The pressure’s on labels - Andy Mcourt

Labels and short run packaging are being seen as some kind of El Dorado by digital equipment manufacturers, as click rates in the cut-sheet digital sector go even lower. There is unquestionably an over-supply of available digital label presses in a market where one or two players dominate and demand has yet to even remotely reach A3 cut-sheet proportions.

The battle line in the war of digital label production appears to be between electrophotographic means of production versus inkjet. There is perhaps a third front, in hybrid machines from mainstream flexo press makers who remain agnostic towards digital processes so long as they support the high-end results of multi-unit narrow web converting. Gidue recently launched it’s M5 ‘digital flexo’ press which automates just about everything except plate cylinder changes. Gidue uses the term ‘digital’ to describe the automation processes, not the way ink is laid down, which is still via photopolymer plates. However, the M5 claims job changes as fast if not faster than true digital and gone are the days of changing ink pans and aniloxes for special colours – all colour calculations are made digitally in the Esko prepress software which works in harmony with the expanded seven-colour Flint ink set.

The Gidue example shows how traditional press manufacturers are keeping the faith with flexo and using ‘digital’ as a marketing term rather than true plateless digital where variable data is possible. Elsewhere in this issue, Print21 European correspondent, Nessan Cleary, takes a deep dive into the latest available technology, so this article looks more at the market, its roadmap and aspirations.

How big is the market?

Market size estimates and predictions vary wildly for the label sector. This is partially due to the fragmented nature of the industry, where producers are fiercely protective of their contracts and some labeling is conducted as part of the manufac-turing process, in-mould and shrink sleeve labels for example. However, one source that has proved very reliable is Mike Fairley, founder of the Labels & Labelling Expos and director of strategic development with the London-based Tarsus Group plc. Fairley has authoured many books on labeling and conducted deep research over a 35-year career.

His 2011 estimate of the size of the global label market at sales value was USD$73 billion. Given CAGR (compound annualized growth rate) from several sources is between 4 and 7 percent; taking the more conservative figure this would mean that in 2015, the global sales of labels will be around US$85 billion (AUD $97 billion at current exchange rates).

By drilling down to the actual suppliers of label converting stock such as Avery Dennison and UPM Raflaltac, the Fairley research estimates that approximately 42 billion sqm of labelstock is converted by around 30,000 converting businesses worldwide.

The driving factor for the strong growth in labels is the world’s increasing demand for packaged foods, products and beverages. Even fresh produce can carry small labels on the mango, apple or banana skin. It comes as no surprise that the furnace of this growth is in the Asian markets of China and surrounds. India, for example, has a very low per capita consumption of labels and yet a burgeoning middle class developing with consumer tastes akin to developed countries. The US annual label consumption is around 15-16sqm/pa; Scandinavia 17-18 sqm/pa. Europe is at 8 sqm/pa but China has yet to reach just 2 sqm/pa – with a market potential of 1.3 billion people! India uses even less than one sqm/pa of labelstock per capita and presents 1.2 billion potential consumers.

Mind-boggling figures of this magnitude should really drive home the opportunities presented to Australian packaged goods and labeling companies by the Free Trade Agreements announced last month, for both exports and joint manufac-turing ventures in those countries. As market-stall retailing changes and becomes an organized ‘chain’ business in these emerging countries; so packaged food and goods will rise, along with the labels that brand them.

On the topic of branding, the highest proportion of labels printed in the world today are for private-label brands; WalMart, Aldi, Tesco, Coles, Woollies and so on.

Digital’s place in labels

What is digital’s place in this exciting boom market of label production? In truth, while digital has garnered an immense amount of publicity and does indeed show a lot of promise for the future, particularly in developed economies like Australia, it still accounts for only about 4 percent of global label production. Doubtless this will grow because there are more digital label presses being sold into markets. Between 20 and 25 percent of all new label presses are digital, but production volumes are lower albeit with higher value-per-label.

Surprisingly, over 40 percent of the world’s printed labels are of the wet glue-applied variety, not self-adhesive, and these are typically printed by the millions on gravure or flexo presses running at great speed – not the realm of digital at all.

Best estimates put the global installed base of narrow web digital label presses at around 2,500 for 2014 ( out of total label presses installed of about 29,000), with HP Indigo claiming a whopping 68 percent of these. Xeikon, with dry toner electrophotographic (EP) engines, claims around 10 percent with the remainder being inkjet and minor EP players. EFI Jetrion currently leads the installed base of inkjet presses but most of these are in ‘secondary’ label sites such as electrical tagging; safety labeling; manufacturer’s statutory markings and so on.

Inkjet digitally printed labels are set to grow but make no mistake about it – EP liquid and dry toner presses are not going away; they still control the majority of digitally-printed labels and will do for some years to come. Long before the HP Indigo ws6000- series, was the pre-HP Indigo Omnius, so Indigo has effectively been in digital labels for about 15 years. Most colour inkjet label presses have been around for less than three.

All the same, inkjet’s growth in digital label production will be on a strong upward trajectory. The arguments in favour are all too compelling; faster, lower cost-per-label, use of unprimed stocks, aqueous UV cured inks, white ink, wider web widths and so on. Screen’s Truepress Jet L350UV, distributed by Jet Technologies here, ticks all of these boxes and also solves the converting side with the just-announced JetConverter. This line even includes a flexo station, foiling, semi rotary die-cutting, twin rewind, matrix stripping – it’s a converter’s dream in a mini 50 metre per minute package and can work inline or offline.

At the lower end of digital, there are many EP and inkjet ‘desktop’ machines that are intended to print on pre-cut stocks and offer little in the way of converting Memjet alone lists twelve label OEM partners, all offering similar engines at 9 or 18 metres per minute and not much converting with the exception of ColorDyne.

A word on Rapid

There used to be another Memjet OEM – Australia’s Rapid Packaging who showed the first working Memjet machine at Ipex 2010 and went on to apply its considerable converting expertise to turn the technology into a proper label press line that could die-cut, laminate, rewind and strip. Memjet ‘boned’ Rapid in October in mysterious circumstances – they just would not give a reason and Rapid said they were dumbfounded at the arbitrary axing of an agreement due to run until 2017, leaving them with almost $2 million in stock engines that Memjet would not allow them to build into their presses.

Despite a good ‘shirtfronting’ (thanks PM), Memjet would not talk, only to say, “… it’s natural there will be an ebb and flow in our OEM partners.” Ebb and flow? Memo to Memjet: the worldwide $80 billion label industry is a major player in branded goods marketing and is a close-knit community of highly technical and experienced professionals who want to work with trusted partners – who don’t ‘ebb and flow’ like the tide. In Rapid, you have excommunicated a much respected label press manufacturer who exported machines to 54 countries and then put their faith in Memjet as its digital platform, sharing their own R&D and actually making Memjet technology work in a commercially-available machine for the first time.

Non-critical desktop machines can perhaps tolerate perfidity in support and supply but working pay-for-label printers respect continuity, support, commitment and a trusted partner who ultimately helps them pay the rent and wages.

With over 40 manufacturers of digital label presses today, it’s a buyer’s market so there is a need to be selective and analytical in choices that fit each individual company’s production requirements. Some inkjet machines are approaching the lower end of flexo print run capabilities and this alone delivers infrastructure benefits by eliminating plates and analogue makeready.

Label printing is a great place to be but, as with all gold rushes, it’s not an El Dorado. Even if you find the gold; it requires refinement.