Some key socio-economic and political changes are reshaping a polarized European label market.
In some respects the Western European and North American label markets share several similarities. Both have roughly a 28 to 29 percent slice of the total global label market. Converters on both sides of the Atlantic divide basically use the same type of equipment and materials and find themselves coping with similar pressures on unit costs, rising raw material prices, increased energy costs and much else. There is also an understanding that innovation and flexibility are the keys to remaining competitive. But that is where the similarities end. As one would expect from such a diverse collection of around 40 countries, the various regional markets are influenced by differentiations in national character and economic growth patterns. Ultimately they must affect the consumption and usage of labels. There is also another often overlooked factor, and that is the effect of key economic and politically-inspired changes. They cannot be ignored, particularly by North American companies doing business in Europe.
Take the fall of the Berlin Wall, for example. It happened just over 15 years ago and unified western and eastern Germany. The social and commercial costs were huge and remain the main cause of Germany's present under-performing economy and high unemployment. In the early 1990s the 15 former Soviet republics, with Russia as the largest, became independent countries, at least in name. The political and economical fallout remains a source of uncertainty, as shown in the crisis surrounding the Ukrainian election. Significantly, on 1 May 2004 the European Union went from 15 to 25 member states and increased its population by around 25 percent. However, GDP increased by less than 5 percent, because eight of the 10 countries were former satellites of the USSR. An enlarged EU now forms the world's largest trading bloc with a population of 455 million people.
A dozen of these countries make up the single-currency eurozone (the UK and Denmark are notable exceptions). But a largely inflexible eurozone is considered by some to be an economic basket case: Gross domestic product grew by only 0.9 percent in 2002 and 0.6 percent in 2003. It is expected to have risen by 1.8 percent for 2004. By contrast, the UK's GDP will have risen by 3.2 percent by the end of 2004, although pundits expect a ceiling of 2.5 percent in 2005. Uncertainty over oil prices is compounded by the strength of the euro and pound sterling against a weak US dollar, with its effects on exports. True to form, economists have begun to forecast gloomy times ahead for most European economies. Naturally, lower consumer and industrial demand will adversely hit the labeling and packaging industry.
As for the structure of the European label industry, it splits roughly 39 percent for wet glue applied and 45.5 percent for pressure sensitive in most consumer applications. Film based shrink sleeves, wraparound labels and in-mold labels are growing fast in the developed markets--reflecting the enormous growth of plastics in packaging--but take only an 8 percent share of the total market. As for production methods, web fed printing of wet glue labels remains a small market, although new types of in-line finishing techniques are attracting more sheetfed litho printers. Narrow web technology has moved far from the historical dominance of semi and full rotary UV letterpress, especially in Germany, France and Switzerland. In the late 1980s letterpress accounted for 70 percent of European press sales, whereas in the United States flexo accounted for 80 to 90 percent of presses. Today, roughly 75 to 80 percent of new roll fed label presses in Europe have either conventional or UV cured flexo units. Flexo's improved print quality and better color consistency is the clincher here, since European print buyers have always expected high quality as a non-negotiable right.
Around 10 percent of presses are combination models, either UV flexo or offset based, equipped with UV rotary screen and often hot or cold foil units. With respect to anilox rolls and platemaking, again these reflect an international approach. There is, however, a growing interest in computer-to-plate systems as part of digital prepress workflows. Substrate trends, including the use of film label stocks, follow roughly the same patterns as in North...