Asian Label Markets: the world's largest region--in area and population--presents a dynamic, growing label market.
Geography buffs know that Asia is the largest continent by landmass. It's actually larger than the land area of the moon. With over 4 billion people, Asia is also biggest in terms of population--60 percent of the world's people within its borders. Astoundingly, this many people standing side by side holding hands would reach around the world at the equator more than 100 times. So it's big in scope, to say the least, and with size comes diversity. And the label market in Asia is a dynamic one, and also one with lots of room for growth. After all, with so many people, there are that many more products that potentially need labels.[ILLUSTRATION OMITTED]
Three of the top four economies in the world are in Asia-China, Japan and India. China is the second largest economy in the world after the United States. Another heavily populated area, India, is now the fourth biggest economy in the world, while relatively small Japan is the third. So, with three of the world's top four economies in Asia, along with a host of underdeveloped and developing nations, it stands to reason that the Asian label market presents its share of fascination and potential.
AWA Alexander Watson Associates, headquartered in Amsterdam, the Netherlands, is a global business-to-business market research, publishing, and advisory services company. The firm focuses on the specialty paper, film, packaging, coating, and converting industries, and last year released the Labeling Markets Asian Market Study and Sourcebook 2009, and earlier this year the Chinese Label Markets Product Decoration and Technology Study 2010. Thus, AWA is a resource for a look inside the Asian Label Markets.
AWA estimates the regional market at 13,500 million square meters of label material, or 33 percent of total global label demand. Glue applied and pressure sensitive labels together dominate the market with shares of 43 and 37 percent respectively. Sleeve labels at 12 percent of the market is a reflection on Japan's taking the lead in that sector, while in-mold is very much a niche at just 1 percent, according to AWA.
Not surprisingly, as their respective populations are enormous, AWA's analysis of per capita label demand confirms that despite China and India having a significant regional presence, there is even further potential for massive future growth when comparing label use in the more developed countries of Europe and North America as well as it's regional counterparts of Japan and Korea.
AWA, through its studies, has identified a number of trends within the region that are having an effect on the label industry. The studies show that although letterpress and offset litho remain the dominant print processes used for label converting, the market continues to invest in narrow web flexo technology, provided by imported presses and an increasing level of local, lower cost manufactured UV flexo machinery--which has become of interest to printers across the region.
Demographic and lifestyle changes are driving labeling in all sectors, AWA says, and this is due to the growing middle class consumers in China, India, and Southeast Asia. Also, continuing innovation in the development of application and end use segments for labels is being driven by global brand owners and retailers' investment in local operations. Major growth in packaged beverage and food sectors is also providing a major boost the label industry.
Asia Pacific Label Market - 2009 Pressure-sensitive 37% Glue Applied 43% Sleeving 12% In-mold 1% Other 7% Source: AWA Note: Table made from pie chart.
AWA says there's been an increase in demand for greater "on the shelf" product differentiation through the use of product decoration technologies. Growth in PET bottles is influencing label format selection, and there's been more of an emphasis placed on film label materials in all formats., according to AWA. Increasing local availability of all label materials--pressure sensitive label laminates, films, and specialist papers, ongoing development and upgrading of press technologies and printing skills, and demand for increased functionality in labels especially as anti-counter feiting measure are all considers Asia's label market drivers. However, competition from other forms of product decoration technologies such as flexible packaging, direct printed cans, and cartons is strong and growing and will present a challenge to labeled containers, AWA reports.
Flexo's foothold
Mike Russell is the international sales manager for Mark Andy, the label press manufacturer headquartered in St. Louis, MO, USA. Russell has been traveling to Asia since 1995, helping Mark Andy establish a presence in the region, which, according to him, has presented a host of challenges, but, in some areas, are being overcome. With 15 years of narrow web experience in Asia, Russell provides some keen insight--and an insider's view--of Asia's label markets.
Asia Pacific Regional Label Markets - 2009 Japan 21% China 35% S. Korea 6% Taiwan 6% SE Asia 6% Australia 5% India 21% Source AWA Note: Table made from pie chart.
Russell talks about one of Asia's country's that has been a major influence on the region's label markets, and how it's created a challenge for flexo technology to take hold. "When we look at Asia, what we're finding is the 'Japanese letter--press mentality'. Less than 1 percent of the label presses in Japan are flexo--that's how few are there. The country is just totally dominated by letterpress. And if you look at Asia's first consumer products, they were all Japanese. And this has really influenced the rest of the region," he says.
There's another obstacle that's been in the way of flexo that Russell points to--offset printing. He says that companies that have wielded some influence on Asia's label markets--companies like Proctor & Gamble and CCL--have wanted to print labels using offset. "The reality is that offset is a very small percentage of the market. And I haven't seen anyone successfully making money with offset. So we're fighting the letterpress mentality on one side and offset on the other, but now people are coming to the reality that flexo can provide a reasonably good label that's going to satisfy the CPG companies (consumer products goods). There's still some demand for offset but it's lessening. So what we're seeing are more health and beauty companies and CPGs in the region, and they have brought in more labels that are more flexo-friendly. There's a little demand for gravure, because some people want to run the cheaper metallic ink," Russell says.
"Right now the flexo hotspots are Thailand and Indonesia--there's competition there for flexo projects," Russell points out, adding that while it appears that no one is buying offset, the decision-making process buyers have presents an obstacle. When it comes to offset, Russell says, "people think they want it, but when they see the price, they don't want it. Although it seems to be delaying the decision to buy."
A reason for offset's appeal is perhaps due to what Russell says is the Asian market's biggest driver--quality. "Cost is a big driver," he says, "but because of that Japanese letterpress mentality, quality demands are very big, especially in Southeast Asia. It's surprisingly strong, and I'd say quality demands are stronger in Asia than it is even in the US, particularly in regard to prime labels.
Russell emphasizes that one of flexo's main drivers in Asia is volume, especially in China. However, he notes that the consumer market is not like the West. "There's just so much stuff that we buy (in the US) that has labels and packaging. But in China it's different. They have this great up-and-coming middle class, but when they get some money, they don't necessarily buy the things we do. Their luxuries might be different--it might be tobacco, alcohol, bottled water--and these things are printed on letterpress or gravure presses. But pharmaceuticals is picking up, and nutraceuticals and food are growth markets--this is where labels are starting to grow. If volumes come up, then I think it starts playing into our hands from a flexo standpoint.
"The whole infrastructure is still letter--press dominated. It's cheaper right now to make letterpress plates and flatbed dies. So we're continuing to try and break that mold. That's the challenge," Russell says. "It's changing--we're starting to see to rotary and magnetic die companies in the region, and the ink companies are over there now too. We need the support structure--the flexo training, the dies, the inks--and that's what we've been doing since 1995, developing the flexo infrastructure."
China, with its massive population, perhaps holds some more potential than some of the other Asian countries when it comes to flexo. But China is notorious in the industry (any industry) for the ability of its engineers to expertly copy machinery, and it's not so much the flexo presses they're copying. "There are so many locally-made letterpress machines in China. They're not copying flexo presses, they're copying letterpress machines. And they're getting better all the time, following that Japanese mold," says Russell. "So in China, the challenge is not only letterpress, but cheap, locally-owned letterpress. But the nice thing about China is that they are a little more open-minded, and they have the volume to support flexo. For some, the light bulb goes off and they see the benefits that flexo can provide."
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| Author: | Katz, Steve |
|---|---|
| Publication: | Label & Narrow Web |
| Geographic Code: | 90ASI |
| Date: | May 1, 2010 |
| Words: | 1522 |
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