It is logical to group food and drink together. However, for the label converter, beverage labeling has many distinctive features, which is why we are treating it separately here. Also, Finat has designated beverage labeling as the end-user sector with the most potential for self-adhesives. At present it accounts for 8-9 percent of the total self-adhesive market.
GLOBAL MARKET SIZE AND MAIN CHARACTERISTICS
The total world market by volume of all bottled beverages, including waters, wines, beers and spirits is of the order of one thousand billion liters, or 140 liters for every man, woman or child in the world.
Bottled waters are in volume terms the biggest category, accounting for some 15% of the total, followed by non-alcoholic drinks. Waters and soft drinks are also the fastest-growing sectors, with rapidly expanding sales particularly in Middle East countries. The worldwide beer market is stagnant, but with some rapid growth areas like Africa, where branded beers are replacing home-brews. So-called ‘craft’ beers – low-volume beers, generally from small breweries – are an expanding business particularly in the USA. Wine production fluctuates with weather conditions. Over the past decade South American, Australian and New Zealand wines have taken an increasing share of world markets. However, half of all the world’s wines come from just three countries: Italy, France and Spain. Spirits consumption worldwide is growing. The important Chinese market has stabilized but still has good growth potential.
REGULATORY BACKGROUND – ALCOHOLIC BEVERAGES – EUROPEAN UNION
For drinks containing alcohol, labeling regulations everywhere require an indication of the alcohol content, and in most cases also the country of origin and a health warning and storage instructions. For EU countries there are standard regulations (see ref 1169/2011 for ‘information which must be provided’ on the label). As regards public health warnings, the European parliament in April 2015 voted a resolution ‘Calling on the Commission to begin work immediately on the new EU Alcohol Strategy (2016-2022) with the same objectives, updating the regulatory framework so as to assist national governments in dealing with alcohol-related harm, to support monitoring and the collection of reliable data, to encourage prevention and health promotion and education, early diagnosis, improved access to treatment, continuous support to those affected and their families, including counseling programs, to reduce traffic accidents caused by drink-driving and to better differentiate within drinking patterns, behaviors and attitudes towards alcohol consumption’. This resolution has not yet been adopted by the Commission, but many suppliers of alcoholic drinks are already adding extra health-care warnings, for example, those aimed at women during pregnancy.
Even within the EU some countries have specific extra labeling requirements: Austrian wine labels for example must show the origin of the wine and the amount of sugar and alcohol indicated as dry, semi- dry, sweet, or semi-sweet. The United Kingdom stipulates that the wording on all labels shall be ‘in British English’.
REGULATORY BACKGROUND – ALCOHOLIC BEVERAGES – UNITED STATES
These are laid down principally by the US Tax and Trade Bureau (TTB) which in addition to the usual stipulations on alcohol content and country of origin also defines the conditions to be met before a beverage can be called ‘low carbohydrate’. For each type of beverage (wines, beers, spirits) the TTB provides detailed rulings on label content, font size and many other requirements .
REGULATORY REQUIREMENTS – NON- ALCOHOLIC BEVERAGES
Bottled waters are a huge market (ten billion USD in the US alone) and are subject to strict labeling requirements particularly regarding their origin and the quantities of minerals they contain. Certain waters are used in the treatment of illnesses, and incorrect or inadequate labeling information can have serious consequences. For waters marketed in the EU, Directive 2009/54/EC regulates the marketing and exploitation of natural mineral waters. Certain provisions of this Directive are also applicable to spring waters. Commission Directive 2003/40/EC establishes concentration limits and labeling requirements for natural mineral waters and the conditions for using ozone-enriched air for the treatment of natural mineral waters and spring waters.
Natural mineral waters are subject to an authorization procedure carried out by the competent authorities of the EU Member States.
