Avery Dennison optimistic about Latin America growth

Avery Dennison forecasts ‘low double digit’ sales growth for the company in Latin America this year, according to president and chief executive officer Dean Scarborough – significantly higher than the 2-4 percent growth forecast the company expects globally.

Scarborough said the company has also seen low double digit sales growth in the Andean region in the first quarter of 2013, compared to the same period last year.

According to Don Nolan, global president of Avery Dennison’s materials division, the company is growing faster in Latin America than in other emerging markets, and has invested some US$50 million in local infrastructure in the past 15 years.

Scarborough and Nolan were speaking at a press briefing before a dinner in Sao Paulo with around 60 of its label converter customers. Among the attendees were representatives from leading Brazilian converters Alphacolor, Baumgarten, Grif, Mack Color and Prakolar.

The event in Brazil was part of a tour of customers in the region which also saw the pair visit Chile and Colombia, accompanied by Ronaldo Mello, Avery Dennison’s vice-president for South America.

‘Latin America is an important region for Avery Dennison, both for our materials and RBIS divisions,’ affirmed Scarborough. ‘We are seeing top line sales growth in the region.

‘Latin America is becoming an important source of apparel for the United States, which benefits our RBIS division. In the material sector, we are particularly strong in the household goods, food and beverage, wine, and personal care sectors.’

Nolan added: ‘Latin American customers are often among the first to adopt our new products,’ citing particular interest from the region in the company’s Global MDO film range.

Interest in Global MDO – described by Nolan as ‘substantially thinner than other products on the market’ – also reflects an increasing interest in environmental sustainability in the region. Another recent material launch, MultiCycle, which allows the label to remain on a bottle for up to 30 washes, is also garnering interest from Latin American converters, where returnable glass bottles are commonplace. According to Ronaldo Mello, 65 percent of beer bottles in Brazil are returnable.

Scarborough, Nolan and Mello identified Peru and Colombia as the two fastest-growing markets in the region. They also enthused about the more mature markets of Chile – whose highly developed export market is dominated by self-adhesive – and Brazil, where they see great potential in the beverage sector as brands move from wet-glue to self-adhesive.

Nolan cited the example of mineral water, which has not yet seen wide adoption of pressure sensitive materials in Brazil, unlike in other parts of the world. ‘As sales of premium brands increase,’ he said, ‘so does the likelihood of their using pressure sensitive materials.’

According to Ronaldo Mello, projects are already underway with various beverage brands in Brazil, including manufacturers of local spirit cachaça.

Nolan emphasized the company’s recent investment in the region, which includes new distribution centers in Recife in northern Brazil and Lima, Peru. Capacity at the manufacturing facility in Vinhedo, Brazil, was increased last year. He said Avery Dennison has invested more than 50 million dollars in the region in the last 15 years. 

In Argentina, meanwhile – currently beset by currency controls, import restrictions and high inflation – the company is benefitting from a local manufacturing presence not shared by its competitors.

New laws say companies can only import goods into the country if they are also exporting an equivalent volume. Avery’s factory in San Luis, near the wine-growing region of Mendoza, is able to supply local converters with most of the materials from the company’s portfolio. Exports from Argentina to Chile and Brazil have been increased in order to offset the importing of those materials which would otherwise not be locally available to Argentine converters.