The rising influence of the ‘silent salesman’ worldwide

Global trends in labels and packaging for the ‘home and personal care’ market

Looking at global trends for home and personal care (HPC) products including detergents and other, household cleaning products, and personal care products such as body soap, moisturising cream, shaving foam, shampoo, toothpaste, and the like, brings out a new wave altogether. An insight of Avery Dennison’s senior marketing managers team. Pressure-sensitive labels are effective on home care products. Given the way in which consumers make purchase decisions at the store, without any pre-plan to buy a particular brand, every HPC product has the potential to be chosen from the shelf. In order to win the consumers, the product must convey the message that it is different from its neighbours’. How can this be done? Increasingly, the answer lies in the application of pressure-sensitive packaging.

Pressure-sensitive labels allow marketers to promote the unique features of a product. They also reduce costs, allowing products to be processed in smaller lots with more varied designs. This keeps inventory to minimum and ensures greater design freedom than direct printing. Moreover, pressure-sensitive labels are universally recognized as being of high quality and are thus associated with higher-value products.

It is difficult for an HPC brand to outperform its competitor’s products if it simply looks the same way they do. Fortunately, labels and packaging are effective ‘silent salesmen’, working tirelessly to make product stand out and to influence the purchase decisions of consumers of every segment in every country.

Europe and the US: looking for appealing packaging and eco-friendliness

According to a survey conducted in the year 2009 by management consulting firm McKinsey & Company, 80% of shoppers make their purchase decisions in-store, rather than before shopping, while spending a mere 2.6 seconds doing so.

These results not only call into question the clout of mass media advertising and marketing campaigns, but also suggest that packaging’s capabilities to directly appeal to consumers at the counter having a great impact on purchase decisions. This reinforces the power of labels and packaging as a sales promotion tool for HPC manufacturers. Rightly, the brands today compete largely on shelf-appeal.

With a drop in consumer spending as a result of global economic contraction, and subsequently greater emphasis on lower prices and economising, there has been a conspicuous increase in private brand products developed by major retailers. These private labels, or store brands, already account for about 20% of the total turnover of the retail sector in the US, and for 30% to 40% thereof in Germany, Great Britain, and other European markets.

A major characteristic of private brand products is that these retail for less than the national brands manufactured and sold by HPC manufacturers. This lower price is primarily because retailers can keep advertising and sales promotion costs to a minimum. As a result, both sides are moving in parallel towards emphasising the packaging and external appearance of their products, with private brands stressing economy and utility while national brands offering a sense of security and luxury.

Along with high-impact packaging designs, eco-friendliness has become a much valued brand characteristic. Greater convenience and improved product functionality are no longer enough for today’s consumers; with rising environmental consciousness, they are increasingly choosing simple packaging and natural products, and considering recyclability when they make purchases.

Europe and the US: pressure-sensitives dominate HPC labels

In Europe, the label market for personal care products is forecasted to be around 470 million m2 in 2012, with an average annual growth rate of 0.5% for the three years from 2010. Pressure-sensitives will account for 85% of this market, with direct printing at 7%, shrink-wrap at 3%, and others at 5%. In the home care products sector, the market is expected to remain steady at around 350 million sq m of labels in 2012. Pressure-sensitives will claim 75% of this total, in-mould 15%, shrink-wrap 5%, glue 2%, and others 3%.

For the US, market for personal care product labels is forecast to be around 295 million sq m in 2012, with an average annual growth rate of 1% for the three years beginning 2010. Around 69% of these labels will be pressure-sensitives, with direct printing accounting for 17%, glue for 8%, shrink-wrap for 3%, and others for 3%. In the home care sector, the market for labels is expected to achieve an average annual growth rate of 0.7% for the three years from 2010, resulting in a total market of around 235 million sq m in 2012. Breaking this down by type, in-mould will be 38%, glue 24%, self-adhesive 20%, shrink-wrap 7%, thermal wax transfer, 6%, and direct printing 5%.

Leaving aside the US home care segment, pressure-sensitive labels are thus expected to account for the lion’s share of the market for labels for HPC products in the US and Europe, being used on 70% to 80% of all products.

The shift to pressure-sensitive labels has occurred over time, with the US home care market still in the early stages of pressure-sensitive adoption. However, it is clear that HPC brand owners seeking differentiation are now firmly in favour of pressure-sensitive labels.

Brazil: brand strategies target the young

In the label market for HPC products in Brazil, pressure-sensitive labels and shrink-wrapping are being widely adopted. Marketers say that these packaging solutions ‘easily catch the eye on product shelves,’ and ‘give a sense of class.’ Manufacturers appreciate the fact that they ‘make it easy to deal with a large number of product types in smaller lots.’

HPC manufacturers headquartered in the US are making trends from their home market and from Europe to Brazil, compelling domestic manufacturers to anticipate these trends. In fact, there have been cases in which products developed in Brazil have reached to Europe and the US, and hence worldwide. However, even though manufacturers are competing with each other ruthlessly, the brand loyalty of consumers in Brazil is not significantly high. Local consumers have a tendency to decide on purchases based on price and quality.

In Brazil, as elsewhere, HPC markets are affected in no small measure by factors such as fluctuations in population, age structure, and changes in lifestyle. Brazil’s Total Fertility Rate (TFR) is 1.9, according to a data announced by the Brazilian Institute of Geography and Statistics for 2007. This is a considerable decline from 5.3 in 1970 and 2.8 in 1990. In response to this, manufacturers seem to be working to raise brand awareness among the younger generation, rather than targeting older consumers. For example, seeing brand development through new product naming in the form ‘Product Name + Teen’ and ‘Product Name + Kid’.

China: towards a HPC label market of 226 million sq m in 2012

In an uncertain world economy, China stands as a rare growth market. In 2009, China became the world’s leading exporter for the first time, after coming in second behind Germany for export value each year from 2003 to 2008. In terms of gross domestic product, preliminary calculations suggest that Japan, which is number two in the world, will cede its ranking to China this year. As 2010 progresses, China’s retail sector is showing signs of brisk activity. Business Monitor International, which carries out country risk evaluations and market research, has forecasted a more than two-fold expansion in turnover for the retail sector in China, expecting it to grow from US$1.22 trillion in 2007 to US$3.2 trillion in 2013. Given rising earning levels and the government’s support of measures to stimulate internal demand, it is anticipated that there will be an expansion of individual expenditure in the future as well.

HPC market trends in China are similar to those affecting Europe and the US. More stress is now being placed on the development of effective labels and packaging, as manufacturers recognize the power of these sales promotion tools to boost the consumer’s desire to purchase. With the large number of product lines competing for attention in supermarkets, pharmacies and convenience stores, pressure-sensitive labels incorporating eye-catching design and high functionality are becoming mainstream.

According to surveys by Euro Monitor China and AC Nielsen China, the market for personal care product labels in China in 2008 was approximately 140 million sq m. Breaking this down by sector, it consisted of pressure-sensitives (61%), direct printing (31%), shrink-wrap (7%) and others (1%). The home care label market for the same year was around 86 million sq m: 50% pressure-sensitive, 15% direct printing, 15% wrap-around, 12% shrink-wrap, 6% glue, and 2% others.

Looking ahead, the scale of the market for HPC product labels in China in 2012 is forecast to be 226 million sq m, with an average annual growth rate of 7.8% for the five years from 2007. In this context, we must not forget that China has been putting a lot of effort into making not only low-cost goods but also high-value products with multiple uses. China’s commitment to growth and current economic strength raise all sorts of possibilities that are reminiscent of Japan’s period of rapid economic growth.