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Food and beverage trends yield sizable labeling opportunities

Ten years ago, Hormel Foods Corp., Austin, MN, began the process of developing a better can packaging solution for its market-leading SPAM® spiced ham lunchmeat. Relates Don Nelson, director of purchasing-CO for Hormel, the company's primary objective was to design and manufacture a can that would be easier to decorate than its existing three-piece litho-printed aluminum can. Other objectives centered on improving the can's integrity, enhancing the graphic appeal of the package, increasing brand flexibility and dramatically reducing can inventories, among others.

In 1999, Hormel unveiled a new SPAM package that consisted of a 12-oz, two-piece drawn aluminum can with an easy-open end, decorated with an oriented polypropylene label. The initial launch included just four stockkeeping units.

Last year, Nelson reports, Hormel introduced an astounding 87 different SPAM skus and increased its total volume share by 0.5 percent, up to 86.2 percent, versus 2001. "After the introduction of the new can, we almost doubled our overall preference out in the field," he notes.

Nelson says that the massive expansion of variety options and the healthy increase in consumer preference can be directly attributed to the new package design. Eliminating the need for time-consuming metal decoration and large inventories of preprinted cans, the film label enables Hormel to quickly react to consumer needs, changing skus on a dime. And, the package's appearance is enhanced by the ability to use 10-color printing technologies, as well as print on both sides of the label.

Also, because the product is now retorted before label application, the package graphics are no longer degraded, as was the case previously when the preprinted cans were sent through the retort process.

Label opportunities abound
Hormel's successful conversion to film labels was just one of the many topics presented to the "students" of Applied Extrusion Technologies, Inc.'s (AET) fifth biennial Label Institute, held last February. Attended by packagers, converters and packaging suppliers, the event laid bare the pockets of opportunity that exist in the food and beverage market for new product packaging using film labels, that are being driven by changing consumer preferences.

Among the opportunities identified at the institute, which was "taught" by 15 industry experts, were the following:

• While fluid milk sales are relatively flat, opportunities for growth are available in the single-serve and flavored-milk markets, related Corinne McGarrity, marketing director at the International Dairy Food Assn. She added that the greatest growth has been observed with branded milk products.

• Labeling trends are being driven in part by an increasing demand for plastic labels and for the no-label look, and by the change in bottle shapes to convex or concave formats that require full-body sleeve labels, said Dieter Leykamm, senior vp, head of div. labeling technology for Krones AG.

• There is a massive ongoing conversion from glass to polyethylene terephthalate, with a 51-percent increase in plastic packaging volume from 1992 through 2002, versus a 3-percent decline for all other materials (paper, glass and metal), John Denner, director of global procurement for Graham Packaging, told attendees. However, he noted, considerable conversion opportunities still exist in the areas of frozen juice concentrates, ready-to-drink teas, shelf-stable and chilled juices, and wide-mouth food applications, among others.

• One of the fastest-growing categories, with a 10.3-percent compound annual growth rate from 1997-2002, is bottled water–a category that is continuing to thrive–said Gary A. Hemphill, senior vp, information services for Beverage Marketing Corp. This growth, he related, is coming from the single-serve market. Other opportunities he cited include the ever-expanding health and wellness beverage category, as well as targeted beverages created to address consumers' more active lifestyles and increasing "need-states," or reasons for use, such as refreshment, social/fun, hydration, indulgence, and more.

• Increasingly, alternative beverage marketers are viewing full-body shrink-sleeve labels as a tool for effectively merchandising their products, due to the label format's graphic appeal, noted Huston Keith, principal of Keymark Assoc.

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