Beverage Industry

Labeling Options Offer Marketing, Production Advantages

January 1, 2005

Labeling Options Offer Marketing, Production Advantages
As technology has evolved, beverage labeling has been transformed from a commodity to a powerful marketing tool that provides differentiation in a crowded marketplace.
“More and more, the beverage industry is treating the label as an important part of the package, especially with new brands or products [companies are] trying to reposition,” says Dan Muenzer, vice president of marketing for Spear USA, a Cincinnati-based supplier of film pressure-sensitive labeling systems.
There are four main beverage labeling options — cut-and-stack, full-wrap hot-melt or spot-cold-glued film or paper labels; roll-fed, usually produced with laminated film constructions; pressure-sensitive; and shrinkwrap. In choosing a label type and application method, beverage-makers must consider how established a brand is and its production volume.
“If your product is high-volume and is required to be produced at the lowest possible cost, such as bottled water, you’re most likely to select the lowest cost, most efficient method such as cut-and-stack labeling,” says Lou Iovoli, director of sales and marketing for Hammer Lithograph Corp., an offset and flexographic packaging printer in Rochester, N.Y. “Business in this category is not often going to use a screen-printed, pressure-sensitive label because at high volumes it becomes a difficult cost/benefit analysis. When you multiply a tenth of a penny per label by 10 million bottles, it is significant.
“The question becomes will I generate incremental new sales for the additional cost and impact on operations? Will my throughput be impacted significantly by the labeling equipment needed? And do I have to invest in new capital to apply the label?”
Bottle shapes influence label choices, as do product and packaging color — clear labels are popular in cases where color is among a product’s main features. “We’ve seen, in the past 10 years, the growth of the clear, no-label look,” says Muenzer. “That’s been growing at about four times the rate of standard labeling. Beverage marketers tend to view a no-label look package as more contemporary, modern and hip.”
“A clear, no-label look can be achieved today with pressure-sensitive, roll-fed, and full-wrap cut-and-stack labels,” adds Iovoli. “The newest of the options is clear full-wrap cut-and-stack labels so bottlers with traditional labeling equipment can get the same no-label look.”
Cost, package type and marketing are key considerations in choosing a label, yet beverage categories also tend to influence manufacturers’ selections.
Wine and beer
“The wine industry has gravitated toward pressure-sensitive labeling, as opposed to the standard cut-and-stack label,” says Muenzer. “Within pressure-sensitive, they can use film or they tend use specialty paper pressure-sensitive labels because it gives the traditional look of wine, but steps it up a notch.”
In addition to design flexibility, winemakers often use pressure-sensitive labeling systems on their filling lines due to the efficiency and quick job changeovers offered by the application equipment.  
Meanwhile, the beer industry, a predominant user of paper labels, is now beginning to shift toward pressure-sensitive labels; Anheuser-Busch’s conversion of its Bud Light brand is one high-profile example. Fast line speeds and high volume previously made pressure-sensitive labeling impractical, but new technology is moving labeling closer to traditional speeds.
Historically, price has been a barrier to using pressure-sensitive labels in the beer category — they are typically as much as three times more expensive than paper. “Pressure-sensitive is more expensive on a label-to-label basis, but what brewers are starting to recognize is that there’s a total applied cost to the system,” says Muenzer. “If you take into account machine efficiencies — uptime, job changeover time, everything beyond the cost of the label — in many cases, pressure-sensitive is less expensive.”
Spirits labeling is often a hybrid of wine and beer category trends, with many manufacturers converting to a variety of  label styles. Spirits companies have been more progressive than brewers in using alternative decorating methods, and many use a combination of paper and film labels to achieve a unique look.
“For example, Bacardi Limon is geared as a contemporary product, so the package is very dynamic and colorful and takes advantage of the no-label look of film,” says Muenzer. “At the other extreme, Bacardi also converted its standard white rum to pressure-sensitive, but kept it in paper to be more consistent with its traditional look.”
“Hammer has also seen the shift to greater experimentation,” says Iovoli. “We are currently working with two multinational brands to convert them from offset paper to a new, unique engineered cold glue, metallized, synthetic cut-and-stack label. This allows the user to get the sheen of metallized film and consistent performance of  synthetics without increasing costs or buying pressure-sensitive labelers.”
Non-alcoholic beverages
In the soft drink category, flexoprinted, roll-label, film wraps continue to be the standard due to high production volume. The method also works well with contoured PET soft drink containers. “We think it’s going to stay that way because of the capital expenditures involved in changing to another method,” says Muenzer. “The product is inexpensive, so manufacturers just don’t have the price points to justify doing a lot with their package.”
However, the no-label look is popular among other non-alcoholic beverages like fruit drinks, teas and coffee drinks. It allows isotonics like Gatorade to show off the product’s color, which often drives consumer selection.
“If you were talking about  brands like Gatorade, many people will pick their favorite color. The brand is that powerful,” says Iovoli. “In other cases, clear labels are used because beverage-makers want the product to interact with the package graphics to create maximum shelf appeal.”
Other non-alcoholic beverages use shrink labels or opaque pressure-sensitive labels to mask product separation or sediment. “Shrink-sleeves have made inroads into the category,” says Iovoli. “It’s a very forgiving manufacturing method, but it’s more expensive because as you increase the label’s surface area, you’re increasing raw material costs.”
In any category, Iovoli offers beverage-makers this advice on finding the right label: “The key is to find a vendor base that will accurately assist you in analyzing the most effective decorating method for your goals, weighted against cost, marketing and performance.” BI