Read later
  • 28 Sep 2022

Finat unites European industry at ELF 2022

Delegates gather for the Finat European Label Forum in Baveno, Italy

This year’s European Label Forum, the first in-person ELF event since the pandemic struck, covered the critical challenges faced by label converters in a post-lockdown world.

In June, 350 Finat members gathered in the beautiful lakeside setting of Baveno, Italy, for the first time since the Covid pandemic struck in 2020.
 
Finat managing director Jules Lejeune kicked off proceedings with a comprehensive survey of the last two years. The multiple impacts of Covid, strikes in the paper industry, chip shortages and the Ukraine War have all severely impacted the label industry supply chain. ‘The direct suppliers to the industry cannot get the raw materials they need from further up the supply chain, so this is not a problem that can be quickly fixed.’
 
Finat’s annual materials survey showed the European labels industry growing at a healthy 7 percent through 2021 — more than double the growth rate of 2020 — with non-paper rolls growing at more than 9 percent. Southern Europe saw the highest growth rates (9.5 percent, up 2.8 percent on 2020) and eastern Europe (9.6 percent, up an impressive 6.9 percent on 2020).
 
Finat’s annual Radar survey shows that European label converters posted average sales growth of 9.2 percent in 2021, just under double that of 2020, although there were significant regional differences. Eastern European converters saw sales growth drop by almost one-third in 2021 compared to 2020, while Scandinavian converters saw sales growth plummet from 9.2 percent to 5.3 percent. The most significant gains were posted by converters in central and southern Europe, followed by UK and Ireland.
 
The Radar report shows food and beverage sectors growing the fastest at more than 8 percent in 2021, closely followed by retail at 7.5 percent, transport and logistics at 6.5 percent, personal care at 5.9 percent, with pharma and household chemicals at just over 4 percent. Industrial chemicals and consumer durables posted respectable growth rates of 3.1 percent and 2.8 percent. The only sector to decline growth was, predictably, automotive, which shrank by 1.4 percent.
 
The Radar survey looked at capital equipment buying intentions and predicts that 33 percent of the Finat converter sample intend to buy digital presses in 2023, against 19 percent for this year. For conventional presses, a buying spike of 29 percent last year was reduced to 14 percent of the sample in 2023. 
 
Consumer trends
 
The Baveno ELF was packed with actionable data on consumer trends. Benjamin Punchard, global packaging director at Mintel, made the observation that the Covid pandemic has instilled a deep fear of contamination in consumers. For example, almost half of Italian consumers reported that they regularly disinfect shopping when they get home.
 
The most significant gains were posted by converters in Central and Southern Europe, followed by UK and Ireland
 
‘As on-the-go consumption returns, consumers will look for both convenience and hygiene, and we are already seeing snacking products released using anti-microbial coatings or incorporating anti-bacterial wipes,’ said Punchard.
 
Mintel’s research found consumers more focused on long-life products and limiting time spent in stores, prioritizing larger pack sizes and turning to ambient products.
 
Packaging sustainability is a key concern for consumers, with a marked preference for non-plastic containers. This has sparked innovations in the paper/board category with the launch of new technical papers for pouches, tubes, sachets and even paper bottles. 
 
The plastics industry has responded with more sustainable ocean-collected plastics or bottles and labels that incorporate more recycled material.
 
The flexible packaging industry also has a negative sustainability image among consumers, said Punchard, and has responded with the development of ‘technically recyclable’ materials, such as the
mono-material HDPE pouches used by Reckitt Benckiser for its dishwasher tablets, or with recyclable PP replacing a non-recyclable multilayer structure.
 
Matthias Vollherbst, CEO of German converter Vollherbst Druck, called on delegates to adopt sustainability ‘heart and soul.’
 
