Label industry in UAE: Intense competition, still growing!

Sheikh Zayed Road Dubai

UAE (United Arab Emirates), a federation of seven countries has a population of just about 9 million out of which over 85% are expatriates, yet there is a label industry that is growing steadily and is attracting interest from global suppliers all the time. At the start of this millennium the number of label printers in UAE worth the mention was less than 10. The number of label companies has been rapidly growing ever since. Those were the days when Industrial growth started seeing an upswing in UAE. The number of companies from India who started to set up shop in the UAE was also growing. Indian label printers who were ambitious to go global started to make efforts to use UAE as a gateway to the world of international business. The then Finance minister (later Prime Minister) Dr. Manmohan Singh’s economic liberalization programs had become the catalyst in aiding the Indian entrepreneurs’ aspiration to be called a multinational!

Dubai has always been the face of UAE even though in terms of area it is just less than 5% of the of the total of 83,600 km² area of UAE (The whole of UAE in terms of area is smaller than the small state of Meghalaya in East India). The largest emirate (or country) in UAE is Abu Dhabi at 67,340 square kilometers, yet it is Dubai that is recognized as the face of UAE. Dubai has a population of 2.7 million that, if not already there, is inching towards a figure twice that of the population in Abu Dhabi. Surprisingly the percentage of women in Dubai is just 31 % and men 69 % according to data available as of 2014. This is largely due to expatriate population who, leave their families back home and travel to UAE for gainful employment. The gender mismatch is also similar in other emirates. UAE is a federation of seven emirates, and was established on December 2, 1971. 

The constituent emirates are Abu Dhabi (which serves as the capital), Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain. UAE is a major international tourist and business hub. It has one of the highest per capita incomes in the world at nearly $25,000 USD.  UAE has approximately 10% of the world's total known oil reserves, 90% of these oil reserves are in Abu Dhabi and only about 10% of these are in Dubai. UAE is not anymore solely reliant on oil and gas revenues. The oil sector contributes about 30% of the country's GDP.  Lead by Dubai the trade, tourism, real estate and construction are large contributors to UAE economy. Sometimes one wonders how a country with population and area less than most big cities in India, continues to attract such fervor for tourism and investment. Indians form over 25 % of UAE population. With the country being home to between 50,000 and 60,000 Indian companies, today India is UAE's largest trading partner.

The label industry in UAE is facing a more or less similar situation as in India. The market keeps growing and the number of printers also keeps on increasing, thereby translating into intense competition and lower margins. Being a federation of emirates or countries with low population, it is actually the exports that are driving growth in labels. From being a trading distribution centre, UAE has transformed to be a manufacturing hub selling globally. The immediate access to Middle-Eastern and African markets is the starting point for all label companies and as they step up their capabilities, from here they venture into Europe and beyond as well. The glitter, liberal life style, cosmopolitan character and excellent infrastructure of Dubai and the rest of UAE, has always tempted the ambitious investors to establish presence here. According to recent Smithers Pira report, total printing revenues in the Middle East and North Africa (MENA Region) were $17.6 billion in 2012, and are forecast to grow 7.2% per annum reaching $26 billion by 2018. On trying to reach an approximate market size in the region; considering labels to be 20% of the total print industry, the size of label industry in this region in 2018 is estimated at $5.2 Billion. Pressure sensitive labels being a little over 40% of the total labels industry one can estimate the market size of pressure sensitive labels in the MENA region in 2018 to reach approximately $2.08 Billion.

UAE Label industry is largely, either owned, run or managed by Indian expatriates. This

Kimoha Factory in Dubai

market is divided into 3 distinct segments; (A) the top end that has 5-6 very big players. (B) The big players that are the middle segment and (C) The not so big players who are either testing their luck or are the offshoots, ex employees of A & B trying to emulate their ex-employers. As is always, the middle segment suffers the most as they are continuously held back by the competition from the smaller players making it difficult for them to invest so as to get into the top segment due to lower margins and unviable return on investment. The niche or top segment has the least competition but delivering to customer’s expectations and retention is in itself a big challenge that the top players keep attending to so as to meet the demands of their high end customers. Therefore the increase in number of printing companies, affects largely within the segments they operate in. The established top players in UAE include; Emirates Printing Forms in Abu Dhabi, Kimoha in Jebel Ali-Dubai, Pacman CCL in Alquoz-Dubai, Futurepack in Sharjah and GulfAdhesive Label Factory in Ajman. In recent times established Indian companies who have invested in UAE include Gulfscan, Prakash Labels and Ajanta packaging.

