Although the European labels industry has returned to pre-crisis growth levels, converters must plan for continued innovation in the face of rising materials prices and generational change.
In 2011 the European labels industry continued its recovery from the worst days of the global economic recession. But if converters do not keep up investment levels and find new, value added niche markets, longer term profitability levels could well be under threat as raw material costs continue to rise and retailers engage in price wars.
In his farewell speech, outgoing Finat president Andrea Vimercati summed up the situation very well. After warning that the European labels industry is failing to invest enough in training, ‘human capital is as important as investment in machinery’, he continued; ‘if label converters are to survive, they need to organize their operations in ways which encourage creativity and shorten the innovation lifecycle.’ Adding stress to this process are the challenges facing family-run businesses, which account for the great majority of European converters. ‘The first generation was always the innovator. How to deal with continuing change is the challenge of their heirs, who need a new vision and resources. They need to embrace the complexity of change,’ said Vimercati.
According to FINAT figures, pressure-sensitive label demand in 2010 finally returned to pre-crisis levels, showing an 11.4 percent increase over 2009 and three percent increase over the 2007, the year the crisis started. This ‘solid recovery’ affected both paper and film rolls. Paper demand grew by nine percent, but PS film continued to outstrip paper, growing by an impressive 15.3 percent over 2009.
Since 2000, PS film consumption has grown by 50 percent and film now accounts for over 20 percent of European PS label consumption. Southern Europe remains some way behind in its use of filmic PS labels, at around 30 percent of North and Central European levels. Paper labels represent 80 percent of the PS market in the South against 70 percent in North and Central Europe.
Geographically, demand in 2010 was strongest in East and Southern Europe, with Turkey, Russia, and Bulgaria the star performers with over 20 percent growth. This compared with an average four and a half to eight and a half percent growth in the developed North and Western markets, with Germany alone showing double digit growth. ‘Demand for PS labelstocks in Eastern Europe has more than doubled in 10 years, while regions in the North and West have remained stagnant over the same period,’ noted Finat secretary Jules Lejeune. Last year Eastern Europe crossed the one billion sq m benchmark for the first time. But this represents a per capita consumption of only 3.3sq m against 15-18 percent in North and West Europe, so there remains huge growth potential. ‘It seems clear that in North and West Europe demand has reached maturity, although German, Austria, Sweden and Benelux have increased per capita consumption,’ concluded Lejeune.