Sharp drop in European labelstock demand as converters clean house after a volatile 2022, says FINAT RADAR

In Q4 2022, labelstock demand in Europe dropped sharply, after a poor first half of the year caused by strike-related paper shortages from Finland, and a rebound in Q3. For the year as a whole, European self-adhesive labelstock demand decreased by 4.7% compared to 2021, says the latest report from FINAT.

Compared to Q4 2021, European consumption of paper and film roll labelstocks decreased by no less than 24%, the sharpest year-on-year decline in a single quarter recorded since FINAT commissioned the collection of statistics in 2003.

ABOVE: European roll labelstock demand in m2, growth versus same quarter in previous year compared to GDP, 2004-22.

The contraction in demand is a correction of the "erratic" market behavior in the previous three quarters that started with the long paper strike in Finland in the period until Easter, the resulting paper shortages and increasing lead times, the refilling of label-converter warehouses in the third quarter and the mounting general economic uncertainty in the intermediate period caused by the Russian invasion of Ukraine, rising energy and raw-materials costs, rising interest rates and a looming recession due to losses in disposable incomes of European consumers.

As a result of this, label converters decided to deplete stocks toward the end of 2022 and postpone the procurement of new labelstocks. In spite of recessionary expectations, underlying fundamentals for the European label industry until recently remained positive, according to the latest FINAT RADAR report released in December, of which the results were based on a survey in November 2022 among 60 brand-owners. According to the survey, at that time nearly 85% of the respondents expected their label procurement to increase or at least remain stable. Given the moderate economic forecasts for Europe that have emerged more recently, the coming months will tell whether these expectations were justified.