Driving profitability in
labels, with embellishments, digital printing & hybrid printing

Self-adhesive or pressure
sensitive labels industry in India has grown steadily right from the time of
its initial entry into India to be indigenously produced in the mid-1960s when
a screen printer manually created the first label. Thereafter, label manufacturing
has evolved and completely transformed
technically over the years. Initially, small and slow very narrow web
letter presses, 4 or 5inch wide, from the eastern part of the world were used
to print with blocks and die-cut labels with flatbed dies in roll form. These presses
eventually started going wider in printing width with growth in demand. The
need for increased production in 1980s brought in the adoption of rotary
flexographic printing presses. However, since the flexo plate technology was
just evolving, usage of letterpress block printing was still growing. It was in
the new millennium that developments brought in prepress and plate making
technologies, made it possible for printers to decrease their dependence on
letterpress printing technology and invest in flexo presses that eventually became
modular and print widths going wider with increased speeds. Toward the middle
of the first decade of the new millennium, the pop and Mom retail stores, known
as Kirana stores catering to consumers, started being replaced by the entry of organized
retail outlets and with it, came the increase in demand for labels and
packaging. When it was realized the customer’s point of purchase decision to
lift the product off the shelf is the driver for sales, brands felt the
imperative need for attractive labels and packaging. Different print
technologies started being employed and presses with advanced capabilities
started being developed and offered. While all this transformation was
happening, the label industry in India was all along registering a robust double-digit
growth. It was largely accepted fact that even though labels are a very small
part of the large packaging industry, it was more profitable. Due to this, the
number of label printers kept growing, investments also came in from
established offset printing companies. With cheaper label presses coming from
China and availability of good affordable machines in India, the label printing
capacities have grown exponentially. This increase in capacities, the pandemic,
the strikes in Finnish paper mills, the Ukraine war, the re-emergence of Covid
in China, etc. brought the margins in
the labels industry under intense
pressure. Raw material prices have since escalated, freight rates,
salaries and overheads have increase while competition does not leave room for
increase in selling prices. In such a difficult scenario, label converters are
looking at options to drive in profitability.

