Environmental legislation leads to changes in the European adhesives and sealants market

Citation

(1999), "Environmental legislation leads to changes in the European adhesives and sealants market", Pigment & Resin Technology, Vol. 28 No. 2. https://doi.org/10.1108/prt.1999.12928baf.008

Environmental legislation leads to changes in the European adhesives and sealants market

Environmental legislation leads to changes in the European adhesives and sealants market

Keywords Adhesives, Europe, Sealing

Price competition and the threat of low-cost entrants from outside Europe to the adhesives, sealants and related products market are driving manufacturers to become increasingly flexible. Evidence of strategic positioning will be noticeable amongst companies wanting to remain competitive.

A new study by Frost & Sullivan finds that price, quality, service and environmental credentials are the key issues affecting the highly competitive nature of the total European adhesives, sealants and related products market.

Maria McFaul, research manager at Frost & Sullivan, says: '"Despite a steady improvement in all European markets since 1994, the legacy of additional capacity and continuing pricing pressures has led to highly competitive conditions. Raw material costs have continued to increase while the demands from end-users, many of which are demanding higher levels of service, continue to pose greater challenges to suppliers."

Total revenues for the European adhesives, sealants and related products market amounted to US$11.34 billion in 1997. While the market was adversely affected by continuing economic problems in some key European markets such as Germany, growth is, however, forecast to continue at a rate of around 4.3 per cent per annum for the period 1998 to 2004. Frost & Sullivan forecast that the European market will be valued at US$15.31 billion in 2004 (Figure 2).

Environmental credentials are becoming particularly important for all those who operate in the market. This is particularly true for manufacturers using solvents, especially players active in the adhesives sector. In this area, worries over VOC (volatile organic compounds) are encouraging the use of alternatives. Both waterbased and hot-melt methods are being developed by manufacturers in their attempts to skirt ever-more strict EU and national legislation.

Figure 2 The European market for adhesives, sealants and related products (percent of revenues by product type ­ forecast for the year 2004)

Different environmental drivers are affecting adhesive and PSA tape markets. Issues such as recycling and the generation of wastes are important for the adhesives sector, while many end-users of tape face the additional problem of recycling packaging wastes. Reducing waste at source and any contaminated substance (particularly chlorine and paper) are key elements of research and development programmes.

In working towards the reduction (and eventual elimination) of solvent use, a key trend sees many companies working towards the implementation of more efficient water-based and hot-melt formulations. While the development and application of such alternatives is currently limited, the use of such "alternatives" is set to increase. While there is no prospect of solvents disappearing altogether, their use is likely to become increasingly limited to higher specification situations.

In terms of sales into Western Europe, 3M Europe was the clear leader in market share in 1997. In second place ranks the German adhesives manufacturer, Henkel, followed by Fasson Roll Division.

The competitive factors operating in these industries are not unlike those in other mature European industrial sectors. Price has become increasingly important, as has quality and service, although the role of each varies according to the product type and end-user. Some segments of the market, such as packaging tape, and to some extent, adhesives, are increasingly being seen as commodity items with demand being driven by price. Other segments, such as sealants and speciality adhesives, are marketed more on quality features.

The rise in after-sales service has been one of the most influential trends in recent years. End-users and intermediaries are increasingly demanding technical and educational support. This development has often opened up new market opportunities for some smaller, service-orientated companies. With multi-nationals continuing their hold over the market, the only route into many segments of the market for smaller manufacturers has actually been with a service-orientated approach.

Frost & Sullivan concludes that in, future, the core markets for adhesives, sealants and related products are going to continue to develop and change further. Adopting the correct positioning will be vital for the success of both the smallest and largest of firms.

Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets, including the chemicals and materials industry for market trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications such as the European market for structural adhesives (3507) to support industry participants with customised consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.

Details: Report Code: 3518; Publication Date: May 1998; Price: US$3,950. For further information, contact Frost & Sullivan. Tel: +44 171 915 7824; Fax: +44 171 730 3343.