April 25, 2005
Today, the packaging and packaging equipment market sees a confrontation between domestic and foreign manufacturers. It appears the industry is in for major changes.
Analysts at the World Cardboard Manufacturers Organization claim that Russia is virtually the only country in all of Eastern Europe where annual growth in packaging material production has been observed over the past two years. For containerboard, this figure stands at 6% per year (in other European countries it does not exceed 2%), and for polymer packaging — more than 7%. Today many companies understand that packaging is not something to economize on: unremarkably presented products will linger on the shelves. "In our employees' observations, packaging is one of the key requirements buyers place on a product," notes Viktor Sorokovikov, deputy director of Lama, a Tomsk food distributor. The Siberian region's packaging market has noticeably transformed over the past few years and is now on an upswing.
The Retreat of Crude Forms
For packaging production in Siberia, smooth and corrugated board of various profiles is widely used — both locally produced and brought in from beyond the Urals.
Over the past five years, corrugated board packaging has undergone significant changes. For example, Kuzbass-Tara LLC (Novokuznetsk) produces corrugated containers of any size from three- and five-ply board on Italian equipment. At the customer's request, a two-colour flexographic print can be applied to the board. This is a kind of mainstream of cardboard packaging, providing stable revenue.
Today, some enterprises are trying to move away from it, focusing on more promising technologies. For example, Novosibirsk company Novokor-S has chosen its own development path by combining microflute production with lamination.
The point is that cardboard cannot have imagery applied to it by offset — only flexography can be used. But such packaging does not look very attractive to the consumer and primarily serves a transport function — protecting the goods from external influences during shipment. "To solve this problem, lamination was invented in Europe in the late 1980s," explains Konstantin Goppe, commercial director of Novokor-S. "An image of any complexity and colour solution is applied by offset to a thin single-ply cardboard, and the resulting sheet is glued onto two further layers — the laminated microflute board is ready. It looks beautiful, and possesses both flexibility and sufficient rigidity." Such material can be used to make both transport packaging for food products and consumer packaging with original design and colour solutions.
East of the Urals, laminated microflute board is currently only produced at Novokor-S's facilities. The offset printing in the lamination process is handled by ordinary printers. They, in turn, are not limited to applying imagery but also engage in the production of single-ply cardboard packaging themselves.
Making a box from cardboard is a multi-stage process. Stamps must be made, the shape die-cut, folded, glued — that is the general technological sequence. Today, automatic lines are used for product packing; they are extremely demanding as regards the dimensional accuracy of containers. Strict adherence to standards requires modern equipment and technologies. "For the production of packaging from smooth printing cardboard, only imported equipment is used — predominantly German or Swiss, which has high precision and a many-year guarantee of stable operation," says Andrei Otnyakin, deputy general director of Novosibirsk printer Harmens. In producing a single print run, up to a hundred different factors are taken into account, from raw material selection to logistics. This is why few companies can take on cardboard packaging production.
Around 200–300 enterprises currently operate in the "cardboard" segment of the Russian packaging market. In the Siberian region, packaging products from Novosibirsk companies Fort-Press, Harmens, and Print-Master, as well as Yekaterinburg's Avantazh, are most commonly encountered. Smooth cardboard packaging is also produced in Krasnoyarsk and Irkutsk, but manufacturers there do not have top-class equipment and therefore cannot offer a competitive product in the premium price category.
Competing cardboard packaging manufacturers themselves generate demand for their high-technology products by firmly setting price boundaries and placing consumers in a situation of choice: buy at a higher price but high quality, or cheaper but simpler. Over the past five years they have demonstrated to consumers the importance of their products, including their impact on sales volumes.
