As 2008 comes to a close, this year has proven, yet again, that in spite of tremendous market opportunity and predictions of double-digit growth in North America, in-mold labeling and in-mold decorating continue to lag well behind other labeling/decorating methods. That was the short version of the market outlook offered by William Llewellyn, vice president and senior consultant for AWA Alexander Watson Associates BV, at IMLCon ‘08 North America, held in Phoenix, AZ on Oct. 22-24.
Llewellyn’s data for world market shares by labeling technology for 2007 show that pressure sensitive and glue applied/wrap-around labels hold leading market share with 39% and 50% respectively. In-mold labeling accounts for just 2% of market share. The global in-mold label market in 2007 was led by Europe with 49%; North America had 33%; and Asia/Pacific 14%.
The North American market shares by labeling technology for 2007 shows that pressure sensitive held 45%, glue applied accounted for 43%; 9% was sleeves; and 2% in-mold, with 1% an assortment of niche products. Europe wasn’t far off that with glue applied labels at 49% of the market share of labeling technology; 42% pressure sensitive; and 3% in-mold.
Still, Llewellyn is hopeful that North America will see “good growth” in in-mold, while it is “falling off in other areas.” With IML use growing at a 5% annual rate for North America from 2003-2007, and the projected growth rate for 2007-2012 just over 6%, Llewellyn calls these figures “disappointing” but added, “It is a significant growth for in-mold labels given overall label market is slowing."
Extrusion blow molded applications have proven the best ones for inmold label use in North America, accounting for 91% of IML use there. Label sales for extrusion blowmolded products reached 210 million sq. meters in 2007, but growth is slowing as the market matures and as competition from pressure sensitive and sleeve labels increases. For injection molding, IML sales in 2007 were only 20 million sq. meters, but that growth rate is increasing as levels of domestic label supply improve. However, adoption by major brand owners remains an obstacle. “There’s a need for nationwide brands to commit to the format,” said Llewellyn, who pointed to Procter & Gamble’s delay in adoption of in-mold technology, instead moving to a smaller container and using pressure sensitive and heat shrink sleeve, as an example.
Container shape in North America also poses an obstacle to IML adoption. In Europe, rigid plastics packaging often is rectangular, whereas in North America round packaging dominates. Beyond package design, one of the primary threats to IML is a complex and extended value chain. “IML technology requires all the players including the raw material supplier, the label maker, the printer, the moldmaker and molder,” said Llewllyn. “If all the players are not integrated, the failures in the market will prevail.” Brand fragmentation is also an obstacle because of a greater number of SKUs and each new SKU (stock-keeping unit) has a unique label/package requirement.
Retailers now command market dynamics, noted Llewllyn, and consumer product manufacturers must respond faster. “This is where direct printing is an option,” he said. “Some retailers want a change in three days and you can’t print labels that fast.” The risk of holding pre-labeled containers in inventory is that the stock turns obsolete, or there is a design/branding change. Still, there are opportunities. Llewllyn pointed to markets such as the food service, Do-It-Yourself products, flowerpots, and stadium cups as offering possibilities for molders with inmold labeling capability.