Avery Dennison Predicts a Potential Boom for Pressure-Sensitive Labeling Materials in China

Pressure-sensitive labeling solutions set to take off as consumers favor brand-appealing packaging and the national labeling industry matures

SHANGHAI, December 1, 2009 – Avery Dennison, the global leader in labeling solutions, predicts a potential boom in the market for pressure-sensitive labeling solutions in China as Chinese consumers increasingly favor products that use brand-appealing packaging and the national labeling industry matures.

Speaking at LabelExpo Asia 2009 today, Mr. Dagang Li, vice president and general manager, Roll Materials China, Avery Dennison, said: “Consumers here in China today want safe, convenient, high-quality products that are highly functional and, increasingly, environmentally sustainable, too. What is not well understood, however, is that most consumers make decisions about these product attributes in just a few seconds, while perusing the store shelves.”

Shelf-appeal strongly influences sales

Industry research showed that about 80% of Chinese consumers make their purchase decisions in the store while they shop, scanning the shelves for an average of 20 seconds or less. This means that packaging has a tremendous impact on sales.

“Packaging has become a silent salesperson, with pressure-sensitive packaging delivering a high-value premium image for consumer goods. Pressure-sensitive materials allow for more flexible packaging design and more innovative applications, and consumers associate them with higher value products,” Mr. Li continued.

Some household prestigious brands are already taking advantage of pressure-sensitive labels to enhance their products’ functionality and shelf-appeal:

• Kingway Beer changed the look of Kingway Draft with pressure-sensitive labels in 2003 and is a delighted customer since then.
• Great Wall Wine Company, one of China’s largest wine producers, is transitioning all its white wines to self-adhesive labels after using them on its high-end wines since 2008.
• Nivea revamped its bottle design last year with a curvier look and a more functional, firmer grip. The mew design, with an enhanced brand image, has been well received by consumers.
• Pulmuwon, one of the biggest companies in Korean food market, applied PS labels to their egg products and created a sensational response from consumers. Since then Pulmuwon has switched almost 30 kinds of egg products to PS label packaging.

Pressure-sensitive industry becomes more professional

During its 15 years in China, Avery Dennison has participated in the development of the local label converting industry. It sees this industry is now prepared to take a substantial leap forward, becoming more global, customer-centric, and innovative.

“The industry is reaching a critical mass here in China. With our good relationships with converters, we are leading the way to a more customer-centric approach to applications development. By staying close to the market, we are helping our partners and end-users adopt international best practices and create more innovative solutions for use in China and overseas,” said Mr. John Quinn, vice president and general manager, Asia Pacific Roll Materials Group, Avery Dennison.

Avery Dennison believes in expanding the local labeling market by helping participants work more efficiently. It set up the Avery Dennison Self-Adhesive Label Converting College in 2000 to provide professional training to label printers, converters, and end-users. To date, it has graduated more than 2,000 students from China and the Asia Pacific. Avery Dennison also provides free consultation services through the College, introducing new technologies, innovative applications, and advanced operational knowledge to China to advance the industry as a whole.

Recent Avery Dennison innovations include:

• Re-sealable labels, tamper-evident labels, and freshness-preserving valves for the food industry.
• Anti-counterfeiting technologies and packaging applications for the pharmaceutical industry.
• Eco-friendly products such as paper made from readily renewable sources such as corn, bamboo, and sugar cane, as well as printed bamboo fabric labels, organic cotton woven labels, and water-dissolvable garment tags.
• New RFID (Radio Frequency Identification) solutions, such as the one adopted recently at Hong Kong Airport for baggage tracking.

Avery Dennison is showcasing these applications and other solutions this week at its booth (Hall E1, Stand B1) at LabelExpo Asia 2009.

Pressure-sensitive market ready for substantial growth

“With consumers demanding more, and an industry increasingly capable of delivering more, China’s pressure-sensitive market is ready for substantial growth. We are already seeing the market here picking up and, given the current strength of China’s retail sector, we foresee remarkable opportunities for the local pressure-sensitive industry,” said Mr. Li.

The pressure-sensitive industry is considered a leading economic indicator, changing in advance of the economy. The pressure-sensitive market in China is now slowly gaining pace, alongside economic growth that saw retail sales reach US$1,153.8 billion in the first eight months of 2009, a 15.1% increase over the same period in 2008, as revealed by China’s National Bureau of Statistics. Overall, retail sales are expected to reach $3.2 trillion by 2013, doubling the 2007 figure, according to BMI Forecast Modelling.

