With over 4 billion people, Asia is also biggest in terms of population – 60 percent of the world’s people within its borders. Three of the top four economies in the world are in Asia – China, Japan and India.

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.

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.

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. 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 letterpress 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 letterpress 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.”

Spotlight on India

India’s Gross Domestic Product, which grew by 9.4 percent in 2007, the highest growth rate in 18 years, had come down to 7.2 percent by the end of 2008 when the world was facing the onset of a downturn. The GDP further plunged in 2009 to 6.1 percent, and Sahni says that “fortunately India was still growing. By the year’s end, signs of economic recovery were evident. It is estimated that by the end of 2010 India will achieve 7.7 percent to 8 percent growth in its GDP. The label industry, which saw a quieter time in 2009, is coming out of a slumber. Label printers are smiling once again and press installations are being reported,” he says.

What follows is Harveer Sahni’s account of the Indian label market – where it’s been and where it is today : “Self-adhesive labels in India originated in Mumbai around 1965, some 30 years after Stanton Avery produced the first self adhesive label in Los Angeles, CA, USA. These labels were initially the forte of the screen printers, who printed and gummed them manually. Gradually, flatbed Japanese letterpress printing machines were brought in to usher in the advent of self-adhesive labels in roll form. By the end of the 1970s, the pressure sensitive label industry had spread to all the four metros of India. The biggest growth came in the late ’80s when big users of labels like pharmaceutical companies and FMCG (fast-moving consumer goods) producers started to use self adhesive labels. As we entered the 1990s, well known label presses started to be installed. And by the late ’90s, Avery Dennison had set up manufacturing operations in India, and UPM Raflatac soon followed. The Indian labelstock producers have also kept growing in numbers across the country, though their operations are at a relatively smaller scale.

“The Indian narrow web label industry has witnessed growth and is still predominantly growing in flexographic rotary printing. Most of the new investments that are being made are in this segment. It is interesting to note that while investing in new presses, the Indian printers have graduated from being users of basic Mark Andy presses to fully loaded models of internationally branded presses like Nilpeter, Omet, MPS, Gallus, Rotatek, Mark Andy, etc. They are now demanding all servo, all UV, multicolor presses with multiple decoration and converting capabilities. This sector is producing the biggest growth rate. As competition becomes the order of the day, printers are investing in or expressing their interest in other newer and diverse printing and converting technologies.

“Ajanta Packaging in Mumbai invested in a waterless offset press some years ago. Many in the industry deemed it as a poor decision. Ajanta proved them all wrong by buying two more such presses! Now, others are also investing or considering investments in this technology. However still, the offset printed label segment is minuscule as compared to the size of market in this country. Printers are also getting indulgent with combination presses and offering advanced printing capabilities to their demanding customers.

“Digital printing is catching up and as the technology gets more user-friendly and cost effective, it is likely to grow at a much faster pace. Until a couple of years ago you could easily tell where the first few HP Indigo presses were installed in the country. Now, slowly and steadily, the numbers continue to rise. Moser Baer, Janus, and SGRE are printing labels with their HP Indigo presses, and Webtech with its recently acquired Xeikon digital press, and these companies are proudly leading the growth of digital printing in India. “RFID is one technology that still excites people and confuses the printers. It has not picked up despite the versatile nature of labels this technology can offer. The few printers who have made investments in this area are not satisfied as the expected returns have not come in. The fast changing nature of this segment and the cost of indulgence play a deterrent in its growth in the Indian market. Surprisingly, interest in this segment refuses to go away.

“The biggest challenge facing Indian label printers is the entry of international label printing companies. These companies, when they set up operations here, take away all the customers who they are servicing in their home markets, depriving the local players of a substantial market share. Shrink sleeves also remain an area of concern for the Indian pressure sensitive label industry. It has taken away a lot of the filmic label segment business. Label printers are attempting to regain market share by increasing their decorating capabilities in filmic labels. With a growing middle class having surplus disposable income, retailing is big business and with it comes a huge demand for bar code labels, price labels and plain labels. Unfortunately, small label printers with their locally built rotary presses, flatbed presses and Chinese built cheap presses, bring intense competition to this sector, aggravated by the fact that they use stock lots and reject materials flooding the market. This hampers the growth and progress of organized players in the label industry. The few printers who have grown big in size in this segment have done so by creating a pan-national marketing network.

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