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    Narrow Web Europe

    Good news in unexpected corners of Europe

    ...

    Good news in unexpected corners of Europe
    Related CONTENT
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    John Penhallow01.26.18
    The fourth quarter returns for 2017 are not in yet, but Europe’s economy is at last looking up, with 2.2% year-on-year GDP growth for the Euro area (running neck-and-neck with the US), and industrial production (a better indicator for label demand) up a healthy 3.7%. Within the Euro area, Spain and, believe it or not, France top the polls, but they are knocked into a cocked hat by the Czech Republic and Poland, both with GDP growth just a whisker below 5% and industrial production growing at over 10% annually. This healthy growth across Europe is reflected in FINAT’s statistics, which show good development across the board, particularly for food labels and for variable information printing. FINAT figures also confirm the growth is being led by Eastern European countries, especially Hungary, Poland and Romania.

    Separatism
    If there is one thing business people all over the world dislike, it is uncertainty. And while Europe, like the US, has had a fairly good year economically, clouds of uncertainty are gathering around two of its most vibrant regions. One is the United Kingdom, where the Brexit negotiations are stumbling on toward the cliff-edge, which is March 29, 2019. That is the date on which – if there is no settlement with Britain’s European partners – the UK will crash out of the European Union, and the tailback of trucks waiting for customs clearance at Dover and Calais will stretch back to London and Paris, respectively. Everybody keeps saying “wiser counsels will prevail,” but we know from experience that it’s not always true.

    At a FINAT meeting shortly before the Brexit referendum in 2016, your correspondent spoke to an English lady closely associated with the label industry. “What,” he asked, “About Britain’s land frontier in the event of a Brexit?” She replied, “But we’re an island, we don’t have a land frontier.” One referendum and two years later, that forgotten land frontier (the one between Northern Ireland and the Irish Republic) was the most contentious issue at the latest round of talks in Brussels. A “hard” Brexit (with Britain outside the European Customs Union) would mean a “hard” border (in effect, a wall) between the two parts of Ireland. And walls, despite what some people think, are generally bad news for the economy. Not everyone in the British label industry is worried about Brexit, however. Tony Bell of finishing equipment manufacturer AB Graphic reckons that with the falling value of the pound, “There has never been a better time to buy British,” and Ian Kendall of UK’s Reflex Labels went on record as saying his company is, “Gearing up to make the most of Brexit,” and is “well placed to mitigate raw material cost increases and maximize on the wealth of new global opportunities that will present themselves once the UK is outside of the EU.”

    Not everyone is as sanguine. Forty years of economic integration have encouraged the development of complex intra-European supply chains. The absence of frontiers has encouraged the just-in-time inventories, which the label and packaging industries now find normal. If we look at label inks, UK producer Paragon supplies a significant part of the UK market and is a major exporter. So far, so good. But ink’s raw materials are sourced from many countries and are in Europe subject to the unbelievably complex REACH regulations. Will ink manufacturers soon have to make different inks for UK customers? Think of the expense, and the paperwork! Then there’s labelstock: Britain has just two PS coating plants, one each for Avery Dennison and UPM Raflatac. Herma, a major player, has none, and supplies the UK from Germany. All of Europe’s labelstock suppliers trade papers, films and finished rollstock without needing to worry about frontiers. If the Brexit talks fail, all this will change. The main sufferer will clearly be the UK, but with serious collateral damage particularly to Ireland, there will also be damage to the other 27 countries in the EU.

    A Spaniard in the works
    The other European region shaken by political uncertainty is Catalonia, which is the economic powerhouse of Spain. HP Indigo’s European HQ is near Barcelona, labelstock producer Manter is in Northern Catalonia, and press manufacturers Rotatek and Midi Maquinaria are both based in the province, which also produces nearly one-third of Spain’s PS labels. Independence candidates have formed the largest grouping after the December 2017 elections. Since the turmoil began in October, 1300 Catalan companies have moved their headquarters outside the province. Right now, the smart money is being placed on a negotiated settlement, probably giving Catalans greater autonomy within a united Spain. But in Spain, as in Britain, reason may not prevail.

