Print+Promo 2020 State of the Industry Report: The Essential Business of Labels
Print+Promo remains committed to providing the best news and resources we can for you during these unprecedented times. For Print+Promo’s 2020 State of the Industry Report, we dug deep to measure print industry health, learn more about the major issues currently affecting the print industry, and find answers to questions, like: Which verticals are poised for growth?
As part of our investigation, we reached out to experts in various market segments: printed forms, labels, promotional products and direct mail. Below is an excerpt from my conversation with Thomas Spina, president and CEO for Luminer Converting Group, Lakewood, N.J. Find out what he had to say about the current state of labels, the influence of young consumers and the new opportunities in the CBD market.
What are your thoughts on the current state of the label sector?
Thomas Spina: The state of the label industry certainly follows the U.S. economy. It has been very good for several years. There are some headwinds ahead, but all in all companies are growing profitably. There is always a struggle for margin—investing in the latest technologies and remaining out of commodity markets I believe [are the] keys to profitable label manufacturing. New press technology is very expensive and almost all of that gained efficiency goes to the customer. The largest printers continue to get bigger, but therein lie the opportunities. Speed to market and great customer service gets and keeps customers. Lead times from customers are forever shrinking, and you must be able to respond. So, small- to medium-size label companies and similar brokerage or reseller firms have a real advantage. As has been for several years, trends are to smaller runs with more unique printing, decoration and construction. ... A lot of value added happens after the label has been digitally printed in small- to medium-run quantities. Examples of this would be pattern varnish, hot or cold foil stamping, raised varnish for a braille effect, addition of holographic security features and, in our case, bringing multiple preprinted webs together to form various types of peel and reseal, or clean-release coupons, or various other types of multi-ply labels. Over the last five years, there has been an onslaught of high-finishing equipment to enter the market for printers that complements the digital presses that are doing the basic high-quality printing. ... The move to digital printing is still great, but those [printers] that are successful meet their customers’ demands. So, if the customer requires short-run multiple SKUs, a digital press is best; if a customer is moving their brands to shrink film or flexible materials, printers must adapt. In our markets, specialty constructions, such as multipage labels or pattern adhesive coated labels, are key. Resellers should be looking for the applications where margin is available and then connecting with the manufacturer that has those capabilities.
As more consumers skew younger, what kinds of innovation are you seeing in the digitalized makeover of labels for consumer products?
TS: The big change that we see in this consumer change is individualization. Brands want to speak to their customers on an individual basis if possible. Digital printing has allowed companies to do this. I would say more important than the age concern is that consumers are simply smarter and they have more information at their fingertips. They care more about the items they buy, so they read labels more, but like in the past, they must be attracted to the label. So, print quality and decoration, and differentiation are critical. As packaging designers get “crazier,” we, as label printers, must have the capability to produce those designs. And for those out selling labels or any printed packaging for that matter, the job is no longer just sales—it is technical sales. Yes, relationships with buyers do matter. Trust is very important, but a salesperson must have the technical knowledge and ideas to help their customers create those attractive packages. When a packaging designer or buyer has a problem, you want to be the person they call for the answer. The sale is just about won at that point.
With that being said about consumer trends, not all of today’s younger generations understand the benefits of packaging labels, for example. Instead, they view them as waste generated. How can the industry do a better job of promoting sustainable solutions, and how is your company implementing such changes?
TS: Sustainability is a great buzz word, but I see more and more small, individualized products on the shelf. Coffee used to come in one recyclable aluminum can; now it comes in a thousand different little containers. Do I even need to mention water bottles? I do think consumer product companies look at sustainable packaging, but the bottom line is the product had better move off the shelf, and if that can be done with sustainable packaging, great; but if not, the best packaging required will be used. I think even more than sustainability, consumers want safety. So, if a product appears safely packaged, and that took a little more paper or plastic, so be it. If the packaging components [are] completely sustainable, but the product does not appear to be safe, it will not be purchased.
What kinds of labeling opportunities are CBD products presenting to distributors? What is your advice before diving into this market, especially since not all products are created equally?
TS: As this market expands, it is still a bit of the Wild West. Companies, however, are starting to become more sophisticated in their label design. Those distributors that can offer technical advice will be valuable to those clients. So, if you have no idea of the requirements of pharmaceutical labeling, (which may not be necessary yet, but it will be soon), you should not be in that market. But, if you understand the nuances of pharmaceutical labeling, or even cosmetic labeling, there is a lot of opportunity. Certainly, most of it is short run and very well-suited for digital. But, we definitely see the need for expanded content and most products are sold in very small packages, and [there is] more ingredient and instructional safety information required. At our company, it is very important to bring this information to the people who are in front of those buyers or product designers. So, we offer in-house training and facility tours so distributor salespeople completely understand the processes that we speak of and offer. Understanding what types of constructions are available and how those products are automatically applied will make a distributor a valuable asset to those CBD companies.
Based on past trends, what are your expectations for the short-term future of labels?
TS: Short- to medium-term, we see more of the same: Demands for shorter lead times, slight raw material price increases and consolidation in both the printing industry and the customers we sell to. This means bigger companies will need fewer vendors. So, as a printer or a distributor, you must have the resources necessary to be a valuable asset to your clients [in order to] remain relevant. If you are just putting ink on paper, or just selling ink on paper, you probably won’t be relevant for long. You must continue to invest in the best capital equipment, gain knowledge through training and diversify your offerings that speak to high-quality decoration other than just print. Distributors must build relationships with those printers that not only offer all those things I speak of, but are willing to train their distributors on how those assets are used for package development.
Please note: News about the novel coronavirus is changing quickly. As we finalized our 2020 Print+Promo State of the Industry Report, there were different statistics compared to when you are reading this, as forecasts did not account for COVID-19’s profound effect on the economy.