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Avery Dennison expands in India

With a new investment of USD 34 million, Avery Dennison is setting up a state-of-the-art manufacturing plant in Greater Noida, Uttar Pradesh (UP) as part of its strategy to achieve sustainable business growth and serve its key markets more efficiently.

With a new investment of USD 34 million, Avery Dennison is setting up a state-of-the-art manufacturing plant in Greater Noida, Uttar Pradesh (UP) as part of its strategy to achieve sustainable business growth and serve its key markets more efficiently. With this latest cash injection, Avery Dennison has now invested more than USD 136 million overall in India.

The new facility will enable the manufacturing of new innovative products, improved quality and faster service to customers, according to Pankaj Bhardwaj, vice president and general manager, Avery Dennison India. ‘We are delighted to announce a new manufacturing plant in Uttar Pradesh, a key part of our overall strategy to keep expanding the market and enhancing our ability to better serve our customers,’ he says. ‘This expansion also reaffirms our commitment towards our stakeholders and in developing state-of-the-art products and services while embracing innovation and future technologies. This step also further strengthens our belief in the potential India holds and towards our people to grow the business sustainably.’

According to Mahesh Pathak, senior operations director, SAPSSA, Avery Dennison Labels & Packaging Materials, the plant will be ‘extremely energy efficient in line with our 2025 goals’.

‘We are putting efforts towards building a green infrastructure and a smart factory that will include an energy management system, a RFID-linked inventory management system, and a plethora of new technologies and best practices built in,’ he continues. ‘Finishing equipment will have a high level of automation and link with Industry 4.0, including robotics. The plant will also house the fastest coater in the region.’ 

Bhardwaj adds: ‘We are committed to making India a very competitive production unit and have a compelling proposition for exports. We are already exporting to ASEAN, Africa, Australia and New Zealand. We can proudly say we manufacture in India almost 95 percent of products sold in the local label industry, and this will rise further thanks to the new plant. This investment will help the local industry become more self-sufficient.’

Spread over 12 acres and located in the Yamuna Expressway Industrial Development Authority (YEIDA), the built-up area will be more than 100,000 sq ft. Equipped with a state-of-the-art coating and lamination line, the new plant will produce technicallyadvanced pressure-sensitive materials for labeling and packaging. 

Anil Sharma, vice president and general manager, LGM, Avery Dennison APAC, said: ‘India is one of our key markets in the Asia Pacific region. There is no doubt that it holds immense potential for us to further grow our business and cater to customer needs. This investment is proof of our confidence in this region and of its importance to our global business strategy. The new facility will enhance Avery Dennison’s capability to grow the market for labels and packaging materials in India in close collaboration with our customers.’

Market trends 
According to Bhardwaj, the pandemic has accelerated some existing trends and also created new ones. ‘Accelerations include anything connected to health and hygiene. These sectors remain promising. New categories in food and in-home consumption are growing. The alcohol segment is being impacted because the hospitality sector is not doing well. 

‘There have been strong changes in some market segments. Modern retail has not performed well, but “mom and pop” companies are doing extremely well. They seem to have quickly adapted to new technology and have been serving customers efficiently. Previously, we never saw kirana stores accepting orders on WhatsApp, but that fundamentally changed during this period. E-commerce has strongly accelerated, especially in categories where it was not so dominant, such as groceries. We actually expected it to happen in five years, but the pandemic made it a reality in six months.

‘Home consumption-related appliances and automotive segments have also done well. The apparel market is rebounding too. We expected it to remain affected for a long time because it is discretionary spending, but the recovery growth in this segment has surprised us.

‘In fact, rural consumption has gone up too, primarily because agriculture has done phenomenally well. Additionally, rural areas have shown great resilience against the pandemic.’

Another segment that exceeded expectation was smart labels. According to Bhardwaj, sales of smart labels went up by five or six times in 2020 compared to 2019. ‘Converters who started early and understood the market as well as the technology could scale up effectively during this time,’ he says. ‘But those who did not have the knowledge are enquiring now. They are realizing the importance of efficient management of materials and the value that RFID brings to the table. The number of serious enquiries has gone up. I think it has been a tipping point for people realizing the importance of RFID as a technology.’

Avery Dennison has also seen more customers enquiring about products with recycled content. ‘There is a latent consumer expectation that companies are going to behave in a sustainable fashion as far as packaging is concerned,’ says Bhardwaj. ‘This is well recognized. I won’t say that Covid has helped much in that direction because the use of single-use plastics has only gone up, but the need to find a more sustainable solution is there. The need is getting stronger by the day.’

In response to this demand, Avery Dennison has launched a series of sustainable products during the pandemic. These products are either thinner or have recycled content or are responsibly sourced. ‘Our sales of these products have been much better than in 2019. There is a clear and gradual shift in the portfolio towards more sustainable products. We believe it is just the beginning of a long journey,’ says Bhardwaj. 

Avery Dennison continues to work with brand owners to offer sustainable label products. ‘We are working with them to enable better recycling. We are trying to find ways to connect with more brand owners and finding ways to recycle or down cycle, while constantly promoting the message of recycling and ensuring they are a part of the sustainability discussion,’ says Bhardwaj. 

Avery Dennison India has partnered with more than 20 brand owners and converters for its liner and matrix recycling programs. ‘We are, however, not fulfilling our aspirations,’ he continues. ‘We recycled more than 200 metric tons in 2020 which is more than we did in 2019, but we could have done more. Covid did not help because the logistics were significantly impacted. We are now refreshing this program to make it more compelling and easier to use for converters and end users. The program needs industry promotion, adoption, and continuous discussions. We hope to increase recycling volume multi-fold.’

Bhardwaj says that one of the biggest concerns in the Indian market is the penetration of flexible packaging in the ecosystem. ‘We, as a country, use humongous amounts of flexible packaging which are not being recycled on a large scale. Segments like dairy are not using flexible packaging in most parts of the world. But for us, almost all milk is packaged in flexibles. Although, refill packs have been selling more compared to previously.’

Pandemic impact 
Turning to the overall health of the industry, Bhardwaj says that many Indian converters were seemingly not in the best financial situation even before the pandemic. So it was not a surprise to see some pushed to the brink. However, Indian entrepreneurs’ resilience is underestimated, he believes: ‘The way small converters managed was marvelous. We have thankfully not seen casualties and people are coming back on track. A lot of them have returned to pre-Covid volumes. In general, the industry has managed its financial health very well. A lot of people used this time to look at their businesses and understand their strengths and weaknesses.’

‘Nonetheless, it is true that the industry has a lot more to do,’ he concludes. ‘The transition has to happen from us being a very commoditized label industry, to becoming a functional value-added label industry. And that option is being offered to converters by brand owners because the consumer is asking for functional and value-added products. We are at the cusp of that transition of improving the industry and its attractiveness. If the industry continues to hold the right financial prudence, we will only become stronger.’