Opinion and comments of label
printers across India was sought on how to drive-in better margins in the label
production in the given circumstances. Three questions were posed to all, their
response is somewhat similar, yet some do have apprehensions about the steps
that are suggested whether they will actually drive in margins? However still,
a direction on the way forward appears to be an imperative. The printers in the diverse geographical zones
who contributed their views are as follows;
North:
Anuj Bhargava, Kumar Labels NOIDA
hereinafter referred to as (AB)
Rajeev Chhatwal, Kwality Offset
New Delhi (RC)
West:
Mahendra Shah, Renault Paper,
Palghar (MS)
Himanshu Kapur, J K Fine Prints
Mumbai (HK)
Priyank Vasa, Unick fix-a-form,
Ahmedabad (PV)
East:
Manoj Kochhar, Holoflex Kolkata (MK)
South:
Raveendran Selvarajan, Seljegat
Sivakasi
(RS)
Lakshminarayanan Parthasarthy, Signode
India Ltd. (Wintek) Bangalore (LP)
Question:
Do
you agree that Embellishments, Digital printing & Hybrid printing or
converting are important steps to get better prices for labels?
AB: Yes,
value added labels do add to margins. However still, the main buyers are few.
Startups or premium products cannot add volumes where multiple players offer
value additions.
RC: Embellishments certainly
will get you a better price if you have a technical edge over your competition.
Just a different printing process does
not get you more price from customers. One needs to decide which process to use
to get better return based on machine capabilities .
Hybrid is still
not suited for the Indian Market. However good converting and finishing is
important for short runs on digital to reduce wastage.
MS: Yes, I
agree. With increase of just-in-time orders, shorter runs and demand for innovations, it is economical and faster to produce with
Digital printing. Embellishments complemented with other capabilities, aid
improvement in value addition.
HK: More
technical the labels are, better is the margin. Unfortunately, large companies
expect more for less. The basics of costing has been lost by most label
converters. Embellishments also add to costs, but to recover those costs is
difficult.
PV: We aim
for the best process fit for a job, be it digital, flexo, hybrid or offset.
That is the only way to master production cost. Digital embellishment always gives
an edge and keeps business secure but does not always guarantee increased
profitability, it comes with its own limitations.
MK: I agree that
Embellishments, Digital printing & Hybrid printing or converting are
important steps to get better prices for labels. Value addition invariably leads
to a better realization. Brand protection elements such as hologram, security
inks, security designing also add value.
RS: Not
only embellishments, but also innovations along with having capabilities for attending
to needs of customers are important. If food and pharma customer needs labels
with water-based inks, we need to have those capabilities. If they need booklet
labels it becomes an imperative to be able to create them. Every printing process
has its own specialty so when you are able to create labels with Hybrid and
digital technologies, then of course selling prices are better.
LP: QR codes and AR (Augmented Reality) in labels, connecting consumer to
the brand – is what we see as way forward for profitability . Embellishment
leads to aesthetics, shelf appeal, increased sale and brand value for better
profits to the buyers and converters.
Question: Have you taken any steps in this
direction to increase your capabilities?
AB: We are always focused
to value added labels. We have capabilities do embellishments like 3-D effects,
embossing, textured foiling, screen printing and many other such processes that
enhance the aesthetics of product.
RC: We have already
invested in converting equipment with finishing and embellishing capabilities
like foiling, Screen printing, Lamination etc. Our range of labels includes-
Foil stamped/embossed labels, labels with tactile effects, Laminated, 3-D
embossed, Variable data and Holographic labels etc.
MS: Since long, our
customer profile is such that embellishments and employment of multiple print
technologies is an imperative, for this reason we invested in hybrid presses
many years back. Currently to achieve just in time capabilities we are
investing in digital printing which will also give us additional production
time on our main printing presses.
HK: We have always invested
to be a capable company, right from inception so have the capacity to do all types
of embellishments.
PV: Yes, we have added
digital capabilities. Having multiple printing technologies at our disposal,
enables us to pick and choose processes that are best suited for a particular
job depending on the complexity of decoration required.
MK: We are constantly trying to scale up our capabilities of adding diverse
authentication features and other embellishments such as foiling, registered
hologram stamping, variable data printing and finding new materials that are
unique.
RS: At
Seljegat we always endeavour to stay invested and capable with the latest
developments. We have already installed machines with multiple capabilities,
and we prefer all inline. We can do embellishments, special varnishes,
multilayer labels, digital for variable or personalized labels, embossing, etc.
We are always ready to cater to the changing needs of customers, nowadays
pharma and food companies are demanding labels to be done with water-based inks
or low migration inks, we have immediately empowered ourself suitably to serve
them. In today’s time if we cannot deliver that extra, then we get lost in the
crowd of intense competition.
LP: We are already having all capabilities and exploring AR in labels as
next step towards Brand connect and Brand promotion.
Question: What in your opinion are factors
that can drive in better margins? Please mention steps at given prices of
inputs.
AB: Label
companies should invest in making labelstocks for captive use, negotiate hard
while buying machines and for buying raw materials.
RC: As
competition gets aggressive, systems need to be designed to reduce wastages,
increase productivity and buy raw material at competitive prices. Making our
internal systems strong is the only way out to drive-in better margins.
MS: We
started the process of optimizing production costs, long time back. We
collected data of all ongoing jobs for past 3 years and calibrated all
processes as per the following;
a) We dwell on
actual time needed for the job and check if the processes are
complying with targeted numbers.
b) If not
complying what's the core reason and if for some reasons not meeting
norms, can solutions be found?
c) Evaluating,
if no solution is possible, is the job generating profit for the company?
d) If not ,
either get the price increase or discard such jobs to save time for more
sustainable jobs.
HK:
Rather than controlling the input prices on which we have no control, we should
focus on getting better prices from clients. We need to factor-in the basics
like label waste that is completely non-recyclable and cannot be salvaged.
Label machines are capital intensive we must add the impact of cost of
investment in the total price of end product.
PV: To
improve profitability;
Freight cost management is an imperative, it can save lot of money.
Process improvements and wastage control is necessary. One should start
with small steps like exact web sizes, proper sheet layout, special sizes for
volume jobs, ink management and keeping a track of low moving stocks.
Refrain from unhealthy competition.
Learn from your mistakes as a team. Take all complaints seriously. Try
implementing simple solutions.
Update monthly performance chart of individual operators, give them incentives for faster turnaround
and increased capacity utilization. Take corrective steps to reduce downtime
due breakdowns.
· MK: Key to improve margins is to provide customised solutions by
understanding what the customer needs. We try to incorporate various levels of
authentication, embellishments and decoration to tailor solutions that best
meet their needs. If a customer cannot afford to pay for the hologram, we focus
on enhancing the printed authentication features keeping costs under control,
and yet get a price that enhances our profitability while the customer
appreciates the value we deliver.
RS: For driving in better margins, the instant
reaction is to buy cheaper but if we have to think of steps at given raw
material prices then one has to research internally and implement changes. As a
first step we have opted for equipment and steps for faster changeover time
between jobs to increase productivity. We have invested in a system for make
ready to be completed before one job ends. The changeover time for us has
reduced from one and half hour to just thirty minutes. For job set up we were
using fresh labelstock but now we use rejected, old and leftover unusable
stocks. Next, we are now switching over to LED UV as its operational and lamp
replacement cost is lower. New equipment has been ordered and will be installed
soon. We plan to install an automatic butt slicer for non-stop production. Reducing
wastages is also on our radar and we constantly work on it.
LP: The
following steps are necessary to drive in profits;
Watertight operations, control on
wastages and minimising set-up waste.
Reducing overhead costs, improving
efficiency and OEE (Overall equipment effectiveness).
Propose embellishments to customer
making the label more premium to claim better realisation.
Summation:

