Market Review: Label Technology

By Noel Jeffrey

Label Styles Get Fancier with New Shrink Sleeve Capabilities, Digital Customization, and Flashy Printing

If anything, the overwhelming design trend for labels is to make their silent shouts from store shelves even louder than ever in order to attract consumer attention. As a result, anyone who hasn't shopped for the past couple of years would be amazed at how different products look due to the increasing use of shrink sleeves as well as high-style pressure sensitives, and even customized and regionalized labels. In aggregate, there's been a change of scenery that continues to accelerate, especially in supermarkets.

"Shrink wrap is huge," says Bert Hodapp, COO and owner of Chicago's Kaleidoscope Imaging, a firm that creates packaging prototypes, comps, and production art. "It permits structural branding because you can show off the shape of the package. For example, WD 40 has developed a proprietary shaped can—and it's also a way to fight counterfeit products." (See "Wow! What A Package!", Package Design, Jan/Feb 2004, p. 64.)

Hodapp notes that pressure sensitive labels are being used for structural branding as well—he calls it "the no label look." Hodapp adds, "A clear pressure sensitive label shows off the package. The next step is making the pressure sensitive part of decorating. For example, a soft soap container with clear labeling can fit into a home's décor."

As for regionalized labeling, made possible by digital presses like the HP Indigos that can vary each individual image, Hodapp believes that while the cost of digital consumables is still too high for the industry to go "all digital," he does see value in the process now. For example, he notes that in Toronto alone, Frito Lay offers a different chip package for each area of the city. Soft drink companies that offer to redeem cans at certain theme parks also require the customization made possible by digital. For example, if Six Flags is redeeming Coke cans, their image would be printed on the can while a similar offer might have Universal Studios or Knott's Berry Farm—whatever the appropriate name happens to be.

Phil Angevine, owner of Logmatix, based in Marietta, Georgia, also sees the benefit of variable data digital printing. His company prints flexo product labels and coupons. Logmatix also offers thermal transfer printing including sequentially numbered preprinted bar codes and warehouse labels. He is about to acquire his first digital color printer, a desktop VIPColor Technologies label printer that will allow him to offer short-run color labels that are too costly to run on a flexo press, and allow him to vary label images easily. "We see that fitting into the service bureau part of our business," Angevine says. "We will be able to achieve 600 dpi color without plates."

No shrinking market for shrink sleeves

Shrink sleeves or shrink-wrap labels, undeniably the hottest among today's trends, are single layer films printed on either a flexo or rotogravure press, although gravure is the dominant process. Once printed, the labels are unrolled, slit into strips, and formed into a tube with a secured seam, then re-rolled for application machinery. The application line consists of an apparatus to separate the labels, slip each individual label over the entire package, and then send it to a heating unit that shrinks the film onto the bottle or can.

Rick Whipple, vice president of sales and marketing OSIO Labels in Anaheim, Ca., explains the evolution: "Arizona Iced Tea started the bandwagon and others jumped on. Then Nestlé began using sleeves for their Coffeemate non-dairy creamer product and went from an average market share to as high as 60 percent. That's remarkable and shows the power of that packaging. Customers will continue to get on that band wagon."

Alcoa is the company that prints the majority of Nestlé's shrink sleeves for its flavored milk beverages and non-dairy liquid creamers, among others. According to Terry Copenhaver, commercial manager for Alcoa Flexible Packaging's Shrink Sleeve Labels, shrink films in use today are polyvinyl chloride (PVC), copolyester films (PETG and PET), and oriented polystyrene (OPS). She points out that while PVC is the lowest cost and currently dominant in the U.S., it can contaminate post-consumer recycling. PETG and PET are showing the greatest market growth. These substrates have the highest shrink—but the highest cost as well. Nonetheless, she sees PETG replacing PVC as a current trend. OPS, Copenhaver says, has a 30 percent yield advantage and also separates during recycling. Therefore, she expects that in the future, OPS will replace PETG.

