Labels offer growth opportunity for plastic films in Europe

The production of film for use in labels is a high margin specialty business which film producers are keen to target. AMI has recently completed the first in-depth study of the market for plastic-based labels in Europe, identifying both the size of the market and its future trends, as well as providing a detailed analysis of the structure of the value chain for each label technology. According to AMI's research in 2008 plastic films accounted for 27% of the 13 billion m2 of label facestock used in Europe. However, while the demand for paper-based labels is expected to show little or no growth over the next five years, demand for plastic labels is expected to grow by over 6%/year so that by 2013 plastic labels will account for a third of the European label market. While weak food volumes and destocking towards the end of 2008 meant demand weakened throughout the year the overall prospects for plastic labels remain strong. The importance of the label within the consumer product marketing mix is fuelling demand for plastic labels, and brands remain committed to investing in added-value product presentation. The market is being driven by growing demand for clear-on-clear labels in food and beverage applications, innovations in plastic containers, plastics ability to deliver aesthetics and functionality superior to traditional materials and growth in the packaged consumer goods industry in Eastern Europe. The largest market for plastic label film is in self adhesive labels. In square meterage terms plastic self adhesive labels accounted for 35% of demand for plastic labels in Europe in 2008. With only one-quarter of the total self-adhesive label market based on plastic film there is considerable opportunity for replacement of paper and this trend will help drive demand growth of 7%/year to 2013. In glue-applied labels, plastic labels accounted for 15% of the total market in 2008 or 25% of the total demand for plastic labels. Plastic film is mainly used in wrap-around labels and for roll-on-shrink-on-labels. The market is being driven by paper replacement and the development of plastic spot patch labels (currently this market is almost entirely in paper). AMI forecasts this segment to grow by 5%/year to 2013. There also exist specific label applications which have developed through the use of plastic film, namely in-mould labels and sleeve labels. Both of these applications are expected to enjoy growth of between 5 and 6% pa driven by new application opportunities in food and beverage containers. A further 10% of the plastic label market is accounted for by release liner used with self-adhesive labels. AMI's comprehensive survey details both the production of plastic film and the demand from printers/converters. Plastic film production for label applications in Europe amounted to nearly 200,000 tonnes in 2008. Europe is a net exporter of these films and demand from printers and converters of labels amounted to 186,000 tonnes. The types of plastic film used vary significantly within each segment of the label market. The primary material used is PP which is the main material used in the production of glue-applied and in-mould labels. PE films are mainly used in self-adhesive labels, while PET and PVC films find use primarily in sleeve labels. In addition, the rapid development of plastic release liner within the self-adhesive labels industry is expected to contribute to annual demand growth of over 10% for PET film within label applications in Europe. Supply of film in Europe is highly concentrated with 74% of output accounted for by 10 companies in 2008. Most of the leading players are focused on a particular segment of the plastic label market, a consequence primarily of the film technology employed. Nordenia is the leading supplier of PE film; Treofan, ExxonMobil and Innovia the leading PP film suppliers to this market; Klöckner Pentaplast is the leading supplier of PET and PVC films. The printing and converting of plastic labels is more fragmented, with the top 10 printers accounting for only 39% of production in 2008. The largest printer of plastic labels is CCL Label, which operates several sites across Europe and has a leading position in most plastic label segments, apart from glue-applied. That sector is led by Constantia and Mondi Packaging. Fuji Seal is another leading supplier and is an integrated film extruder/printer for the shrink sleeve sector.
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Reclamax single step plastic recycling machine