smart labelling matters with TLMI

For most people, a cursory glance at the back of a Nutella jar is enough to discern that it is never going to win health product of year. Based on the label, there is approximately 210 grams of sugar in a 13-ounce tub, while the second most used ingredient is fatty palm oil.

Back in 2012, however, Athena Hohenberg was convinced that the chocolate-and-hazelnut spread was part of a balanced diet, regularly serving it to her four-year-old daughter.

After a close friend informed her otherwise, Hohenberg filed a lawsuit against Ferrero in California the same year, claiming that the representations made by Ferrero in labelling Nutella, “an example of a tasty yet balanced breakfast,” were deliberately misleading.  

Despite complying with ingredient listings and nutrition facts,  Ferrero was ordered to pay $4 for every jar of Nutella bought in California since August 2009, or bought anywhere else in the United States since January 2008.

The company also agreed to change its marketing campaign, clearly state fat and sugar content on the front of the jar, and amend the company website.

For Dan Muenzer, president of the International Label Body TLMI, the Ferrero case remains a cautionary tale for brands and manufacturers, particularly seven years on, as product labels are now increasingly exposed to greater scrutiny by consumers and government regulations have become more stringent.

“It is getting so difficult, and there are so many entities getting involved now,” he says, “whether it’s regulatory bodies, governmental groups, health and safety organisations, and the label manufacturer is quickly becoming an information source to help their customers navigate that landscape. It’s a tricky proposition that comes with a lot of responsibility.” 

It’s an industry that Muenzer has seen steadily develop  since he began working for Spear, the pressure-sensitive labelling supplier, in 1994, where he witnessed the beginnings of digital print, a technology that has since enabled manufacturers to produce labels on shorter runs with a greater range of designs.   

“In 1999, we built our first facility, in Wales of all places. And then by 2003, we had built a greenfield site in South Africa and the market just exploded,” he says. “At the time brand owners were converting to pressure sensitive labels for differentiation and for shelf appeal. Ultimately the Heineken's and Anheuser-Busch's of this world converted because of the lower total-applied cost for graphic design. That was when it really arrived.”

Since then, the label market has enjoyed steady growth and is set to reach $44.8 billion globally in 2021, according to market researcher Smithers Pira. Pressure sensitive remains a dominant segment, accounting for roughly 58% of the global market in 2017, and is set to increase progressively over the next five years.

Such increases have largely been driven by an increasing focus on source reduction and sustainability in packaging more generally, burgeoning consumer demand for convenience food and the growing footprint of large retail chains.  

Naturally, such trends have been supported by the relatively low cost at which labelling can be replaced or altered, and the continued need for barcodes and other secondary applications that meet a growing raft of food safety and pharmaceutical compliance issues.

Perhaps most important, are changing attitudes among consumers who now place greater scrutiny on the products they buy, becoming increasingly savvy in their ability to flush out meaningful information from labels, cautious of gimmicky food and beverage marketing ploys. 

“Consumers are just buying things differently now and they want a trustworthy, transparent relationship with brands,” Muenzer says. “Equally, they don’t want to be bombarded with information, there’s a much greater emphasis on providing clear, easy to follow ingredient listings.”

Technology and smart labelling are now taking these interactions a step further, providing the public with ready access to detailed product information at the touch of a button. Meanwhile, companies benefit from traceable information, enabling them to monitor a product from conception to the shelf.   

With advances in radio-frequency identification labels (RIFD) and falling costs—a RFID tag was priced at about $1 in 2003, and is roughly 10 cents today—items are being tracked across the supply chain, ensuring they remain secure, while tags automatically update stock & inventory databases. Meanwhile, growing sales of biologics and specialty drugs that require thermal-sensitive packaging are promoting the use of smart labels equipped with temperature-control functions.

Alongside this is the growing realm of near field communications (NFC), a technology that enables brands to create smarter products that communicate with consumers through tags designed to transmit short strings of information to smartphones.

“NFC is the modern day RFID,” Muenzer says. “It works in a similar way to a QR code, but has more sophisticated capabilities. Increasingly brands are using it to engage with consumers, to send them interactive messages and offers that can be tailored specifically to them, based on their location, the time of day, current events. It’s an entirely different level of engagement.”

