Interview with the President of ROSUPAK-2007 International specialized exhibition on the packaging market development

Interview with Mr. Vladimir A. CHUIKOV, Chairman of the Board of Directors of GOTEK Group, President of ROSUPAK Exhibition.

- What is your opinion about the development of the Russian packaging market? What are the tendencies and prospects of the market?

- The packaging market today is one of the leading segments of the Russian economy as far as the market growth is concerned. By the information from the State Committee of Statistics, the growth in this segment amounted to 53 per cent from 1999 up to 2003, which means over 10 per growth per annum. It is much higher than the growth of the world market, which amounted to 4-5 per cent per annum. Individual segments, such as certain types of the cardboard packaging and flexible plastics, in particular, are growing still quicker, their annual surplus amounting to 15-20 per cent. Most of the analysts tend to believe that in the years from 2005 to 2009 the Russian packaging market will grow in its cost value, and eventual negligible fluctuations of the macroeconomic situation in Russia will not stop this tendency in any way. It is expected that the process of the initial saturation of the Russian market with the packaging material will continue till the years of 2010, and this is only a modest forecast.

Besides, the local market of the consumer packaging demonstrates a higher growth, than the packaging market as a whole.  If, in the experts’ estimation, the most optimal growth of the packaging market, as a whole, amounts to 10-12 per cent in the cost value, this index for the consumer packaging is about 15-16 per cent. It is expected, that in 2008 the forecast for the volume of the market of consumer tare and packaging will be twice as much as the index for the year of 2003.

Of course, the demonstrated dynamics of the market growth is very attractive for the investments in the packaging business. Russian producers, as well as western companies, demonstrate quite active investment policies, and, practically, in all the sectors of the packaging, into the bargain. The leading world companies, such as Alcan, Stora Enso, SCA, TetraPak, Amcor, Rexam, Sisecam, Owens-Illinois, have already announced their new projects.

- What is this growth accounted for?

- The growth of the packaging market results from the growth of the economy of the country, as a whole, and the life improvement of Russians. A sharp growth in the consumer market (20 per cent per annum), correspondingly, resulted in the packaging demand. The segment of the food packaging occupies from 70 to 75 per cent of the whole packaging market in Russia, as everywhere in the world. The fact that Russia is approaching the standards of the European culture of consuming accounts for one of the factors of the growth in the packaging consuming, and that is consuming natural products, having very short period of their storage, ecological properties of products, use of the fast food, a decrease in the number of the products bought in one purchase. Such tendencies entail new offers at the food market, and, correspondingly, in the packaging market. In the absence of the severe competition, some of the new products enter our market much quicker than the countries of their origin.

The fact of the transnational companies, the acknowledged leaders of this market, such as Mars, Cadburry, ВАТ, Unilever, Nestle, who brought the western quality standards to the Russian industry in the mid 90-s, exerted an essential impact on the development of the packaging industry. Many companies now order the packaging here, in Russia, now, but, unfortunately, the local manufacturers cannot always meet their requirements. In this connection the western manufacturers have all the chances to enter the market, which is now existing and growing rapidly in the Russian packaging business.

Besides, the sales structure has crucially been changed. The development of the trading chains and the leading companies’ entering the market entailed the development of the new packaging segments, both in the sector of the consumer packaging and in the group packaging. The role of the packaging is changing and, so does the packaging itself, accordingly: the packaging becomes an active element of the marketing communications between the manufacturer and the buyer.

- But, despite the active development of the Russian packaging business, the Russian packaging manufacturers cannot fully satisfy the needs of the local packaging market …

- Yes, that is true. As the analysis of the information from the State Customs Committee shows, the import of the packaging material and products accounts for an essential part of the packaging consuming. At the experts’ estimation from “PRADO Marketing Company” the leader of the packaging imports to the Russian Federation until 2004 was Poland; Germany and Ukraine were also importing essential volumes of the tare and packaging. However, the large import volume from the Ukraine was determined, and it is still caused, first of all, by the fact that the country serves a corridor for the imports from European countries. The ten leaders in the packaging delivery in 2005 were Italy, China, Austria, France, the Great Britain, Finland and Czechia. However, I would like to stress hereby, that at present only the packaging, which is difficult to produce in Russia due to technological or economic reasons, is imported, moreover this packaging is usually more expensive.

- What is in the greatest demand at the Russian market today?

- I would like to acknowledge that there is still a lot we can learn from our western colleges, both in the field of the new technologies use, and in the production management.

The Russian manufacturers, nowadays, modernize quite extensively the packaging production and technological complexes. Moreover, our growing market “devours” the most modern highly technological machinery, as well as the cheapest equipment, even the second hand one. I believe that in the nearest future Russia will demand innovations for Russia, though widely used abroad, technologies and products, both in the packaging production, and in the information technologies. And, of course, the experience of the world leaders, operating in this segment, is very important for a further development of the Russian packaging business and the economy of the country in general.

One of the major issues was, and still remains, the problem with raw materials. For example, the current deficiency of the raw materials for production of the corrugated board in Russia is estimated at the level of 3 – 5 per cent of the whole volume of its consumption, however, if the existing tendencies remain, both in the raw material production and in the packaging production, the deficiency might reach the level of 7 – 10 per cent of the volume of the consumption in the nearest future.

