Central & Eastern Europe Label Markets

Central & Eastern Europe Label Markets

In the late 1980s and early ’90s, the world saw the collapse of communism in Eastern and Central Europe and the dissolution of the Soviet Union and Yugoslavia. Several years later, the privatized label industry in this region emerged.

And so, while North Americans and Western Europeans began to tackle complex printing technologies, people like Vladimir Kurciev, Sterin Boris and Drabyk Volodymyr began a complex job of a different sort: launching the label industry in their own countries.

In 1993, Vladimir Kurciev founded label converting company Moniko in Skopje, Macedonia. He started out printing simple labels using flexography and says he was the first to bring the labeling industry to his country.

In Belarus, "I was one of the people who in 1995 first brought flexo technology and the first label printing machine to Belarus," says Sterin Boris, who is now joint owner of three companies related to the labeling industry: Printstar, Flex-n-roll and Label Express. He works out of Minsk, Leshinskogo, Belarus.

And in Lviv, Ukraine, Drabyk Volodymyr, general director of Ekko, says his 11-year-old company was first in Ukraine to manufacture self-adhesive labels in reels. "At the first stages of our activity we started purchasing labels in Poland and Slovakia and sold these products in Ukraine. In 1995, we bought the first machine from the USA."

Compared with developed nations, the label industry in Central and Eastern Europe is young and inexperienced. But it is growing quickly, and with this growth has come the desire for increased capabilities. While there are still hurdles to get over, experts predict that the label industry in this area is looking up. Way up.

Several studies have documented the growth of the label industry in this region of the world. This includes not only growth in sales for label printers in the region, but increased opportunity for world suppliers to the industry. Here’s a sampling:

In regard to the Russian self-adhesive roll label market, The Russian AWAreness report, published in 2001 by AWA Alexander Watson Associates, in Amsterdam, concluded that "Although the market in Western Europe is expanding at an annual rate of 5 to 6 percent, the Russian market in its developing stage is growing at +25 percent."

A study named Packaging Machinery in Poland вЂ" February 2003, conducted by International Business Strategies in Gaithersburg, MD (www.internationalbusinessstrategies.com), concluded that "the packaging machinery market represents a very good opportunity for American producers. Although the import value from the US is not substantial, it has been growing considerably during the last three years. According to preliminary data for 2002, imports from the US rose by 100 percent in 2002."

In a study titled World Labels, published in November 2001, The Freedonia Group Inc. in Cleveland, OH, concluded that "the best gains are expected in the world’s emerging economies, which already account for almost one-third of global label production.” Specifically, the report stated that “Eastern Europe will also log double digit annual gains as greater self-sufficiency in label production is achieved."

These studies offer glimpses into the dynamic growth and increased opportunities in this region. It is important to note, however, that the growth varies depending on the country. The growth is primarily dependent on the strength of the country’s economy and the stability of its banking system.

Consequently, some regions are doing better than others. Klaus Bachstein, CEO of Gallus in St. Gallen, Switzerland, differentiates between countries expected to enter the European Union and the ex-USSR countries that are not yet expected to attain membership.

As for the nations that will be joining the European Union, Bachstein says, “It’s quite easy to predict that these countries will follow EU regulations. That means they will be much more stable, and will create much more confidence in Western investors.” In the ex-USSR, “there is more business risk in these s countries, even though the fundamentals are without a doubt positive.”

Certain niche markets are also growing faster than others, and this too varies according to the country. Ronaldas Vaitiekunas, marketing manager for PakMarkas in Vilnius, Lithuania, says the food market dominates his home country. Concerning other countries, “throughout all of Europe the situation is very different. Czech has a very strong car manufacturing industry and a strong market for industrial labeling. But Poland and Hungary are dominated by the food industry also. Poland also has a strong cosmetics industry,” he says.

Others agree that food packaging is a growing market, especially in East Europe. “The growth is generated by home market growth in the packaging, food industry which is around 23 percent per year, and the fact that still about 80 percent is imported from the West and Central Europe,” says Walter Eitner, export manager for Mark Andy AG in Allschwil, Switzerland.

While Eitner sees huge growth for the food industry in Eastern Europe, he points out that “Central Europe is loosing some of their orders now as the East has better quality machines to produce better labels.”

The growth in most countries is impressive, but perhaps more newsworthy are the complex products produced in this region.

“It has taken the labeling industry вЂ" label stock manufacturers, press and ancillary equipment manufacturers, printers and packaging technologists вЂ" over 60 years to reach today’s high levels of competence in developed markets (Western Europe and North America). It has taken the Russian labeling industry less than 10 years,” states the Russian AWAreness report.

While the report follows only the Russian label industry, this trend proves true throughout much of Eastern and Central Europe. “The majority of label converters in Central Europe are new, modern companies, equipped with the latest technology,” says Vaitiekunas.

“In many cases, the machinery and raw materials in East European countries are state-of-the-art, so technically at the same level, or even higher than in Western Europe,” says Mika SillanpÐ"¤Ð"¤, senior vice president,