Industry focus – How the industry is developing

Mike FairleyDirector Strategic

Development

Agenda

• Overview of labels• Trends we see impacting the industry• Update on the digital label market

Market Overview

• Industry growth globally 2013 = 6-7%• But 80% of growth is in emerging markets• Emerging markets offer huge opportunities• Industry remains very fragmented, limited

consolidation mostly in USA• Flexible packaging and cartons good growth

Evolution of Label and Package Printing

Flexible Packaging Folding Cartons Labels0

10

20

30

40

50

60

70

80

90

100

$89 B$79 B $73 B

Digital PrintTotal value

Valu

e in

US

dolla

rs

$3 B

Estimated worldwide print value 2012 in $B

Market overview

North America 28.4%

Western Europe 27.1%

China/Asia Pacific 21.9%

Japan 7.20%

Eastern Europe 7.80%

South America 5.6%India 1.4%

Rest of World 0.6%

Estimated breakdown of the global label market in 2012. All kinds of labels now in excess of 46 billion sq.m

The global label market by region

Market overviewGlobal Markets Estimated per Capita Label Consumption

USA 15-16m2

Scandinavia 17-18m2

W Europe 12-15m2

E Europe/ME 6-7m2

China 0.9m2

Brazil 2.2m2

India 0.9m2

SE Asia 2-3m2

Market overview

45%

41%

7%3% 4%

Total Western European label market by type of label

Self-adhesiveWet GluesleevingIn-moldOthers

Market Overview

• Price squeeze continues with rising costs and pressure on margins

• Adoption of digital accelerating• PS still has major share of label market but

shrink/IML gaining from a low base (3% per annum)

Market Overview

• Environment ever increasing importance i.e. Heidelberg press labeled carbon neutral

• Linerless still being adopted, traditional material suppliers downgauging, recycling

• Opportunities beyond the label, many converters offering other decoration techniques i.e. cartons/flexibles

Trends

• Interactive labels and packaging growing• Inkjet becoming the new digital technology• Material costs rising

Trends

• Wine/spirits/beer growing opportunity for printers

• Brand protection/anti counterfeit, end users becoming more concerned

• Private label continues to get more market share

Trends

14

17

23

26

27

33

36

41

50

51

70

75

126

0 20 40 60 80 100 120 140

ITM (Intermarche) private label

Danone total company

Coca Cola total company

Metro Group private label

Royal Ahold private label

PepsiCo total company

Tesco private label

Aldi private label

Unilever total company

J&J total company

P&G total company

Nestle total company

Walmart private label

Worldwide sales $bn

‘Private labels’ are now the biggest brand in the world

52% of all brand product launches in 2011 were ‘Private Labels’

Production

Consumption

Number of companies and brands (microbreweries)

MORE COMPETION

The image, the label, is becoming more

and more important as happened in

the wine sectorSource: Manter

Major Beer Trend

Emerging Trends

• The rise of the marketing printer • The new mobile world• On the go products

Emerging Trends

• Out to share products• Speed to volume manufacturing• Multi purpose packaging

• Increasingly advanced digital toner label presses have been introduced over past five years

• Proliferation of new inkjet label presses coming to the market over the same period.

• Digital moving in to packaging

Digital Label and Package PrintingCurrent Status

• Major new press and finishing equipment for label printing launched at DRUPA in May 2012, e.g. Landa, HP, Xeikon, Domino, etc

• More new developments at Labelexpo 2013• Digital label printing now well established• Current installed base worldwide now over

2,300 machines

Digital Label PrintingCurrent Status

Market share of new digital presses installed worldwide as a percentage of total new presses installed

Digital Label Printing

0

500

1000

1500

2000

2500

3000

3500

4000

2010 2015

Electrophotographic Inkjet

Current and forecast growth of inkjet printing for labels to 2015

Where is inkjet in the label world?

Digital Label Printing

Digital Label Printing

Key Facts

• Global digital print market now estimated at over $3 billion

• Value of digitally printed labels growing at 15% + per annum

• Around 95% of gross billings from the installed base are currently for prime labels

Digital Label Printing - summary

Macro Trends for the future

FromInformation CarrierInactive Label or Pack Fixed Information Unsecured DataMinimal Food SafetyHigh Wastage TechnologyUnlimited Resource

ToCommunications MediumInteractive Label or PackVariable InformationSecured and Traceable DataHigh Food Hygiene/SafetyLow Wastage TechnologySustainable Resource

The role and function of labels and packaging will continue to change

Industry focus – How the industry is developing

Thank you for listening