    The beer also rises
    As total beer consumption falls, craft beers rise. Following the trend established in North America, Europe is seeing a massive rise in artisan brewers. Brewing beer in your bath is nothing new (thirsty Europeans in Saudi Arabia have been doing it for decades, although for a different reason), but in Europe the trend seems to be a reaction to the concentration among big international brewers. With just three giants (InBev, Heineken and Carlsberg) now controlling the top 90% of world beer production, there is plenty of room at the bottom for bathtub brewers. In France, the National Association of Independent Brewers puts the number of French craft brasseurs in November 2017 at 1250, up from just 600 a year ago, with over 10,000 different brands – more than in Belgium, traditionally the home of exotic and unusual brews. From Britain, French brewers have adopted the mode of “Brewpubs,” where connoisseurs can sample beers brewed on the premises. Although France’s supermarkets offer artisanal beers, the main outlets are still the hotel, bar and restaurant sector. All of this means lots and lots of short run labels, and short runs in turn call for digital label presses. The big three brewers have not been slow to react. A generation ago they vied with each other in buying up and closing down every small brewery in sight. Now they are back on the acquisition trail, but to “invigorate” the specialty beer sector. It has escaped the mainstream media, for example, that Heineken is now the proud owner of Mort Subite and will be continuing production of this extra-strong Belgian beer (yes, the beer’s name does mean “sudden death,” but don’t let that put you off – it’s good stuff). Not to be outdone, AB Inbev has acquired two up-and-coming UK craft brewers, Camden Town and London Fields, and it is preparing to launch a greenfield micro-brewery in Lithuania (bet you didn’t know that).

    This trend may be disturbing for lovers of “true” artisanal beers, but label converters with digital presses are laughing all the way to the bank. And they are not the only ones: the big names of the bottling and labeling world are also busy designing equipment with fast and flexible changeover technology. Market leader Krones, based in Germany, now offers bottling and labeling lines to accommodate almost any shape of bottle, and can apply either wet glue or PS labels or even a combination of both.

    Mahou San Miguel claims to produce 70% of all Spain’s beer but found its equipment was not suited to filling small batches. It called in Krones to help it deal with its low output beers. According to Franz Scheck of Krones Iberica, “The company was spoilt by its high-performance lines and was not used to frequent changeovers either. This new line, which we installed, guarantees maximized bottling quality for small batches as well, while at the same time reducing product losses and upgrading the company’s innovative vigor.”

    What could be simpler than a cheese label?
    Anyone who thinks marketing dairy products internationally is easy probably hasn’t tried it. Both the European Union and the United States levy huge import tariffs (34% on average for the EU, about half that for the US) and then find lots of other ways to protect their domestic dairy industry. Different labeling regulations are one of them. Because cheeses can (rarely) carry nasties like salmonella, labeling requires traceability, not just of the cheese but also of all the ingredients, right back to the cow, goat or whatever.

    What’s more, several countries insist on their own labeling regulations – a bigger typeface for labels on cheese going to South Africa, for instance. Export cheese to the United States and you’re faced with a mountain of paperwork that can only be climbed with help from a dedicated agency. And in case you suspect the US of being unnecessarily bureaucratic, try this delightful little extract from EU regulations for dairy products:

    In addition to the complying with requirements of Regulation (EU) 1169/2011 on the provision of food information to consumers, Chapter IV of Annex III, Section IX of Regulation 853/2004 requires that in the case of products made with raw milk, whose manufacturing process does not include any heat treatment or any physical or chemical treatment, the labeling must clearly show the words “made with raw milk.” Raw milk is defined as milk produced by the secretion of the mammary gland of farmed animals…

    Well, that’s all for this month. It’s time for your correspondent to take a coffee break, with just a few drops of a secretion from his favorite cow.
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