Customer service drives the European market for adhesive labels

Citation

(1999), "Customer service drives the European market for adhesive labels", Pigment & Resin Technology, Vol. 28 No. 3. https://doi.org/10.1108/prt.1999.12928caf.003

Customer service drives the European market for adhesive labels

Customer service drives the European market for adhesive labels

Keywords Adhesives, Customer service, Europe, Markets

The adhesive labels market, which has been growing at around 10.0 per cent per annum in recent years, is expected to continue its strong rate of growth for the foreseeable future. However, market growth is expected to slow towards the end of the forecast period, owing to the fact that a changeover in demand from other, more traditional label types, will begin to come to an end (Figure 3).

Figure 3 The European Market for adhesive labels (per cent projections by shipments and market segment ­ forecast for the year 2005)

A new study by Frost & Sullivan, the international marketing consulting company, reports that the dynamics in the adhesive labels market are being influenced by a number of factors, including enhanced customer service; new replacements following a decline in traditional labelling methods; improving levels of flexibility in printing, and an increase in specialisation. The development of safer, higher quality, longer-lasting labels is a further factor contributing to overall market growth.

In 1997, the total European adhesive labels market was valued by Frost & Sullivan at US$3.57 billion, representing 3.26 billion square metres. By 2004, revenues are expected to reach US$5.83 billion and will be represented by a total volume of 4.86 billion square metres.

Jonathan Cross, research analyst at Frost & Sullivan, says: "The adhesive labels industry is characterised by a general move towards custom-made labelling and flexible printing. Shorter production runs are becoming increasingly common in order to maintain the most flexible levels and styles of production. This flexibility is an advantage that is made possible with PSA labels. It therefore follows that these factors are affecting market growth in a favourable way."

Frost & Sullivan's study identifies a trend in the market that is currently changing the nature of competition throughout the adhesive labels market ­ the introduction of post-sale services. Many companies are following up the sale of labels with services in order to gain a source of non price-competitive advantage in the market.

These services might include anything from consulting to guaranteed short delivery times or advice. Major competitors in the market have in recent years been competing on their levels of customer services as well as driving their prices down. Whilst driving the market in this way, however, it is also making it increasingly difficult for smaller companies in the market to compete.

PSA labels have been taking over the market in recent years. They now account for around half of the adhesive labels market as a whole and this figure is growing at a fast rate throughout the different sectors. Whilst growing in their markets organically, they are also growing as a result of, and at the expense of, traditional labelling methods.

PSA labels can offer higher levels of print quality, as well as a much easier mode of application. As a result, the market has been growing dramatically and is expected to continue to do so in the coming years.

Whilst there have not been a great deal of technological developments on the labelstock production side of the market, there are constant improvements and refinements on the printing side of the market. These improvements are mainly geared towards making printing increasingly flexible in order to cater for the higher demands that are currently being put on labels. Flexible printing can allow for shorter production runs and can make test marketing easier and more cost-effective.

The companies in the adhesive labels marketplace tend to be active in most of the sectors, and in the case of the major competitors, in all sectors of the market. There is not a great deal of variation in the nature of competition from one sector to the next. The big five competitors in the adhesive labels market are: Raflatac, Fasson Roll Europe, Jackstädt, MACtac Ritrama and Samuel Jones.

Differences in the competitive structure tend to lie in the end-user labels markets. Sometimes the same materials for labels can be sold at vastly different prices depending on the end-user. Computer labels or security and logistics labels tend to fetch much higher prices than do, say, food and drink labels. This can be attributed mainly to the fact that the labels are actually of superior quality in these markets, but often prices are higher simply because of the higher level of perceived quality that exists in customers' minds.

In conclusion, Frost & Sullivan finds that the future of the European adhesive labels market lies mainly with filmic materials.

They have experienced dramatic growth in recent years and this trend is expected to continue. Whilst the paper and plastic labels segments will also grow, it will not be at quite the rate as that of filmic labels. The relative share held by these segments will actually decline in favour of labels made from filmic materials.

Areas of particularly fast growth will tend to include those niche markets such as security labels where a degree of specialism, or bespoke production, is involved.

Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets, including the materials industry for market trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications such as the European Adhesive Tapes (3557) and Pressure Sensitive Adhesives (3435) markets to support industry participants with customised consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.

Report Code: 3577, Publication Date: December 1998, Price: US$3,950.

Details available from Frost & Sullivan's Public Relations Department. Tel: +44 (0) 171 915 7824 or Fax: +44 (0) 171 730 3343.