ALPS Featured Article: Brands and Labels-'The Industry Perspective'

Image Courtesy: labelsandbrands.com

The Label World is transforming at an unprecedented rate due to which Label printing & Packaging industries are persistently evolving to meet the ever growing & emerging market needs.

Today’s technology driven consumer has totally revolutionalized his shopping experience. He is more aware and demanding which has led to many challenges for Brand owners. Where on the one hand it is opportunistic yet on the other it has made the competition fierce among brand owners .

Today, if a brand needs to sustain itself in the market and wants to enjoy consumer's loyalty, it has to stand out in the digital campaigns as well as on the shelf. This has opened up a host of opportunities for Label printing & Packaging industry as brand owners are looking for smart and attractive packaging solutions with labels playing a crucial role.

The need of the hour is customized and personalized packaging to go hand in hand with the digital marketing campaigns launched by the brand or to attract particular genre of clientele.

The pace of change has led to attractive designs which need to have multiple effects to engage consumer.

Today a label is no more ‘A Product Identification data’ as it used to be, but it has become multi dimensional adding more cores to its meaning.

It is a brand identity, it has developed a persona of its own , It stands out.

With the rise in the complex requirements by the brand owners, label jobs will tend to increase considerably.

By incorporating technology advents and marketing gimmicks labels have out grown themselves from their traditional image.

They are now viewed as a sophisticated tool for not only positioning a brand but an identification mark of the brand authentication as well.

The challenge which lies amidst this advancement for Label Industry is reluctance of brand owners to pay in accordance.

The cooperation between the tricycle of Label Industry, Brand Owners and Consumers is limping.

Views of Industry experts on how does brand owners perceive the ongoing changes in Label Industry.

Mr. Samir Patkar

Samir Patkar, Heidelberg Asia & Regional Head of Sales – Asia Pacific, Gallus Label Presses

Labeling which plays an integral part of packaging and brand recognition  also plays key roles in merchandising and product success, furnishing opportunities for producers to stand out among competitors as they jostle for retail shelf space.

Product differentiation calls attention to individual brands in many ways. By associating unique characteristics with their products, brand owners create instant recognition and authority within their niches, leading to higher sales as visibility and credibility rise.

The name of a product/ Brand , for example, provides a cornerstone to build on, often inspiring brand themes that increase recognition among consumers. Whatever you sell, your logo and supporting artwork aim to please those within your target market, so the visual images do more good than your sales pitch alone. Even your color-scheme is chosen with consumer appeal in mind, catering to trends within your niche.

In the times of retail modernization brands today need to stand out in the crowd especially when certain goods today use same size, shape and style of packaging. As markets become more competitive, however, brand owners continue to work with converters to help set them apart from competing brands. One way forward to create Colorful graphics with the intent to add value embellishments in the label by process mix of printing processes like  flexo, screen, cold/hot foil, gravure all in line to create colour brilliance and high product appeal to attract consumer attention that highly supports brand differentiation.  Playing around with different substrates that support both added value and sustainability is getting more popular, for example, labels are now printed directly on a variety of materials, clear films, metallised surfaces, higher use of PP/PE/PET including Silver metallised films  that were once difficult to print. And color is used more effectively than it once was, helping brands establish themselves through color recognition.

Brand differentiation is essential to retail marketing success, so packaging plays a primary role by calling attention to your products over those of competitors……..hence it will not be improper to state that “ The Package is the Product”.

Considering the critical criteria’s as above the converters need to understand the critical role they play today in supply chain and brand building of brand owners and ensure that a business environment of win – win is created. Innovation that supports business growth needs to create value for everybody in the supply chain for the cycle of innovation to continue …. Else it only damages product value and erosion of street prices  which does not support anybody business goals !

Mr. Manish Mehta

Mr. Manish Mehta, MD Reifenhauser (India) Marketing Ltd. Mumbai

THERE IS NO DENYING THE IMPORTANCE OF THE LABEL for content, marketing, brand positioning and the company image itself. And at the same time, there is also no denying the fact that margins are constantly under pressure, with brand owners demanding always a high quality, yet not willing to increase prices especially for packaging. 

UNLESS, there are new features or value adds that not only benefit the brand owner but also ensure benefits to consumers. 

This therefore, and now, even more, underscores the need for high end technologies, not only to optimize on productivity and production costs, but also new solutions such as aesthetic appreciations or security, anti-counterfeiting solutions et al. 

Of late, has been a trend of big players selling off to multinationals and flexible packaging converter also wanting to have a share of the label pie. 

While on the one hand this is increasing competition ( to the benefit of the brand owner in terms of costs, delivery and differentiation), on the other hand, it is also a very clear indicator of the expected growth in the industry, which is being reflected in terms of number of machines being installed as well. 

