| 99Market Focus: Europe Europe reels from multiple shocksAfter successfully coming through the Covid pandemic, the European label industry has been hit by a series of shocks that are likely to have profound consequences through 2023. Andy Thomas-Emans reportst the end of 2021 there was a great “Brand owners noted that bigger label deal of optimism in the European Alabel sector. The industry had converters had more success in sourcing grown by 7 percent, up from 4.5 percent in 2020. The worst impacts of the pandemic materials than smaller vendors at the height of looked to be over, and any problems in the the supply chain disruptions. In the same way, supply chain were considered temporary as the labels industry underwent a rapid buyers indicated a growing preference for label post-pandemic recovery. No infationary pressures were on the horizon.vendors with more than one production facility One year later and that situation has changed - and for the worse. Supply – another way of mitigating risk”chain issues turned out to be structural, a continued shortage of computer chips, and a months-long strike by UPM with the long-lasting paper strike in smaller vendors at the height of the supply forestry workers. Then on 24th February Finland, the resulting paper shortages chain disruptions. In the same way, buyers Russia invaded Ukraine. Alongside the and increasing lead times, the reflling indicated a growing preference for label humanitarian catastrophe, Europe of label converter warehouses in the vendors with more than one production experienced surging infation in energy and third quarter and the mounting general facility – another way of mitigating the risk raw materials costs and further blockages economic uncertainty in the intermediate from shortages and other disruptions in in the supply of raw materials critical to the period caused by the Russian invasion of order fulfllment. manufacture of label machines, materials Ukraine, rising energy and raw materials The 2022 Radar report also looked at and consumables. costs, rising interest rates and a looming the impact of the post-Covid landscape on recession due to losses in disposable end-use label sectors. Labelstock consumption down incomes of European consumers.’ Not surprisingly, the report showed food A Finat survey in the middle of last year As a consequence, label converters made and beverage sectors growing the fastest found that 60 percent of converters had the decision to wind down inventories at more than 8 percent, followed by retail suffered fnancial losses of up to 6.6 percent toward the end of the year and postponed at 7.5 percent, transport and logistics at as a direct result of label industry supply the procurement of new label stock. 6.5 percent, personal care at 5.9 percent, chain issues. Losses of over 4 percent were with pharma and household chemicals at caused by problems in the wider packaging Label buyers remain positive just over 4 percent. Industrial chemicals supply chain. Despite this downturn, label buyers and consumer durables posted respectable At the same time, rapidly increasing remained positive about the industry’s growth rates of 3.1 percent and 2.8 percent. infation reduced European consumers’ prospects moving into 2023. The only sector to decline growth was disposable incomes, impacting what they In the latest Finat Radar report, released automotive, which shrank by 1.4 percent.have available to spend on packaged goods in December, 85 percent of the 60 brand A survey of capital equipment buying of all kinds. owners interviewed expected their label intentions showed that 29 percent of These multiple crises and uncertainties procurement to increase or at least remain converters said they planned to invest heavily impacted the last quarter of 2022. stable in 2023. in conventional presses in 2022, almost Compared to the fourth quarter in 2021, Of course, we will need to see if these certainly a result of the higher order European consumption of paper and flmic intentions hold up given the recent volumes placed during the pandemic. roll labelstocks decreased by no less than economic forecasts for European growth, For 2023 that fgure was down to 24 percent, the sharpest year-on-year but it is an encouraging sign. 14 percent, with 33 percent planning to decline in a single quarter recorded since Over half the brand owners interviewed invest in digital – better suited perhaps Finat commissioned the collection of indicated that their companies had to the need to remain agile in a period of quarterly statistics in 2003. experienced ‘signifcant’ label supply chain continued uncertainty.Finat managing director Jules Lejeune issues in 2022, and this has impacted their explains: ‘the contraction in demand is a buying behavior. For example, brand owners For more news from the correction of the erratic market behavior noted that bigger label converters had European label market, visit in the previous three quarters that started more success in sourcing materials than www.labelsandlabeling.com/europe Jan - Mar 2023