Finat reports on supply chain evolution in label printing industry

The second session of the Finat’s European Label Forum (ELF) 2024 has focused on the crucial developments along the supply chain, exploring key themes such as sustainability, recyclability, digital transformation, and the role of AI in reshaping the labelling industry.

The ELF 2024 session on developments along the supply chain highlighted the urgent need for the label printing industry to adapt to changing market conditions, regulatory requirements, and technological advancements. Sustainability, digital transformation, and collaboration emerged as key drivers for future success. As the industry moves forward, leveraging AI, embracing sustainability initiatives, and fostering cooperation across the supply chain will be essential for maintaining competitiveness and achieving long-term growth.

Sustainability and circularity

One of the major themes discussed during the session was sustainability, particularly the need for a holistic approach to packaging and label design. Finat said that the industry is under increasing pressure to adopt circular economy principles, with major brands pushing for more sustainable solutions. Panelists emphasized the importance of sustainability throughout the value chain, from raw materials to the final product.

As pointed out during the industry panel, sustainability is not just about replacing materials like plastic with alternatives but about reducing overall carbon emissions and finding the right balance for each application. For instance, some packaging solutions made from paper may have a higher carbon footprint than plastic, highlighting the complexity of this issue​.

It was noted that brand owners are increasingly requiring end-to-end sustainability, covering suppliers, logistic and production. These demands are pushing companies to innovate and invest in technology that improves efficiency while reducing their environmental impact​.

The industry also faces regulatory pressures, such as the Packaging and Packaging Waste Regulation (PPWR). While regulation creates a level playing field, it also introduces challenges, particularly for smaller companies that may struggle to comply with complex requirements. There is a growing need for collaboration across the supply chain, with associations like Finat playing a pivotal role in helping smaller converters adapt​.

Recyclability and material innovation

According to Finat, as the market shifts towards sustainability, recyclability has become a key focus. Label producers are working on innovative solutions like wash-off labels that improve the recyclability of containers. However, the need for continued efforts to find solutions for waste materials like matrix and liner waste was also emphasized​.

In terms of material innovation, the panelists discussed the balance between different types of packaging and their environmental impacts. While plastic has been criticized for its environmental footprint for some applications, it might be the most sustainable option due to its lower carbon emissions compared to other materials like aluminum or glass​.

Digital transformation and AI integration

Digital technology is revolutionizing the supply chain, enabling better tracking, process automation, and efficiency. The integration of Artificial Intelligence (AI) into various aspects of the supply chain was a prominent discussion point. For example, AI could help predict supply chain disruptions and improve decision-making, which is crucial for preventing issues like the shortages experienced in recent years​.

AI is also transforming consumer interaction with brands. As discussed in the presentation on consumer attitudes to watch, AI-driven tools like generative AI are enhancing the personalization of consumer experiences. For example, one of the world’s leading soft drinks brands used AI to create a flavor profile and packaging design based on consumer data, reflecting the growing importance of AI in product innovation​.

Collaboration across the supply chain

The panelists agreed that the future of the labelling industry depends on collaboration across the value chain. As the complexity of regulatory requirements, consumer demands, and technological advancements grows, it becomes increasingly difficult for companies to operate in isolation. Family-owned businesses, in particular, are under pressure to document and meet sustainability goals, which requires greater cooperation between stakeholders​.

The importance of data sharing and standardization was also discussed, particularly in relation to sustainability metrics. The need for standardized carbon footprint calculations across the industry to ensure consistency and transparency was mentioned.

Economic challenges and supply chain resilience

The forum also addressed the broader economic challenges facing the industry. The post-COVID recovery has been uneven, with significant fluctuations in demand for labelstock. Many converters have seen sharp declines in profitability due to rising material costs, and there is a clear need for more resilient supply chains​.

The session concluded with a call for continued investment in technology and innovation. AI, automation, and digitalization were identified as critical tools for improving efficiency and meeting the evolving demands of both regulators and consumers.