Why this is important to Wisconsin businesses: Sustainability, convenience and shelf life are among the trends driving the new types of packaging needed in the market.
The global market for packaging equipment is developing toward the emergence of new, high-performance machines with an ever-increasing share of automation, which reduces the influence of the human factor in the packaging process. In Russia, the share of manual labor in the industry is high, but due to the presence of leading world manufacturers, it is declining.
Packaging equipment for the food industry includes dispensers, capping equipment, wrapping machines, form-fill-seal packaging machines, skin and blister packaging machines, heat shrink equipment and labeling machines.
Analysts predicted that the industry's growth would reach 3-4% in 2020 and remain at the same level over the next two to three years. Given the situation with COVID-19, actual growth may be significantly less; on the other hand, the food industry is one of the least affected by the pandemic, so the demand for packaging equipment may persist.
Above-average growth rates are especially likely for packaging equipment for breakfast cereals, snacks, semi-finished products and high-quality chocolate products, as well as sweet pastries and bars. In addition, soft drinks are becoming increasingly popular. In Russia’s largest cities, consumers are conscious of their health and tend to buy more bottled water and functional and enriched soft drinks.
In 2018, the value of packaging equipment imports for Russia’s food industry amounted to $734.8 million.
In physical terms, most equipment is imported to the Russian Federation from China (about half of the total volume); however, in value terms, the share of Chinese products is only 7%, because they are much cheaper than European equipment. The leading positions in the export of packaging equipment to Russia in monetary terms are held by Germany (30% of total exports) and Italy (27%). The top 10 supplier countries also include Lithuania, Poland, the Netherlands, France, Switzerland, Denmark and the U.S.
The packaging equipment market is developing under the influence of the following factors:
- a decrease in the proportion of packaging, driven by sustainability concerns;
- the growing popularity of packages such as pouch packs, sachets, stick packs, etc. due to a focus on convenience;
- increased demand for smart packaging using electronics, microsensors, authentication platforms and the Internet of Things;
- increased standards for environmental friendliness of packaging;
- demand for products with an extended shelf life, which requires special types of multilayer packaging with high barrier properties; and
- reduced thickness of films while maintaining all the necessary properties by using new technologies.
Accordingly, the need for specialized equipment to work with such packaging is growing.
The most important factors affecting the choice of equipment by customers are:
- speed of filling and packaging and high performance of equipment;
- the maximum degree of automation in order to eliminate the human factor in the packaging process;
- vertical packaging as the fastest and most reliable method of packaging;
- reliability, maintainability and affordable after-sales service;
- energy efficiency of equipment;
- conditions of purchase: deferred payment, leasing, discounts (under normal financial conditions, consumers prefer European equipment with a higher residual value); and
- increased labeling requirements.
About 80% of all products are packaged in single-layer, low-density films (LDPE and BOPP). The share of barrier films (multilayer polymers with increased moisture, light and air impermeability) is 5%.
In conclusion, it should be noted that the packaging equipment market is affected by problems associated with environmental pollution and waste disposal. In 2019, Russia proposed to ban plastic bags at the legislative level. Over time, plastic packaging may be replaced by more environmentally friendly biodegradable plastics or paper.
In summary, there are opportunities for Wisconsin companies to sell their products in the Russian market, including:
- Exporting packaging equipment for the Russian food processing industry
- Localizing the production of packaging equipment within the Russian Federation, with the aim of easier access to the Russian market and obtaining a significant market share
One of the first steps when entering the Russian market is to visit the Rosupak trade show. In addition, to successfully enter the Russian market, it is recommended to conduct market research, analysis of competitors and a search for potential business partners.