“At Avery Dennison, we will continue to steadfastly support the growth of China’s packaging industry and partner with local brands seeking to gain market share as the local, regional and global economies rebound,” concludes Mr. Quinn. “Our strength is that we provide solutions rather than just products, leveraging our advanced technology, deep customer knowledge, and more than 70 years of global experience.”

For more information and Avery Dennison solutions to your business needs, please visit http://www.averydennison.com.cn/.

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About Avery Dennison Roll Materials

Avery Dennison Roll Materials is dedicated to the manufacture of the leading global brand of self-adhesive roll labelstock - Fasson®. It has dedicated regional presence in Asia Pacific, North America, South America and Europe. Roll Materials Asia Pacific carries out pioneering new research into material sciences, polymers, precision coating and printing processes at its Philip M. Neal Research Center in Kunshan, China. It also trains its partners and label printers from the region at the Self-Adhesive Converting College it established in Kunshan, providing professional training in self-adhesive label printing and converting technologies.

Today, the Fasson® brand is synonymous with innovation in pressure-sensitive materials and customer-focused service. It represents best-in-class quality, reliability and performance, with product applications in virtually every major industry around the globe.

For more information, please visit http://www.ap.fasson.com/

About Avery Dennison

Avery Dennison is a recognized industry leader that develops innovative identification and decorative solutions for businesses and consumers worldwide. The Company’s products include pressure-sensitive labeling materials; graphics imaging media; retail apparel ticketing and branding systems; RFID inlays and tags; office products; specialty tapes; and a variety of specialized labels for automotive, industrial and durable goods applications. A FORTUNE 500 Company with sales of $6.7 billion in 2008, Avery Dennison is based in Pasadena, California and has employees in over 60 countries. For more information, visit http://www.averydennison.com.cn/.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

Certain statements contained in this document are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements and financial or other business targets are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but not limited to risks and uncertainties relating to investment in development activities and new production facilities; fluctuations in cost and availability of raw materials; ability of the Company to achieve and sustain targeted cost reductions; ability of the Company to generate sustained productivity improvement; successful integration of acquisitions; successful implementation of new manufacturing technologies and installation of manufacturing equipment; the financial condition and inventory strategies of customers; customer and supplier concentrations; changes in customer order patterns; loss of significant contract(s) or customer(s); timely development and market acceptance of new products; fluctuations in demand affecting sales to customers; impact of competitive products and pricing; selling prices; business mix shift; volatility of capital and credit markets; impairment of capitalized assets, including goodwill and other intangibles; credit risks; ability of the Company to obtain adequate financing arrangements and to maintain access to capital; fluctuations in interest and tax rates; fluctuations in pension, insurance and employee benefit costs; impact of legal proceedings, including a previous government investigation into industry competitive practices, and any related proceedings or lawsuits pertaining thereto or to the subject matter thereof related to the concluded investigation by the U.S. Department of Justice ("DOJ") (including purported class actions seeking treble damages for alleged unlawful competitive practices, which were filed after the announcement of the DOJ investigation), as well as the impact of potential violations of the U.S. Foreign Corrupt Practices Act; changes in tax laws and regulations; changes in governmental regulations; changes in political conditions; fluctuations in foreign currency exchange rates and other risks associated with foreign operations; worldwide and local economic conditions; impact of epidemiological events on the economy and the Company's customers and suppliers; acts of war, terrorism, and natural disasters; and other factors.

The Company believes that the most significant risk factors that could affect its financial performance in the near-term include (1) the impact of economic conditions on underlying demand for the Company's products and on the carrying value of its assets; (2) the impact of competitors' actions, including pricing, expansion in key markets, and product offerings; (3) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through selling price increases, without a significant loss of volume; (4) the impact of an increase in costs associated with the Company’s debt; and (5) the ability of the Company to achieve and sustain targeted cost reductions.

For a more detailed discussion of these and other factors, see “Risk Factors” and “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in the Company’s most recent Form 10-K, filed on February 25, 2009, with the Securities and Exchange Commission. The forward-looking statements included in this document are made only as of the date of this document, and the Company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

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