Vinesh Bhimani Managing Director Kimoha

The rough estimate of the total market size in terms of labelstock usage in UAE alone is approximately 50 million square meters per year. This maybe off the mark, but after interaction with leading printers, this estimation has been arrived at. We cannot really translate this in terms of per capita usage as about 80 % of the labelstock is exported either as converted labels or as a part of manufactured end products. UAE appears to be a bigger market then Saudi Arabia for production of labels because of better infrastructure and liberal policies aided by no tax regime for sales within the GCC countries. According to Nimeesh Lilani at PacmanCCL, “The reason for this is the ease of doing business in UAE, easy availability of funds and it being a logistic hub with ease of making clearances and shipments”. According to Vinesh Bhimani heading Kimoha, “from the just a handful of label companies,there are now in excess of 45 label companies. 

Gopalan Nair & Chinnadurai at Future Pack

The market is getting crowded”. Chinnadurai at Future Pack says, “New entrants are just one part of the story affecting margins, online auctions have started to surface in UAE also, this will be another headache!” he further added, “We are trying to replace old machines with new technologically advanced equipment to produce cost effectively.” Sachin Arya at Ajanta packaging says, “Prices have become challenging and payments are delayed making it difficult for us to operate. More and more Indians are wishing to locate outside India and to succeed; they are under compulsion to sell by undercutting prices”. Chinnadurai feels that if the trend goes on like this it will not be long before we see some people exiting this business. 

Assad Antonios heading Abu Dhabi based Emirates Printing Forms says, “Cost of living in

Assad Antonios of Emirates Printing Forms Abu Dhabi

UAE has gone up and with new printing companies coming up in Africa the market place is shrinking bringing pressure on smaller players to exist” Increasing number of printing companies, bring with it the need for more operators whose demands become difficult to meet as they wish to bring their families to UAE as well. It is becoming very expensive to hire operators. One wonders how the new entrants with just one machine and that too of a lower end can survive in an economy where per capita income is one of the highest in the world and the market appears to be almost saturated. However still, most big printers have said that there is definite growth in the market. The UAE market as mentioned earlier in this report is dominated by a few large printing companies. Dubai based Pacman CCL Is headed by John Dawson and has been in the news for their recent takeover of Mumbai based Super labels. The company is a joint venture between the Albwardy group and Geoffrey Martin lead CCL Label, the world’s largest label company. They have units in Dubai, Oman, Egypt, Saudi Arabia, Pakistan and now India. Jebel Ali headquartered Kimoha headed by Vinesh Bhimani has been a front runner and always striving to excel. Abu Dhabi located Emirates Printing Forms has been another success story. They have grown from just being a computer forms manufacturer to a huge enterprise manufacturing Continuous forms, Self adhesive labels, document security printing, wrap around labels on wide web machines, EDP products, Shrink Sleeves, IML, Cut & Stack Labels, etc. Assad Antonios of Lebanese descent has been heading the company for last 26 years. He is proud to mention that this company, growing at a steady rate of 10% per annum, now operates out of over 100,000 square feet shop floor space with 140 employees. He is happy that due to respect given to all employees and creation of a family like atmosphere, the company has very low employee turnover. Sharjah based Future Pack is a part of the Saudi Arabian ENPI group which in turn is a part of the Saudi Printing and packaging Co. (a public listed company in Saudi Arabia). The company produces a diverse range of paper and plastic packaging. Chinnadurai as their Vice President Operations at Sharjah has lead the company from just labels to even production of specialized labelstocks and innovative label products. 

 

The Label industry in UAE started from Dubai then spread to other emirates like Abu Dhabi, Sharjah and Ajman. With real estate prices escalating and cost of living in Dubai becoming unaffordable, label printing started to come up in other Emirates like Ras Al Khaimah, Umm al-Quwain and Fujairah. Today the label printers are spread over in all emirates. However it is pertinent to note that it is not the domestic sale or locational advantage that makes them locate their units in far off emirates rather than in Dubai. It is actually the need to produce cost effectively with lower overheads that takes them to other emirates. The growing market at this manufacturing hub has made Tarsus the organizers of Labelexpo series of events around the world to invest in Gulf Print and Pack Dubai. The show has become a premier event in Middle East Asia and printers from all countries in the region make it a point to visit the show. This year’s edition, as per their official website has over 200 exhibitors. Registering a 26.7% increase, 11918 visitors from 110 countries visited the last edition of the show. The interesting part of UAE is that the local governments recognize the need for exporting and increasing their share of global trade rather than relying on the limited and fast depleting oil reserves. They have transformed the UAE economy from oil revenue based one to one based on global trading, manufacturing, tourism and real estate development. It is evident that mindset of rulers of the country will make manufacturing to prosper and with that, the market of labels in UAE will surely grow.

Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi-India February 2017

The article maybe published with the permission of Narrow WebTech Germany giving credit to them and to the author

For advertising enquiries please email to; harveersahni@gmail.com

Digital label printing in India, the journey has begun!

In May 2015 I wrote on this blog that the verdict from the Indian label industry, after I had interviewed some leading printers was, “Digital for labels has to wait”. In the concluding part of my article I mentioned, “The time frame before digital printing becomes largely visible and used in label printing in India varies between three to five years.” 

Amar Chhajed Huhtamaki PPL-Webtech

I must here appreciate and commend Amar Chhajed of Huhtamaki PPL-Webtech labels for his foresight when he said digital printing in labels will become evident in 2-3 years. He said this in May 2015 and two years hence as we enter the third year since then, we note that some big time investments are being made in digital printing in labels. Digital printing in labels has been registering continuous growth in Europe, followed by that in North America. 

I and Adrian Tippenhauer MD Rako Etiketten

In my reporting on the last DRUPA, I had quoted Adrian Tippenhauer Managing Director of Rako Etiketten Germany. According to him the last 36 label presses acquired by them out of the 100s that they have, are all digital presses. If the Labelexpo-Europe and Drupa are indicators, the visitors to these shows can very well imagine the way forward. Digital was the most predominantly exhibited technology at these events. HP became the biggest exhibitor at DRUPA with an almost 5000 square meter hall showcasing their digital offerings.  Other leading suppliers of digital label presses were all there. The writing was on the wall that it would not be long before the trend starts to flourish in India. Indian label printers have been very cautious towards investing in digital printing of labels. However as they say, you cannot stop an idea whose time has come. When I researched and estimated the size of digital label market in India, the findings became interesting. By latest count the population of leading brands of digital label presses in India has reached 22 in number. This is besides the small low value small printers that some companies may have acquired. Now this is a fairly impressive figure when just a year back we had the industry largely saying that digital has to wait. Estimating the size of the digital label market I made some assumptions. The average width of the press was taken as 330mm (as widths vary from 250 mm to 370 mm), printing speed is calculated at an average of 30 running meters per minute, because it varies from 20 to 50 meters per minute for different brands and working hours assumed at 12 hours per day. This amounts to a total consumption in the industry for digitally printed labels of over 52 million square meters in a year. Self adhesive labels form the largest part of total label market which include besides self adhesive labels, shrink sleeves, wrap around labels, wet glue labels, in mould labels, etc. In October 2016 I had estimated the total Indian label industry size (mostly conventional) at almost 900 million square meters per annum. This translates into to almost 5.8 % of the total self adhesive labels in India to be printed digitally; conservatively we can assume the figure to be 5%.  This surely indicates that for digital label printing in India, the journey has begun!

In the last edition of LMAI’s magazine Label Legacy, Gautham Pai Managing Director of Manipal

Gautham Pai MD Manipal Technologies

Technologies said, ““Digital printing offers a plethora of opportunities for both the suppliers and the clients. With the Indian market trending towards more customized products, a large number of brands, shorter TATs (Turnaround Times) and more ecologically sustainable solutions, Digital printing would prove to be one hallmark technology for the Label Industry.” Manipal Technologies has an HP Indigo installed at its subsidiary UPSL in Chennai. The deterrent so far for the label industry to invest in digital printing equipment has been the high cost of consumables and the end price to consumer including margins, as not being acceptable. However the evolving retail selling patterns and consumables becoming more affordable, the technology is now more relevant. As run lengths continue to shrink, short runs being more in demand and customization or personalization needs become imperative to modern day marketing; it is driving printers to think digital. Added requirement for variable data on the labels that helps companies to track and trace their products, brings about the compelling need to complement their analogue printing with digital printing. In words of Narendra Paruchuri of Pragati Pack Hyderabad who have installed an HP Indigo 6800, ““One of things that all of us must understand and appreciate is that both digital and analog will co-exist. Digital’s greatest advantage is variable data printing. Short runs are cheaper. So the areas are clearly ear marked.” Digital printing of packaging and labels is growing at an enormous pace in the western world. We have touched the tip of an iceberg; it will not be long before the trend picks up in India as well.