Price increase
is an ongoing process, the impact of inflation is felt every year along with
that of other unavoidable circumstances. So, manufacturers need to gradually
increase selling prices to maintain a healthy bottom line. Unfortunately, that
is an ideal scenario but in actual the selling prices are driven by market
dynamics and competition. In the present situation, for the label industry, it
is time to look internally and evaluate. Based on the views of the printing
fraternity it is largely agreed that embellishments, security features and
innovative concepts on labels that enhance the shelf appeal and lead to better
sales volumes for brands, can help get better prices. The simpler the label is,
more is the competition. As indigenously produced label presses have come
within the reach of middle level printers, the competition in that segment has become
intense. Moreover, with organized retail and ecommerce becoming the predominant
selling systems, need for more decorative labels, IT enabled labels and
personalized variably printed labels with security features has escalated. Not long-ago
setup of label jobs took an hour or more with 2 or 3 persons on each press and at
least 100 meters of material being used before final saleable production
commenced. With increased automation, advanced automatic registration controls,
higher speeds, etc. now a single operator can setup a job in just a few meters
in about 15-30 minutes, with increased productivity, less wastages and quick
changeovers between jobs by keeping the next jobs ready. Using exact size
materials and not generating offcuts is also a necessity. These are changes
that add to margins and reduced operational expenses.

Food and pharma
safety and health concerns are matters of importance for discerning customers,
this, along with statutory rules for toxic or unsafe materials used in
converting labels, are to be avoided. There is an increased demand for
non-migration and water-based inks because UV inks are considered somewhat
hazardous for direct food contact and skin contact applications. Printers need
to have such capabilities to supply as demanded by print buyers. Most companies
feel that to reduce costs there is need for internal production systems and the
workflow to be strengthened or monitored continuously to reduce downtimes at
each stage, opt for more automation to reduce manpower and use energy efficient
machines, equipment or systems.

Finally, time
has come when EPR (Extended producer responsibility) compliance has become mandatory.
Sustainability and circular economy are becoming a social responsibility for earth
to be a safer planet. Large FMCG companies and brands have already started
opting for or expressing preference to buy from certified green companies. It
will not be out of place that producing in compliance, may as well add to cost
but it may also qualify for better pricing for this good social cause.
Written by Harveer Sahni Chairman,
Weldon Celloplast Limited, New Delhi February 2023