Most label manufacturers have good news this year. The market is expanding, and for shrink-label makers it is expanding quickly.
Corey Reardon of AWA Alexander Watson Associates BV, an Amsterdam, Netherlands-based market research and marketing firm, estimated the North American market is growing 4-5 percent annually. Though not the double-digit gains of a decade prior, the growth still is a cause for enthusiasm amidst an industry with Ally McBeal-thin profit margins.
Obviously not all segments of the market have been increasing equally. Self-adhesive and shrink labels have trumped glue-applied labels. Glue-applied labels are expected to remain static in 2005, while self-adhesives will increase another 2-3 percent. Reardon expects shrink-label productivity to shoot up 15 percent.
AWA measures the market in volume produced instead of sales to avoid mistaking inflation for expansion.
In 2004, about 93.1 billion square feet of labels were produced in North America. Only 14.4 percent of all labels come from the sleeve market globally, and 10 percent nationally.
However, each year the glue-applied manufacturer's share has been whittled away. Self-applied labels still have the largest slice of the market with 46.3 percent, but they, too, are giving ground to shrink labels.
Another market research firm predicts similar growth.
``Shrink labels have the ability to transform containers to such an appealing shelf presence,'' said Gary Duncan, author of ``Shrink Label Markets, Materials, and Application Technology,'' a study from PakIntell LLC of West Chester, Pa.
Duncan's study asserts that internal competition between shrink-label makers will heat up now that roll-on shrink-labeling technology has improved. Roll-on labels now will be able to chip away at sleeves' market share, especially in high-volume markets. Duncan said 70 percent of the shrink-label market is devoted to sleeve and 30 percent is roll-on.
``Likely we'll still see nice growth for sleeves in short-run applications. For long-run applications, it'll probably be roll-on,'' Duncan said by telephone.
The growth of shrink labels stalled in 2004 at 6-8 percent; growth is usually 10-15 percent. Duncan attributes that to the usual suspect, rising material costs, but he also suspects the growth will get back on pace in 2005.
Reardon warned that labeling's primary opposition could be flexible packaging, another hot market for plastics.
``Some flexible pouches are taking market away from rigid packages with a label on it,'' Reardon said. ``I go to the supermarket, and I love looking at the labels or product decoration. Now I go and see more of these pouches.''
He listed some firms that use flexible packaging with direct printing: Starkist tuna, Capri-Sun drinks and Uncle Ben's rice among them.