By Corey M. Reardon, President & CEO, AWA Alexander Watson Associates
In the mature and developed label markets of North America and Europe, sleeve label market growth rates – while stabilizing at lower rates of growth than previously – are still outperforming the other product decoration/label formats in terms of growth. Across all the geographical regions, heat shrink sleeves claim the highest market share of all the sleeve formats.
By region, North America grew the fastest, at 5.8%, with Asia growing at 5.5%, Europe at 5.4%, South America at 3.6%, and Africa and the Middle East at 3%.
The European region is a leading consumer of sleeve labels, which claim 14% of the overall label market and, in 2018, 19% of the region’s primary product labeling volumes. Sleeve labels are primarily found in the beverage segment (50%), followed by the food segment (30%), and household chemicals (10%). Heat shrink sleeve label volume growth was the highest for all label formats in Europe in 2018 at an estimated 6.6%, while total sleeve label format volumes increased by 5.4%. Forecast growth to 2021 for all labeling technologies is 3.2% p.a., with sleeves forecast at a CAGR of 4.4%.
In North America, market status is also positive, demonstrating stable label market growth across United States, Canada and Mexico, delivering an overall growth rate in 2018 of around 3.2%, driven by high growth in sleeve, in-mold and pressure-sensitive label technologies. The forward forecast for 2018-2021 suggests an overall annual growth rate of 2.9%, with growth strongest in heat shrink sleeve and in-mold label technologies.
In 2018, North American sleeve label market volumes are estimated to have grown by 5.8%, and claim an 11% share of the total label market. Heat shrink sleeve volume growth was estimated at 7.0%, to a volume of 895 million square meters. Stretch sleeve label volumes grew by 3.0% to an estimated 226 million square meters. ROSO™ MD and RFS MD sleeve labels grew by an estimated 4.2% to a total volume of 231 million square meters. The North American market is the leading user of RFS MD sleeve label formats. Sleeve labels are primarily found in the beverage segment (50%), followed by the food segment (25%), and household chemicals (13%).
In the Asian region, the Chinese label market, combined with good growth in India and South East Asia, have had a positive effect on overall label market growth rates – 5.7%. Asia is currently the world’s largest and fastest-growing label market, with a 44% share of global demand. In 2018 sleeve labels claimed a 27% share of it, as well as 33% of the primary product label market. Beverage is once again the largest end-use label market in Asia by far, representing 47% of the total, with food in second place at 23%. The sleeve label technologies grew by an estimated 5.5% in 2018 – in line with 2016 and 2017 growth, with the highest percentage increase evidenced by RFS/ROSO MD sleeve labels, although volumes for this format are low. The forward growth forecast for the Asian market over the period 2018-2021 is estimated at 4.2%, with sleeve formats enjoying higher growth, at 5.2%.
South American label volume growth in 2018 is estimated at 1.6% – a recovery from static/negative growth shown in previous years — and the outlook is for continued moderate growth. The forward forecast for the region in the period 2018-2021 predicts a continuation of positive growth rates at an annualized growth rate of 1.8%. Key end-use label market segments within the region are food, beverage, health and personal care products, and retail.
Sleeve labels, with a 4% share of the overall South American label market and 5% share of the primary product label market, grew by 3.6% in 2018, with heat shrink TD sleeve volumes growing at a slightly higher rate of 4%.
In Africa and the Middle East, South Africa, Israel, North Africa and the Middle East remain the main label markets, and ongoing political and economic issues across much of the region detract from the realization of higher penetration rates for packaged goods and the use of labeled products. Regional growth in 2018 was consistent with that experienced in 2017, at 3.9%, and forecast overall growth for the label market for 2018-2021 is forecast to remain stable at 3.9%.
Sleeve labelling grew at an estimated 3% in 2018. Food is the largest end-use segment for labels overall, at 47%, with beverage in second place at 29% — characteristics of a developing market. Sleeve labels claim just a 10% market share, and while in-mold labels are forecast to be the fastest growing label technology in the region, at a CAGR of 4.5% for 2018-2021, glue applied labels, with a 63% market share in 2018, will continue to account for the majority of additional total label volumes in 2021.
PET, HDPE and PP containers are widely recycled in Europe, North America and Asia for extensive, broad-ranging second-life use. As a result, consumer brand companies (and recycling companies) require shrink sleeves that are compatible with the sorting and recycling processes used today around the world; do not reduce the quality of recycled plastics, and do not have an adverse effect on the recycling of the plastic films employed. A recycler will work to remove all materials that he does not want – typically, everything other than the container itself (e.g. cap, sleeve) – and the process often begins with shredding of all the material followed by a bath to separate materials of different densities and remove those not required. Recycling sleeves with plastic containers can be complex, and the increasing use of perforated heat shrink sleeves is contributing to simplification.
The sleeving technologies are continuing to evolve at all points of their different value chains — and heat shrink TD sleeve labels are enjoying an ever-increasing understanding of the promotional benefits of combining high-quality graphics with complex container geometries on FMCG packaging. For such technically-unique applications, and simpler, less ostentatious sleeve labels, this is a product decoration and identification technology that is here to stay.