For waters in Europe (and to some extent in the rest of the world) brand names and places of origin are important marketing tools. The label being an essential part of the marketing mix must conform exactly in color with the brand owner’s requirements. Typical example of these strongly branded waters are: Perrier, Volvic, and San Pellegrino.
For the United States the FDA gives only succinct labeling guidelines, namely that the label must include the bottler’s company name and contact details, plus ‘some quality details’.
For other non-alcoholic drinks like colas and juices, labels generally (in most countries) must show the percentage of fruit, if any, and the sugar content.
PRODUCTION, DISTRIBUTION AND MARKET STRUCTURE
Market structures are very different for each type of beverage.
For bottled waters, Nestlé with bottled water sales of 30 billion USD worldwide is among the leaders (it owns Perrier, San Pellegrino and other well-known brands).
For colas and other non-alcoholic drinks Coca- Cola is market leader with annual sales worldwide of 50 billion USD, followed by Pepsi with 35 billion USD. Other players in these markets are considerably smaller.
The beer market is also increasingly concentrated, dominated by Benelux-based Heineken and InBev (2016 sales 22 billion and 44 billion USD respectively) and South Africa’s SAB Miller. InBev’s 100 billion USD acquisition of SAB Miller will create a near monopoly in certain markets (see Figure 3.1). Total world beer sales at retail prices are estimated at between 600 and 650 billion USD.
The wine market by way of contrast is very fragmented. Total world production is estimated at 276 million hectoliters, and over half of this is produced in just four countries, France (17 percent), Italy (16 percent), Spain (14 percent) and USA (11 percent). Long-term production of wine is falling as growers switch from low-margin table wines to classier vintages. Significant is the rise of Australian and New World wines which over the past decade have increased volumes substantially.
The other joker in the pack is China. Statistics on its wine production are not necessarily reliable, but according to some observers the rate at which new vineyards are being planted in China could make that country the largest wine producer in the world in the longer term as the new vineyards reach maturity. Already, China (including Hong Kong) is reckoned to be the largest red wine-consuming nation in the world. Its imports come mainly from France, followed by Australia and Spain. Consumption of wines has increased rapidly in recent years and per capita US consumption now stands at 12 liters per year, a rapid increase, but still a long way behind France and Italy (44 liters and 39 liters respectively).
The spirits market is different again, with two companies, Bacardi and Diageo, dominating.
Between them they control two-thirds of the world spirits market. Well-known brands of whisk(e)y, vodka and gin are among Diageo’s brands (it also owns the famous Guiness stout). This UK-based company had 2015 sales of 10.8 billion GBP (16 billion USD).
Bacardi, with headquarters in Bermuda, has worldwide sales of 4.5 billion USD. The fastest growth in spirits consumption is in the developing world and in particular in China. Chinese demand for imported spirits (especially whisky and brandy) is booming and some industry experts believe China could soon be the largest spirits market in the world. Self-adhesive beverage labels currently account for some two billion sqm of labelstock. The total volume of other types of beverage label (mainly wet-glue) is between three and four billion sqm, which gives self- adhesives good prospects for growth.
TYPES OF LABEL MOST USED FOR BEVERAGES (1) – BOTTLED WATERS
Often neglected as the ‘poor relative’, labels for waters are a vast market. With each person in the world consuming over twenty liters per year, that works out at between 120 and 150 billion labels every year. By far the dominant labeling technology is wraparound, with labels printed in one or two colors. Print runs are long, and gravure is the most used print technology, followed by flexo. Most waters come in plastic bottles and recyclability (see below) is a major concern for public bodies, bottlers and label converters. Premium brands of water will often have two or more labels. One or two of the world-famous premium brands of water use glass bottles. Glass is also used for water distributed to HBR (hotels, bars and restaurants) and labels for these must adhere securely until the empty bottle is washed, and must then be easily detached – not an easy task.