These capabilities have been particularly embraced by alcohol companies, with Diageo piloting the trend in 2015, partnering with Thin Film Electronics, the company behind Apple Pay technology, to create a Johnnie Walker ‘smart bottle’. The concept comprised a 70cl glass package that hid an NFC sensor in its neck collar, sending cocktail recipes and special offers to directly to customers.

Since then a growing number of alcohol companies have experimented with the technology, including Spanish winemaker Barbadillo, who created a Versos 1891 smart bottle, and Pernod Ricard, who launched  45,000 ‘smart Malibu bottles’ in UK-based Tesco stores in 2016.

For Muenzer, it’s an opportunity to launch products that can target consumers in the retail space, but then follow them home to the drinks cabinet, creating an opportunity for further digital engagement while tracking their purchasing habits.  

“Fundamentally, it means companies can push different products, promote seasonal offers, they can send personalised reminders 'Hey, do you remember where you were when you bought this bottle two years ago?'” he says. “It’s an entirely different way to interact with consumers.”

While NFC remains a niche and expensive segment of the market, rather than a broad marketing trend, for Muenzer, these kind of advancements demonstrate of a new way of looking at labelling, a philosophy that sees the label itself as part of a much bigger branding message.

“For me there is no question that the label industry has outgrown being a one-dimensional informational vehicle,” Muenzer says. “Whereas once upon a time, the label was just an afterthought, nowadays it’s something people think about very early on. It’s becoming a crucial part of the branding message and, as smarter technology increases, it can become an effective way to communicate with customers.”

While the technicians continue their work, most label manufacturers are concerning themselves with the here and now, working to maintain high standards of production with short turnaround times, while complying with stricter governmental regulations.

In the US, this comes in the form of new labelling requirements implemented by The Food and Drug Administration which come into force in January 2020. These new laws involve the implementation of more specific nutritional labelling, including declarations of calories, sugars, daily reference values, percentage daily values, as well as a specific format on how to display the information. According to the FDA, the aim is to provide consumers with more transparent information, enabling them to make better nutritional decisions.

As the leading association for the label and packaging industry in North America, TLMI is working as an intermediary between regulatory agencies and label manufacturers, distilling the legal jargon into a language that its clientele can better understand.

“In the US there are 2500 label printers, so rather than having 2500 people trying to figure out what the FDA wants, we’re deciphering the regulations and sharing them in a vernacular that label printers understand,” Muenzer says. “It’s a massive undertaking, and it's something that we haven't done before, so our organisation is changing out of necessity.”

Given the unique structure of the American political system, however, where each state can impose its own labelling requirements and food safety laws, advising manufacturers on which rules to follow can be a tricky exercise. 

“We’re sending updates to our members on the regulatory changes and how they will impact them, but I'd be lying if I said we were covering everything,” Muenzer says. “We’re following as much as we can, but in the US, every state can control and ask for different things. California, for instance, tends to drive a lot of labelling and packaging decisions, because they are far stricter, and have far more requirements than the rest of the country.”

While these quandaries might be inconvenient for some, not all manufacturers have to work as speedily as others. Those with less than $10 million in annual food sales have until January 2021 to comply, while suppliers of single-ingredient sugars such as honey and maple syrup have until 1 July, 2021 to make the changes.

Fundamentally, as Muenzer says, increasingly stringent regulations only serve to show the growing importance of the labelling industry and its role in enabling consumers to make healthier, more informed decisions. “There's absolutely no question that it's an opportunity and a problem. But ultimately, the more information that is required, the more important the label becomes,” he says.

For now, the labelling industry looks set to grow at a steady pace, 5.4% globally according to market leader Smithers Pira, with rising demands for convenience food, the growing footprint of large retail chains, more health savvy consumers and requirements to provide more nutritional information, keeping it on coarse.

In many ways new consumer attitudes are forcing brands and label manufacturers to look at labels the old-fashioned way, making them clear and transparent sources of information, free of marketing jargon. Alongside this, the growing potential of smart labelling technology is providing novel ways of tracking products and engaging consumers, forcing brands to consider labels as part of a broader marketing strategy, thinking about them at the start of a product launch, rather than at the very end.