By Andrei Skvarsky.
Smurfit Kappa, a Dublin-headquartered multinational packaging manufacturer, has boosted its presence in Russia by buying out a Moscow-based packaging producer, according to British financial adviser Moorgate Capital.
“We are seeing increased interest from our packaging clients in acquiring in Russia,” a statement from Moorgate quoted Nicholas Mockett, head of packaging industry mergers and acquisitions at the London-headquartered consultancy, as saying.
“There are two key reasons. First, the growth in packaging in Russia is stronger than elsewhere in Europe. Secondly, for some acquirers, other emerging markets have become lower interest due to their own issues, for example the political situation in Turkey, uncertainty over debt levels in China, the recent corruption scandals in Brazil, and the economic woes in South Africa,” Mockett said.
Though Russia’s gross domestic product dropped to less than $9,000 in per capita terms by 2016 from $15,000 in 2013, “you may well expect it to recover”, Mockett said. He cited a forecast by The Economist that the country’s GDP would grow by 1.5 per cent in 2017.
Mockett pointed out that Moscow has a permanent population of more than 12m, which is bigger than the population of Belgium, Greece, the Czech Republic, Portugal, Sweden, Hungary, Austria, Switzerland, or Bulgaria.
“This means there is a concentration of consumers who are typically demanding more and more packaged goods, including luxury items, which is good news for packaging manufacturers,” he said.
Smurfit, which has operations in 34 countries on three continents and 45,000 employees, already has three plants in St Petersburg. The company, which chiefly manufactures paper-based packaging, recorded sales of 8.6bn euros for 2016.
Soyuz, the Moscow firm it has just acquired, produces corrugated packaging for a range of sectors and employs about 300 people.
“Russia is an attractive growth market for us with exciting potential,” an article on British website PackagingNews quoted Pim Wareman, chief executive of Smurfit Kappa North East Europe, as saying.