Opportunity Knocks

Tag and label printers are facing a double-edged challenge—maintain margins in the short term, while investing in technologies that may determine the future course of their businesses.

TODAY'S TAG AND label printing business is dynamic to say the least. It is experiencing a wide range of challenges and new opportunities that require printers to stay focussed on overall market conditions and, in some cases, to make key decisions as to the future direction of their companies.

On the downside, some of the traditionally strong (and large) label markets are mature and are experiencing stiff competition from alternative printing methods. The Freedonia Group's "Labels" study issued in July 2004 identifies glue-applied, heat-seal, and gummed labels as established labeling methods whose growth prospects are relatively poor. Some of the low growth expectations in these sectors stem from broader packaging trends such as the move away from canned products to newer packaging methods including stand-up pouches.

On the plus side, newer labeling methods—most notably sleeve labeling—are experiencing a bright future, with solid, sustained growth expected. In a study titled "Labeling Markets: North American Sourcebook 2004," Alexander Watson Associates (AWA) calls for sleeve labeling to grow between 12 and 15 percent through 2005. Sleeve labeling includes wraparound labels, shrink sleeves, and stretch sleeves.

Labels are also playing an increasingly important role for brand managers to help differentiate their products on the store shelves. In the AWA study, several trends were identified that are being driven by this growing focus on product decoration:

• Expansion of product decorating capabilities to meet brand challenges at lowest cost;

• Promotion of higher-performance labelstock with the emphasis on film materials;

• Consumer market focus on premium products and differentiation through higher-quality qraphics;

• Developments in the use and quality of digital printing.