Shades of growth

9 April 2008



Three converters in three emerging countries - Brazil, India and Turkey - are inking their way towards growth. Adrian Tippetts reports


The future looks very bright for the package printing industry in the emerging economies – with fast growth driven by increasing middle income earners, stable economic conditions and the arrival of organized retailing. For those prepared to invest in state of the art equipment and adopt the highest standards of management practice, the rewards are great.

The packaging markets in emerging economies are growing at a staggering rate. In India and Turkey, for instance, the label markets are experiencing growth rates of 20–25 per cent while Brazil’s is somewhere closer to 15 per cent.

Some markets fare better than others: wealth has grown in these countries thanks to stable economic conditions, a skilled workforce, and the necessary regulatory requirements that allow competition, and prevent corruption. These conditions attract the foreign investors that provide the necessary liquidity to kick start an economy.

India’s economy has not only grown because of a low manufacturing cost base. With some 450,000 engineering and science undergraduates in the country, India is making a solid base for becoming tomorrow’s technological superpower. Besides heavy industries like mining and automobiles, its US$28 billion IT industry employs over 750,000, while the pharmaceutical and biotech industries are showing fast growth.

This virtuous circle of wealth creation spawns the middle income earner market, the lifeblood of the fast moving consumer goods market. There are now 450M middle income earners in India – already equivalent to the population of the EU and growing at 10 per cent yearly. This demand entices manufacturers and retailers to the region, who in turn need a local supply of packaging. As a result, organized retail, in the form of the supermarket, shopping mall and branded store, is taking a greater share of the grocery market.

For those label and package converters who are willing to deliver to the high quality and service standards expected by the global manufacturers, the rewards can be high. That requires investment in state of the art technology, and adopting lean manufacturing and quality management practices. One company achieving success is Webtech Industries, of Mumbai, India. It supplies leading global players in the food, beverage, cosmetics and pharmaceutical markets, with self-adhesive labels from its fleet of nine Mark Any LP3000 and 2200 flexo presses.

Amar B Chhajed, managing director of Webtech, comments: “The quality and service levels required are as high as one might expect anywhere in the world. It’s been driven by increasingly discerning consumers, and the brand owners themselves, who expect exactly the same look and feel for their products, across all regions. The success of a brand in the new organized retail environment depends to a great extent on the impact it makes on a crowded shelf.”

Not only must the pack be eye catching; that high quality look and feel must be consistent from one territory to the next – and from one production run to the next. The need for brand consistency, cost control, and efficient productivity has led the company to install a Colorsat Match gravimetric ink dispensing system from GSE Dispensing, of The Netherlands.

The dispensing system reduces the manual input needed for making precise colour dosages. Specially suited to narrow web printing needs, it formulates ink recipes from up to 20 ink barrels, according to precise colour and volume requirements, in just a few minutes. It also calculates surplus inks from previous production runs into new recipes - an arduous task if calculated manually. A key benefit is the ability to recall repeat orders and produce the recipe with identical results. This is an important means of guaranteeing colour consistency, time and time again.

With the new ink logistics system, Webtech expects to be better placed to win business in labels for pharmaceuticals, one of India’s fastest growing sectors. The pharmaceutical sector, and some food industry customers, have very strict packaging requirements, and seek traceability of packaging raw materials. Thanks to the Colorsat ink dispenser, individual ink raw materials can be traced clearly to each job: the software has a database of all orders, making detailed information about make-up of individual recipes easily accessible.

Amar Chhajed concludes: “All stages of our label converting operations are fully professionalized. We are now very well placed to deliver to the exacting, global standards expected by both the major brand owners and India’s increasingly discerning consumers.”

It can be said of India, that when any market size is given as a numerator, the figure is always large. But when set against the population – 1.13B – as a denominator, it is tiny. This merely emphasizes the vast potential for market growth that exists. One commentator pointed out recently that India could have as many as 150,000 branded retail outlets by 2025. With right investments, companies such as Webtech are well placed to reap the rewards.

Elsewhere, in Turkey…

On economic issues alone, Turkey’s house is in better shape than some EU members. Inflation is now steady; growth is over 5 per cent. Exports are booming, now standing at over US$85B. The country’s packaging suppliers have carved a niche thanks to proximity to Europe, as well as a favourable cost structure.

