Regulars / The Mike Fairley column | 31The Mike Fairley column A challenging year aheadAfter two years of pandemic restrictions, the industry has a new set of problems to face over the next 12 months ust when the label industry thought it might be coming to the “These latest energy, commodity end of the, virtually global, Covid pandemic and the various lockdowns, the working from home restrictions, materials Jand infationary factors are already and labor shortages, supplier bottlenecks, extended supplier lead times, and cost and price increases, so along come another set of having a major impact”challenges that need to be faced and overcome – a war in Ukraine, even greater shortages of all kinds of products and materials, leading producers of grain and sunfower oil. Indeed, Ukraine was distribution problems, and rocketing energy prices, leading to exporting almost half of the world’s total supply of cooking oil infation rates surging across the developed markets at a level not before the confict began. A signifcant reduction in supply of these seen for many a long year. products has impacted supermarkets and food manufacturers, both Indeed, infation was already running above target in the leading to rising costs and shortages of supply, as well as a possible developed economies at the end of 2021, and that was before the need to adjust food product ingredients or cooking methods – and Russia-Ukraine crisis which is bringing further infationary pressures a subsequent need to reduce label run length orders and either on commodity prices – particularly for energy and food – and increase food prices, reduce costs or change their labeling to refect a likely continuation of the supply chain disruption issues that ingredients changes.the label industry has been facing during the past year. Agustin In this respect, perhaps some words of encouragement to label Carstens, the global central bank boss, expects policymakers may converters can come from the UK’s Food Standards Agency who soon have to raise interest rates to levels not seen for many years. have given temporary approval to substitute coconut oil, soybean These latest energy, commodity and infationary factors oil, or fully refned palm oil in place of sunfower oil. It has also said are already having a major impact on not only businesses and that, given the ‘extraordinary circumstances’, manufacturers may households and the amount of money they have for investment also use rapeseed oil instead of sunfower oil and, at least for now, and spending, but also on lifestyles, leisure, entertainment, they will not have to print new labels or update their ingredient household products, food and drink and, in turn, will undoubtedly lists if they do make these substitutions. Hopefully other countries have an increasing impact on the world of label and package might make similar dispensations.printing – especially in the area of production, energy and As a consequence of supply chain problems and cost increases, investment costs over the coming months. supermarkets and food manufacturers, who were already facing Leading international economic forecasters expect energy prices infationary pressures of their own, are now being faced with to remain high, possibly increase further, even if the war ends soon, consumer, and media, pressures on the rising cost of foods. What and are already indicating that supply chain bottlenecks will tighten answers do they have? Try to cut costs? Minimize or simplify the due to sanctions and companies cutting ties with Russia, while product range? Reduce portion or pack sizes? Try and add value? If Ukraine’s role in producing components for Europe’s automotive the label industry wants to minimize the possible impact of their industry has already led to vehicle factory shutdowns in several key customers demanding cost cuts in the supply of labels and eurozone countries. packaging, then they will likely have to spend more time working with them to fnd acceptable and new solutions. Changes to food labels Yet isn’t this what the label industry has always tried to do? It’s Global food prices – already up by a third or more over the past one of the reasons why label converters and industry suppliers have year – are continuing to increase across Europe and the wider largely continued to achieve above infation levels of growth for world. In particular, Russia and Ukraine are among the world’s many years and, according to a recent Finat report, even continuing Apr - Jun 2022