Avery Dennison (NYSE: AVY) makes office products and self-adhesive labels that cover everything from shampoo bottles to highway signs ^[1]. The company also makes barcode tags, price tags, and security devices for retailers. With product sales in over 89 countries world-wide, international sales represented 66% of net sales in 2009,^[2] a 6% increase since 2007 due to an operations focus on Asia, Latin America, and Eastern Europe. ^[3] Avery Dennison's self-adhesive labels, which accounted for more than half of the company's revenue in 2009, are in high demand in many different industries worldwide.

This demand however, is being threatened by a sluggish economy as businesses and families cut back spending on office and home supplies. Additionally, Avery Dennison is hurt when the demand falls for products in other industries that use Avery's adhesive labels -- when this happens the manufacturers of these products will demand less from Avery. Additionally, increasing energy and commodities prices are also hiking up the cost of obtaining raw materials and making products. Avery Dennison is dependent on raw material such as paper, plastic film, and resins^[4] to make its products. Rising energy and commodities costs are forcing Avery Dennison into a difficult choice - raise prices on its products and risk losing customers, or cut its operating margins and earn less profit.

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