Benjamin Franklin, one of the founding fathers of the United States of America and one of the discoverers of electricity, once said, “Beer is the proof that God loves us and wants us to be happy.” Another of the founding fathers, Thomas Jefferson said that one can measure the quality of a democracy by the affordability of its beer. Fittingly, in the pursuit of happiness and the exercise of democracy, beer sales in India posted a 11% volume growth this year. The hot summer of 2015, the rising prices of competing liquors, and a tougher standby the government on illegal spirits and country liquor further spurred the growth of branded beer.
Indian beer consumption is still very low compared to the global average consumption. According to Euromonitor, the per capita consumption of beer in India is estimated at 1.6 litres, which is significantly less than China at 35.5 litres, Germany at 105.6 litres, and the US at 75.6 litres. In the total alcoholic beverage market in India, beer contributes only 4% in revenue. The low penetration in beer consumption provides a substantial and sustainable headroom for growth of beer demand in the future. Moreover, rising income levels in the country have a direct positive correlation with and impact on beer sales especially amongst urban consumers who are more exposed to the West and prefer to socialize with beer.
The growing income levels particularly those of the urban earning class constitute a potential market for beer manufacturers in India. Beer volume sales are estimated to grow at a CAGR of 10% in the 2012 to 2017 period. Although the UB Group and SABMiller India enjoy market shares of 53% and 27% respectively, Carlsberg has come up to a 6% share and other international players like Budweiser, Heineken, Corona Extra, and Guinness are eager to make it big in this market. While global beer markets are experiencing low or stagnating growth the focus is shifting to India with the market set to flourish with 10 international brands and 15 new breweries looking to establish themselves in the next three years.
In India, in the past five years, beer sales grew by nearly 90%, compared to less than 60% growth for other alcoholic drinks. According to Euromonitor, the Indian beer industry was worth Rs. 257 billion in value and 23.3 million hectolitres in terms of volume. Considering the 650 ml bottle being the most common container for all companies, in 2014-15, there were around 3.584 billion bottles with labels. For the label printers, it is worth mentioning the phenomenon of ‘inefficient bottle pool management’ in India. Frequently, customers have more bottles at home than they drink on a weekly basis because they tend to buy regularly and bring them back irregularly. Consequently, SABMiller, which manages Shaw Wallace Breweries, has warned that the country could face a beer shortage in the peak consumption season next summer.
In the Business Line financial daily, SABMiller India, expressed its fear of ill servicing the demand in the summer months on the back of this ‘inefficient bottle pool management’ in a market that is heavily dependent on recycled bottles. “The route which the bottle takes to the trade and ultimately to the consumer should be the same it takes back to the brewer through the value chain.” But in India, the route is fragmented and dispersed where the bottles spend a lot of time in the trade and this results in a high incidence of breakage. The 650 ml beer bottle is common to all companies and can be interchangeably recycled while the 250 to 300 ml bottles have proprietary designs and logos on them. Thanks to breakage and diversion to other unorganized players, only around 60 to 65% of the beer bottles are actually returned to the brewers, says a liquor industry consultant.
Till about a year and half ago, bottles were being returned to companies at an average price between Rs 3.00 and Rs 3.50 a bottle. Taking advantage of the shortage, second-hand bottle traders hiked prices from the normal Rs 3.00 to Rs 3.50 to Rs 7.00, which is almost equal to the price of a new bottle! Not to be left out of the party, glass manufacturers sharply increased prices too. The bottle shortage took its toll on profitability of the beer companies.
The managing director of SWBL admitted that bottle prices had seriously affected the company’s profitability, especially in light of regulations in several states that prevent companies from passing on cost increases to customers. UB too in its annual report talks of an ‘unprecedented cost push’ caused by the bottle shortage. In an attempt to beat down the prices of recycled bottles, Indian brewers have injected around 250 million new returnable glass bottles into the beer market in the past few months.
Considering all these economic and behavioural (in general) patterns and following industrial norms, the first step in making a beer label is to decide what to make the labels out of – either paper with built-in adhesive (self-adhesive or pressure-sensitive), or regular paper (possibly metallized on one side) that one glues to the bottles – also known as wet-glue labels. Paper gives you a couple of advantages over stickers and label paper. Paper is cheaper; comes in a variety of surface finishes, textures and colors – but it can be difficult to get paper labels to stick to glass bottles. Many glues only stick to porous surfaces. Glues that stick to glass can be hard to remove when we try to reuse and relabel the bottles. Apart from these, beer labels offer two major challenges – challenge from defreeze (that is it should not be affected due to wetting and freezing temperature) and challenge of recyclability (that is hot water steam must loosen the glue without harming the label). Although pressure-sensitive labels look much better than wet glue and do not peel off when kept in an ice bucket, due to their higher cost, bottlers continue to resist the adoption of PS labels.
