantities for cans but still able to fill them with different styles.”

    Inland’s Kuehlmann does caution, however, that the market could lose share to other competitors since it has been booming for a while. “There are so many players,” she says. “This is and will continue to be a challenge especially as other markets, like cannabis, spirits, wine, and more, take share away from craft beer.”

    Despite the challenges, the future is still bright for craft beer labels and packaging. “I think we will continue to see more and more original designs and use of specialty inks, coatings and embellishments,” explains Kuehlmann. “It is a fun time to be a printer because there are a lot of really eye-catching things we can do with a label or package, and we are starting to see more and more adoption of these technologies by the brand owners.”
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