From: https://tidbits.com/article/14299
Print Mailing Labels and Use Mail Merge -- Most people are surprised to learn that Contacts can print mailing labels and envelopes using standard formats from Avery and Dymo, and that you can even create your own layouts for custom labels. Apple doesn’t trumpet the functionality, but instead buries it in the Print dialog.
To print labels or envelopes, first highlight the contacts to include in the print job. Then, choose File > Print, and click Show Details. Next, from the Style dropdown, choose a style: the choices include Envelopes, Mailing Labels, Lists, and Pocket Address Book. Once you have chosen a style, use the Layout and Label panes in the Print dialog to refine the layout and content of the mailing labels or envelopes. In the Layout pane you can set label dimensions, choosing from various standard sizes. In the Label pane you can specify a logo or other image to use, and choose a font.
If, however, you need to add barcodes or intricate graphics to your labels, look to other applications. For example, Labels & Addresses ($49.95) from BeLight Software gives you much more printing flexibility, including personal and corporate templates, creative fonts, hundreds of images, and the capability to print postcards and a variety of label shapes. As an added bonus, the software can begin printing mailing labels in the middle of the page, so you can make use of partially used label sheets.
Labels & Addresses also solves the problem of how to create a single address label for multiple contacts who share an address, such as married couples, a need that often arises when printing labels for holiday cards. For more information about that, read Jeff Carlson’s “Labels & Addresses Restores Holiday Card Sanity” (12 December 2008).
Dedicated label printers, such as the LabelWriter printers from Dymo and Smart Label Printers from Seiko, print your labels in long strips, so that you don’t wind up wasting unused labels at the bottom of the sheet. They support a vast array of label sizes, and while they come with their own software, it’s often better to rely on Labels & Addresses.
If, instead of using labels, you frequently need to print directly on envelopes, I suggest you take a look at Ambrosia Software’s EasyEnvelopes ($9.99), which also integrates with Contacts.
You can also create mailing labels, envelopes, and directories inside your favorite word processor. Both Pages ’09 and Microsoft Word recognize Contacts as a data source for mail merge — unfortunately, the just-released Pages 5 no longer supports mail merge. Any fields on a contact card can be included in form letters and phone list directories as well.