Industry focus – How the industry is developing Mike Fairley Director Strategic Development

Agenda Overview of labels Trends we see impacting the industry Update on the digital label market

Market Overview Industry growth globally 2013 = 6-7% But 80% of growth is in emerging markets Emerging markets offer huge opportunities Industry remains very fragmented, limited consolidation mostly in USA Flexible packaging and cartons good growth

Evolution of Label and Package Printing Estimated worldwide print value 2012 in $B

Market overview The global label market by region

Market overview Global Markets Estimated per Capita Label Consumption USA 15-16m 2 Scandinavia 17-18m 2 W Europe 12-15m 2 E Europe/ME 6-7m 2 China 0.9m 2 Brazil 2.2m 2 India 0.9m 2 SE Asia 2-3m 2

Market overview

Market Overview Price squeeze continues with rising costs and pressure on margins Adoption of digital accelerating PS still has major share of label market but shrink/IML gaining from a low base (3% per annum)

Market Overview Environment ever increasing importance i.e. Heidelberg press labeled carbon neutral Linerless still being adopted, traditional material suppliers downgauging, recycling Opportunities beyond the label, many converters offering other decoration techniques i.e. cartons/flexibles

Trends Interactive labels and packaging growing Inkjet becoming the new digital technology Material costs rising

Trends Wine/spirits/beer growing opportunity for printers Brand protection/anti counterfeit, end users becoming more concerned Private label continues to get more market share

Trends ‘Private labels’ are now the biggest brand in the world 52% of all brand product launches in 2011 were ‘Private Labels’

Production Consumption Number of companies and brands (microbreweries) MORE COMPETION The image, the label, is becoming more and more important as happened in the wine sector Source: Manter Major Beer Trend

Emerging Trends The rise of the marketing printer The new mobile world On the go products

Emerging Trends Out to share products Speed to volume manufacturing Multi purpose packaging

Increasingly advanced digital toner label presses have been introduced over past five years Proliferation of new inkjet label presses coming to the market over the same period. Digital moving in to packaging Digital Label and Package Printing Current Status

Major new press and finishing equipment for label printing launched at DRUPA in May 2012, e.g. Landa, HP, Xeikon, Domino, etc More new developments at Labelexpo 2013 Digital label printing now well established Current installed base worldwide now over 2,300 machines Digital Label Printing Current Status

Market share of new digital presses installed worldwide as a percentage of total new presses installed Digital Label Printing

Key Facts Global digital print market now estimated at over $3 billion Value of digitally printed labels growing at 15% + per annum Around 95% of gross billings from the installed base are currently for prime labels Digital Label Printing - summary

Macro Trends for the future From Information Carrier Inactive Label or Pack Fixed Information Unsecured Data Minimal Food Safety High Wastage Technology Unlimited Resource To Communications Medium Interactive Label or Pack Variable Information Secured and Traceable Data High Food Hygiene/Safety Low Wastage Technology Sustainable Resource The role and function of labels and packaging will continue to change

Industry focus – How the industry is developing Thank you for listening