Thursday, October 27, 2016
Indian labels market; inching towards a billion square meters
“The annual turnover of Indian packaging industry will touch $ 32 billion by 2025 from the present $ 24.6 billion” the Union Minister for State for Commerce and Industry E M Sudarsana Natchiappan said as per report in the Economic times of Jan 06, 2014. We are now into the end of 2016, which is almost three years hence. The growth rate is estimated by the Indian Institute of Packaging and the ministry of Commerce & Industry at 15%. If I take this CAGR (Compounded annual growth rate) of 15% and calculate, the total packaging market size in India at present should be 35 Billion USD per annum. According to PIRA (Pira is the worldwide authority on the packaging, paper and print industry supply chains), labels constitute less than 3% of the total packaging market. This includes all of Self adhesive labels, Shrink sleeves, Wet glue labels, In-mould labels, etc. So the market size of labels in India if I calculate at a modest rate of just 2.5% of the total packaging market, it works out to be in excess of 0.9 Billion USD or at present rate of Forex conversion rate, it is estimated to be Rupees 6000 Crores. Assuming 40% of this to be the market of self adhesive labels, the market size of self adhesive labels then works out to over Rupees 2400 Crores or approximately 900 million square meters. This would include all of printed paper & film labels, Sheeted and roll form labels, stock lots, Barcode labels, etc. The organized sector may look much smaller but together with the unorganized sector in the label industry which has mushroomed all across different geographical zones in the country adding volumes to the overall consumption, the consolidated figure becomes substantial. Consumption continues to grow steadily in even the smaller towns of the country. Some of my industry colleagues exercising caution, differ in opinion and emphatically state that the market size is lower. With current Indian population in October 2016 being 1.33 Billion, the per capita usage of label materials in India is estimated by me to be 0.67 Square meters while my other friends in the industry feel it is a little less than half a square meter per capita, meaning the market size is almost 670 million square meters. So the market should be within the range of 670-900 million Square Meters.
In 2003 I made a presentation for Cham Tenero Paper Mills Pressure Sensitive Symposium in St. Moritz Switzerland whereby I had made an assessment of market size of self adhesive labels in India based on consumption of adhesive and silicone sold in India to produce silicone release liners and self adhesive labelstocks. The presentation has been reproduced by me as a post on this blog, please check out . With my experience of being a siliconiser and labelstock manufacturer I calculated the amount release paper and labelstock that could have been produced. The figures coincided and gave a realistic picture of indigenous production of labelstocks by local players to be between 125-140 million square meters plus the imports and sales of Avery Dennison which had just started to get a firm foot hold into the market and was operating out of their Gurgaon facility only. Taking 125-140 million square meters as the reasonable figure in 2003 and calculating at the Ministry of commerce and Indian Institute of Packaging declared CAGR of 15% per annum we arrive at a present market size of self adhesive label materials of 769-861 million square meters which is within the estimated market size arrived at in the paragraph above. In the earlier part of the new millennium we saw rapid growth of self adhesive labels, much above the CAGR 15%, this was for various reasons; the economy was opening up, organized retail was also coming up creating new demand for labels and the old slow flat bed label printing machines were making way for faster rotary flexo label presses.
In 2013 I wrote an article on Baldev Singh Jandu of Jandu Engineers, who besides making label printing machines also makes coating and lamination machines. Most of his equipment is supplied to MSME units that fall into unorganized sector. He has been making coaters for many years now. In 2013 alone he sold 16 coaters, though he says his coater are being now designed to run almost 100 meter per minute, yet I calculated at an average speed of just 50 meters per minute, two 8 hour shifts and a 25% down time. That would translate into an annual production capacity of 170 million square meters. This increase is coming from just one equipment supplier in just one financial year. He has been building coaters and selling for many years. He continues to sell his coaters and there are others also like him building coating lamination machines adding to the bulging capacity of self adhesive materials in India. Then we have hot melt adhesive coaters coming in from China. This all is besides the capacity augmentation by the likes of Avery, SMI or the imports by Raflatac. I am sure neither of these coaters are idle nor are they up for sale. The market is huge and continues its upward trend. In the second half of 1990s there were just three labelstock manufacturers in NCR Delhi and maybe 10 to 15 across the country. Today the number in NCR is close to 30 and overall in India is in hundreds. This all leads to figures of market size much larger than what we are assessing it to be.
Let me go about this, another way. There are more than 500 label printers for printed labels and an equal if not more, number of label manufacturers who produce plain labels, price labels, A4 inkjet/laser labels and barcode labels. This adds up to a 1000 converters having anything from one to maybe twenty presses. There are large converters who use over 40,000-50000 square meters per day and then there are those who consume much less. If I take just an average of a modest 2500 square meters per month and with almost 1000 converters, this translates into a consumption of 750 million square meters per annum! If I increase the average consumption to 3000 square meters per day the consumption figure jumps to 900 million square meters calculated at 300 days production. If I add to this the sheet fed label market the market sizes increases further. I have tried assessing the market size in three different ways and each time it reaches within the same limits. Surely we have with finality crossed the half a square meter per capita consumption mark and are inching towards the one square meter per capita and presently hovering around close to the magical I billion square meter mark!
Note for print publications: Magazines may reproduce the above article by giving credit to the author.
Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited New Delhi India. October 2016.