Russia needs investments in packaging

Russia has huge potential. It also pertains to new investments in the packaging industry. This is what Eric Pavone, Business Director of BOBST Business Unit Web-fed, thinks, and an interview with him Unipack.Ru offers to its readers.

What interesting things could visitors see at BOBST stand at RosUpack 2014 in Moscow?

As you can see, we have a large booth at the show. Why is that? Because Russia is one of the most important markets for our company. Under the slogan "One group is one brand", since 2012, we have unified all group companies under one brand name of BOBST. The Web-Fed Business Unit manufacturing flexible packaging machinery has undergone particularly great changes. Earlier the brand-names of our equipment - laminators, metallizers, flexo machines and gravure printing machines – were called Rotomec, General, Fischer & Krecke. Now we have all united under the brand name of BOBST. I must say that we have not lost our identity, we still produce Rotomec, Fischer & Krecke and other machines, but these names have turned into machine model names. Therefore, here, at an important packaging exhibition like RosUpack, we represent the company under one brand name of BOBST.

RosUpack is not a show wherein we need to demonstrate equipment. We participate in this show because the exhibition provides an opportunity to meet. Business, image and communication with customers - these are the main factors of our participation. Many leading packaging manufacturers - such as Mondi, Constantia Flexibles, Eximpack, Gotek, Danaflex etc. - have their stands at RosUpack. And they all are our customers. It is important to be close to them at the fair to demonstrate our commitment to the Russian market. And we're glad to have taken part in this exhibition.

What can you say about Russia? How interesting is the Russian market to your company?

With regard to the products we offer, Russia is particularly important to us in the field of metallization. I’d like to emphasize that we are leaders in the vacuum metallization machinery and gravure printing market; we are constantly growing and developing in the area of high-speed laminating machines and flexographic satellite printing machines (CI type). In 2012 our company launched a new generation F&K 20SIX Flexo Press in the field of flexo printing, which allowed us to offer a printing solution for the whole range of flexible packaging.

Russia is also important to us because of the big potential, including the potential for new investments. Russia currently imports large amounts of finished packaging, mainly from China, India, Turkey and Poland. And we see no reason for business not to support and not to invest in the packaging industry. Russia is perfectly able to independently produce whole packaging rather than import it. Therefore, it is very important for BOBST to be here, to be closer to its customers in order to support their business, provide for ROI in modern equipment. Flexible packaging consumption keeps growing as the population increases, changing consumer habits and preferences.

Nowadays, we are witnessing the development of flexible packaging market worldwide. What characterizes this market?

Currently, there is a big shift from rigid containers and packaging to flexible packaging. Consumption of flexible packaging is growing 4.5% per annum. The main driving factor of growth here is Asian countries. Thus, growth in India is 10%, in China - 9%. But in Europe and the U.S. we can also see an increase of about 2% per annum. In Russia market is growing by 4-5% per annum. Many products are no longer being packed in glass bottles changing over to flexible plastic pouches. Butter, dairy products, fresh food, cosmetics previously packed in hard plastic containers, are now switching to flexible packages – doypacks and others. Russia's prospects in the packaging industry are to produce more in the country rather than import. Obviously, there is a requirement for big investments in the productive forces, and subsequently production growth in the country will be assured. Packaging is a very interesting business. There may be a need for more big retail chains. In the future we are likely to see in Russia such big trading companies as Wal-Mart.

In this country retail chains are developing fairly fast, including foreign retailers, there are more than 60 Auchan shops trading now.

Yes, but you need more Auchans and other hypermarkets such as Carrefour, Selgros, Wal-Mart etc. These chains have earned trust of customers, and they want to invest in the future. Their market entry is welcome. And as is well-known, big hypermarkets prefer to sell packed foods.

What is the global packaging industry in for in the near future?

BOBST is indeed one of the packaging industry leaders. And we are preparing the future, which is associated with digital technology. Do you know that we have a strategic partnership with Kodak? In the near future we plan to present our first digital BOBST machine for printing on corrugated board. This will be a great high-speed machine. Our engineers are also working on digital machinery for producing folding boxes and flexible packaging. It will be a nice addition to the existing range of equipment produced by us, because digital systems are designed to manufacture small and very small runs of packaging.

Have you been to Moscow before? What are your impressions of the city and the people?

Yes, I have been to Moscow many times. First I came here in 2000. I would say, over the fifteen years Russia has undergone dramatic changes. I am impressed with Moscow’s infrastructure, roads, communication availability, and modernization. I recollect my first visit to Moscow. Now your capital is very different. In terms of infrastructure Moscow resembles European capitals or the new Shanghai. This is a very modern city. If we talk about consumption, it is already a mature market. This applies to consumer habits, behavior, and preferences.

How, do you think, doing business with the Russians differs from doing business with other nations?

In my opinion, doing business with Russians is simpler and easier. Although there are some difficulties with the customs, where you need a lot of papers. Here we have specialists to help. Fifteen years ago, we considered Russia to be a rapidly developing market. Now we believe that we are already talking of a mature market. This view is supported by the quality of equipment used in the industry, cars and electronics. We can virtually see the same standards as in Europe. Fifteen years ago it was not so yet.

Interview by Michael Bredis