TYPES OF LABEL MOST USED FOR BEVERAGES (2) – NON-ALCOHOLIC DRINKS
Carbonated soft drinks and fruit juices are the main categories in this sector. Market leader Coca Cola uses almost exclusively wet glue labeling. However, when the company was preparing its ‘Share a Coke’ campaign (with different first names on the label) in 2013 a problem arose. The company has always ordered its labels in very large quantities. Suddenly it needed to order just a few thousand of every label type – and there were thousands of different types. A self-adhesive label converter in the Netherlands rose to the challenge. He ‘recruited’ half a dozen converters in different parts of Europe, all using the same model of HP Indigo press, and together they delivered what was called ‘the most complex label order ever seen’. Apart from the logistics, the biggest problem was ensuring color conformity: every label had to be in exactly the right shade of Coca Cola red. Since this first large-scale experiment, several other beverage manufacturers have copied the idea, which is made possible by today’s digital label presses. This has helped the self-adhesive label to broaden its appeal to beverage manufacturers, many of whom still use simple wraparound labels.
The juice market is another big beverage sector where branding is important. Self-adhesive labels are widely used to make the product stand out on the supermarket shelf. Shrink sleeve labels are also increasingly used, and they have several advantages. Their 360° coverage of the surface makes them attractive for designers and brand owners, and by using opaque films the shrink label is light resistant, an important criterion for perishable liquids. They can be designed to give full or partial coverage of a bottle, and can also provide tamper-evidence. Being printed on the inside makes them scratch-resistant. Films used are PVC, PETG, PLA and EPS Foam, each type having different shrinkability. Designing shrink sleeve labels is difficult, requiring 3D programs like Esko Studio, Pigmentz or Adobe Illustrator. Special programs exist to pre-distort the designs. All print technologies can be used, but today’s shorter runs favor flexo or digital. Steam, infrared or hot air are used to apply the sleeve to the bottle.
TYPES OF LABEL MOST USED FOR BEVERAGES (3) – BEERS
Unlike wines, which are mainly in glass bottles, beers are packed in three main ways – bulk (draught), can and bottle. Worldwide, the bottles account for one third of total beer consumption. Labels for mass- market beers are still mostly wet-glue. However one major brewer, Heineken, is developing what it calls ‘brand experience’, and is using self-adhesive labels as an integral part of it marketing plan. In this case the labels are clear-on-clear to give a no-label look to the bottle. Several other brewers have copied this idea.
Another labeling innovation, popular in the United States where beer is often drunk from the bottle, is to give a ‘tactile feel’ to the label. This is done by embossing, screen-printing or (more recently) by digital printing.
Another development in beer markets is the growth of so-called ‘craft’ beers. Originally home- brewed by lovers of ‘authentic’ brews, they are now a rapidly growing part of the market, particularly in the United States. According to the Brewers’ Association, there are today more than 3,500 craft breweries in US alone, they sold 26 million hectoliters in 2014, and had sales of 20 billion USD.
The trend is well established in England where it arose out of the ‘real ale’ campaigns of 20 years ago, and even in Germany 12 percent of all beer sold in 2014 was craft beer (according to Mintel Market Research). The importance of the craft beer revolution is that these beverages are mostly sold in bottles, with self- adhesive labels, and with many varieties. This is helping label converters to gain ground in the beer sector, so long as they can offer premium printing quality in a wider variety of substrates than is normal with the Heinekens of this world. Label converters who have invested in new technologies such as digital printing capacity are able to meet the short-run requirements of the craft beer sector, which includes special effects such as tactile varnishes, hot/cold foils, embossing and inks which change color when cooled.
Because craft beers are more expensive, labels are sometimes provided with NFC tags; these are thin, flexible labels that integrate with a product’s packaging or label and can be read with the tap of an NFC-enabled smartphone, enabling the consumer to dialog with the brewer or distributor. For the self- adhesive label business there is however a downside to technological innovation in beer labeling: the arrival or rather the return after several decades of absence – of direct printing. The equipment manufacturer KHS has developed a digital direct print engine configured with print heads from Xaar and using low-migration inks from Agfa. The manufacturer claims a resolution of 1080 x 1080 dpi and a speed of up to 36,000 PET bottles per hour. The world’s first ‘Direct Print Powered by KHS’ system in industrial production with direct printing on PET beer bottles was installed in the Martens Brouwerij (Belgium) in mid-2015.
