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FLEXO Magazine : January 2010
www.flexography.org JANUARY 2010 FLEXO 19 trating on local or national needs---but progress is catching up. The move toward consolidation and rationalization, leading to the evolution of larger groups is taking place slowly and the current world economic difficul- ties will contribute to that progress: a survey late last year expected to see at least 100 companies subject to merger, acquisition or bankruptcy this year. It has already happened in the labelstock market, where 90 percent of Europe's output is now produced by 10 compa- nies, with the "big three" accounting for 70 percent of the material used in self-adhesive label printing. The key dynamics of the industry show a flattening of the growth curve, a high penetration in key end-use markets, a slowing of innovation, declining margins and pressures on costs and this move to consolidation and rationalization. In short, self-adhesives have come of age. But, given the nature of Europe, the printing picture varies region by region. The "sophisticated" areas like the UK and Ireland, Scandinavia and the Western continental landmass, where self-adhesives are a well-established part of the labeling scene, are expected to see little growth over the next five years. The big areas of opportunity are eastern Europe (including Russia), Central Europe and, less so, Southern Europe which are still developing their retail markets. The banking crisis that enveloped the world in the second half of last year struck the self-adhesive industry in the third quarter of that year. Until then, pro- ducers had seen the continuing growth pattern it had enjoyed since its large- scale expansion began in the 1970s. But the sharp cut-backs in all areas pro- duced a dramatic decline in demand, resulting in its first-ever loss of volume in 2008---albeit by only 1 percent (another indication of the strength of the sector). This slowdown is expected to show a further decline of 2 percent this year, fol- lowed by a static period next year and a return to modest growth in 2012. Even though annual growth rates over the next five years, forecast at 0.5 percent to 1 percent (closely following the growth in GDP), seem small, that expansion on last year's output of 5.3 billion sqm. is still a considerable amount of label materials used! The four key areas of use are: • Variable information printing (44 percent) for items that need indi- vidual aspects such as price and weight included. • Primary product labels identifying the brand, product, decorative ef- fects as well as informing custom- ers/users of the myriad of detail that legislation now insists they contain (40 percent). • Functional and security labels (8 percent). • Promotional labels which advertise price cuts, promotions---even char- ity fund raising stickers (8 percent). The greatest potential growth area is the primary product sector, which represents about 70 percent of Euro- pean demand, but this is also the area of greatest competition from alternative packaging technologies. Food prod- ucts, which account for 22 percent of all self-adhesive demand, represent the strongest of all segments and for obvi- ous reasons will remain so. The retail sector, representing 16 percent of use, has taken a knock because of the obvious reduction in consumer spending but the beverage market and health and beauty prod- ucts are gaining in importance to our industry and already each account for 10 percent of use. Futuristic labels, such as those containing micro-chips, are still the coming thing. They contain fascinating prospects for the future as the cost of electronics comes down to affordable levels. What all this means is that there are still great opportunities for printers--- and their customers---that are prepared to explore new printing techniques, effects and materials. It is a challenge for our industry, and given the large proportion of small to medium sized firms, often under family control, there is a need for FINAT to help its members capture that future. ABOUT THE AUTHOR: Andrea Vimer- cati, sales manager at Pilot Italia, is president of FINAT. He joined the FINAT Board in 2002 and has been an active member of both its membership com- mittee and its converters' committee, as well as being the key link between the organization and GIPEA (the Italian national trade association). He has also been a Board member of Assografici Young Managers' Group since 2004. To learn more, call 704.588.3371 or Toll Free 866.588.8686 When you purchase your anilox rolls from Harper, you not only receive the most advanced anilox roll on the market, you gain access to the leading innovators and technical experts in the field of flexographic printing and converting. Technical support is a commitment we take so seriously, we devote an entire division to helping our customers achieve unprecedented levels of quality, consistency and profitability. Call 800-438-3111 and start working smarter today. GRAPHICSOLUTIONS DIVISION HARPERIMAGE.COM Americas • Europe • Asia ©2010 We’re talking smart.
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