AWA seminars address key trends in the label and packaging industry

AWA Alexander Watson Associates hosted three concurrent events ahead of Labelexpo Americas 2022. The market research firm welcomed attendees to explore the latest trends and developments in the label and packaging industry on September 11-12 , in Rosemont, Illinois, USA.

In addition to the AWA & TLMI Sleeve Label Seminar, which was held for the 16th time, AWA hosted the first North America Narrow Web Pouch Seminar and the 15th Annual Label Release Liner Industry Seminar.

All three events benefited from a wide range of industry sponsors including Resource Label Group, Siegwerk, Multi-Plastics, Hudson-Sharp, Avery Dennison, Elkem, Mactac, UPM and many more.

“Our goal was to have an inspiring week,” said Corey Reardon, President and CEO, AWA. “We organized an evening focused on networking and reunions. The program was set up so that participants can move between programs and learn what’s happening – simultaneously – in the industry.

The opening night, which took place on September 11, focused on sustainability and the recent increase in M&A activity in labels and packaging. Kelly Murosky, Packaging Development Manager, Seventh Generation explored the various sustainable innovations underway in pressure sensitive labeling, shrink sleeves, pouches and more. Seventh Generation offers plant-based cleaning products for everything from laundry detergents to disinfectant sprays.

“We work on many different types of packaging, from labels to corrugated cardboard,” Murosky said. “We are well aware of the waste generated by packaging and its effects on nature. We are one of the first companies to put ingredients on our packaging, and we felt this was a necessary change in this industry because consumers should know what is in their products and which could be a toxic ingredient.

Murosky also detailed the latest trends in sustainable packaging, including bio-based and PCR for alternative stocks. She cited UPM Raflatac’s new product Ocean Bound, as well as the company’s Forest Film, respectively, in these two areas. Additionally, the industry is seeing greater adoption of compostable adhesives and improved washing technology for PET.

Jonathan White, Managing Director, Mazzone & Associates, concluded the evening with a discussion of M&A activity in the industry. According to White, 2021 was “a banner year by any definition.” Although 2022 has slowed some down, he noted it’s still “very strong.”

White said: “The net-net is that we are still in a very robust environment for labels and hoses. You can’t say that about the economy, but you can say that about the industry we’re in. M&A activity was hit hard in 2020, but valuations rebounded in 2021. There was a lot of activity and low interest rates, which is why 2021 was such a great year.

While White conceded that 2021 was likely an outlier, with 8-9 times the multiple range, mergers and acquisitions are likely to continue – especially in this sector. Small deals continue to dominate the space, but size matters when it comes to price. Financial sponsors or private equity groups accounted for the bulk of deals, and this peaked in 2021, with nearly two-thirds of all deals.

“Financial sponsors have pulled back a bit in the market in 2022, and corporate buyers have stepped into a market with a lot of disruption or uncertainty,” White said. “Higher interest rates will reduce the present value of future cash flows. This can result in significantly lower valuations.

Sustainability also played a key role in White’s presentation, as he highlighted the importance of valuing the environment when selling a business. “Five years from now, if you don’t have a legitimate sustainable strategy, you’ll have a hard time selling a business. This is how important sustainability has become.

During the AWA & TLMI Sleeve Label Seminar, Linnea Keen, President of TLMI, spoke about the growth many members of the association have experienced. Of the 90 responding processors, 81% saw an increase in growth from 2021. About 16% saw a decline in activity while 3% of respondents said activity remained static.

“Overall, we’re seeing very strong growth, which is the most opportunistic and optimistic part of being in this industry,” Keen said.

Technology will also play a key role in the future, as 23% of respondents said they had purchased a digital press in 2022 – and more are planning to do so in the future, especially as media converters labels aim for efficiency in their facilities.

On sleeves, AWA’s Market Research Manager Anum Javed Beg illustrated the state of the industry. A total of 71 billion square meters were printed last year, with PS holding a 41% market share in the label market. Meanwhile, sleeves accounted for 19%. Beverages and food were the main labeling drivers with 43% and 22%, respectively. Paper labels accounted for 52% of the market compared to 48% for films, and paper saw growth of 4% in 2021.

“The market is growing but at a much more stable pace,” Javed Beg remarked. “We recorded global growth of 3.8% in 2021 for the label market.”

The Sleeve Label event also featured several round tables. John McDowell, President of McDowell Label, Resource Label Group, Ryan Hughes, Founder of Ghost Lifestyle, and Dave Parsio, Vice President of Sales and Marketing, Multi Plastics, explained the value of shrink sleeves at all levels of the chain of supply, from the supplier to the converter to the brand.

“We can decorate virtually any shape and size of container, which drives a lot of demand,” McDowell said. “Being able to provide brand owners with quick changeovers and quick turnarounds gives them tremendous design flexibility and freedom.”

“Our goal is to be as sustainable as possible while trying to perform at the highest level for our brands,” added Hughes. “Thanks to our partners, we can execute at this level.”

Other presentations featured Doug Horn, Partner at Clairvest, who presented the Buyer’s Perspective on M&A, and Zack Meister, Head of Global Shrink Sleeves Business Development, Siegwerk, who detailed the importance of inks and coatings for successful sleeve label printing.

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