South America and the Self-Adhesive Label Industry

Published: January 01, 2003, By Corey M. Reardon, AWA Alexander Watson Assoc.

South America is a key prospect for the self-adhesive label industry… but when?

A recently-published AWA market research study, “Self-adhesive Labelstock 2001: North and South American Market Update,” provides an overview of the self-adhesive labelstock market in South America.

South America commands only 4% of the worldwide market for self-adhesive label stock — 532 million sq m. In a region with a population in excess of 400,000,000, per capita usage of labelstock is negligible.

Industry suppliers continue to focus with interest on the future possibilities — but the timing is unpredictable, given South America's general regional economic instability.

Nevertheless, South America has attractive growth trends in material usage. Primary product labels, variable-information print and office labels, and functional/security labels are the three main application areas. Primary product labels take the largest share — 57% of the market, or 303 million sq m. Today, most of this usage is in papers, although — as elsewhere — films continue to take market share and currently are achieving double-digit growth levels in South America.

Variable-information print, business systems, and office labels hold 43% of the South American market today, and we predict they will overtake primary product labeling shortly as the major usage area. Fueling this growth will be the increasing sophistication of warehousing, product, and component tracking systems; growth in direct mail, Internet ordering; express mail services; and other bar code-focused applications.

While functional and security labels have a recognized role to play in product authentication in developing economies, such applications represent less than 1% of South America's self-adhesive labelstock usage today.

Brazil is the largest and most developed market overall, with a 2001 consumption of 272 million sq m of self-adhesive label stocks. Annual market growth is 6-8%.

Chile, the second largest market in the region, consumed only 51 million sq m in 2001, but from this much smaller base it's growing at a healthy 10-12% per annum, as is Colombia, with a similar consumption level.

There is very little manufacture of self-adhesive laminates in South America: Of the global manufacturers, only Avery Dennison (with Jackstädt) manufactures there, and even then estimated capacity usage is lower than 65%.

Nevertheless, there will be an increasing need for a more comprehensive supply network for all types of label stock as the economies stabilize; international product manufacturers begin to look at establishing regional production and packaging; and the consumer society takes hold.

Until the regional trade pact — Mercosur — becomes more transparent, and the wavering economies stabilize, no one can predict confidently when the South American market genuinely will open up.

For details of the study, visit the website at awa-bv.com.

AWA Alexander Watson Assoc. is an international market research consultant company for the converting and packaging industries.