Another contender is Krones with its Direct Print System DecoType for decorating plastic containers, said to run at up to 12,000 containers/ hour with high print quality . According to Krones this can enable digital container decoration to print onto shapes where labels cannot be used.
It also avoids overproduction of labels, needs no adhesive and so reduces storage costs.
This development of direct printing could have repercussions far outside beer labeling and could inhibit the growth of self-adhesive technologies over the whole beverage sector.
TYPES OF LABEL MOST USED FOR BEVERAGES (4) – WINES
With very few exceptions, wines are sold in glass bottles, and the only two labels types used are wet- glue and self-adhesive. Traditionally, wet-glue labeling has dominated in Europe. For low-value, high-volume wines it still dominates. Wet-glue bottle-labeling units are expensive, and they are durable. Bottlers tend to wait until the last possible moment before considering a change to self-adhesive labeling. The self-adhesive
wine label offers many advantages: any shape of label is possible, and two or even three labels can be accurately applied in a single pass. The disadvantages are cost, and speed of applications. The latest generation of fully automatic pressure-sensitive labeling lines run at speeds close to those of wet-glue applicators, but total applied cost is still higher for
self-adhesives. However, the wine market worldwide is changing. The market for cheap table wines is declining, and growers are trading up to higher quality wines. For labeling, run lengths are getting shorter, so the fast set-up time of self-adhesive labelers is a big advantage. Finally, many smaller wine growers who in the past would have sent their wine in bulk to be bottled and labeled now find that they can do the job themselves with only modest capital investment in a semi-automatic self-adhesive labeler. Particularly in Europe, wine label converters can be found clustered thickly around the continent’s main wine-growing areas. Although flexo printing dominates for these converters, many use venerable letterpress machines. In fact, a wander round some of these small label converters’ shop floors can be as good as a trip to the museum. Digital label printing is making inroads into the wine label sector as growers, cooperatives and shippers call for special labels for supermarkets, wine stores and hotel/restaurants – and they don’t want to hold stocks of labels which they may never need. For these reasons, wine label converters are ‘going digital’ to provide their customers with just-in- time, short-run labels.
Smart labels for Burgundy
Belgian authentication specialist Selinko in partnership with NXP Semiconductors now supplies smart labels for wines made on the Geantet-Pansiot estate in Gevrey- Chambertin. The new microchip-enabled wine labels will enable the estate to safeguard its distribution network in order to protect its wines from counterfeiting, combat gray markets and also to communicate with its customers directly and in a targeted manner. The customers, for their part, can authenticate their bottle and obtain information about the wine (vintage, production, serving temperature, storage) and the estate, simply by tapping the back label with their NFC smartphone.
Similar smart devices are already used on Grand Cru wines. This is the first time smart labels are being used for more modestly prices vintages.
Different wines need different substrates, and all the major labelstock producers now have tens, even hundreds of grades specially developed for the wine sector (see below). Labels for white wines, rosés and champagnes are generally coated, wet strength papers, since they must withstand chilling and immersion in iced water without wrinkling or falling off; mass-market rosés sometimes carry a clear-on-clear label, but this is the exception rather than the rule.
