How is the global demand for labels developing by 2020?
Global label demand by region in 2015 (Source: Freedonia Group)
The global demand for labels is projected to increase 4.1% per annum to 58.8 billion square meters (sqm) in 2020, with a value of almost USD 125 billion. Labels are used in most sectors of the global economy, but mainly in primary packaging applications. As a result, label demand tends to track trends in manufacturing activity and is particularly sensitive to trends in certain nondurable goods segments, including food processing, beverage production, chemical manufacturing and pharmaceutical processing.
by Mike Richardson
The largest regional label markets tend to be where there is the most manufacturing activity, including North America, Western Europe, and the industrialised areas within the Asian-Pacific region. North America and Western Europe are relatively mature markets and are expected to register modest growth through 2020 although both regions’ performance should show an improvement over the 2010-2015 period.
In contrast, Asia/Pacific is projected to show the fastest growth among regional markets, even as the growth of the massive Chinese market slows considerably as its economic growth decelerates. Manufacturing activity is also expected to grow rapidly in the Africa/Mideast region, leading to above average growth for label demand.
In North America, the food sector represents the largest market for labels, accounting for 17% of overall demand in 2015. Although it is the largest label market in the region, it accounts for a smaller share than in other regional markets. Through 2020, the fastest growth will be seen in the pharmaceutical segment due to strong growth in pharmaceutical production, while the more mature food segment is expected to be amongst the slowest gains.
Prospects in the mailing segment are more challenging, as more people use the Internet to communicate, pay bills, complete application forms, file tax returns, and so forth. On the other hand, the increasing popularity of online shopping will benefit the demand for shipping labels.
Within the North America region – which includes the United States of America (USA), Canada and Mexico – the US has by far the largest economy. Thus, when viewed in the aggregate, North America is an industrialised region featuring a large services sector and mature markets for most types of consumer and industrial goods and services. The US and Canada are firmly in the ranks of the world’s high income countries, while Mexico can be categorised as middle income. Over the past two decades, the expansion of the Mexican economy has benefited from rising trade volumes within the region.
Not surprisingly, given its large economy and population base, the US dominates the North American market for labels, accounting for 80% of the regional market in 2015. This is primarily due to its large food, beverage, and consumer products industries, which are the most important users of labels. The Canadian and Mexican label markets are considerably smaller than the US’, with Canada accounting for about 8% and Mexico for about 12% of the regional market.
Demand for labels in the Asian-Pacific region totalled 19.5 billion sqm in 2015, making it the largest regional market worldwide with about 40% of global sales. While countries such as India and Indonesia will continue to experience some of the most rapid gains in the world, slow growth in Japan – which remains one of the world’s largest markets for labels – will limit overall advancement.
Through 2020, demand for labels in the Asian-Pacific region is forecast to rise 5.7% per year to 25.7 billion sqm. While this growth will be well above the global average, it will also represent a deceleration, largely due to the slowdown of the economic growth in China. Regional gains will be boosted by particularly strong increases in developing countries such as India and Indonesia.
Glue-applied and pressure sensitive labels combine to account for nearly 85% of demand by application method in the Asian-Pacific region. Despite facing increasing competition from plastics, paper labels will continue to account for a majority of label facing materials.
Nevertheless, plastic packaging continues to make inroads at the expense of metal and glass containers due to cost and performance advantages (e.g., lighter weight and greater design flexibility), which will boost demand for plastic labels and limit growth for paper-based products through the forecast period.