Russia's packaging industry is facing the worst crisis in its modern history, as the ongoing military conflict between Ukraine and Russia, as well as unprecedented sanctions imposed on the country, have led to a massive exodus of global packaging producers from the local market , and caused the current domestic shortage of packaging in the country.
Traditionally, production in Russia has been heavily dependent on the supply of foreign packaging and raw materials, with an average import share of 30%-50%, and even higher in certain market segments. Western action has led to the departure of most global packaging producers such as Elopak, Tetra Pak, Smurf Kappa, Ball Enterprises and others, in what has become the worst situation for the market since the collapse of the Soviet Union.
This poses a big problem for Russia's economy and packaging industry, because in recent years Russia has achieved almost complete import substitution only in the field of non-food packaging.
The withdrawal of some global manufacturers such as Tetra Pak from the local market, a strategically important segment of the market - liquid food, especially milk, and most other dairy products has created a threat of packaging shortages, as such products are traditionally sold in Produced in Russia in foreign cardboard packaging.
In the case of Tetra Pak, most Tetra Pak packaging is no longer suitable for Russian food producers following a ban on the supply of raw materials for demand from its Russian factories and the refusal of Swedish authorities to exclude the goods from the sanctions list. This is a major blow to them. The Russian side is seriously worried that Tetra Pak's departure will lead to a shortage of milk and dairy packaging in Russia, and may even pose a threat to the country's food security. However, the ability of the country and some local producers to ensure a widespread and rapid shift to aseptic packaging has stabilized the market situation.
According to the statement recently issued by the official spokesman of Russian Minister of Industry and Trade Denis Manturov and the national official directly responsible for the development of the packaging industry of the Russian government, Russia has sufficient aseptic packaging production reserves for the purpose of further supplying the domestic market. This should help avoid packaging shortages in Russia's food industry, especially dairy. "Currently, the domestic market provides the necessary amount of dairy packaging. We do not foresee any shortages."
According to data from the Russian Ministry of Industry and Trade, 12 billion pieces of cardboard packaging are consumed in the domestic market each year, most of which accounted for the output of Tetra Pak and Pure Pak in the past. However, a quick switch to similar products and the local management of Tetra Pak's Russian operations (as production resumed) helped avoid any packaging shortages in the domestic market.
As far as aseptic packaging is concerned, it has traditionally enjoyed high demand in Russia and it is likely that this trend will continue to be observed. According to Russian Deputy Prime Minister Victoria Abramchenko in an interview with the Russian RBC business newspaper, this is an environmentally friendly packaging that is not inferior to similar foreign products in terms of quality and safety.
Conditions are also being created for the development of domestic paper packaging production as part of a national plan. One of these projects was launched in the Vladimir region last August. The factory is entrusted by the local packaging manufacturer Formabox, covering an area of 12,000 square meters, and 100% of the raw materials required by the factory are purchased domestically.
At the same time, the local MoloPak factory has established another large-scale production capacity of aseptic packaging for the food industry, producing 300 meters per minute. The company also plans to build a new complex that will produce about 1 billion bales per year, according to Timur Gusin, the company's managing director. The bulk of future production will go into packaging for milk, juice, wine and baby food.
Nevertheless, despite some new domestic production coming on stream recently, according to some Russian analysts there is still a shortage of around 30% of cardboard in the domestic market. The situation is also complicated, Russian cardboard is not always of high quality and does not meet product shelf life requirements. Many food producers are still being forced to find alternative packaging suppliers, including in Southeast Asian countries, modifying their ranges to support more cost-effective products.
At the same time, the ban on the supply of printing materials and products to Russia in the fifth round of EU sanctions against Russia has become bad news for the industry, leading to interruptions in the supply of important raw materials and products. The latter are used in Russia for the manufacture of various types of packaging, including varnishes ( pigments ), adhesives, solvents, bases for the production of stickers. It also creates major challenges for the production of all major types of packaging, forcing major packaging customers to switch to cheaper domestic counterparts.
Until now, many Russian food and consumer goods manufacturers have begun developing temporary product packaging designs until an alternative supplier is found. For example, Sady Pridonya, one of Russia's largest fruit juice and baby food manufacturers, will produce products in minimalist packaging due to shortages of cardboard and varnish, according to an earlier statement.