For red wines the fashion is to have a textured label, either with a paper face material or a white filmic substrate made to look like paper. For all types of wine except the most expensive, gold foiling is used extensively to make the bottle stand out on the shelf. Several label converters have developed applications which enable their customers to design their own wine labels from a set of patterns; interestingly, the customers are free to put whatever text they want on the back label (which contains the legally required information). ‘That way’, one label converter explained ‘If they make a mistake, it’s not our fault’. The back (or contra) label for wines is in nearly all cases a white label printed in one color. The same conditions (moisture resistance) apply as for the front label.
|When launching a brand of Cachaça (a kind of rum) on the UK market, the distiller wanted a label that would stand out. The design chosen used Tintoretto Crystal Salt material for a rich tactile feel to reflect the Salto sugarcane green, with subtle sepia imagery. Added embellishments included a reflective gold foil to give the product a premium look. The fine foil detail on this label, printed and finished by AJS Label on HP Indigo and Newfoil equipment, is exceptional and typical of the attention to detail given to spirits labels.|
The wine label does not normally need to be recyclable, since in most countries, Germany is an exception, glass wine bottles are not washed and re-used. Glass being a total barrier, there is no question of unwanted migration either.
Self-adhesive and wet-glue labels account for over 90 percent of the wine labeling sector worldwide. The remaining ten percent is mostly bag-in-box packing, increasingly popular for cheaper wines. There is also direct printing, made possible through recent technical advances, and sleeve labeling. Both of these are at present very small niche markets.
TYPES OF LABEL MOST USED FOR BEVERAGES (5) – SPIRITS
In most of the world you are allowed to brew beer in your bath and wine in your washtub, but you may not distil spirits. This is partly for public health reasons (wrongly distilled spirits poison you) but mostly since spirits are heavily taxed. With just two companies controlling two-thirds of the business, the global spirits market is highly concentrated. It is also highly regulated. Some governments require distillers to seal
each bottle with a sequentially numbered self- adhesive security tape or tax stamp. There is a small but flourishing black market in ‘genuine’ spirits labels which are sold to crooked distillers. Label converters need to be equipped to count spirits labels with great care and to ensure that surplus or slightly defective labels do not find their way into the wrong hands.
One of Scotland’s biggest printers of wet-glue labels supplied many of that country’s distilleries and reckons more than half of all Scotch Whisky labels are wet-glue. For all types of spirits label, printing and finishing is complex, involving up to twelve operations
including screen printing, embossing and foiling. Different overt and covert security features are used. While contra-labels for wines are mostly white, in the case of spirits the contra label is colored and complex, often giving cocktail suggestions as well as health warnings.
The proliferation of brands and sub-brands of spirits makes for shorter runs. This together with distillers’ requirements for just-in-time deliveries means that spirits labels are a market opportunity for the self-adhesive label converter, particular if equipped with a digital press. For top-of-the-range spirits, NFC- based smart labels are being used. Constantia Flexibles in partnership with Thinfilm Electronics has developed smart labels which are uniquely identifiable and not only provide anti-counterfeit protection but also offer the brand a two-way communication with the consumer (see below). At present these labels are cumbersome and expensive, such that they can only concern expensive items, but the technology is likely to become cheaper as it grows and spreads.
RECYCLABILITY AND THE ENVIRONMENT
Plastic bottles are increasingly used for non-alcoholic drinks, and occasionally for beer. In many cases the plastic is PET. PET bottles are generally not washed and re-used; they are recycled by shredding, and are
used to make clothing, carpets and other products. To permit recycling, the label must be easily removable. This is most frequently done by flotation. A leading materials producer now makes recyclable sleeve label film.
Ecologists (rightly) condemn the pollution caused by plastic drinks bottles of all kinds. It is the label industry’s responsibility to work together with the plastics industry to improve recycling rates and above all to ensure that the label separates easily and does not pollute the recycled product.
POINTS TO REMEMBER:
- Beverage labels have high growth potential, particularly for self-adhesive technologies
- Bottled water and beer markets are concentrated (except for craft beers), wine market is highly fragmented
- Content of label must conform to local regulations in each country where it is marketed
- Spirits, and spirits labels, need protection against counterfeiting
- Ecological concerns (recycling) are a major factor.