Pressure sensitive labels

Pressure sensitive labels Global Market Outlook:

• The global pressure sensitive labels market size, in terms of volume, is about 36.9 billion sq. m in 2023 and is set to grow at 5–6 percent, to reach 45 billion sq. m by 2027

• 2023 is anticipated to be a promising year for pressure sensitive labels market growth from non-essential end use segments

• Growing consumer preference for pressure sensitive label products, increase in e-commerce activities are other driving factors of pressure sensitive label market in 2023

• Paper shortage, coupled with UPM Finland strike, sanctions against Russian trade, have impacted the price of pressure sensitive label products. Pressure sensitive label prices are anticipated to stay elevated in 2023

Pressure Sensitive Labels Demand Market Outlook

• Sustainable material and innovative product features are the prime factors, which brand owners look for in engaging with suppliers

• The pandemic situation has increased the operating cost of suppliers, which led most of them to focus on cost cutting than on product innovations. Suppliers are expected to resume their pressure sensitive label innovations spend in 2023

Cost Structure Analysis: Pressure Sensitive Labels

• APAC is dominated by supply from China as it exports the raw material to the other neighboring APAC countries. The prices majorly depend on China’s output

• The European raw material prices increased on a monthly basis since the outbreak of COVID 19. The price change was due to firm ethylene spot and contract prices, which increased the prices in the spot market, which results in slight variations in the raw material prices during the period

• Raw material contributes to around 70–75 percent of the cost and it is a major cost driver, followed by labor cost and electricity cost

• Coated paper prices are anticipated to face a rise, along with resin-based raw material, which is alternatively used to produce pressure sensitive labels

Porter's Analysis on Pressure sensitive labels : Developed Regions

Supplier Power

• Though fragmented, the major upstream industries (label stock producers) in North America and Europe, like Avery Dennison, UPM Raflatac, etc., hold majority of the global market share

• Most converters are not backward integrated into label stock production, which limits the supply chain transparency, thereby decreasing their power over facestock suppliers

Barriers to New Entrants

• Low capital investment, in terms of printing equipment (flexo machines range from $10,000–25,000), decreases the barrier for new entrants

• Digital printing is a rising trend in this region, with an initial investment of $45,000 and enhanced printing speeds. Newer machines with better quality and higher speed are being introduced by companies, such as Gallus

Intensity of Rivalry

• Europe and North American labels market is fragmented, thereby increasing the rivalry among suppliers

• To increase their market share, major suppliers are involved in M&As

• Suppliers are also actively investing in product differentiations through innovations to stay competitive in the market

Threat of Substitutes

• In-mold labels, which is witnessing a tremendous growth of around 6–7 percent in Europe and 5–6 percent in North America, is a possible substitute for PSL in plastic containers

Buyer Power

• In spite of several M&As, the supply base in North American and Europe remains highly fragmented

• This directly translates into low switching cost for buyers, thereby enhancing the buyer power further