SOI Report: Labels, Featuring TLMI's and Coast Label Company's Craig Moreland
As part of Print+Promo’s 2017 State of the Industry Report, we reached out to experts in four major market niches. Here, TLMI’s and Coast Label Company’s Craig Moreland discusses the present state of the labels sector and offers strategies for growth.
What are your thoughts on the current state of the label sector?
Craig Moreland: Growth in the label segment continues to provide terrific opportunities for distributors to differentiate themselves by solving problems and devising unique products for their customers. Virtually every industry uses labels, and the North America market for label products is in excess of $10 billion. According to TLMI studies, the North America market for labels has increased an average of 4.5 percent per year for the last 10 years, and there was only one down year, which was 2009. Because of the size and diversity of the label market, label manufacturers generally specialize, and I’ll limit my specific comments to the medical, industrial, electronics and aerospace market segments that Coast Label Company typically serves.
What do you think the biggest changes will be this year, and what will drive them?
CM: Printing technology continues to evolve, providing performance print solutions to a wider range of customers than ever before. At Labelexpo [Americas] – Chicago last September, we saw a growth in digital print technology options, particularly in the UV-cured inkjet category. As end-users are increasingly looking for shorter runs with more versioning, faster delivery times, vibrant graphics with high opacity whites and more variable print options, this technology provides them the results they seek. Similarly, improved servo motor technology has increasingly allowed these digital presses to offer high value-add finishing options, that when combined with flexographic printing, allows for unprecedented options for end-users. Other important trends include an increased focus on “down gauging” to thinner materials, as well as a shift to materials that recycle better.
Your company is a four-time winner of the Eugene Singer award for Best Managed Company, awarded by the label industry trade association TLMI. What is the key to your success?
CM: I am very proud, not only of those awards, but also the fact that in five other years, we finished second. This high level of consistency ties directly to what I believe—that success in business is directly connected to reliability, taking great care of your customers so that they stay with you, grow with you and refer new customers to you.
To this end, we have focused our business to specialize in consulting and solving unique problems for label users. Many of the distributors we work with have end-users with exacting needs. So, we see that our customers appreciate not only the care we take in developing a solution with them, but also that we can then deliver consistent product order after order. Because of this, I consider our team’s knowledge, our integrated software solutions and our ISO quality system all as invaluable tools in our success.
What kind of plan or growth strategy has your company implemented in order to stay relevant and profitable?
CM: The label industry has seen a tremendous amount of growth, as well as consolidation over the 26 years that I have owned Coast Label Company. We have remained relevant by being a specialty manufacturer rather than trying to be everything to everybody. One example of this is that we are one of the few label companies in North America to concurrently: maintain an ISO 9001 certified quality system; to hold UL/cUL Recognized Component Manufacturer designation; carry the elite 3M Select Converter status; and to operate a L.I.F.E. environmentally certified facility. Each one of those designations requires periodic recertification and training, and that keeps us current and our team sharp. Then, by being consultative in our approach, we help distributors solve customer challenges. All together, these solutions earn the type of orders that repeat with us at a rate that exceeds 90 percent.
Additionally, we are in the midst of our third major printing technology upgrade. We just installed a Durst Tau UV inkjet web press paired with a Grafisk Maskinfabrik finishing machine that I can best describe as the “Swiss Army Knife of digital label finishing.” These machines together are just simply state of the art. While the largest label industry volume is in national brand prime labels and stock blanks, we feel that there will always be a place for the niche products and solutions we specialize in.
Coast Label Company has been serving clients in the medical industry for more than 20 years. Do you find that distributors are hesitant to enter this market and navigate the complex requirements demanded by this sector? How do you help distributors fulfill their customers’ labeling requirements?
CM: In my opinion, no other vertical market requires a closer working relationship between the distributor and manufacturer than the medical market. End-users generally require non-disclosure agreements, quality system certifications, such as ISO 9001, and assurance that the plant is up to the task of making product that matches their exacting requirements. Distributors are generally going to have to disclose who the manufacturer is, and that means they are going to have to work with a supplier they trust and who has a spotless manufacturing facility that will stand up to close scrutiny by the end-user. We produce labels for several Fortune 500 companies and many more smaller medical companies through distributors, and it’s our job to not only make great product with detailed process documentation and repeatable quality, but to work closely with the distributor to meet all of these customer requirements, while making the distributor look great at all times.
We have found some distributors hesitant to call on this type of user, but I would encourage those who want to get into this segment to partner with an experienced manufacturer and then focus their selling skills on understanding what the customer needs and wants. Learn to ask a lot of open-ended questions and then communicate with the manufacturer so that the customers’ needs—and, in particular, their wants—can be solved through collaboration. It might take a little longer to land that medical account, but it will pay off because these accounts typically place tremendous value on a reliable and responsive label partner and they will be loyal customers for whom the lowest price is not their most important objective. Even in this industry, the trend is toward less experienced buyers who will be relieved to find a label supply partner that helps them do their job better.
Is there anything you would like to add?
CM: I would encourage distributors to explore opportunities to improve label products for their customers rather than just try to find a lower price on exactly what the customers are purchasing now. Ask questions about: how they are using the labels; why they want certain materials or features; what’s working, and particularly, what’s not working; and explore how to improve the product so the customer gets more value out of its labels. Then, engage your suppliers to see how they can help you provide a better product for your customer. There are new generations of adhesives, equipment and solutions out there, and it’s amazing how a new twist or improvement can provide better lock-in with your customer than price on its own ever can.