Only joking. But only just. The big stick wielded by label and/or packaging buyers informs every aspect of food labelling.

Markets drive the roll-labelling industry. That’s what makes it so dynamic. However, when market forces take over, they can practically dictate who wins and who loses. This is roughly what has happened to the food labelling sector. The same service-led changes also mirror events in some other prime/product labelling sectors, but they are not nearly as extreme.

First some facts. After adding thermal price/weigh labels, the combined food/supermarket label sector is extremely important for label producers. In Europe it accounts for some 15 per cent of pressure-sensitive label value – down by a mig margin in recent years – and some 15 per cent of volume. In 1997 the market was worth an estimated £312 million, having grown about 9 per cent on 1994 levels. Annual market growth is expected to be around the 4-5 per cent mark, subject to regional variations.

Not surprisingly, production is extremely varied and involves a wide variety of paper label stocks. Filmic usage is increasing, but remains minimal here. Depending on application, labels may need to tolerate extremes of temperature and moisture, while adhering to irregular shapes.

Demand is growing for labels and seals that combat tampering and the huge and growing problem of retail theft. Labels that incorporate some form of anti-theft device that triggers an in-store alarm or some other form of deterrent represent a market with huge potential. Some retail groups look to a future where all goods sold retail will have some form of protection, preferably added at source.

Other developments offering profitable potential include multi-ply ‘dry-peel’ construction, or resealable leaflet/labels for seasonal promotions, recipes and such like. Time Temperature Indicator (TTI) labels have been tested among some retail groups to monitor the freshness of food in transit and on the shelf. Last year, for example, SE Labels Group introduced a US import involving part-printed heat-sensitive inks that darkened beyond a certain period. TTI technology is also used in pharmaceutical packaging.

Innovations like these represent the brighter aspects of self-adhesive food labelling. In the main it resembles the market for canned foods (including pet foods) where sheet-fed, glue-applied labels dominate. This is another labelling sector noted for low margins and an excess of press capacity. Competitive food labelling technologies include shrink sleeves, cut-film wrappers and the various in-mould technologies, used mainly for decorating plastic containers of dairy products like margarine and ice cream.

The continual battle between stores’ own-label brands and independent brands has seen retailers spending more on pushing their own brands into more up-market brackets. This looks at first glance a good thing for converters, but retail price wars – real or phoney – ensure that buyers’ will go for the keenest prices as usual.

Another aspect to watch is the economic health of food producers in general. Judging from the Financial Times’ FTSE – Leaders and Laggards’ weekly column it is not good. This plots percentage changes in the performance of 52 listed sectors since 31 December 1997. While constantly changing, Food Producers has languished around the bottom of the list. Surprisingly, Paper, Packaging & Printing has regularly appeared near the top at +13-15 per cent.

As far as food labelling is concerned, a major drag on performance is that invoiced prices have hardly changed during the decade. If 50,000 full-colour labels size 50 x 50mm cost around £8-9 a thousand in 1989, then that is roughly what buyers expect to pay today. Of course, it now takes a lot less time to produce them to far higher standards and in real terms the cost of materials is the same or probably lower.

Production may be faster, but there are more hidden costs. For example, more suppliers are expected to work to BS 5752/ISO 9002 quality assurance standards. They must also conform to hygiene and environmental performance levels, while operating just-in-time stockholding schemes.

As in other prime/product markets, buyers want deliveries of smaller runs measured in days, rather than weeks. That means running plants geared up to create and handle digitised artwork and repro, ideally with a form of digital proofing with modem or ISDN links. In the pressroom, converters must expect to reschedule narrow-web capacity at short notice and have smooth platemaking producers in place. Good production planning, perhaps backed with a shopfloor data collection and an on-line analysis system, is only the half of it. Most of the larger organisations may want their suppliers hooked-up to their EDI network.

How different it used to be. Until the late 1980s full-colour labels were a comparative novelty. Those that could print them were among the technically elite. In Europe they were the first to take advantage of photopolymer letterpress plates and led the ascendancy of UV rotary letterpress, with Gallus, Nilpeter and Ko-Pack in the vanguard. Converters who could consistently deliver good quality process-colour labels within six to ten weeks were seen to occupy a high added-value niche market.

In the UK – as in North America – consumer acceptance of convenience foods, a growing food processing industry and emerging supermarket own-brands all prompted high label volumes. That also applied throughout the specialised sectors, such as bakery, dairy and health foods, and set the pattern in varying degrees throughout the rest of Europe. Most converters ran fairly small independent operations, but margins were high enough to run one or two automated multi-colour presses and perhaps a full electronic pre-press system, as sold by Purup and Barco at the time.

The rest is history. Increased competition with more presses to serve the market would have dented profit expectations anyway, but other factors came into play. For a start, much-improved and far cheaper flexo presses overtook letterpress in most western markets. Much later, along came economical rotary offset and UV flexo, backed by enhanced UV curing systems and flexible magnetic die cutting manufacturing. Today, these technical advances, combined with widespread access to the latest paper and filmic labelstocks, means anyone can produce high-quality process-colour labels.