Konstantin Goppe cited an instructive example. About five years ago, Novosibirsk company Shokoladnaya Strana began producing biscuits in cardboard trays — at the time this was considered a breakthrough in product presentation. The trays were made by the old technology: a two-colour flexographic print was applied to a microflute box. The packaging was practical, but on the shelf it looked like a grey patch. Switching to a slightly more expensive but incomparably higher-quality package made from laminated microflute board led to a 40% increase in biscuit sales. Commercial success signalled to other Novosibirsk manufacturers the start of adopting progressive technologies. As a result, crude "corrugated" board and flexographic print remained only in the transport packaging segment.
Democratic Polymers
Paper as a packaging material is gradually ceding ground to polymers. To be sure, it has its own advantages. Paper and board are "noble" materials that lend goods solidity and significance in the eyes of buyers. Polymer packaging, by contrast, underscores dynamism, an accelerating life rhythm. Both have the right to exist in different price categories and for different target audiences. For example, premium-class confectionery cannot be packaged in polyethylene bags, let alone cellophane wrappers. A polymer "shell" suits more democratic chocolate bars aimed at young people.
At the same time, polymer film serves as good protection against ultraviolet radiation and atmospheric oxygen, significantly extending the product's shelf life. Polymer is not affected by moisture or fat; it is stronger than paper. Finally, polymer packaging is easier to manufacture than paper: the technology is within the reach of even medium and small enterprises.
Siberian packagers use polymer film, 80% of which is produced in Russia. Half of this volume is processed at local facilities. A wide assortment of printed polyethylene packaging — from stretch film to sleeves — is offered by Novokuznetsk firm NovoPak. Packages of various configurations are made by Omsk company Upak-Servis. Kemerovo's Upak-Tsentr not only produces goods from polyethylene, polystyrene, polypropylene, and PET (polyethylene terephthalate) but also develops a new, timely direction — secondary processing of packaging materials and plastic products of all types.
In general, over the past two years Russian polymer packaging manufacturers, including Siberian ones, have been investing in promising technologies developed abroad. Thus, the Omsk Chemical Company (OKhK) and German firm Bruckner signed a turnkey contract in 2004 for building a line for the production of high-quality film. The contract covers not only equipment delivery and installation but also an extensive training programme and marketing support. On the new line, OKhK will produce a broad range of polystyrene-based materials for product packaging and thermoforming. Its launch was planned for late 2005.
According to a Soyuzupak association market study, paper currently leads the Russian packaging materials market — in 2004 its share was 54.3%. Polymer films account for 38.6%, and other types of packaging (glass, metal) — 7.1%. But the production of polymer films and packaging equipment for them, which has intensified over the past two years, may soon change this ratio. This will largely depend on the technical capability of enterprises.
Technical Revolution
Russia's most important trading partners for packaging equipment imports are Italian, German, and Dutch enterprises. Countries such as Turkey, Poland, the Czech Republic, and Slovakia are also trying to increase their share of the Russian packaging materials market. Judging by the enthusiasm with which foreign companies and their trading representatives participate in numerous regional packaging trade fairs, Siberia is for them a promising sales market.
This year, Czech firm OMNIPOL A.S. entered the Siberian market. It offers buyers a horizontal machine for forming flat pouches from printed reel packaging material, and a vertical machine for forming bags from a reel and automatically filling and sealing them. But these units are equipped with simple relay automatic control devices, which by world production standards is already yesterday's technology.
Today, "smart," self-regulating packaging equipment is at the peak of development. For example, Moscow firm Optima-Rossiya brought a new development from Swiss company Inauen Maschinen AG to Siberia in early 2005 — a series of machines for sealing trays and packages for supermarkets. Complete automated lines can easily be configured from these units. The modular design allows them to be adapted for the most diverse products and production needs. A modern tray-sealing automatic performs seven different operations; its throughput is up to 3,500 packages per hour. New models are equipped with a control panel with a touchscreen.
Vacuum packaging is widely used for food products. Vacuum equipment and technologies in Siberia are also mainly of foreign origin. For example, Novosibirsk company TsentrPak specializes in supplying Dutch company Henkelman's vacuum packers to the region. Foreign systems are distinguished by a high level of service and wide functional capabilities. Almost all models of vacuum machines imported to Siberia are equipped with a control panel with 10 adjustable programmes for optimal operation with different products. For use in aggressive environments (for example, fish processing workshops), machines made entirely of stainless steel are available.
