Pernod Ricard is elevating labels with supply chain synergy

The primary objective for every brand owner is straightforward: to gain consumer attention. Brands strive to capture attention at the store shelves, and usually, it’s the packaging that does the initial job. Labels, with their dynamic nature, hold particular importance. Unlike bottles or glass, which incur high costs to change or replace, labels offer a faster and more convenient option for differentiation, and label changes often are the easiest and quickest way to make a brand stand out. 

However, when designing a label or packaging, brands often find challenges in turning vision into reality. The biggest hurdle seems to stem from a lack of technical knowledge concerning print production processes. 

Ingrida Kanopkaite, packaging category director, closures and labels at global wine and spirits brand Pernod Ricard, says: ‘When we create a label from scratch, it normally starts with design agencies and then brand managers or marketing teams get involved. What I see quite often is that the technical knowledge is not there. Yes, agencies have nice visuals, but can they know how to make it a reality? That’s another story.’ 

Labels are susceptible to change, and their shelf life is typically an average of 12 months. ‘Normally, you may change legal text because of evolving regulations, or you may need to rebrand. Promotions also drive quite a lot of changes in labels. And when it comes to labels, we have high complexity in labels. We have more than 10,000 SKUs in labels only,’ says Kanopkaite. 

I’m not buying labels for just price A or price B. There are a lot of considerations beyond the price

Pernod Ricard holds second in the wines and spirits industry and is a market leader in the premium spirit segment. The company has one of the most comprehensive portfolios in the industry and owns more than 240 brands. Pernod Ricard is perhaps best known for its world-renowned brands including Absolut, Chivas, Jameson, Mumm, Martell Ballentine’s, Jameson, Malfi and many others. 

Supply chain 

The focus of Pernod Ricard’s procurement in the last two years has been on the security of its supply chain and managing inflation. 

Kanopkaite explains: ‘We all know that the label industry was suffering because of long strikes. Despite that, we grew by double digits and recovered after Covid. The year-on-year growth was 20 percent plus. So, we had massive growth, but on top of that, we had supply issues. That was a fun journey, I would say. And besides the  inflationary market that we’ve been living in the last two years, we also had to deal with price increases, whether it’s driven by energy cost or supply demand.’ 

Kanopkaite’s professional understanding of the label market and printing technologies aided her in navigating the challenging times. 

Pernod Ricard now focuses on sustainability and innovations for which the company is partnering with leading technology and material suppliers globally. Kanopkaite spoke with Labels & Labeling as she made her way through Labelexpo Europe 2023. 

‘I am here to meet our indirect suppliers such as UPM, Fedrigoni or Avery Dennison, as well as ink suppliers, hot foil or cold foil suppliers because that is where I see a lot of value.’ 

As a supply chain professional, Kanopkaite advises design agencies and marketing professionals on the right materials to use and where to source them from. ‘For instance, I can advise that we might not need this special paper or 20 colors when we can achieve the same results just with a slightly different process.’ 

She adds that having technical knowledge in printing, in terms of choosing the right substrates, inks or processes can help her as a procurement professional to achieve her goals of having better costs and a shorter supply chain. Collaboration is essential. Only 10 percent of procurement professionals know their indirect suppliers beyond their label vendor. 

Kanopkaite has a network of paper mills, ink and adhesive suppliers. She highlights the importance of bringing together brand managers and marketing teams to explain the technology. ‘I organized knowledge workshops for marketing teams, explaining to them what is flexo, offset, or silkscreen and what can be achieved with these technologies. They didn’t know these things, and this changes the mindset of people about how different substrates can impact the final result of the label. 

‘I am happy to share this knowledge because then, with time, you will see the results. It takes time to train them but, in the end, we, as supply chain professionals, can direct our teams a bit and support our goals as well. Becoming a business partner who can advise, but not become a bottleneck or blocker.’ 

Developments in sustainable packaging

Pernod Ricard has been building its sustainability agenda for several years and has defined sustainable guidance for its packaging vendors. The company has laid down guidance regarding cutting down the use of plastic and using more bio-degradable materials in packaging. The company recently added labels to that guide. 

‘But again, if you look at the labels on a bottle, labels typically contribute below 2 percent of total CO2 emissions of the bottle in your hand. The label typically is the non-essential component, and all the attention goes either to cartons or glass. 

Labels are still a gray zone. We are now focusing on labels and that is the beauty of having this blank page to start with. That’s why I welcome all possible solutions. By attending this event [Labelexpo Europe 2023] I can bring new ideas to Pernod Ricard,’ Kanopkaite explains. 

For instance, Pernod Ricard has switched to the ‘forest’ label by UPM for its Lillet range. 

Kanopkaite adds that spirit brands today are working toward reducing the use of rigid boxes as a sustainable measure making the label a main message sender to the consumer. ‘We are expecting label sizes to become bigger or increase the use of digital QR codes on each of our brands, so consumers can get all the required information.’ 

Unlike other categories in the beverage market that have a well-developed deposit system to collect used bottles, spirit bottles are often not returnable given their long shelf life. As countries introduce new directives about waste, recycling and extended producer responsibilities, this concerns spirit brands such as Pernod Ricard. 

For Pernod Ricard, a sizable portion, around 85 percent, of its labels are pressure sensitive and often have high standards for its adhesives, often requiring features such as ice water resistance, and in some cases, using hotmelt adhesives. This often means that a label can’t be removed in the recycling wash process. 

These challenges loom large, often presenting time constraints, especially when new guidelines emerge with tight deadlines, such as those set for 2025. As the industry undergoes substantial changes, staying proactive is crucial to ensure preparedness for what lies ahead. Kanopkaite states that this is a challenge not just for brands but also for converters. 

When we create a label from scratch, it normally starts with design agencies and then brand managers or marketing get involved. What I see quite often is that the technical knowledge is not there

Converters might not know who the decision maker is. Labels are often seen as commodities or treated as an afterthought, but Kanopkaite recommends that brand owners include their label converters earlier in the process. 

‘Converters say that they want to talk more with brand owners,’ she says. ‘Yes, please involve procurement, but we are not the only ones who should be involved. Behind me, there are brand managers, finance, planning, sustainability and sales. Connecting them all together is not where it ends because I need to understand the process of how they operate and what we can do together as a big team to achieve these big results. I’m not buying labels for just price A or price B. There are a lot of considerations beyond the price.’ 

Pernod Ricard looks to extend its culture of innovation beyond its walls to all the vendors it works with. The security of its supply chain is essential, but the company also expects new ideas from its packaging supply chain as well. 

‘Because now, within the transformation of Pernod Ricard, we are much more able to drive and implement those ideas. If you look back 10 to 15 years ago, brand owners talking with paper mills did not exist because we have always been talking to converters. Now we are becoming open to other elements in the supply chain and that is where we see a lot of opportunities,’ she notes. 

When it comes to printing technologies, Kanopkaite has been carefully following developments for a significant portion of her career. Reflecting on the past, there have been significant innovations in terms of processes and technologies available in traditional methods such as flexo and offset and in digital printing. 

Kanopkaite intends to focus on exploring these avenues to bring additional value to the process at Pernod Ricard. 

The true value, Kanopkaite summarizes, lies beyond the machinery. It’s in the collective understanding of each aspect of print production and innovation that the possibilities of groundbreaking ideas lie.