To cut a long story short, mushrooming of players will continue, as will as the need for differentiation, along with the growing demand for labels with newer and fresher concepts of sales and marketing. 

Quality demands in terms of infrastructure, kind of machines, clean room etc will also be precursors for higher realizations in the markets along with brand image and brand positioning taking center stage. 

Mr. Danny Mertens, Corp. Communications Mgr.-Digital Solutions Xeikon-Digital Div. Flint Grp. Belgium

"Brand owners are always looking for new manufacturing techniques to support their drivers. The most important ones are:
- shorter runs for different reasons like localization of products, different product versions and flavors according to local preferences or trial marketing actions such as customized or even personalized packaging.
- fully integrated and digitized workflows to support last-minute decisions on manufacturing changes to come to a fully flexible production process which allows for just-in-time production.

The label industry has to cope with these drivers and the resulting requirements and both converters and brand owners are typically on a balance between the new requirements and the new (available) production techniques. At Xeikon we see a lot of marketing trials for new types of labeling illustrating the drive to fully flexible customization as well as growing print volumes at our customers doing this already today."

Mr. Mahesh Kode

Mr. Mahesh Kode, Business Unit Head, Narrow Web, Siegwerk India Pvt. Ltd. Gurgaon

The last decade or so has seen a revolutionary change in the buying habits of Indians!

The Indian Labeling industry has been quick to sense and adapt to this changing need and ever-increasing demand for Aesthetics, Anti-duplication & Branding, and Shelf-appeal challenges. The country has continued to see a spate of high-end Imported presses being installed and added over the years, producing labels that rival any others produced in the most developed countries, and yet, at what price??!!

Alas, the Brand Owners who have created this need for enhanced decoration techniques and fine, high-quality printing, have then set the Packaging Development and Purchase teams to browbeat the Label-convertors and suppliers into submission, challenging them to produce the highest quality at the lowest possible prices…

It is a fiercely competitive scenario, wherein quality, consistency, supply-chain, innovation are all taken for granted in the face of say, a reverse-auction, that does not always end up altering the original vendor, but only secures lower prices from the same supplier when the actual auction-winner is unable to service demand in real-life!!!

One hopes that the MNCs, domestic FMCG players (who are getting as successful as the former, sometimes even outshining them with products and campaigns!) and BOs start realizing that this vicious cycle has to end somewhere, and their partners in the entire supply-chain should get their dues worth for the investment, hard work and systems that they deploy to produce millions of labels that all look the same and yet stand out!

Label Convertors, on the other hand, need to continue improving efficiencies, enhance their people-skills and knowledge to increase productivity, cost their products appropriately based on not just RMC but all direct and indirect costs that go into running a Label-printing plant, and defend their prices based on due merit and cost justification.

India has come of age, and the Indian consumer is now far more discerning and affluent, not wanting to buy a product because it is the cheapest off the rack, and it is time the industry recognizes this change and stops focusing only on the cost or the price-point, and instead brings in more value to the end-user in various ways, be it the product performance itself, or a premium appeal of a superiorly labeled container, which will ultimately ensure sustainable business growth for all the players associated with it!

Mr. Gururaj Ballarwad

Mr. Gururaj Ballarwad, Management Consultant, Signode India Limited & President, ALPS, N.Delhi

In India, all the Brand owners want most of the features & decoration but unfortunately they don’t have budget to spend. Most of the Brand owners are on cost reduction drive.

As a cost component Label only adds 1-2% to the total cost but the questions which haunts is, why only Label is at the radar. Label is the selling point for them, still Label is the only one component which is always targeted.

If they reduce the decoration of the label they will invite more & more counterfeit in the market. Instead of increasing their margins & sales either they will find that brand not growing or in negative.

My suggestion is wherever they are in the leading position they should add more features, decoration & improve the sales rather than looking at reducing the packaging cost.

To end this discussion, I would like to add, the tools that Indian Label Industry need to beat the current course scenario are:

•  §  Setting the Costing right, to include equipment payback & investment for new equipment in 3-4 years
• §  Great Negotiation skills because they are up against a highly qualified & constantly trained purchaser/ brand owner.
• §  Wise Equipment choice, with low cost of production & long term quality product delivery in mind.
• §  USP (unique sales proposition) has to be built into the product, this may be decoration, security features, on time delivery etc.
• §  Every new financial year collaborative brainstorming & planning to  get better pricing  as the opponent for sure is doing a detailed planning on how to get prices reduced and that too in a very structured manner.... leaving our front end guy defenseless.

      Author: Ms. Priyanka Rathi, Executive Secretary-ALPS