Labels hold their own as widespread applications become the norm and technology takes them in a new direction.
From their inception dating back to the 1700s, labels continue to hold their own in today's technology-driven society. These necessary business tools carry weight with bar-coded and other quick-run designs, and are used on everything from shampoo bottles to heavy equipment.
In terms of distributor sales in 2002, labels accounted for $218 million—a comfortable 10.1 percent of total market dollars, according to the BFL&S Top Distributor report of 2002.
In an attempt to find out just what keeps this booming industry booming, four executives provided valuable insight on the sometimes complex, but lucrative world of labeling.
Sales Report
Across the board labels showed stable to increasing sales in 2002. Cleveland-based Proforma generated $20 million in label sales, and continues to be extremely busy with the product.
In fact, Proforma reported the introduction of new labels and its collaboration with one of the largest label suppliers in North America, which is seeking business contracts with beverage, food and packaging companies. Greg Muzzillo, founder and CEO said, "We are just now introducing a market push for labeling in these industries."
Concurring with the report that labels experienced positive sales for 2002 is Bob Troop, CEO of The Shamrock Companies, Westlake, Ohio. He stated that labels accounted for 15 percent of his company's total sales in 2002, and anticipates their sales will remain stable in 2003.
While only 1 percent to 5 percent of label sales accounted for 2002 total sales at the Merrill Corporation, Monroe, Wash., Brian Wiedenmann, general manager, praised the product's overall performance stating that despite the low percentages, the company views label sales as a "small but stable portion of our sales with the potential for limited growth."
While Merrill did not introduce any new label products in 2002, the company "identified widespread applications for labels and managed complete print programs to offer labels as a key value-added service."
For Chicago-based Global DocuGraphix, labels are showing double-digit percentages in terms of total sales and growth. Said Graham McClean, president and CEO, "Labels are currently a high-growth product area for us."
What's Going On
Maintaining success in label sales means different things for different company heads.
For Troop, it means first introducing a whole new crop of label products, including prescription labels, integrated labels, digitally produced labels, and thermal labels, to meet emerging demands.
Secondly, it has meant hiring people who know labels. "I believe strong prospects exist for label sales, and we certainly intend to promote these products more aggressively," Troop said.
In McClean's case, success with labels has come through producing ones that are typically seen on heavy equipment, like a McDonald's Frymaster, and on boxes that go through company production lines. "Because these types of labels are considered high-value labels, a lot of business exists for them," he said.
In addition, McClean reported bar-coded labels to be very consistent in sales. The reason, he said, is that labels incorporating new technology help speed up production lines while increasing accuracy, thus having a significant impact on the bottom line.
Wiedenmann also reported growth for these same labels stating that there has been a notable increase in requests for quick-run and small-volume labels.
"Labels definitely have a niche within the distribution environment. Bar coding, product identification, pharmacy and shipping labels remain key offerings for our clients," he said.
He added that they could be promoted more aggressively based on the selling point that labels "provide an added service component to large programs with complex requirements and distribution needs."
Agreeing with Wiedenmann's position of promoting labels more aggressively, Muzzillo referred back to one of Proforma's key mantras—we don't sell products, we sell relationships.
"We call on human resources professionals, on purchasing people and office managers, and we try to optimize our relationship in those accounts," said Muzzillo.
What to Expect in 2003
All interviewees agreed that labels should experience some level of growth in the coming year or years—whether it be the result of a larger, more aggressive sales force or that of increased demand by those seeking higher-technology labels.
For Muzzillo, growth in label sales will result from Proforma's effort to create unique partnerships with a few premium label companies in North America, as it seeks to establish growth in the contract food, beverage and packaging industries.
According to McClean, distributors in general should expect increased growth in label sales as newer technology is expected to take them into a whole new sales dimension.
He predicted that one of the biggest selling products will be radio frequency labels, or those with embedded chips—a product that is expected to be commercially deployed in about three to five years. Such a chip, he explained, would be able to read the SKU numbers of multiple products in a large bin, out-performing the individual scanning of each product, which occurs now.
While such a product may come with a high cost, McClean assured that customers of the product will easily be sold on its value. "This translates to a nice profit margin for distributors wishing to sell them," he concluded.
By Sharon Cole, Maggie DeWitt, Cynthia Graham and Jennifer Hans
- People:
- Graham McClean
- Greg Muzzillo
- Places:
- Cleveland
- North America