European labelstock demand grew by 6.8% in the first quarter of 2020, compared to the same quarter last year according to the latest figures from industry association Finat.

The increase follows modest growth rates of 1.8% and 1.4%, recorded in 2019 and 2018 respectively, with previous Finat figures showing the second half of 2019 already indicated an upward trend with above 3% year-on-year increases.

According to Finat, ‘Inevitably though, the current and future quarter results are and will be severely impacted by the COVID-19 outbreak and subsequent lockdowns in countries around Europe since March, as short-term demand for critical supplies to the food, pharmaceutical and medical markets surged and retail chains started stockpiling in anticipation of prolonged lockdown periods and consumer hoarding.’

Highlighting specific European markets, Finat’s figures showed that while demand in UK was hit by a ‘significant decline’ in the months surrounding Brexit, Scandinavia showed a mixed picture, and demand growth in central Europe was slowed by below-average but still robust growth in Germany. Southern European countries that were most severely hit by COVID-19, with the exception of France, showed growth numbers in excess of 5%. Year-on-year growth was strongest in Eastern Europe, with leading markets showing annualised growth rates in excess of 10%.

Although lockdowns enforced as a result of the coronavirus pandemic only really took hold in March, it can be assumed that their impact already came into force in February as customers – both for critical and non-critical goods – started stockpiling. In view of these numbers, Finat noted that, ‘it should be no surprise that lead times for self-adhesive materials, especially for non-critical goods have increased substantially. Apart from the availability of raw materials (not only self-adhesive materials but also critical chemicals for the manufacture of consumables such as inks, adhesives and silicones), label converters are facing the impact of lockdowns through the reduced availability of staff on the shop floor, adjustments necessary to comply with tightened operational safety and health measures (OSHA), and cashflow issues related to unilateral extension of payment terms by customers.’

A recent Finat webinar addressing the coronavirus pandemic confirmed that companies are starting to look beyond COVID-19, in regard to gradual relaxation of lockdown measures in different countries. Apart from raw materials issues and short-term supply tensions, of major concern is the impact of a prolonged economic crisis beyond the current government support packages provided in different countries for the coming 3-6 months. It is anticipated that once these packages expire, layoffs increase and credit ratings continue dropping, demand could face a severe downturn.

*pictured are labels produced by Baker Labels in the UK for a campaign set up to provide a million meals to NHS staff over the next three months.