This means food labelling is no longer technically led. Once quality, service and price were the main criteria, now buyers demand service, service and service; they already expect quality will be in place. That also means that label rolls pass smoothly through applicators and bar coded give first-time check-out scans. And forget about haggling over prices, the buyers dictate what they will pay.

Buying power
Aggressive supermarket groups are legendary sources of supply-chain concern and resentment in the UK and the USA. Here, it is said that the top four supermarket chains account for 70 per cent of all the food we buy. No wonder a handful of buyers can simply order business on their terms, while holding the threat of de-listing over the heads of all their suppliers.

Supermarkets and budget-price outlets have also begun to flex their muscles in the Netherlands, France and Germany. The major processed food producers, bakeries and dairy product companies are also consolidating through takeover, which again places pressure upon suppliers.

Not surprisingly many label producers have given up on this sector, or taken steps to reduce their exposure to such an uncertain business. Ironically, the larger label printers could once count upon being on the preferred supplier lists because they had the necessary infrastructure and funds to back large investments. Now a general reduction in run lengths and delivery times measured in days rather than weeks for food labels makes it harder for them to rely on keeping the blue-chip accounts. The balance seems to have swung towards the smaller companies who arguably have a more hands-on approach to handling and processing smaller orders.

The experiences of Tag Labels in Wickford, Essex, typify the situation in Britain. ‘When we were formed 11 years ago stockholding of food labels was minimal. Now it is the norm and of course it represents so much dead money on the floor,’ says Alan Adkins, joint managing director. He adds that tighter prices across the board and increased competition eventually forced a rethink on strategy: ‘Food labelling once accounted for 70 per cent of our total business, now it is down to 35 per cent of a turnover of roughly £5 million.’

Digital production
The firm’s recent installation of the UK’s third Nilpeter DL-3300 converting line with Xeikon print engine reflects a growing interest among certain converters in exploiting digital colour printing’s ultra-short run capabilities to meet multi-variant needs for all types of prime/product labels.

One application is called ‘versioning’, which allows brand managers to order small runs of customised labels or packaging using the actual production materials. It offers an economical short-cut for test marketing campaigns or special promotions in a world where the competitive need to rush brands from the factory to ever-crowded store shelves is paramount. This idea has been applied in the drinks industry – from boardroom approval to studio pack shots – and would work equally well for food, sauces and condiment manufacturers.

Both Indigo with its Omnius and Xeikon with label and wider-web packaging variants see this as just on e of several short-run and market-led applications that are expected to gather pace in the near future. Also, as a proofing medium, digital presses can emulate conventional print processes in mixed production environments.

There are also several instances of digital presses that augment conventional roll-label presses: short-run versioning supplementing the actual production run. This is the case at Simpson Labels in Dalkeith, which installed the UK’s first DL-3300 in February 1997. It is ordering a second to meet extra demand in the food, toiletries and industrial labelling sectors.

Peter Brady, sales and marketing director, feels full-colour personalisation will become a significant factor in digital growth and accordingly the second press will be specified with a more powerful front-end. He adds that companies looking to radically improve their supply chain management of labels have shown the greatest interest in the technology. ‘Some customers – including food producers – have a large number of product variants involving many different export markets. Digital production means we can offer weekly deliveries on very fast turnarounds.

‘This saves real cost by reducing or eliminating stockholding and label obsolescence and gives much greater flexibility by allowing the customer to respond to the needs of the market. We can, for example, print exactly those variants that sell well, make changes to accord with legislation or design alterations, or introduce short-term flash promotions as required.’

One day food producers might attempt to really shorten the supply chain and eliminate inventory by installing their own digital presses, or alternatively have a facility managed by a preferred supplier, who controls the front-end. This form of print-on-demand may not be as fanciful as it sounds. It is another variant of remote output on a network, which could really take off with the development of new types of lower-cost digital colour presses.

An application using conventional presses is already in place. Last summer Tinsley Robor (which also has a DL-33000 line) reallocated two eight-unit presses – a Gallus R200C and a Ko-Pack 250 – to the site of Sara lee Household (which includes bakery products) in Slogh. Branded as Labelling Logistics, it is manned by seven Tinsley Robor employees on a three-year contract.

Cost was a factor, but the driving force was supply chain management for much the same reasons as mentioned earlier. There are also environmental advantages, which will take on increasing significance. Close proximity to the packaging line means on-demand label printing, which reduces waste, eliminates transport and removes the need for protective packaging. Furthermore, a recycling company is contracted to remove the release liner and matrix waste and convert it into fire-bricks. This environmental closed-loop is claimed as the first in the UK and is certainly rare outside it.

All this shows that the food labelling sector reflects much of the complexity and fast-moving nature of prime/product labelling. From short-run colour with minimal downtime to environmental concerns, all the ingredients are there. The over-worked mantra about quality and service certainly rings true here, as does an ability to develop niche markets and hold on to them.

There’s one consolation, however – everyone needs to buy food products.

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