What we will be making:
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Step 1.

To start off, choose the gradient tool (circled in red) and then open up the gradient editor (image 1), by clicking on the area circled in green (image 2). There should be 2 marker points already present for the current gradient. Make each of them a light brown color, such as B1B093. Create a marker at location 25% using a lighter shade(EFEEBE) for the color. Make another marker in the center at location 50%, using FDFDE7 for the color. Finally create a marker at location 75%, using EFEEBE. Now make some large thick text, which will be used as a template, using something like Arial Black 150 pt. Create a new layer inside a new layer set. Use the rectangular marquee tool to create a small rectangular selection, and then create a gradient on a new layer, by dragging the length of the selection.



Step 2.

Next were going to cut the gradient to make it look irregular. Zoom in to 200% and use the elliptical marquee tool to delete the top part of the gradient, creating an inward curve. Create another selection (image 5), using it to cut (layer via cut) the layer into two. Delete the bottom part and then create a taller oval selection to cut the layer from the left hand side (image 6).



Step 3.

Do the same to the right hand side, using a large selection. Place the layer at the bottom, make a duplicate of it and then move it to the top of the letter (image 8). You should now have 2 gradient layers inside the layer set. Use the transform tool (edit > transform) to scale and rotate the duplicate, so that its roughly the width of the upper part of the letter. Duplicate the layer and then flip it horizontally (edit > transform > flip horizontal), as shown in image 9).

Step 4.

Rotate it using the transform tool and then apply a drop shadow to the layer (layer > drop shadow), using the settings shown in image 11. The layers shadow should look like the one shown in image 12.



Step 5.

Duplicate the layer and then use the transform tool to rotate it (image 13) and then shorten it (image 14). Use the transform tool to distort (edit > transform > distort) the orginal gradient layer, so that it looks something like in the one in image 15.



Step 6.

Make another copy (image 16) of the last duplicated layer and then use the transform tool to distort it like in image 17. Make yet another copy, rotating it and distorting it like in image 18. You will need to place this layer below the others, so that the shadow appears over it.

Step 7.

Make another copy and then distort it like in image 19. Duplicate the original layer, from the bottom, and bring it to the top-center of the letter (image 20). Flip it vertically (edit > transform > flip vertical), distorting it slightly to fit the template letter.



Step 8

Next, duplicate the top left layer (image 22) and rotate it by 90 degrees clockwise (edit > transform > rotate 90 degrees CW). Use the the transform tool to distort it so that it covers the top part of the letter.



Step 9

Erase the part on the left (image 25). Duplicate the layer set containing all the layers, flip it horizontally and then move it over the right hand side (image 26)



Step 10.

Next, zoom in to 300% and use the polygonal lasso tool to create the selection shown in image 27. Fill a new layer with grey (AFAFAF) and then contract the selection by 2 pixels (image 28). Add some small text like 6pt verdana, and then create a darker grey (737373) circle, using the elliptical marquee tool.

Step 11.

Merge the text with the label layer and then rotate it by about -80 degrees. Create an oval, with the same dark grey and on a new layer. Nudge the slection to the right, with the arrow key, and then fill it with white.



Step 12.

Nudge the selection again and then delete the selected area (image 33). Use the erase tool to delete part of it, like in image 34.



Step 13.

Since weve duplicated the layer set for the other side, it will be symmetrical. To make the other side look different, you can swap around the order of the layers, like ive done in the example below. And thats the end of this tutorial to create parcel wrapped text!