Despite the sophistication of foreign companies' equipment, Russian manufacturers have begun to actively compete with foreign producers over the past two years — mainly in the dynamically developing polymer packaging sector. Domestic enterprises are boldly offering their own-manufactured technology, built using imported components and their own original software developments.
One of the most significant advantages of Russian packaging equipment is price. For example, a domestic semi-automatic machine — in which film feeding and dosing are handled automatically while bag sealing is manual — costs 2,000 euros. A fully automatic machine runs around 15,000–20,000 euros. Dosers that measure out set quantities of free-flowing products are priced at between 2,000 and 5,000 euros. Imported equivalents cost two to three times more. "Without special leasing schemes, Siberian packagers often cannot afford to purchase and service foreign equipment," says Viktor Sorokovikov of Lama. Taking advantage of the price differential, companies such as Tauras-Phoenix (Saint Petersburg) and Signal-Pak (Yekaterinburg) are consolidating their positions in the Siberian market.
2005 can be considered a revolutionary year for Siberian packaging equipment manufacturers too. Thus, the Cryogenic Equipment Scientific Technical Complex LLC (Omsk) has developed a unit for the group sealing of various products in shrink film. The unit consists of an automatic packager and a heat tunnel, which can be supplied as separate modules. Barnaul Geophysical Plant JSC offers machines for filling and packaging dairy products in plastic bottles. Another new product is a thermoplastic injection moulding machine for making food containers from low- and high-density polyethylene.
An example of just how much demand there is for domestically produced packaging equipment today is NOTIS CJSC. Having committed to manufacturing packaging equipment, the enterprise has become the largest manufacturer in Western Siberia.
Machines under the NOTIS brand operate at 18 food industry enterprises in the Siberian region, in Kazakhstan, the European part of Russia, Belarus, Germany, and Australia. "We use Italian and Swiss components; the machine frames we manufacture ourselves," says NOTIS CJSC Commercial Director Vladimir Plekhov. "Our capacities allow us to produce a wide range of equipment."
Since customers prefer to equip their workshops with packaging equipment of a single brand, domestic manufacturers — following the lead of their foreign counterparts — have adopted a comprehensive approach, producing full product lines for the complete production cycle.
As for the important indicator of reliability, Russian engineers still have room to grow. "'Made in Siberia' machines are somewhat inferior to German and Swiss ones in terms of reliability, though they successfully compete with Italian ones," observes Vladimir Plekhov. This is confirmed by the choices of food manufacturers using packaging equipment. For example, one of the Russian snack market leaders, Sibirsky Bereg (Novosibirsk), chose to stop purchasing Italian machines in favour of NOTIS machines.
On the Eve of a Qualitative Leap
Packaging equipment is becoming increasingly intelligent every year. For example, Siberian-made dosers feature high-level software that allows the system to self-tune when operating parameters change, without the involvement of a technician. Horizontal machines for packaging ice cream, chocolate bars, and glazed curd cheese bars are equipped with several independent drives linked into a single system and controlled by one processor. The machine can independently adjust the speed of its units without stopping the conveyor or requiring additional changeovers. This is especially useful in the production of a wide product range — for example, at bakeries. And such equipment costs less than imported equivalents.
Consumers' appreciation of these advantages has led to growing demand for domestic packaging equipment. "Demand is already beginning to outpace our production capacity," notes Vladimir Plekhov. "The industry is on the verge of a qualitative leap. Technologies of dosing — specifically the competition among packaging equipment manufacturers in applying various dosing algorithms — will see particularly active development in Russia and Siberia."
This trend may lead in the near future to a 35–40% increase in production volumes, and together with improvements to the production base — to structural changes in the packaging machine market in favour of domestic manufacturers.
Andrei Malanov
Expert-Siberia No. 16