Consumer Labels – September 2021

Consumer Trends Drive Label Demand in Packaging Industry

Capstone Partners September 2021 Consumer Labels Industry Spotlight is now available, reporting that labeling demand has been bifurcated throughout the pandemic as industry participants with exposure to defensible categories such as Food & Beverage, Home Goods, Personal Care, Modern Garden Chemicals, and Sanitizers benefited from continued demand while labeling companies serving battered end markets including Travel, Entertainment, Book & Office Supplies, Cosmetics and Luxury Apparel suffered. However, Capstone expects demand to normalize in affected end markets as the economy continues to recover.  In addition, consumer awareness regarding the convenience of online shopping, rising consumer sentiment, and improvements in the Purchasing Managers’ Index (PMI) provide a favorable outlook for label manufacturers.

Financial buyers have comprised the lion’s share of deal activity to-date led by private equity (PE)-backed companies seeking opportunistic bolt-on acquisitions to strengthen their product portfolio offerings and expand their geographic presence. Industry participants with diverse end market exposure and technology-enabled labeling capabilities have fetched elevated trading multiples and are expected to continue to attract heightened buyer interest as PE-backed companies look for additional consolidation opportunities within this highly fragmented industry.

Also included in this report:

• Why merger and acquisition (M&A) activity has continued at a healthy pace in the Consumer Labels industry.
• How surging e-commerce activity and the proliferation of smart labels are changing the industry.
• A summary of three valuation drivers for industry participants.
• A company overview of Brook & Whittle, a decorative label printing service provider and active acquirer in the space.