First, it is the existing printers who, in response to the need of their natural growth, have to invest in new capacities. Secondly, it is the commercial offset printers facing slowdown due to the impact of internet, who are expanding into the label industry which is growing. Then, it is the new investors who are flush with funds, maybe due to some real estate deals, who have no knowledge of printing but on hearsay or with prospective partners, make investments in Label presses. With investments growing in an unregulated environment, it is likely that there is creation of excess capacities. The pressures to break even for the new entrants into the industry, escalates and they start making desperate sales bringing down prices and putting margins under pressure. This creates difficulty for existing established printers. As a result of this situation we find printers complaining of a slowdown and difficult situations arising out of haphazard capacity growth. Despite such situation the label market has over the years segmented substantially and each segment has individually started to branch into their fields and register growth to contribute to a situation such that when we review it on a national level, the label industry shows up definite growth both in capacity and investments. However due to reasons explained herein, the industry is cautious but still growing.Segmentation of the self adhesive label industry is a very important part of its growth and evolution. In the earlier years a label printer would indulge in all types of stickers. These include from plain stickers to printed, hot foiled and decorated labels. With passage of time and investments being made in high-end equipment, it has all changed. The sticker became an engineered product called label. Size of the label industry is measured largely by the amount of labelstock consumed by it. The industry is segmented into various segments like the plain labels or variable information labels, pharma labels, product (FMCG) labels and the innovative/security/special labels.
Strange as it appears the largest consumption of labelstock comes from a segment that has the least investment in equipment and the least margins. The plain label or the VIP label segment producing Price labels or gun labels, A4 labels and Barcode labels accounts for the largest share of labelstocks consumed in self adhesive labels. This also is the segment that has the lowest margins due to less value addition. Converting these does not really need very high-end machines with enhanced capabilities, neither does it need the expensive slitting and inspecting equipment. Most of the time converters are just die-cutting and finishing. These converters are always under pressure to drive in large volumes to stay afloat due to depressed profitability. With low initial investments and because of new entrants into labelstock manufacturing ready to fund their working capital needs with required raw material on credit, there is a rapid growth in the number of entrepreneurs in this segment.
It is interesting that with so many new entrepreneurs, even though in the micro and small sector, they are likely to eventually settle down and start growing to higher levels providing further impetus to the growth of label industry.
The pharmaceutical labels and product label segment is perhaps the face of the self adhesive label industry. It is responsible for producing the highly engineered, converted and decorated labels. This segment accounts for bulk of the investments made for acquiring sophisticated European and American branded label presses. The label printers make huge investments to upgrade their capability not only in printing but also in expensive inspection and quality enhancing finishing equipment to meet the exacting demands of their customers. It is these days a difficult situation for the established players when they are pitched against new entrants who in their efforts to service their investments are ready to forego margins and create intense competition in the marketplace. This makes it difficult to justify returns on investments. This may appear to be a win-win situation for the print buyers. However, in the long run these new entrants may not be able to sustain their customer’s demands for quality control, tight schedules and short runs that cannot be catered to, in view of reduced margins. The pharma sector has in recent times faced slowdown due to circumstances at a global level however in view of the growing health concerns of a large population locally, this sector cannot remain down for a long time. It is thus that printers continue to invest even while exercising caution and restraint.
The top end of the label industry these days seems to be the forte of a miniscule segment that is foreseeing high growth and higher margins. It also is attracting the highest investments in equipments with multiple capabilities in combination printing processes, decorating and diverse converting methods. For obvious reasons there appears to be less competition in this segment. This segment is perhaps the most innovative for its indulgence in creating products that stand apart from the mainline products. Some of the label products that this segment offers are; high security labels, booklet labels, lottery labels, document security, etc. Printers in this segment have acquired and continue to acquire additional capabilities like producing linerless labels, online siliconising and gumming. This enables them to print subsurface or on surface. The equipment they possess has capabilities to shuffle between self adhesive labels, shrink sleeves, lamitubes and folding cartons. They have access to diverse printing and converting capabilities on their expensive equipments.
My HP Laserjet adventure
I own a 5-year-old HP laserjet 1020 monochrome printer
that uses 12A black toner cartridges
yesterday, I was printing on Avery shipping labels
what I do is peel one label off the sheet and stick it in precise
position on another used sheet in the same spot where another label used to be
these are 4x2 labels: I do this using homemade label templates
I made using MS Word with its custom margins and insert shapes features
I do this because I don't print a sheet of labels wholesale,