Turkey’s label industry is growing almost as fast as in India, and professionalizing rapidly. Last year saw 17 new FINAT members, and the Turkish Label Association’s annual awards attracted over 170 entrants. One of the judges, industry consultant Tony White, says: “Overall quality standards in the country are increasing admirably. Label printers are really taking a pride in their work and being more adventurous, using more colours, different print processes and metallic effects.”

Increasing sophistication of packaging makes recipe preparation a more time consuming, potentially costly affair: not only are there more colours to contend with, but often, specific PMS colours are needed, which require a mix of possible colours. And with margins tight, printers are driven to reduce waste just as much as they are to minimize downtime. Anything that speeds up and simplifies the makeready process is a welcome development.

One of the country’s major flexible packaging suppliers, Izmir based Baran Ambalaj San Ve Tic AS, is another company that has invested in improving quality and flexibility in service by installing an automated colour management system.

With ISO9000 accreditation in place, it has embraced modern management techniques, and invested heavily in the most sophisticated, cutting edge plant. A dedicated flexo printing operation, Baran Ambalaj has five 8-colour presses. Marques include Windmöller & Höscher, Bobst Schiavi and Soloflex, supplying major international food and beverage brand owners in Europe and the Middle East with high quality printed packaging in a variety of formats, including mono and multi-layered barrier films, vacuum bags and stand-up pouches. Strict quality control systems assure adherence to procedures and full traceability.

In March 2007, the company also installed a Colorsat Compact M32-SB from GSE Dispensing. Now, it achieves colour precision never previously possible.

The old manual approach to recipe making was a hindrance in an age when clients wanted very complex designs and total consistency in package presentation, from one region, and one job, to the next, says Alpan M Baran, the company’s general manager. “The ink preparation process was the only aspect of our business which was labour intensive. Apart from being time consuming, the process prevented us from being in control of the quality and material waste. As a result, we sought a practical, automated solution.”

Baran has reduced ink waste by about 25 per cent, over the past year. Previously, left-over inks would simply be discarded, since it was too complicated to calculate them into a new job. This is an important saving when one considers that inks make up about half of a package printer’s raw material cost.

“Our inks are ready virtually on-demand, without delay. As a result, we can be very flexible in our job scheduling and responsiveness to our customers,” he adds.

And in Brazil…

It was only 15 years ago that Brazil broke the records for all the wrong reasons – explosive inflation had led the currency to devalue by a factor of a thousand-trillion (sic: 1 x 1015) in three decades. With a little help from the IMF, the democratically elected governments and competent economists have helped pull Brazil out of the mess left by the military junta.

With inflation in single figures, the country is showing steady GDP growth of about 5 per cent, and attracting substantial foreign direct investment, which totalled up to US$198B in 2007. Like in other emerging markets, Brazil is seeing a boom in retailing, with Carrefour and WalMart making significant inroads into the market.

No wonder that self-adhesive label converters are profiting in similar ways as mentioned earlier - growth of the format across Latin America is reckoned to be about 15 per cent a year. Uniflexo Industria Gráfica is one such beneficiary. Aside from self-adhesive labels, it also offers shrinkwrap packaging.

Uniflexo supplies a wide range narrow web packaging to a host of leading names in the food and beverage, healthcare, cosmetics and pharmaceutical industries including Colgate, L’Oreal and Merck & Co. The company has six flexo presses, from Nilpeter and Omet, which also feature high end techniques like rotary screen and hot stamping. For its flexo needs, it too has installed a Colorsat Match ink dispenser from GSE, to improve quality consistency, reduce ink wastage and cut make-ready times.

For label manufacturers in Brazil, the national concern about the uncertainty of the currency value has been exchanged for the global issue of runaway raw chemical materials prices – including inks. With better cost control through automated ink dispensing, Uniflexo is better placed to protect its margins.

“As well as saving costs, automated ink logistics mean we can be much more responsive too,” says Flavio Campagnola, general manager of Uniflexo. “The arrival of the new system means we will no longer need to rely on external suppliers for special recipes, which sometimes took many days to arrive. But above all, the problem of waste, due to unusable left-over inks from previous jobs will be eliminated.”

“Overall, the Colorsat Match brings our ink preparation procedures up to the same high standard of professionalism that we offer at all other stages of our manufacturing process. This will enable us to meet the uncompromising packaging and label quality expectations of our global brand owner customers.”


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