Copenhaver also cites additional markets that will expand in the coming years:

• Full length sleeves (half sleeves in the future)
• Decorative inks (metallic, thermochromatic, pearlescent)
• More plastic containers
• Innovative container shape (designed specifically for sleeves)
• Markets beyond food & beverage

Indeed, Alcoa is spearheading at least one of these trends—decorative inks. Several business units in the company and its ink suppliers collaborated to develop a prototype label for PET bottles that features two new ink technologies. The PET "Fluid!" water bottle sports a 50-micron PETG rotogravure, reverse-printed shrink sleeve. The first is a new interference "flip" ink that changes from one color to another as the label is tilted. In addition to the reverse printed inks, a pearlescent, white tint ink is surface-printed on the label's water droplets and top copy to add depth to these areas. Alcoa Flexible Packaging is making these print technologies available on any shrink sleeve substrate.

Howard Millstein, president of Ameri-Seal in Chatsworth, Calif., and OSIO's Whipple may be competing printers but they are both shrink sleeve evangelists as well. "Little by little, customers are switching from pressure sensitive labels to full sleeves," Millstein says. "Companies are looking for shelf presence through unique shapes. Sleeves are way to do this because you can't put a pressure sensitive on the front and back of some of these surfaces and some of the new shapes won't fit into silk screening equipment. Sleeves also offer more real estate for information and since the process is reverse printed, it is completely product resistant."

Millstein also points out that although people perceive shrink sleeves as a more expensive alternative to pressure sensitive labels and they can be, customers have to make sure they are making a legitimate comparison. "It really depends on the materials you're comparing," he says. What's more, Millstein points out that improving technology continues to streamline the process and lower costs. "Three to four years ago the shrink factor for a label was 60 percent," he says. "Today with PETG, we can achieve an 80 percent shrink factor."

Whipple, whose company's printing plant is in South Korea, notes that they also sell Korean PVC to domestic printers who are their competitors. "Domestic suppliers continue to reduce their costs. Today it's at least 20 percent less than three years ago. It's an evolution," Whipple says.

"I've never seen anything like the growth of popularity for shrink sleeves over the last five years," he continues. "I've even seen it used on products like potted plants and candles. The process can adapt to any container, and the technology has improved so that now a shrink line can do 500 bottles a minute. That's nine a second. When the technology was introduced in the 1980s a result of the Tylenol tampering case, the machines could only apply 100 labels per minute. And today, these faster machines are half the price."

Where pressure sensitives grow

In the heartland of California's wine country, Ben Franklin Press in Napa is known as a wine label printer and commercial printing specialist for the wine industry. In other words, this plant is equipped with offset presses to handle both label printing and all the collateral materials like press packets and master sell sheets that vintners need for a new release. They number familiar names like Stag's Leap and Benzinger among their winery customers and also print spirit labels for International Beverages. The message on their hold line says: "Wine is constant proof that God wants us to be happy."

Partner owners (and husband and wife) Teri Ann Faychild and Dennis Franklin Patterson have been in business for the past 21 years. In June, the company moved to a larger location and added a Sanjo PO3 UV waterless web offset press to its line-up of Heidelberg sheet-feds. The Sanjo, which prints five colors, a foil stamp, and emboss in a single pass, now allows them to print pressure sensitive labels, a requirement they see growing within the wine industry.

"One of our friends who owns a winery explained that pressure sensitive applications are easier on the bottling line," Patterson says. "His old bottling line took off the tip of one of his fingers. Now, he says all he has to do is turn the switch. It's an easier application and these bottling lines are less expensive. However, the pressure sensitive labels themselves are 35 percent more costly so you still have about 50 percent of the market using wet glue."

Cost is not the only factor, however. When the design calls for a deep emboss, pressure sensitives are not the answer. Patterson explains that the embossing die would have to go through two layers of substrate, which requires too much pressure, and too much heat could spoil the adhesive.

While both flexo and offset are used to print pressure sensitives, Patterson says that because wine label quality is so critical, flexo was not an alternative for them. "When you are selling a $40 bottle of wine, quality is critical and the label is a piece of art, and although flexo quality has improved over the years the type of substrates used for wine labels, especially the uncoated papers with different textures, make dot gain difficult to control."

