"Our target customers for the plant will be the Russian food and beverage industry," Hannu Alalauri, managing director, Stora Enso Packaging told CeeFoodIndustry.com. "However, it is the major growth of the beverage industry in Russia that is the main driving force of packaging providers such as ourselves at the moment. Further to this, secondary packaging for alcoholic beverages, in particular beer, has provided tremendous opportunities in recent years and we expect that this sector will continue to drive expansion for us."
Since Russia came out of its economic downturn of 1998, the market for beer has grown faster than anywhere else in the world. According to figures from Scottish & Newcastle, the beer market grew by 6.5 per cent in 2003, bringing the total volume of domestic sales to 7,400 million litres. Local per capita consumption of beer was 51 litres in 2003 and the market leader Baltica, had a market share in 2003 was 33 per cent.
"The focus for this company's Russian markets is quite different to that of our Nordic operations," said Alalauri. "There, our packaging operations are driven by demand from the food industry, whereas in Russia demand is currently being driven by the beverage industry. There is a limited demand for food packaging in this market, but it is still in a start-up phase for us."
The mill is expected to reach full production capacity within the next six to eight months, as, according to Alalauri, the demand for the packaging is being met by existing customers that are currently growing their operations.
"We have built this mill to meet the needs of our customers in this region of Russia," said Jorma Turpeinen, managing director, Stora Enso Packaging VR. "We will be supplying companies within the immediate geographical area, as the long haul transportation of this kind of packaging makes it economically unviable."
Although Stora Enso would not disclose the names of the businesses they will be serving, the Novgorod region currently includes in excess of 1,600 businesses, 85 per cent of which are small to medium in size. Of this total food and beverage processing is currently one of the largest sectors.
Stora Enso's first industrial investment in Russia was the Balabanovo packaging mill inaugurated in 1998 at Kaluga, some 100 kilometres southwest of Moscow. That mill was expanded in 2002.