Andy Thomas: What’s driving growth at Labelexpo?
Labelexpo Europe was the biggest ever event, and all the leading manufacturers of both conventional and digital presses reported healthy sales. How are we to explain this against the backdrop of the Eurozone crisis and talk of a possible double dip recession?
Firstly, it is a fact that the label industry players which survived the 2008-10 recession actually came out stronger: leaner, with costs more under control and moving into value added areas which emphasize service over price. This led to the requirement to invest in new, more productive and value added machinery. It was the postponed investment of the last two years which was the chief driver of machinery and software sales at this show.
At the same time, brands are rebuilding stock levels – but with one crucial difference. They now want to build only the stock they will use in the next production cycle. So although order levels are rising, the number of labels required in each batch is going down; fewer labels, more often. This in turn is driving the requirement for more efficient MIS and for conventional presses and digital finishing lines which can change between jobs economically multiple times in a shift.
A key lesson of the last recession – and other recessions seen by L&L in its 34 year history – is that aggregate label demand remains relatively stable. It simply shifts between segments – typically into the ‘value’ segment dominated by retailers’ own brands, who are more likely to use basic paper labels and less likely to use higher value decorative technologies like foiling.
But even this is changing. All the private label brands are launching product lines targeted directly at up-market branded competitors – Tesco Finest is a great example. The demand is for better graphics and substrates which convey a superior product image, but all at a reduced cost per label compared to the branded alternatives. German value retailer Lidl, for example, has specified high quality rotary offset for its paper labels to create graphics which leap off the shelf.
Opportunities are always created at times of rapid change. Labelexpo showed the supplier community creating the hardware and software tools necessary for entrepreneurial converters to exploit these opportunities to the full.
Andy Thomas
Group managing editor
Labels & Labeling
