The label industry has undergone a quite dramatic change in recent years, becoming ever more global in its operations – whether it’s the materials or technology suppliers, or the major label converters. Following new global opportunities, new markets and GDP growth countries and regions has enabled the label industry to continue to achieve global growth of around 4 to 6 percent: something it has been able to achieve for a great many years.
Not all countries and markets have been able to benefit from this evolving global label growth. Most western European countries and the United States are forecast to drop to 1 to 2 percent GDP growth per annum over the next five years. Even that may be optimistic, as the EU has recently downgraded its forward growth forecasts for the main European economies to little more than 1 percent or less, while eastern Europe, which has fared much better over the past 10 to 15 years, appears to be looking at forward growth of only 2 to 3 percent.
There seems little doubt that trading conditions for many label converters in western European countries and in North America over the next few years will not be easy. Pressures on brands and retailers to reduce packaging, cut back on the use of plastics and look at new ways of marketing and selling more environmentally friendly produce (possibly without labels) will bring new challenges for many in the world of labels. Ongoing political instability in Europe and between China and the United States doesn’t help either.
Fortunately, while the developed world economies have slowed, new global markets for labels have emerged, leading the major labelstock and press technology suppliers to establish manufacturing facilities outside of their traditional key homes in North America and western Europe. In short, the label industry today is a totally global business which tends to follow the global brands as they expand into emerging countries and new markets.
So where are the ongoing and new label markets of tomorrow? Study of GDP growth forecasts by country/region over the next five years make for interesting reading. Six out of the forecast top ten growth markets by 2024 are all in Africa, with Ghana, South Sudan, Rwanda and Ethiopia all expected to achieve GDP growth rates of 8 or 9 percent in 2019. Senegal in excess of 10 percent. Countries such as Uganda, Kenya and Egypt in turn are all looking at growth of around 6 percent. Building a sophisticated label industry in all these countries will create its own challenges and undoubtedly take time.
Also in the higher top ten to twenty GDP growth markets over the next five years are many of the key Asian countries: India and Bangladesh, Philippines and Vietnam with forecast growth of around 7 percent, Indonesia and China slightly lower at just over 5 percent, and Malaysia at just under 5 percent – but all still considered as good growth markets. Some of the big label converter groups have already established plants in some of these countries and regions. Looking ahead, India is expected to become the world’s leading economy within a few years, followed by China.
Perhaps one of the key challenges for the traditional label technology suppliers is that China and India are now fast developing their own label technology and increasingly competing against western manufacturers in their home countries, and already having a substantial presence at Labelexpo Europe. China has also been investing substantially in Africa and will likely see the region as a natural territory to expand their label technology and businesses.
As for Latin America, activity slowed in a number of key countries in the early part of 2019, notably in Brazil, Mexico, Argentina and Chile, but with modest recoveries expected in most of these for 2020. Trade and technology tensions between the United States and Mexico have not helped that country’s label industry.
So what can we say about the overall outlook for the global label industry? Does it still have a good future? What kind of overall growth can be expected up to 2024?
IMF forecasts for the year ahead point to a weaker than anticipated global activity investment, and demand for consumer durables is expected to be subdued. Projections for 2020 therefore show global growth at just 3.5 percent. Having said that, the label industry has largely grown at between 1 or 2 percent above GDP worldwide for many years, so the long term label industry trend of global growth of somewhere between 4 and 6 percent still seems achievable. But that is likely to be largely attained in the world’s biggest growth markets in Asia and Africa.
The developed label markets of Europe and North America will undoubtedly have their own challenges to remain competitive, with investment particularly targeted at efficiency, productivity, workflow automation, waste reduction and environmental performance. The industry has had its challenges before, but it is probably the most adaptable and technology sophisticated of all the print sectors. It may become more streamlined, more automated and more environmentally conscious – but will undoubtedly survive and continue to grow.