Asia-Pacific: Unpacking APAC potential

Due to the COVID-19 pandemic, the market for self-adhesive labels in the region was negatively impacted. The implementation of the lockdown in the region led to supply chain constraints that significantly obstructed the industry's expansion. 

‘The onset of the COVID-19 pandemic disrupted supply chains across the region, causing delays in raw material procurement and manufacturing operations. The label market was not immune to these challenges, facing both demand fluctuations and logistical hurdles,’ notes John Ooi, an industry veteran known for his visionary sustainability approach in label and packaging markets and founder of Materials in Works. ‘Many businesses had to halt or slow down operations due to lockdowns, labor shortages and transportation issues, leading to a temporary decline in production and sales.’

Emerging from the pandemic

According to Mordor Intelligence, the market has made a full recovery and is on track to grow at a compound annual growth rate (CAGR) exceeding 6.3 percent through 2029. In the near term, the firm projects the market will reach 16.23 billion USD by the close of this year.

Jane Tan, managing director of Press Systems Group (PSG), a Thailand-based distributor serving Southeast Asia’s print sector, confirms that the market has indeed rebounded. 

‘The pandemic disrupted supply chains, leading to production delays and decreased demand in sectors such as luxury goods and non-essential retail,’ says Tan. ‘However, the market has rebounded, fueled by growing demand in essential goods, healthcare, SMEs, and e-commerce, all of which now require more labeling products and innovative designs.

Similarly, Durst’s global sales manager for labels and flexible packaging, Thomas Macina observes that the regional market has bounced back, driven by growing demand in critical sectors and a renewed emphasis on operational efficiencies to address past challenges.

The situation unfolded differently in Australia, notes Jack Malki, director of Jet Technologies, a Sydney-based company with operations across the APAC region. Malki explains that government and corporate measures, such as guaranteeing jobs and salaries, left consumers with greater disposable income and more leisure time, leading to increased packaging consumption. 

‘Products aimed at the restaurant and hospitality sector were definitely down, but the general label market certainly felt like it grew,’ says Malki. ‘During and certainly since COVID-19, the major impact seems to be on the supply chain, with many raw materials being in short supply as well as shipping disruptions that we never experienced in the past.’

Although the labels and packaging market is currently thriving, regional suppliers and converters still face significant challenges, including persistent supply chain disruptions, inflationary pressures, escalating material costs, and the need to comply with increasingly stringent sustainability demands, which remain a top priority for industry players in the region. 

‘One major challenge is managing the increased costs and availability of raw materials, which affect production and pricing,’ notes Machina. ‘Another is the need for innovation to meet changing consumer demands and regulatory requirements.’

‘There is a mismatch between supply chains that are in difficulty due to raw material shortages and shipping delays, and client demand, which is more erratic with peaks and troughs and less notice of these demand changes,’ notes Malki. ‘That means that label converters are having to lean on their supply partners in greater ways and, at times, improvise on solutions to these peaks and troughs in market demand.’

However, Macina adds that these challenges also present opportunities, particularly in digital printing technologies that offer fast reaction times, quick changes and sustainable alternatives that align with evolving market demands.’

Turning challenges into opportunities

Lifestyle changes, increasing disposable incomes, a rising number of working professionals, and a growing preference for convenience foods are driving demand for packaged goods in Asia-Pacific, particularly in countries like China, India, and Japan.

A recent report from Global Technology Intellect projects substantial growth in the region’s label market, highlighting significant opportunities for expansion. According to the findings, advancements in technology and evolving consumer preferences are key to driving innovation and demand, while supportive regulatory frameworks and rising awareness further bolster market growth. Market Research Intellect predicts steady growth during this period, offering a positive outlook for industry players willing to adapt to trends and adopt strategic approaches.

Key growth drivers include rising interest in sustainable products and the increasing adoption of digital transformation. Macina notes a distinct move towards sustainable and digital solutions. Brands are focusing on reducing waste and carbon footprints while leveraging more agile and efficient printing technologies to align with these evolving market demands.

‘At Durst, we are well-positioned to support these needs with our advanced digital printing technologies that focus on reducing environmental impact without compromising on quality,’ he adds. 