As Heineken, one of the largest breweries in the world, switched to pressure-sensitive labelling for its complete range of bottled beers – other major breweries have also started to follow suit. The main reason is label aesthetics – but improvements in bottle drying and label applicator technology also prompted this proposition. Previously, breweries used to have a ‘wet’ production environment – to apply a PS label the bottle had to be completely dry and bottlers used to buy bottles that were labelled by the glass manufacturers. Formerly, wet-glue label applicators were faster – able to produce 70,000 bottles an hour while PS labels being on a web, did not run at such high speeds. But nowadays, PS label applicators can run at 115 metres a minute compared to their speeds of just 30 metres a minute some three to four years ago.
High wet strength metallized paper for beer bottles
For India and most other markets, ‘high wet strength metallized paper’ is the substrate of choice for beer labels. It is a type of ‘cast coated paper’ strong enough to withstand tearing, rupture and other types of damage when saturated with water. Wet strength is a measure of how well the fibre web holds together upon a force of rupture and it is expressed as the ratio of wet tensile strength at breakage to dry tensile strength at breakage. Tensile strength can be measured (with unit KN/m) both in the machine and cross direction of paper. As an example, the wet tensile strength of 15 gsm facial tissue is 35 grams against the dry tensile strength of 115 grams.
The addition of various chemicals (that is wet strength agents or WSA – Polyamide Epichlorohydrin or PEA is mostly used for neutral and alkaline paper making) improves the tensile properties of paper by cross linking the cellular fibres with covalent bonds that do not break on wetting. In wet conditions, these chemicals help to retain as much as 30% of the original dry strength of paper. WSAs are applied in different dosages to make various grades of paper for bank notes, filter papers, label papers (8 to 10% of dosage for high wet strength) and wall papers amongst others. High WS paper has two parts – base paper and a coating layer. Base paper should have good dimensional stability with internal cohesion. Coating is generally applied on one side of the paper. Paper is coated via a roller system and then it enters the chrome plated calendar system in wet condition. Gloss is achieved as paper (with coating layer) is dried on a chrome cylinder. Kaolin (as pigment), binders, starch as co-binders, mould release agents are ingredients used in coating.
WS label paper for use on recycled beer bottles, should have a high opacity level in wet condition and the wet strength should be sufficient enough to withstand the labelling process using wet bottles and soda (NaOH) recovery units. With these obvious properties, high WS paper is the answer for labels for the products that are kept in fridges or iced buckets or used in wet labelling assemblies. Wet strength papers, used for beer labels are sometimes metallized with a layer of aluminium with matte or gloss finish for decorative and protection properties. The vacuum metallization process deposits a super fine layer (around 0.08 to 0.1 gsm) on one side coated paper. This metallized surface becomes waterproof, non-absorbent and a barrier against light, water vapour and oxygen. The direct metallization process in a high vacuum consists of three independent steps.
The first is varnishing whereby a thin layer of varnish is applied on the coated paper surface for regular finish for metallization. The varnish also helps in the moisture retention of paper. As the varnish fills the pores of the paper, it also reduces the consumption of aluminium. The second step is metallization in which the varnished paper passes through a ‘metallization chamber’ at a speed of around 450 to 500 metres a minute where a thin layer of aluminium is applied in vapour form. Aluminium is coiled in the form of a ‘wire bobbin’ which touches the boats heated to 150 degrees Centigrade. Aluminium melts, evaporates and finally gets deposited on the paper by condensation. Paper is cooled to a temperature of 15 degrees Centigrade as it passes through water chilled rollers. Modern metallizers allow us to work with a moisture content of around 2.5% which reduces the hysteresis that it undergoes in the drying – rehumidifying process. The third and last process is lacquering in which a thin layer of lacquer is applied to give the final characteristics of the paper for printing. A dorsal treatment, if necessary, is also carried out during this phase and color, if any is specified, is applied.
Labels with metallized WS paper, must be tested before affixing. For example, a transfer and release (wash off) test measures the time that caustic soda takes to penetrate the label to release it from the bottle. Printing performance is ascertained when ink remains on label even after the bottle is washed off. Odour (by a Robinson test) or smell of the printed label (with glue) should not be transferred to the main food or beverage. The main products made with WS metallized paper are labels for returnable beer bottles. Therefore, the ink along with a top coat varnish should be able to resist alcohol to a specified extent.
