Push-Pull Strategies

The pressure-sensitive label market continues to stretch itself in pursuit of increased market opportunities. Could it do more to extend its reach?

On top of the lingering challenges of overcapacity and maturity in the narrow-web industry, the pressure-sensitive label market is having to weather a persistent price squeeze and steady inroads by alternative label and package structures. How are pressure-sensitive converters and suppliers staying strong in the face of these market forces?

Statistics have long favored this label segment, and for good reason. "Pressure-sensitive has the widest application base of any label decorating method," says Jennifer Dochstader, managing director at Label and Packaging Communications (LPC), a market research and communications firm serving the label and package-printing industry. Dochstader pegs current overall growth for the pressure-sensitive market at 4 to 6 percent, and believes that among the strongest markets for current and potential pressure-sensitive growth are the beverage, security, health and beauty, and pharmaceutical sectors.

A Freedonia Group study released in 2002 notes that pressure-sensitive labels also continue to play a key role in variable information labels, expanded content labels for medical and personal care products, and secondary-labeling applications such as "smart" RFID labels.

Marks of a commodity?

Amid this strong market presence and steady application development is the specter of commoditization, a trend that industry insiders both acknowledge and dispute to varying levels. At the very least, pressure-sensitive label converters may need to more aggressively differentiate themselves.

One online directory of pressure-sensitive label suppliers, www.pressuresensitivelabels-ez.com, powered by Thomas Register, lists nearly 800 label companies. What's more, a quick examination of converter Web sites suggests that many pressure-sensitive players highlight similar aspects of their services—specialization in pressure-sensitive labels, long-term industry experience, ability to serve all markets, custom capabilities, and single-source or total production services.

Dochstader acknowledges that some types of pressure-sensitive label applications have arrived at commodity status. She observes that for some consumer product companies (CPCs), "the label is thought of as just one element of the total package," noting that packaging engineers at a few CPCs are currently very focused on package functionality, and may devote more attention to design elements such as the container's contour, shape, and aperture, than to the label.

"And [CPCs] know there are a multitude of companies out there that can do quality pressure-sensitive label printing. We're witnessing more and more end users implementing reverse auctions/on-line bidding into the overall supply chain management structure, and the label certainly isn't exempt from this trend," Dochstader adds.

According to Lynn Crutchfield, executive VP/COO at Acucote (Graham, N.C.), "There is heavy commoditization occurring within the industry, not only from the label converters' position but from the suppliers' as well." Crutchfield sees pricing standardization as a bittersweet by-product of this trend. "On the one hand … the 'playing field' relative to pricing for materials is fairly level," he notes. "On the other hand, traditionally large, high-volume converters are finding themselves squarely competing with smaller, low-overhead converters.

"It's not a very pretty situation out there as end-use business is moving around a lot from converter to converter," Crutchfield sums up. "The old ties of converters to end customers appear to have been severed."

That's not to say there isn't any resistance to a purely price-driven pressure-sensitive world. "There is no doubt that there is cost pressure in the pressure-sensitive label market, but we are far from being a commodity marketplace," contends Albert Groen, specialty product line director, Avery Dennison (Painsville, Ohio). "The request for different pressure-sensitive applications continues to require engineered solutions, and there is room for differentiation in almost all segments."

Those solutions may have to spring from a little technological soul-searching on the part of converters. Dochstader says cost pressures have spurred a "technological re-focus" in which no job or production method escapes scrutiny. "Everyone is holding the technology they have under the microscope," she says. As a result, a label's original substrate may be replaced with a thinner film, a hot foil element may be replaced with more inexpensive technology, or a screen-printed label may be transitioned to flexo.

New product peel-out

For suppliers, avoiding commodity status means pushing pressure-sensitive labels' already wide spectrum of applications still wider. In other words, there can be no rest for the new-product weary.

At Wausau Coated Products (Wausau, Wis.), where pressure-sensitive offerings range from label stock for web printing to top-coated products for on-demand and digital printing markets, recent new introductions include: Thermal Overlaminating Film (TOF), which enables any blank label to become a direct thermal imaging product; Dry Release Technology in the form of pattern-coated coupon stock and full-coat dry tag products; and hot melt, emulsion, and UV-cured transfer adhesives that allow customers to create their own labels on-press using printed two-sided facestocks.

According to Gretchen Kray, director of purchasing, Wausau Coated has shifted away from commodity business, and turned its focus toward the specialized needs of creative end users, as well as markets "not traditionally touched by pressure-sensitive suppliers."

Continual product evolution is also a leading strategy at Crown Roll Leaf (Paterson, N.J.), where pressure-sensitive converters can choose from 12 pixellated and holographic patterns available with permanent acrylic adhesive, and either a 50-lb. release liner for roll label applications or a 90-lb., stay-flat release liner for sheeting applications. COO/Owner James Waitts says holographic materials manufacturers must "routinely produce new patterns" and evolve at the pace of the pressure-sensitive marketplace.

Avery Dennison, whose Fasson® pressure-sensitive papers and films serve the label segment with a range of adhesive options and liners, has introduced a host of products in recent months to meet both general market and specific application needs. Its latest rollouts include removable adhesives, material options for labeling tubes, digital printing materials, decorative sticker market materials, and security application materials.

Raflatac (Fletcher, N.C.) is set to take advantage of the march toward digital printing. It has introduced a range of roll-to-roll digital label printing substrates targeted for the HP Indigo ws2000 and ws4000 presses. These presses use a digital offset color process that requires a substrate specifically developed for its application. To accomplish this, Raflatac's digital labelstocks incorporate a proprietary topcoating that is designed for extended shelf life.

Who is in the opposite corner?

For pressure-sensitive label suppliers and converters, competition can take many forms—a specific material, a competitive label structure, or an alternative package design.

Groen sees glue-applied labels as the segment's biggest competition from a pure volume perspective. However, pressure-sensitive labels' flexibility to make changes, cleaner and more productive processes, and innovation potential provide key advantages, he says.

When going up against shrink sleeve films, Groen says pressure-sensitive labels offer advantages including ease of application, better differentiation through a variety of facestock materials, and the option to show the packaged product.

Waitts says Crown Roll Leaf's pressure-sensitive polyester facestocks feel the most competition from metallized vinyl and cellophane. Crown has opted to continue to focus on polyester innovations because vinyl and cellophane harbor "inefficiencies of scale" and "are much more challenging to handle."

According to Kray, Wausau Coated sees a shift away from bottles, jars, and other containers being affixed with prime labels in favor of pouches and other full-print flexible packaging solutions that provide "a definite presence on retail shelves." As part of its movement away from commodity applications, Wausau Coated now provides flexible packaging customers with options and insight to their applications, she says.

Another competition-busting strategy may be to join forces with the opposition. Pressure-sensitive film manufacturer Ritrama, for example, is highlighting self-adhesive products for "seal and reseal" applications, such as packaged wipes, in which a flexible package is opened and resealed a number of times. These products can feature PE, PP, or custom face materials, along with pattern-coated adhesives.

By: Sue Friedman