“The APAC region’s strength lies in its fast-paced innovation, adaptability, andstrong manufacturing base”

‘The drive to digitization is supported by several market changes,’ agrees Jet Technologies’ Malki. ‘Firstly, the difficulties in the supply chain and the unpredictable nature of the market lend themselves to label converters utilizing digital print in greater ways due to the flexibility and speed to market. That is further supported by sustainability drives as brand owners start to produce their products “on demand” rather than build substantial inventories of products and have some of those products end up in landfill when not consumed.

‘Digital label printing is vital to shortening the entire supply chain for brand owners and producing everything as required with minimal waste, improving sustainability outcomes.’
Malki believes the current market opportunity is the ongoing shift towards more sustainable packaging. He notes that Asia appears to be lagging behind Europe and the US in this regard, presenting label converters with the chance to capitalize on these opportunities and secure significant client gains. 

‘Companies are increasingly adopting eco-friendly packaging and labeling materials, such as biodegradable or recyclable substrates,’ says PSG’s Tan. ‘At the same time, digital transformation plays a crucial role, with more businesses integrating automation, data-driven solutions, and digital printing to improve production efficiency, minimize waste and cater to shifting customer demands.

‘Many customers require greener products to support their own sustainability commitments. We are working closely with our leading European suppliers to meet the growing demand for more sustainable products. This is evident in both the ink sector and UV curing, where scope emissions are analyzed. We believe PSG has a competitive advantage in these sectors as our European suppliers have been supporting customers in their home region with stricter environmental requirements.’

Consistent with Material in Works’ Ooi, many businesses in the ASEAN region are investing in sustainable label materials, such as biodegradable and recyclable options, to meet both regulatory requirements and consumer preferences.

Additionally, the shift towards digital printing is gaining momentum, offering advantages like reduced waste, lower inventory costs, and quicker turnaround times, which are crucial in the current fast-paced market.  

‘There is a clear shift towards sustainable packaging options, driven by both consumer preference and regulatory pressure,’ confirms Domino’s Myatt. ‘Digital transformation is also a key trend, with more companies adopting digital printing technologies to improve efficiency, customization and reduce waste.’

Inflation poses challenges to sustainability efforts

While sustainability remains a top priority for many businesses in the Asia-Pacific region, caution is advised, according to market research firm GlobalData. Its latest report highlights that high inflation since 2022 has dampened consumer enthusiasm for sustainable packaging. Only a third of respondents consider recyclable packaging when making purchasing decisions.

‘Sustainable packaging initiatives have been driven by consumer awareness, corporate commitments to prove green initiatives and regulation. Given the multiple factors encouraging sustainable packaging, manufacturers have increased their investments. With all-round support, sustainable packaging has been trending, especially since the COVID-19 pandemic, when consumer awareness increased. However, the high inflation since early 2022 has dampened these initiatives, says Parthasaradhi Reddy Bokkala, lead consumer analyst at GlobalData.

‘Sustainable packaging materials are generally priced higher than traditional packaging materials,’ adds Deepak Nautiyal, consumer and retail commercial director for APAC and the Middle East at GlobalData. ‘They require special manufacturing processes to be acceptable to consumers. However, these processes increase the costs of the material. Amid rising input costs, manufacturers are not in a position to absorb these costs and have to pass them on to consumers, which will ultimately lead to price increases. Given the high prices due to inflation, products would become even more expensive with the addition of these costs.’

‘Overall, we can see a trend of consumers moving towards products they consider to be more sustainable,’ comments Malki. ‘No doubt that there will be some ups and downs in that move, and right now, there is an inflation crisis, so it does not surprise me that in some segments, consumers are moving back to lower cost as the priority. Sustainability does not need to be more expensive and quite the opposite; reusing products made with less energy and less waste must ultimately result in lower costs as well, but it is a topic that brand owners will have to continually revisit along the journey.’

According to Bokkala, Asian consumers, who are generally enthusiastic about embracing products with sustainable packaging credentials, are now highly concerned about high inflation and economic uncertainty. This makes them more pragmatic with their purchase decisions. Consumers are in a dilemma between supporting sustainable initiatives and scouting for cheaper prices.

‘Consumers’ confusion can be gauged from a recent GlobalData consumer survey, wherein nearly a third (31 percent) of respondents opined that recyclable packaging is essential when purchasing products,’ notes Bokkala.

‘Conversely, 58 percent of them responded that they are checking or comparing prices before a purchase, while 46 percent stated that they are switching to cheaper brands.’
‘I agree that inflation has led some consumers and companies to opt for cheaper alternatives, especially in cost-sensitive sectors,’ says PSG’s Tan. ‘However, in premium and export-driven industries, sustainability remains a priority. Many businesses are now striving to balance cost-efficiency with eco-friendly practices.’

