FINAT cautious on European self-adhesive label market

In a follow-up on the recent FINAT congress, which took place in Munich on June 12-15, Jules Lejeune, managing director at FINAT, has presented an overview of the label market.

In his market overview, Lejeune said demand for self-adhesive label materials in Europe in 2012 amounted to 5.78 billion sq m, a growth of 1.7 percent compared to 2011. This consolidated self-adhesive’s position as the dominant labeling technology in Europe with a market share of 45 percent compared to wet-glue (40 percent), sleeving (seven percent), in-mold (three percent) and other technologies (five percent).

‘The linear growth pattern of around five percent year after year that lasted until the middle of the last decade has disappeared,' Lejeune said. ‘Evidently the label industry did not escape the impact of the global financial and economic crises. But not only that, as with consumption levels reaching maturity in Western Europe, self-adhesive demand has become more sensitive to the volatility of consumer behavior.

‘But there are two “counter forces”: innovations in the filmic label domain and the on-going evolution of Eastern Europe continue to offer significant upward potential.

He added that 2012 was an important benchmark for the European self-adhesive label industry.

‘Last year, total labelstock consumption of 5.78 billion sq m doubled the estimated 2.84 billion published by EPSMA for 1996, the base year of our data set. However, it took the industry about seven years to reach the halfway mark of this journey, and from 2003 onwards it took almost 10 years to add the other half of the overall increase. This clearly illustrates the decelerating growth pace of the industry.

‘The slowdown in year-by-year growth rates between mid-2005 and mid-2008 was mitigated by the higher, but also descending, growth rates for filmic label materials. From mid-2008 onwards, the industry trend is severely disturbed by the global crises, with a dramatic downturn in 2008-2009 being corrected by an excessive upswing in 2009-2010 and the double dip in 2010-2011.

‘Signs of modest recovery in the first half of 2012 have been slowed down by signs of a prolonged recession in several European countries as part of government measures to balance budgets and restore confidence in the Euro.’

Global perspective

According to data from Labels and Labeling Consultancy, global label demand, covering all technologies, amounts to between 40 and 45 billion sq m, with about 30 percent of this volume consumed in Europe.

When the emerging markets are included, globally wet glue labels hold a majority share of 46 percent, followed by self-adhesive, sleeving, wrap-around and in-mold.

Lejeune said: ‘Although average per capita consumption of self-adhesive labels in North America with around 15 sq m is similar to consumption levels in the mature markets of Western Europe, there is huge variety of per capita consumption levels across Europe, ranging from three to four sq m in eastern and south-east Europe, to around 20 sq m in some countries in north-west Europe, with an overall average across Europe of six to eight sq m.

‘This indicates a significant upward potential for the label industry in the wider “Eurovision Europe”.

‘Against this background it should be no surprise that the perspective of market developments differs significantly at opposite ends of the European periphery.

‘Against the marginal evolution of labelstock demand in the other aggregated regions of Europe, Eastern European markets consumed 11.4 percent more self-adhesive label materials than in the preceding year. Total labelstock demand recorded in the 12 Eastern European countries with 325 million inhabitants amounted to 1.15 billion sq m, and the region is now approaching southern Europe, covering 280 inhabitants across six Mediterranean countries with a demand of 1.28 billion sq m as the second largest self-adhesive labeling region in Europe.’

Both trail central Europe, covering six countries and 125 million inhabitants, with a demand of 2.27 billion sq m, and within the top five self-adhesive label consuming countries in Europe, Germany and the UK consolidated their leading positions ahead of France, Italy and Spain.

Paper versus filmic labelstock

On balance, demand for self-adhesive label materials in Europe in 2012 added volume of almost 100 million sq m to its business in 2011. About 90 percent of this volume was generated by net increases in demand for roll label materials. Of this net growth, a majority of 48 million sq m was achieved by the net increase in demand for filmic roll label materials, ahead of the 41 million sq m net increase in paper rolls demand in 2012.

‘Interestingly, this overall net increase was entirely attributed to the growing demand from Eastern Europe. In the case of paper-based roll label demand, the net increase in demand of almost 80 million sq m in the 12 Eastern European countries offset the net decrease in the other regions by a factor of two.

‘In the case of non-paper roll label materials, demand growth in Eastern Europe represented almost 75 percent of the net increase in demand across Europe.’

Outlook

During the first quarter of 2013, self-adhesive labelstock demand increased by a modest 0.4 percent compared to the first quarter of 2012, and Lejeune said: ‘Although this positive result prevented the industry from dropping back into a European “label recession”, it continued the downward trend in annualized quarterly growth rates since the third quarter of 2012.

‘As in 2012, demand for filmic roll label materials and aggregate demand for self-adhesive label materials in Eastern Europe continued their role as driving force of labelstock demand, a role which they have played for the past 10 years.’

He added: ‘Despite the prudent signs of slow recovery and significantly improved financial conditions, the countries within the Eurozone continued their recession at the start of the year with their sixth consecutive quarter of output decline. Even Europe’s export engine, Germany, is facing a slowdown.’