In my opinion, one shall pay special attention to the processes in connection with the production management and logistics in particular. And it was not in vain, that at the previous ROSUPAK Exhibition a separate special sector was dedicated to this problem. Only high-tech companies, properly managed, shall survive in the situation of the severe competition at the packaging market, the companies, which already today do their business, taking into the account their future development. The technologies account for the future, as well as for the future of the Russian packaging market.

- How do you assess the outcome and results of the ROSUPAK-2006 Exhibition?

- 26, 051 Russian and 1, 980 foreign visitors visited ROSUPAK during five days of its work. A number of interesting innovations were displayed there, one of them being FOODMASH - the first International Specialized Exhibition of the Equipment and Technologies for the production, processing and packaging of the foodstuffs products, which gathered 61 participating companies.

There were 22 events in the program of ROSUPAK-2006. For the first time the Conference “International Packaging Day” was included into the program, and it was of a principal practical importance both for the participants and visitors. The conference allowed them to get the authenticated information, analytical assessments and forecasts from the competent sources about the situation at the world packaging market and about the tendencies of its development.

The participants and visitors highly appreciated the conference. Mr. Vazlav Vasyak, Director General of the Chamber for Tare and Packaging of Poland, offered to consider the date of the conference, i.e. June 20, as the International Day of the Packaging Industry, to be celebrated annually.

- What is in store for the participants and visitors of the ROSUPAK Exhibition in the year, which has just begun?

- The International Specialized Exhibition FOODMASH and the Conference “International Packaging Day” will be organized within the framework of the ROSUPAK-2007 Exhibition. Beside those events, the participants and visitors of the Exhibition will be facing many interesting projects, including the Specialized Exhibition PHARMAPACK, where the best samples of the packaging for medicinal and pharmaceutical industry, which is actively developing in Russia, will be on display.

In the program of the ROSUPAK-2007 exhibition there is the Russian National Competition for the best national packaging “Grand Star of Russia”, the winners of which will get an opportunity to display their work at the International Competition WorldStar for Packaging-2007”.

- It is quite complicated to organize and stage such events …

- In my opinion, one shall note a high organizational level of the exhibition. It was for the first time that during the forum the Information and Consulting Center was operating, where the visitors could get a good piece of advice in different issues. It was also for the first time that the daily newspaper ROSUPAK, which covered the news and events on-line, was issued. Besides, MVK International Holding Company – the organizer of the forum – has created and maintained the atmosphere of the real festival during the exhibition, being a business event. For example, after the official ceremony of the exhibition opening was over, the Indian three ton she-elephant – Chara -, clad in the ROSUPAK dress, appeared from a huge carton box with the logos of the MVK International Holding Company and the inscription “Handle with care!”, put in front of the exhibition premises of “Crocus Expo”. This impressive action of the MVK received a slogan “We can pack even an elephant!”.

- What would you like to say to the representatives of the Russian and world packaging business community?

- It has already been 10 years, since the ROSUPAK was expanding and developing, mirroring the most modern tendencies of the Russian packaging industry. I would like to name ROSUPAK the heart of the packaging business community, where every participant or a visitor can feel the beating of the packaging industry pulse. It is very interesting to visit the exhibition both for the companies, which have long been working in the industry, and for the newcomers, who have recently come to the market. Everyone will find many interesting and useful things. Therefore, using my privilege as the President of ROSUPAK exhibition, I would like to invite all the representatives of the packaging industry to visit the ROSUPAK-2007 Exhibition in June of this year.

FOR THE INFORMATION: ROSUPAK-2007 is awarded numerous international titles and signs of the following foreign and local unions, packaging associations and exhibition unions:
UFI (The Global Association of the Exhibition Industry),
IUEF (The International Union of Exhibitions and Fairs of the CIS and Baltic countries),
COPE (the Confederation of Organizers of Packaging Exhibitions),
WPO (World Packaging Organization),
FEFCO (European Federation of Corrugated Board Manufacturers),
MTPP (Moscow Chamber of Commerce and Industry),
ULADE (Unión Latinoamericana del Embalaje – the Union of Packaging Manufacturers of Latin America),
PAC (Packaging Association of Canada),
FKM (Gesellschaft fuer freiwilligen Kontrolle von Messe- und Ausstellungszahlen – Society for Voluntary Control of Fair and Exhibition Statistics). MVK International Exhibition Holding became the first Russian company, whose exhibitions are audited in conformity with the FKM regulations, accepted in Europe. The “Ernst & Young” Company is the authorized auditor of the FKM.

FOR THE INFORMATION: In 2006, 870 participants from 36 countries all over the world: Austria, Armenia, Belarus, Bulgaria, the Great Britain, Hungary, Germany, Greece, Israel, Spain, Italy, Kazakhstan, Canada, Kirgizia, China, Liechtenstein, Luxemburg, Moldova, the Netherlands, the UAE, Poland, Russia, Serbia, Slovakia, the USA, Taiwan, Turkey, the Ukraine, the Philippines, Finland, France, Czechia, Switzerland, Estonia, South Korea, Japan, exhibited the up-to-date equipment and technologies for the packaging production and different types of the packaging material at the ROSUPAK exhibition and accompanying specialized exhibitions, such as PACKMASH (packing technologies and equipment), LUXPACK (luxury packaging), ALUMPACK (aluminum packaging).