He described the sustainability initiatives implemented by Vollherbst over the last two years, including a complete switch to renewable energy, a 22 percent reduction in water usage, eliminating paper from the ordering process and reducing materials waste by 15 percent. The company is a beta tester for the Ecoleaf metallization process, which eliminates foil waste and promotes wash-off adhesives to remove adhesive residue from reusable glass containers. Vollherbst has adopted a zero-to landfill policy for all its consumables wastes, focusing strongly on liner collection and recycling.
 
All bases covered
 
The Baveno ELF covered a wide range of topics of immediate interest to label converters. Panel sessions discussed the future of family-owned converter businesses and the smaller independent converter in the face of rapid industry consolidation. There were Q+A sessions with converting groups and materials suppliers looking at how the industry can become more resilient in the face of chaotic supply chain conditions (these will be covered in more detail in the next edition of L&L).
 
One often overlooked factor in building a resilient industry is company culture.
 
Digital label industry veteran Alon Bar-Shany detailed how, at Indigo, he had built a management culture that maintained the ‘insurgent’ vision of the founder as the company expanded after the HP acquisition.
 
Bar-Shany explained that as companies grow, they encounter a set of forces that tend to push them off course. The founder’s impulse starts to wane, and the company moves from an insurgent to a ‘struggling bureaucracy.’ A robust company culture — defined by Bar-Shany as ‘the stories employees tell about the management/CEO over the water cooler’ — helps defy these trends and maintain
the founder’s insurgency impulse.
 
Founder impulses typically cluster around three elements: an obsession with the front line, an insurgent mindset, and a bias for action, along with a strong cash focus and aversion to bureaucracy.
 
Bar-Shany applied this model to the Indigo label team’s development of the HP Indigo 20000 press at a time when HP wanted to focus more on the commercial print market.
 
This required an ‘insurgent’ belief in a potential new market adjacent to labels, accepting some risk of cannibalizing existing sales but mitigating this by strongly supporting existing customers. The end result was opening up a new market sector in digital flexible packaging.
 
Big data, recruitment, supply chains
 
The concept of Big Data was examined in a session that included Dutch converter Geostick - which under Tom Schouten’s youthful leadership has pushed the boundaries in automation and data handling - and Guido Iannone, who is driving automation initiatives at global converting powerhouse All4Labels.
 
MPS’ Marius van Lith explained how automation, digitization and Big Data address the key productivity challenges facing label converters today: increasingly scarce operator skills, increasing pressures on price, smaller order sizes, under-utilization of capital assets, and a push toward sustainability.
 
The essential building blocks include Cloud-based connectivity between machines, factory-wide MIS, and the human/machine interface. Each machine needs to be fitted with real-time performance monitoring, and machine learning algorithms advise managers how to tune and improve overall performance.
 
To help the audience visualize Big Data in practice, Tom Schouten showed a live demo of a control panel representing real-time data analysis of press production data.
 
 
Another key issue for label converters is recruitment. Professor Dr Dirk Burth from the University of Applied Sciences, Munich, presented the results of a packaging industry recruitment survey asking respondents about their ideal employer.
 
Opportunities for professional development topped respondents’ ideal job requirements, coming well above pay and conditions. Half of all respondents favored working for a medium-sized or start-up company and most favored an urban location accessible by bike or public transport and with dining facilities in the area.
 
Other important requirements included fair pay with a ‘clearly regulated and transparent salary system,’ flexible working hours, home working, job security, work-life balance, realistic objectives and professional appreciation.
 
Bram Desmet, adjunct professor at the Vlerick Business School, covered how converters and suppliers respond to supply chain disruptions. Desmet said supply chain management is based around balancing the three corners of a triangle – service, working capital and operational costs. So, for example, decreasing safety stocks reduces the amount of tied-up cash but hits service levels and increases operational costs.
 
With label businesses faced with a shortage of raw material inventory, problems delivering to customers and firefighting costs to close the service gap, Desmet provided potential strategies to restore the balance based on optimizing ROCE (return on capital employed) and pro-active planning.

ABOUT THE AUTHOR

Andy Thomas is strategic director of Labels & Labeling.

See author’s profile »