Whatever it takes for understated elegance

"Designers for the wineries want an elegance. They try for an understated look that requires a lot to be done to a piece of paper but not necessarily look as though a lot has been done," adds Faychild, who admits that the texture of one of their own walls actually found its way to being a label background. "It's amazing what they come up with," he says. "They look just beautiful on the store shelves."

But there's more to current labeling than shrink sleeves and pressure sensitives. For example, among its various divisions and plants, Fort Dearborn Company does print three types of film labels: seamed shrink sleeve, OPP roll film, and pressure sensitives on both flexographic and rotogravure presses. And, at its Niles, Ill., plant and other offset divisions, the company also produces cut-and-stack paper and film labels for national and private brand consumer goods manufacturers. At Niles, 40" and 51" Mitsubishi presses run this work.

"What we're seeing based on the new request for quotations is that there's an interest in saving some of the cost involved with pressure sensitive labels by going to cut-and-stack," says Tony Saia, director of marketing for Litho at the Niles headquarters. "We're also seeing a move from sharkskin and paper/poly to synthetic substrates. The juice/beverage market is driving this conversion for the ‘no curl' appeal and added burst strength of the label."

Saia also notes that designers are taking advantage of the company's trademarked HiColour system, a six-color process that delivers up to 85 percent of Pantone Matching System colors. Not only does this system eliminate the need to run additional spot colors, it provides richer looking packaging. "It's increasingly popular," he says. "It really pops. It makes the product stand out on the shelf."

Phil Angevine from Logmatix, whose company runs three flexo presses with 8-color capability, including 4-color process, also has seen growth in color printing. His take is a good final word: "There may be less brand recognition or loyalty today. If the label looks great, the consumer will buy the product."

Noel Jeffrey regularly covers print production, digital imaging, print-on-demand, and related subjects for the graphic trade media. Contact her at noeljeff1@earthlink.net.

A New Study of Labels Analyzes Manufacturing Costs, Projecting Important Trends into the Future

"Shrink Label Markets and Technologies," a new industry report produced by Business Development Associates, Inc., is now available. This in-depth report deals with technologies, manufacturing cost comparisons, market analyses and projections, key players and commercial aspects, and recycling issues. A few key points are outlined here.

Technology: The three areas of study are shrink film manufacturing, label converting, and label application. The report studies all the combinations of shrink film depending on the resin used (i.e., PVC, PETG, OPP, OPS) and the direction of orientation desired (i.e., Transverse-TD or Machine-MD). Label converting technologies are broken down into four basic types based on printing process and label type: Sleeve/Gravure, Sleeve/Flexo, RAS/Gravure, and RAS/Flexo. Similarly, label application technologies divide into two basic categories based on label type (Sleeve or RAS), and the report looks at the opportunities and obstacles associated with growth of RAS labels for high shrinkage applications using MD-oriented PVC, PETG or OPS shrink film.

Manufacturing Costs: A series of four converting manufacturing cost models was constructed to facilitate cost analyses of the four types of labels. In addition, total label application costs were established and compared for both sleeve and RAS labels by combining converting and application costs. On an applied, "all-in" basis, including a cost premium for MD film and royalty fees for a license to use B&H RAS application technology, it was found that RAS label cost was marginally higher than for a comparable sleeve. Additionally, a series of sensitivity analyses were performed to establish the sensitivity of label cost to variations in several basic, key cost components.

Recycling Issues: Discussed are the negative impacts of two shrink label aspects:

1. the use of PVC shrink labels; and
2. bleeding of ink from shrink labels into recycling system's wash water, and the associated color tinting of recycled plastic flake. Increased volumes of shrink labels coming into the bottle recycling streams may at some point cause recyclers to react in a negative manner.

Conclusions/Projections: Shrink label volume will continue to grow from approximately 50 million pounds in 2003 to 80-90 million pounds in 2007, however, the potential for significant growth of RAS labels is problematic.

"Shrink Label Markets and Technologies" will be published through Packaging Strategies. For more information contact: packinfo@packstrat.com, visit www.packstrat.com, or call (610) 436-4220.