Cascades to exploit Russian recycling demand
in western Russia, giving it a chance to capitalise on the growing
popularity of paper, board and recycling within the food industry,
reports Chris Mercer.
The new office, located in Obninsk, 90km south west of Moscow, is part of Cascades' grand expansion plan stretching from France to Hong Kong. The company is already present in Eastern Europe with offices in the Czech Republic, Poland and Hungary, but believes its specialism in supplying paper and board products, mostly from recycled fibres, will serve well in a rapidly expanding Russian market.
Stéphane Thiollier, Cascades' vice-president, said: "The Russian market hovers around 500,000 tonnes of board, which is not an insignificant market, and is very promising and comparable to the size of certain markets in western Europe."
And a recent report by market analysts Euromonitor shows that Cascades could profit from trends towards light-weight food packaging in Russia. Use of paper-based containers grew by 18.5 per cent between 1998 and 2002, faster than any other packaging type, and is expected to grow by 70 per cent up to 2007.
That is well ahead of the other dominant packaging types - flexible packaging and thin-wall plastic - which are only forecast to grow by 33 per cent and 28 per cent respectively; although flexible packaging still has a 72 per cent share of the market.
Food producers are increasingly converting to paper and board because their relatively light weight can reduce transport costs, which means a lot in a vast country like Russia. Furthermore, the good quality print surface enables ever more inventive marketing in an increasingly competitive marketplace.
Among consumers, folding cartons and board tubs for cheese are spear-heading the rise in paper packaging as Russia's urban population continues moving towards convenience food for quick and easy meals. Russia's healthy GDP growth, around 7.3 per cent for 2003 and forecast to be the same in 2004, has also increased consumers' disposable incomes since the economic disaster of 1999.
Cascades can clearly benefit from a focus on food packaging, yet an underlying advantage is also its recycling policy. Russia's recent signing of the international Kyoto treaty on climate change has given environmental issues more publicity, and the Euromonitor report points to an emerging trend for environmentally friendly packaging driven by consumer concerns.
Cascades has spent 40 years in the recycled packaging industry and is confident this policy can make inroads in Russia. The only difficulty may be getting materials from Cascades' mills in Sweden, Germany and France to Russia, something which will mean extra costs for the company.
