Label Tech

Food producers come and go but they all need labels. James Costello took over Label Tech in his early 20s and has proved to be a safe pair of hands, writes Darren O’Loughlin

James Costello has been a steady hand at the Dublin labelling business since assuming control in his 20s. Covid has brought new trade too

Product stockpiling and increased home consumption resulted in strong demand for many food and drink products through a Covid-ravaged 2020. Ancillary businesses also benefited from the production uptick, among them self-adhesive label producer Label Tech. Across Europe, consumption of materials used for labels was up by 8% year-on-year in the first half of 2020.

James Costello, managing director of Label Tech, says that his quarterly sales projections for 2020 went out the window once the pandemic took hold. Founded by his father Padraig in 1992, Costello has been managing director of Label Tech since 2001, leading a team of 48 people from a 20,000 sq. ft. facility in Santry. The business is Ireland’s largest independent label producer, with clients spanning small food and drink producers to large retailers.

“Typically quarters one and two would be pretty steady for us, before building up to a busy period in the second half of the year,” says Costello (49). “Those rules didn’t apply in 2020 – we saw huge demand for labelling from March through to June. Things were manic for us, busier than we had ever imagined. That surge petered out and sales plateaued in the summer, but they’ve stayed at a reasonable level since then.”

Padraig Costello’s tenure as head of the company that he founded, ended tragically with his death less than a year after Label Tech was established. At the time, son James was in his early 20s and had taken a sales role in the nascent business. Initially focusing on the FMCG sector, Label Tech won a Microsoft Windows 95 labelling contract for floppy disks. It subsequently resumed its focus on food and drinks-related businesses, but with a hand in the pharma, transport and cosmetics sectors also.

Capital investment in Label Tech is a necessary ongoing cost. Over the last three years, Costello says that his business has invested € 1.5m in equipment, most recently purchasing a customisable eight-colour press. “Future-proofing our business is essential and capital investment is a critical part of that. The new Evolution is the first of three presses that will be installed over the next investment phase in Label Tech’s growth.”

Label Tech’s current array of printing and labelling machines can handle long runs for labels, while the digital technology employed can facilitate time-sensitive, shorter-run orders too. Costello’s business manages the labelling for a range of consumer brands, including Temple Bar Whiskey, McIvor’s Cider, canned craft beers such as Rye River, as well as baked goods, cakes and fresh foods brands.

“We moved into the drinks sector more strongly in the last couple of years, where we found that our experience with label design and style was very useful for clients. If someone is going to launch a new whiskey or gin, we can advise on the best materials to use, what label embellishments might work etc. Regulations in the food industry are constantly changing, which can require new product labelling or brand tweaks. We can have new labels ready with short turnarounds of 24 hours if needed.”

Around 80% of Label Tech’s trade derives from the food and drink sector. The Covid-19 lockdown saw a number of companies scramble to get new products out to market, which brought a stream of fresh business to Costello’s company. Product stockpiling around Europe also ensured that the bigger food brands kept Label Tech’s machines busy. “As an essential service, we remained open through the Covid lockdowns and we didn’t have to furlough any staff,” says

Costello. “We were swamped with work all through that period.”

Label Tech isn’t just for the big boys. Costello instances Harry’s Nut Butter, which started out with an initial order of 1,000 labels and was recently up to an average order quantity of 21,000 labels. The product was developed at the Fumbally Cafe in Dublin and is now distributed to gourmet and deli shops around the country. Other recent micro clients include Meltdown Café in Dublin, which makes Hot Stuff sauce, and the Put Your Feet Up scented candle range, a new venture launched by married couple Joe O’Regan and Deirdre O’Conner.

Around one quarter of turnover is sourced abroad, primarily in the UK. “Part of the reason why we invested last year was to expand capacity. That will reduce our lead times, so I am hoping to ‘ buy back’ any delay in sourcing materials.”

Label Tech’s Santry plant runs six days a week and Costello says that he’s considering upping that to a sevenday operating schedule to cater for increased demand. The business also launched a digital service recently to automate orders for existing customers, that can be placed through the Label Tech website 24/7.

Costello undertook a part-time MBA at Smurfit School of Business before taking up the reins at Label Tech. Going back to 2007 and subsequently, Label Tech availed of BES and EIIS finance to fund its activities. The company loaded up with € 3.5m extra debt from AIB in 2017, and in 2019 redeemed equity to the value of € 3.2m.

Net worth at end 2019 was € 3.6m, down from € 6m the year before, and the overall picture is complicated by inter-trading with parent company Sitckyback Holdings. In November 2020, the company moved from long-term accounting advisor FMB to BDO.

Net profit in 2019 was € 460,000, after a depreciation share of

€ 500,000, and there was also a

€ 340,000 gain booked on a property revaluation. “We’ll break € 9m turnover for 2020, which will be an increase of around 5% on 2019,” says Costello, who owns 82% of the shares in Stickyback, where the other director is David Keogh.

“The sense from our customers is that they are optimistic about their prospects this year. One of the big insights for me in 2020 was how positive the outlook is from most of the businesses that we engage with,” Costello adds. “With Covid-19 and Brexit, we’re just going to have to suck it up and move on. This is just a blip and we’ll all get over it in time.”

‘With Covid-19 and Brexit, we’re just going to have to suck it up and move on’