‘The statement that sustainability takes a backseat as inflation drives customers towards cheaper alternatives holds some truth, but it's not entirely black and white,’ responds Material in Works’ Ooi. ‘While cost considerations are indeed pushing some customers to opt for less expensive materials, the overall trend toward sustainability remains strong, particularly among larger companies and those with a long-term focus on corporate responsibility. These companies understand that investing in sustainable solutions now can lead to cost savings and stronger brand loyalty in the future, even if the initial costs are higher.’

‘While inflationary pressures might lead some customers to opt for cheaper alternatives, sustainability remains crucial,’ agrees Paul Myatt, APAC regional service and support manager at Domino. ‘Many businesses understand the long-term benefits of sustainable practices, both from an environmental and brand reputation perspective. Thus, while cost considerations are important, they do not entirely overshadow the drive toward sustainability. For example, the Domino Difference.’

Mordor’s report indicates that, over the short term, significant factors driving the market were the growing regional e-commerce industry and the increasing demand for packed goods from the food and beverage industries, which created significant demand for self-adhesive labels and contributed as the largest end-user industry for them in the region.

‘The current situation shows a market recovery, with increased demand, especially from sectors like healthcare and e-commerce, which experienced accelerated growth during the pandemic,’ adds Myatt.

‘The sectors driving the label market recovery include pharmaceuticals, food and beverage, and e-commerce,’ agrees PSG’s Fagg. ‘With heightened demand for medical supplies, vaccines and packaged goods during the pandemic, these sectors continue to rely heavily on labeling for both logistics and regulatory compliance. Additionally, the rise in online shopping has increased the need for durable, high-quality labels for shipping and consumer information.’

Macina also notes strong growth in the food and beverage sector, pharmaceuticals and logistics: ‘These sectors have rapidly adapted to new consumer behaviors, prioritizing agility and faster turnaround times in their packaging and labeling needs.’

Driving forces behind the APAC market’s growth

The growth of the APAC region is driven by several factors, including its large and diverse population, accelerating urbanization, and the rapid expansion of industries such as e-commerce, pharmaceuticals and consumer goods. The region's capacity to swiftly adapt to shifting consumer behaviors and embrace technological advancements has further fueled its dynamic development. Additionally, the growth of infrastructure, the emergence of a burgeoning middle class, and the evolution of regulatory frameworks have all played significant roles in strengthening the label market across the region. 

‘The APAC region’s strength lies in its fast-paced innovation, adaptability, and a strong manufacturing base,’ notes Durst’s Machina. ‘The rapid adoption of new technologies and a large, diverse market make this region one of the most vibrant and promising for the labels industry.’

Also Malki agrees that the APAC region is an exciting place to be in, as it transforms from a low-income region towards middle and higher income. ‘As consumers in those regions start to have a higher disposable income, they start to consume more and more products, leading to substantial increases in their consumption of labels and packaging,’ he says. ‘We have been in Indonesia for around 11 years, and during that time, the minimum wage has more or less doubled. Vietnam, Malaysia and numerous other countries in the region have experienced similar wage growth. Combining that wage growth with a young and growing population results in substantial opportunities in those countries.’
Rapid industrialization and urbanization continue to drive label demand, while the market's swift adoption of technologies like digital printing and sustainable practices ensures it remains dynamic and competitive.

‘The APAC region's strength lies in its large and diverse population, rapid urbanization, and growing middle class, all of which drive demand for various consumer goods. Additionally, the region's strong manufacturing base, coupled with technological advancements and investments in infrastructure, contributes to its dynamic and fast-growing label market,’ concludes Domino’s Myatt. 

The APAC label market demonstrates remarkable resilience and adaptability, overcoming pandemic-induced challenges to emerge stronger than before. Fueled by a blend of technological innovation, shifting consumer behaviors, and rising demand across key sectors like e-commerce, healthcare and packaged goods, the region continues to drive growth opportunities. While sustainability efforts face pressure from inflationary costs, the market's pivot toward digital printing and eco-friendly materials highlights a commitment to balancing economic and environmental priorities. With its large population, urbanization, and burgeoning middle class, the APAC region is set to remain a pivotal player in shaping the global future of labels and packaging.

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