UPM.COM
Article | May 09, 2018

Demand for labelling materials is growing rapidly, especially in Asia

Sales of labelling materials are increasing globally — this growth is expected to continue to be especially rapid in Asia, which has an annual growth rate of around 7%. In China, the growth estimation for labelling materials is closer to 10%.

Jaakko Nikkilä, Senior Vice President, UPM Specialty Papers ENA (Europe and North America), says that strong growth is driven by global megatrends. In particular, continuing urbanisation and higher consumer income levels in developing economies are increasing the consumption of labelling materials thanks to the rising demand for packaged products.

“This trend is most apparent in China, where people are moving from the countryside to cities, and the middle class has more income available. This massive change is not just affecting the biggest cities, but also the smaller ones,” says Nikkilä.

Consumers prefer labelled products

Food products are a good example of the increased use of labelling materials in China. Previously, people mainly purchased their food in bulk from markets. Today, a growing number of consumers buy packaged and labelled food products from supermarkets.

In addition to consumer packaging, there is an increasing need for labels in the logistics chain, as this allows product batches to be better managed and identified.

“Ensuring food safety is also often based on different labelling solutions, which is expected to increase the consumption of labelling materials significantly in China over the next few years.”

E-commerce, for which China has become the global driving force, is another important subject in this area. Ensuring that huge volumes of products are delivered to customers efficiently requires the use of labels to identify packages.

The scale of e-commerce is demonstrated by the fact that the Chinese postal service delivered over 17 billion express delivery packages to their customers during the first half of 2017 alone, an increase of 30% when compared to the same period in the previous year.

Nikkilä says that the rise of e-commerce can be seen everywhere in China.

“Let’s take the office building used by UPM in Shanghai as an example. Almost every time you use the lift, you see a courier delivering food or packages ordered online. Packages always require labels,” Nikkilä says.

Pole position on the global market

UPM Specialty Papers is the global market leader in labelling materials and has already been producing labelling materials at the Tervasaari and Jämsänkoski mills in Finland for decades.

UPM’s production capacity increased significantly when a new production line for release base paper production was introduced at the UPM Changshu mill in 2016.

“We were already delivering labelling materials to APAC region from Finland, but local production capacity strengthened our position further in China and in the APAC region in general,” says Nikkilä.

UPM’s labelling material customers are label manufacturers who coat the release base paper with silicone, apply the adhesive on it and laminate the face paper, i. label face papers are mainly produced at the Jämsänkoski mill.

UPM also delivers release base papers to siliconisers, who apply silicone to base paper and deliver siliconised material to their customers. These materials have end uses also in other industries, tapes and in medical and hygiene products.

Today, adhesives are also often used in different assembly industries instead of screws, which has also increased the consumption of release liner materials.

“UPM based release liner protects the adhesive during the production process. The liner is removed when the parts are attached to each other.”

A good reputation strengthens our position

Nikkilä points out that UPM’s global market leadership in labelling materials is the result s of long-term efforts.

“We have an extensive experience and expertise when it comes to labelling materials, and we have a reputation for being a reliable supplier. We provide consistent quality to our customers on time.”

UPM Specialty Papers has a long experience of production, sales and delivery of fine papers in Asia.

“UPM has been producing fine papers in China for almost 20 years now, and we have a reputation as a reliable supplier. Now we have brought the same service concept to release base papers. We are the first western producer of glassine papers in China — something that our local and multinational customers really appreciate.”

An increasing number of Chinese customers are also interested in sustainable products.

End users of labelling materials include large global manufacturers of consumer products that require responsibility from the whole value chain.

Nikkilä says that the market outlook for labelling materials is especially bright in China as well as in Southeast Asia China. He sees Japan as an interesting market mainly due to its size, even though the market is fairly mature.

“In Australia, the wine industry has been quite open to using self-adhesive labelling materials, which has increased the demand for our products. We have a variety of opportunities in Asia and Oceania, and we expect strong growth to continue in the region.