Why Russia is one of the world’s largest and most dynamic packaging markets
With some 146 million inhabitants, a well-educated labour force, high income and demanding consumers, Russia is a very attractive sales market. Following crisis years, perhaps as a result of EU sanctions, this massive country is currently experiencing a general boom:
Exports forecast an increase
Experts forecast for 2018 an increase of 2.3% in the real earnings of Russians and retail sales are expected to increase by 3%. At the same time, the demand for innovative, optic and haptic attractive and high-quality packaging for Russian goods continues to increase. New regulations regarding information on packaging and on recycling are an additional boost. Know-how and modern machinery are consequently highly in demand.
Investment in the domestic Russian economy requires high-tech machinery and know-how
In order to satisfy these demands, Russia imports large quantities of technology and material: in the first eleven months of 2017 processing and packaging machinery to a value of some Euro 341 million was purchased from Germany alone – 13% more than in the previous year. In order to further stimulate the domestic economy the Russian government has been pursuing a policy of subsidisation and import substitution. Key industries are generously subsidised, approximately Euro 3.5 billion is planned for agriculture alone in 2018. Exports are increasingly being replaced by home-produced goods, whose quality in turn is improving. By increasing domestic production the Russian packaging industry has been growing for years – between 2015 and 2020 by 8.5%.
In various sectors the country is already the market leader in Europe – for example in flexible packaging, paper and cardboard and hard plastic. Russian manufacturers are also directed towards innovative processes and technology for such measures.
Strong key industries: food and drink, pharmaceuticals and cosmetics
The most promising key industries in Russia for the processing and packaging industry include agriculture and food, drinks (non-alcoholic), pharmaceuticals and cosmetics. In the food sector, the first eleven months of 2017 saw an increase in milk products of 7.6% compared with the previous year, in meat products of 5.8% and in confectionery of 2.3%. The ambitious young middle class in particular are demanding not just convenience products but are becoming more health aware which is reflected in the general decrease in alcohol consumption. At the same time the non-alcoholic sector is continually growing (+5.6% in 2017), a particular favourite being mineral water. Russians place high value on their appearance and health which is also reflected in the high growth rates in the pharmaceutical (+11.2% in 2017) and cosmetics (+7% in 2017) industries.
Why investing in Russia:
146 million inhabitants, a demanding consumer base who are increasingly ready to purchase goods, as they have a higher income and are well educated
Increasing demand for innovative, high-quality packaging
Demand for technology and know-how from outside Russia
Capacity in key industries is being increased: strong growth particularly in the food and drink, pharmaceutical and cosmetics sectors
The Russian packaging market is growing and is already the leader throughout Europe in some market sectors