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Hello, Our Name Is . . . : Pasadena's Avery Dennison Has Turned Label Making Into an Art


Charles D. Miller loves to go shopping. He wanders up and down the aisles, taking too much time and spending too much money. He simply can't resist all those labels.

"I just can't get out of the darn supermarket," said Miller, the imposing, 65-year-old chief executive of Avery Dennison.

And no wonder. The grocery shelves are laden with examples of how his company has turned the mundane work of label making into a science and an art: detergent bottle labels, shampoo labels, labels on mouthwash, soda, deodorant, even chicken.

The Pasadena company has long been known for its office products--file folder labels, binders, dividers and startlingly bright orange dots among them. But behind the "Hello--My Name Is" badge, Avery Dennison is a complex weaving of more than 60 divisions that make and sell nearly everything that has to do with stuff that sticks.

It sells adhesives, paper and film materials, customized labels and automotive detailing products, the software to make labels and inventory systems to track the products bearing its handiwork. Since the Avery and Dennison companies merged in 1990, the combination has muscled its way into leadership positions in many sales arenas. Last year it pulled in revenue of $2.6 billion.

Now, with the most pressing headaches of the merger behind it, Avery Dennison appears ready to cash in on trends and emerging markets such as China and Eastern Europe.

The company continues to suffer from the economic troubles afflicting the United States and Europe. Overseas operations account for 40% of Avery Dennison's sales, and a large portion of those are in Europe. Meanwhile, its division that produces tags for the retail market has foundered in the United States because of that industry's consolidation and downturn, and it so far has only a small--though profitable--presence in the huge Asian garment market.

But there are other forces at work playing into Avery Dennison's hand:

* Its broad range of products makes it a significant supplier to super stores such as Office Depot and Staples, which are establishing the standards for office supplies retailing. The addition of the Dennison products, which include felt markers and glue sticks, makes it the leader in several office product categories.

* Miller said new federal food labeling laws will be a boon to Avery Dennison and other label makers as the labels become bigger and more customized. "The government takes, and once in a while it gives," Miller deadpanned at the company's annual meeting in April.

* The company is making a strong push into the systems control business, in which it manages a customer's inventory and also speeds its own delivery rates.

* Consumer product makers have also been spurring label makers to new creativity to match the trend toward "clear" liquids in clear bottles.

Avery Dennison now produces a variety of labels so smooth and transparent that they are barely detectable as labels. Instead, they look as if they have been printed on the containers.

* Avery Dennison has ventured for the first time into the computer software arena by developing label-making applications for personal computers. While analysts say software is not its forte, the company has quickly taken the lead in labels for use with laser printers.

However, its venture into hardware--marketing a computer add-on for printing individual labels--"has not been a roaring success," Miller acknowledged.

* In Canada, Avery Dennison has begun test-marketing environmentally sensitive office products, labels and other materials that are made from recycled materials and are recyclable.

"We are constantly and very creatively finding ways to open new markets in what I always have thought is a crazy sticky-paper business," Miller said.

The Avery side of the company had its beginnings in 1935 through the determination of R. Stanton Avery to make and sell the first self-adhesive label--one that would stick without adding glue or moisture. The tale of how he built his first label-making machine in a loft in the Los Angeles flower market and founded the company on less than $100 borrowed from his fiancee has become a local legend.

What began as a single-product company was transformed in a decade--during World War II--into an industrial manufacturer. Adhesives, rather than labels, were becoming its most important products, and remain so today.

Ironically, it was the loss of Avery's patent on the self-adhesive process in 1952 that propelled the company into a transforming era of growth.

"When Stan Avery lost his patent . . . he thought it was the company's darkest day," said Avery Dennison's vice president, Diane Dixon.

Instead, competition enlarged the market for self-adhesive products and significantly expanded Avery's business opportunities. It turned its competitors into customers when it began selling adhesives, papers and technological know-how to other label makers.

Miller joined Avery in 1964, during a decade when the company's growth was fueled by its materials business.

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