India is a growing market with rising disposable income amongst the highly populous middle class. The National Council of Applied Economic Research (NCAER) states that by 2025-26 the middle-class population in the country is estimated to reach 547 million people.
According to India Brand Equity Foundation (IBEF), India’s per capita GDP is expected to reach US$3,273 in 2023, up from US$1,983 in 2012. The main consumer spending rises are likely to occur in food, housing, consumer goods, transport and communication sectors.
IBEF also states that India’s GDP growth is estimated to have reached 6.6 percent in 2017-18 and is expected to grow to 7.3 percent in 2018-19. In April-July quarter of 2018, GDP grew by 8.2 percent.
According to Quora, the Indian retail industry accounts for over 10 percent of the country’s GDP and around 8 percent of employment. It is expected to grow to US$1.3 trillion by 2020, registering a CAGR of 9.7 percent between 2000 and 2020.
All these research reports indicate the strong growth of the Indian economy, which is stimulating similarly rapid growth of the country’s label industry.
Labelexpo shows higher-specification presses
Label presses being installed by local converters are increasingly sophisticated: often customized machines with value-adding features such as cold and hot foiling, embossing, Fresnel lens, anticounterfeiting features and so on.
This trend was clear at the recent Labelexpo India 2018 show, with numerous sales announced by not only European and American machine manufacturers but also the Indian suppliers. The growing label industry is paving the way for new entrants such as NBG, SnM Enterprises, UV Graphic Technologies and Hyden Packaging, amongst others, which showed presses for the first time at the exhibition.
Not only did they exhibit – they were also selling machines. SnM Enterprises sold two presses; UV Graphic sealed a deal and Hyden Packaging sold a slitter rewinder with Futec inspection camera on the last day of the show.
Multitec, an established Indian machine manufacturer, announced two press sales and finalized a deal with Domino to produce India’s first hybrid press – a clear indication of the rising sophistication of technology in the local market.
Other international suppliers such as Lombardi, Nilpeter and Omet, Indian companies Alliance Printech, PGI Technologies, Webtech Engineering, RK Label Printing Machinery, Arrow Digital and Moksha Engineering, and Chinese companies Zonten, Wanjie and Weigang all sold presses from the show floor at the event.
Ajay Mehta, managing director at SMI Coated Products, says: ‘Printers are opting for combination presses and are looking at digital technology as well. The industry is becoming very innovative and looking at sustainable solutions.’
The Indian label industry is increasingly investing in digital and UV inkjet technologies. Labelexpo India saw machinery running from several digital suppliers, including Monotech Systems, HP Indigo, Domino, Xeikon, Konica Minolta and others.
Monotech launched its Colornovo UV inkjet press at the show and announced five sales in four days. This is a huge step forward for the Indian label industry, where until just a few years ago local printers were shying away from digital investments.
Most printers are also investing in inspection equipment that was not commonly seen in label factories until recently. Stricter regulations by the government, especially in the pharmaceutical industry, and demand for defect-free and high-quality labels by brand owners has resulted in a surge in installations of sophisticated inspection systems.
Hemant Desai, director of operations, India, at Baldwin Vision Technology, says: ‘The label and packaging industry in India is growing at double-digit rates. There is a demand for print quality management, consistency and waste management. The Indian industry is at a stage of transition and customers are in the process of embracing new technologies and making new investments.’
Rising middle class
Ajay Mehta attributes local label industry growth to the rising middle class. ‘Our per capita consumption stands at about 0.35sqm. The Indian label industry is growing at a rate of about 15 percent per annum,’ he says. ‘There will be a period soon when the surge will be higher than 15 percent, and that’s what everyone is looking at. It’s not about catching up with Europe, America and China in terms of consumption. I anticipate to reach 3sqm or 4sqm in the next five to seven years, which is ten times the current consumption. The industry is poised to grow ten times in a short span of time.
‘Therefore, companies are moving towards more sophisticated machinery. Newer machines are capable of doing registration within 10 minutes, reducing wastage, and have shorter web paths. Pressure-sensitive labels are becoming more cost-effective. The Indian converter is also opening to investing in digital presses. We see growth being driven by end consumers and printers together.’
Ashish Chitale, partner at Mumbai-based label printer Coats & Pack, says: ‘Volume has increased but the price has always been an issue. We have started doing variable data printing also. Any value addition on labels gets a decent price and margin. As a result, we are now offering track and trace solutions, as well as redemption labels,’
Pankaj Bhardwaj, senior director and general manager South Asia for Avery Dennison, says: ‘The label industry in India has a strong correlation with GDP. PS penetration has improved, and more brands are moving to PS from other decoration technologies, although challenges remain in terms of costs. The segments that are growing include home care, e-commerce and general manufacturing, all sectors which reflect GDP growth.’
‘There are elements of industry 4.0 being adopted in the Indian label industry. We see changes towards productivity and efficiency. Therefore, there are more advanced machines are coming in with features to enable value-added decoration on labels. There is a play for digital as well. Compliance is increasing in India too which has led to the need for higher automation so we see more inspection and sophisticated equipment coming in,’ says Bhardwaj of the trends seen in the Indian market.
Sustainability is becoming key, with Avery Dennison launching a glassine liner waste recycling program in Australia, India and Thailand. ‘We already have several major brand owners engaged, and are trialing this service with Unilever, the first company to officially begin recycling its waste liner through our program.
We see great potential and a growing demand in India, which is driven by emerging government legislation and higher global sustainability targets being established by multinational brands,’ says Darren Milligan, senior marketing director, Label and Graphic Materials Group, South Asia Pacific and Sub-Saharan Africa at Avery Dennison. The company is also collaborating with The Himalaya Drug company for a similar project in India.
The label industry, therefore, is growing in tandem with the increasing quality demands of brand owners. Earlier this year at a conference, Barun Banerjee, head of packaging at Nestle South Asia, spoke about the need for sustainable and recyclable labels, green initiatives, new technology, as well as digital print and personalization, and the need of protecting products using anticounterfeiting features on labels.
Rahul Bhargava, vice president, packaging at Sun Pharma, said that more than 70 percent of recalls in the pharmaceutical industry globally occur due to defective labels, thus, stressing on the need of more inspection and automation. Reaction to these trends and requirements, it seems, is now beginning in earnest.
Brand owners, printers and suppliers had an opportunity for a meaningful discussion at Labelexpo India at the inaugural Brand Innovation Day. All parties engaged in discussing ways to take the Indian label industry forward and tap the growth potential.