Sai Packaging team announcing Epson Surepress Purchase

The ease of use and consistency in print reached in this technology makes it interesting for established printers to indulge. Pravin Savla of J P Printers Mumbai is ecstatic that he invested in an Epson Surepress. He says, “I can print good quality on a variety of substrates using the computer to print capability. He caters to his customer base that demands short runs with so many design changes and is still profitable.” He further adds that reduced need of manpower helps him manage well with ample time on his hands. He says conventional flexo and letterpress technologies are time consuming and have hidden costs. Yet another Epson customer Arvind Shekhar of Sai Packaging Bangalore says, “We have had good experience for short run jobs defined as less than 20,000 labels for bigger size and 50,000 for smaller pharma labels and we have never had colour consistency issues with Epson.” Adding to the views of Narendra Paruchuri Arvind states, “I don’t' see it as a standalone ROI (Return on investment). When you see increased sales on Flexo plus plate costs saved; then the ROI makes sense.” Denver Annunciation from Janus International, perhaps the very first label printer to install an HP Indigo label press says, “Yes the technology has evolved a lot and we are seeing the crossover point shift higher”. While those in the process of acquiring capabilities in digital remain tightlipped yet others like Raveendran of Sel Jegat Sivakasi, Manjunath of Global Printing Bangalore and Rajesh Nema of Pragati Graphics Indore say they are studying the technology and will invest in the near future.

While calculating the number of digital label presses in India, I have not taken into account the

presses that are not operational. Out of the 22 presses, the bulk of the share goes to HP Indigos that employ Electro Photography as a process to print, which is similar to offset printing using liquid inks. Electro photography and inkjet are both improving in quality and speed, there evolution and further developments are challenging the dominance of other printing processes like offset, wide-web flexo and gravure. 13 presses amounting to 59% of the total digital label press installations in India are HP indigo. This is followed by 5 Epson SurePress L-4033AW that use water-based inks and is suitable for segments such as pharmaceutical, cosmetics and food, amongst others. The press uses a seventh white ink to print the transparent no-label look, as well as metallic labels. The opaque white printing on materials, such as clear film and metallic substrates, has the flexibility of printing white first or last. Epson accounts for almost 23 % of the installations, 2 Xeikons account for 9% and one each of durst and EFI accounting for 4.5% each.

59% of all the digital label presses installed are in the West Zone, 23% in South and 18% in North. Out of the 13 HP Indigo label presses working in India, 7 are installed in the west zone. One at Janus International Mumbai, 1 at Diadeis Alia (formerly Alia Creative Consultants) Mumbai, 2 at Astron Packaging Ahmedabad, 1 at Essel Propack Mumbai, 1 at Trigon Digital Mumbai and 1 at Skanem Interlabels Mumbai. 4 HP Indigos are installed in South, 1 at Pragati Pack Hyderabad, 1 at Pravesha Hyderabad, 1 with Huhtamaki (SGRE Labels) Bangalore and 1 at Manipal Technologies (UPSL) Chennai. 2 of the HP Indigos are in North. 1 at Hora Art Centre NOIDA and 1 at Moser Baer Noida (working). Out of the 5 Epson Surepress preses 1 is installed in South at Sai Packaging Bangalore others are in the West zone with 1 at Trigon Digital Mumbai, 1 at J P Printers Mumbai, 1 at Syndicate Printers Goa and 1 with a customer in Pune. Of the 2 Xeikons installed, one is with Huhtamaki PPL-Webtech Labels in Mumbai and one with Kwality Offset New Delhi. The only EFI Jetrion installed is with Reynders in Chopanki in the North and the only Durst is with Astron Packaging in Ahmedabad. I have accounted for most of the recognized brands of digital label presses in India.

Hemanth Paruchuri of Pragati Pack

On further evaluation of data compiled by me 9 out of 20 i.e. 45% of the companies who indulged in digital label printing are either multinationals or corporates and the rest 11 are family owned businesses. It is interesting to note that at least 7 out of the 11 companies have the young generation-next either in command or actively involved in day to day affairs of the company. So evidently it is the corporate mindset or the youth that is driving the march into digital printing of labels in India.

Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi India May 2017 email: harveersahni@gmail.com