AWA Alexander Watson Associates hosted three concurrent events prior to Labelexpo Americas 2022. The market research firm welcomed attendees to explore the latest trends and developments in the label and packaging industry on September 11-12, in Rosemont, IL, USA.

In addition to the AWA & TLMI Sleeve Label Seminar, which took place for the 16th time,  AWA hosted the inaugural North America Narrow Web Pouch Seminar and the 15th edition of the Label Release Liner Industry Seminar.

The three events boasted a wide range of industry sponsors, including Resource Label Group, Siegwerk, Multi-Plastics, Hudson-Sharp, Avery Dennison, Elkem, Mactac, UPM and more.

“Our goal was to have an inspiring week,” said Corey Reardon, president and CEO, AWA. “We held an evening that was about focusing on networking and getting back together. The program was set up is so attendees could go from program to program and learn what’s going on –concurrently – in the industry.”

The opening evening, which took place on September 11, highlighted sustainability and the recent surge of M&A activity in labels and packaging. Kelly Murosky, manager of packaging development, Seventh Generation explored the various sustainable innovations taking place in pressure sensitive labeling, shrink sleeves, pouches and more. Seventh Generation offers plant-based homecare cleaning products for everything from laundry detergents to disinfectant sprays.

“We’re working on many different package types, from labels to corrugated,” stated Murosky. “We’re well aware of the waste that packaging creates and the effect it has on nature. We’re one of the first companies to put ingredients on our packaging, and we felt this was a change that was needed in this industry because consumers should know what’s in their products and what could potentially be a toxic ingredient.”

Murosky also detailed the newest trends in sustainable packaging, notably with bio-based and PCR for alternative stocks. She cited the new Ocean Bound product from UPM Raflatac, as well as the company’s Forest Film, respectively, in those two areas. Plus, the industry is seeing greater adoption of compostable adhesives and improved wash-off technology for PET.

Jonathan White, managing director, Mazzone & Associates, concluded the evening with a discussion on the industry’s M&A activity. According to White, 2021 was “a banner year by any definition.” While 2022 has slowed some, he noted it was still “pretty darn strong.”

White stated, “The net-net is we’re still in a very robust environment for labels and flexibles. You can’t say that about the economy, but you can say it about the industry we’re in. M&A activity took a big hit in 2020, but valuations bounced back in 2021. There was a lot of activity and low interest rates, which is why 2021 was such a great year.”

While White conceded 2021 was likely an aberration, with 8-9 times the multiple range, mergers and acquisitions are expected to continue – particularly in this industry. Small transactions continue to dominate the space, but size does matter when it comes to pricing. Financial sponsors or PE groups have accounted for the bulk of the transactions, and that peaked in 2021, with nearly two-thirds of all transactions.

“Financial sponsors have retreated a little bit in the marketplace in 2022, and corporate buyers have stepped in in a market with a lot of disruption or uncertainty,” said White. “Higher interest rates will reduce the value today of future cash flows. That may translate into markedly lower valuations.”

Sustainability also played a key role in White’s presentation, as he noted the importance of valuing the environment when selling a company. “In five years if you don’t have a legitimate sustainable strategy, you’re going to find it difficult to sell a company. That’s how important sustainability has become.”

During the AWA &TLMI Sleeve Label Seminar, Linnea Keen, president of TLMI, addressed the growth that many of the association’s members have experienced. Of the 90 converter respondents, 81% have seen an increase in growth compared to 2021. Approximately 16% saw a decrease in business while 3% of respondents said business remained static.

“Overall, we’re seeing very strong growth, which is the most opportunistic and optimistic part of being in this industry,” said Keen.

Technology will still play a key role in the future, too, as 23% of respondents stated they bought a digital press in 2022 – and more are considering doing so in the future, especially as label converters target efficiency in their facilities.

In regards to sleeves, AWA’s Anum Javed Beg, market research manager, illustrated the state of the industry. In total, there were 71 billion square meters were printed last year, with PS boasting a market share of 41% in the label market. Meanwhile, sleeves made up 19%. Beverage and food accounted for the biggest label drivers at 43% and 22%, respectively. Paper labels accounted for 52% of the market compared to 48% for films, and paper experienced 4% growth in 2021.

“The market is growing but at a much more stable rate,” remarked Javed Beg. “We saw 3.8% global growth in 2021 for the label market.”

The Sleeve Label event also featured several panel discussions. John McDowell, president of McDowell Label, Resource Label Group, Ryan Hughes, founder of Ghost Lifestyle, and Dave Parsio, vice president of sales and marketing, Multi Plastics, explained the value of shrink sleeves throughout all levels of the supply chain, from supplier to converter to brand.

“We can decorate virtually any shape and size container, which drives a big part of demand,” said McDowell. “Being able to provide brand owners quick changes and fast turnarounds gives them tremendous flexibility and freedom of design.”

“Our goal is to be as sustainable as possible while still trying to execute at the highest level for our brands,” added Hughes. “Thanks to our partners, we can execute at that level.”

Other presentations featured Doug Horn, partner, Clairvest, who delivered the buyer’s perspective to M&A, and Zack Meister, global business development manager of shrink sleeves, Siegwerk, who detailed the importance of inks and coatings in successful sleeve label printing.