CCL enters Russian label market through joint venture

Toronto-headquartered CCL revealed yesterday that it is investing approximately Cdn$16 million to acquire a 50 per cent interest in the assets of two label businesses owned by Mamedov. Kontur Plus is based in a new state-of-the-art facility in Moscow and Asterix is based in St Petersburg. The companies had sales of approximately Cdn$26 million in 2007. It will also provide funding for additional capacity at the joint venture named CCL-Kontur. Russia's economy has been expanding at about 7 per cent a year and a growing middle class is looking for higher quality consumer goods. Multinational food and consumer goods firms are increasingly moving into the region, seeking to supply the consumer base around Moscow in particular. Beverage firms Coca-Cola and PepsiCo have both made acquisitions in the region in the last year and confectionery brands are also keen to build a presence in Russia and neighbouring markets. Analysts expect to see modern retail formats continue to grow significantly in coming years, another factor driving demand for the kind of labelling offered by CCL. The firm makes pressure sensitive, shrink-sleeve and in mould labels for food and beverage firms as well as those in the personal care and healthcare markets. It now operates 51 production facilities in North America, Europe, Latin America and Asia with customers including Heineken, Coca-Cola, Knorr and Carte Noire coffee. CCL-Kontur will supply CCL Label's existing global customers operating in Russia and other CIS countries. ​"Russia is another important step in establishing a global footprint for our company,"​ said Donald Lang, chief executive of CCL Industries, in a statement. Geoffrey Martin, president and chief operating officer of CCL, added: "We have known Mr Mamedov and his management team for some time and have high regard for them and their knowledge of both the Russian label industry and the business climate of the country in general. We consider them excellent partners to introduce CCL Label products and technologies into one of the fastest growing markets in the world."​ In October CCL Industries said it had agreed to sell its 40 per cent stake in its European joint venture to its majority partner Portugal-based RAR - Sociedade de Controle for about C$140 million in cash. In mid-2005 it effected a transformation into a pure speciality packaging company with the Cdn $265 million (€164m) sale of its North American CCL custom manufacturing division to KCP Income Fund. The proceeds from the sale were earmarked to fund the continued growth of CCL's higher growth label and container businesses through further acquisitions and technology improvements.