How Global Supply Chain Issues Affect the Labeling Industry

Global Supply Chain Issues

Supply chain problems are rippling through most industries, largely brought on by the pandemic. The shortages in the semiconductor industry have been front and center because they affect the most prolific industry, technology, namely consumer electronics.

However, supply chain shortages affect many other industries. Wine, spirits, and beer manufacturers have been feeling the supply issues recently—and, as is the case with semiconductors, there is no clear end in sight.

For beverage, cannabis, health and beauty, nutraceutical, and other producers, the shortages aren’t just about the materials that go into the products. The problems are far more complex and extend to the materials the products go into.

Great Beverages, But No Bottles

Wineries and spirit producers have suddenly found themselves in a perfect storm. The wine is ready to be bottled and shipped out to the customers, but there are no bottles available. 

The glass shortage has almost paralyzed the alcoholic beverages industry. For wineries, it’s an especially murky situation. With no way to package their products, winemakers have to keep the wine in oak barrels for longer, altering the flavor of the wine. A varietal you expected to be fruitier could end up  more oaky or earthy.

Most producers are willing to pay a premium for the small amount of glass that exists on the market. But even that comes in short supply. So, they are forced to look at alternatives: wine bottles that look completely different than what the consumers are used to or cans.

In fact, canned drinks have grown exponentially in the last two years. While this trend is shifting to ready-to-drink (RTD) beverages, the idea of using cans for other types of drinks is starting to catch on, even as can shortages are also creeping up.

To make things more complex, packaging supplies aren’t the only thing missing in this equation. Materials for labels to put on the packages are growing scarcer every day, too, and this affects pretty much every industry.

Supply Chain Issues in the Label Industry

No matter what your product is packaged in, it can’t be shipped to sellers without a label. This holds especially true in the case of wines, spirits, beer, or cannabis-infused products, where you have a legal obligation to have a comprehensive label.

Label supply chain shortages

Today, pretty much everything that goes into a label is in short supply:

  • Raw materials, like paper, films, and overlaminate items. Major materials suppliers face an unprecedented order backlog. This can delay orders for at least a week in the case of basic materials and up to a month in the case of special materials.
  • The supply of films (especially polypropylene films) is affected by oil and gas refining rates, which have led to an inflation of the prices.
  • Adhesive suppliers are also facing an order backlog. The shortage of acrylic acid monomer has also led acrylic emulsion adhesive producers to fall back on order completion and even put sales controls in place.
  • Inks—both base inks and specialty inks and varnishes—are becoming more difficult to acquire by the minute. 
  • Global increases in delivery times also impact label material timing. Shipping container supply, backups at ports, a shortage of trucks and drivers, labor shortages, and more are causing delays that are often unpredictable. 

Yes, it’s a perfect storm and, unfortunately, we have no way of knowing when it will end. What we do know is that prices for every single component of labels have increased and, consequently, an increase in the prices of the final products is imminent.

What can you do in this situation? How can you make sure that your products have the packaging and the labels you need?

Label supply chain shortages

Stay Ahead of the Supply Chain Issues in Labeling and Packing

First and foremost, it’s important to plan ahead. From what we know now, we recommend all our customers to plan their label production at least three months in advance, ideally six. 

Get started early and get quotes as soon as possible. Keep an eye on your inventory and try to estimate your future stocks as early as possible. Again, we don’t know exactly when this will end, so it’s advisable to keep preparing everything in advance for the rest of the year and the better part of 2022.

Next, make sure you work with an established label printing company. Aside from the usual differences in quality and diversity of label materials, inks, and varnishes, established companies have better relationships with raw material suppliers and you stand a better chance of printing your labels the way you want them printed.

At Labeltronix, we try to stay ahead of the shortages as much as we can. We are in constant communication with our suppliers, most of which we have worked with for over a decade. We remain dedicated to helping you find and source substitute materials that will meet your needs. Give us a call or drop us a line if there’s anything we can help with.

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