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Russian Market of Aluminium Foil

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Russian Market of Aluminium Foil Russian Market of Aluminium Foil I. Tikhomirov, Deputy Director of RUSAL’s Packaging Division Conference: «International day of package» Moscow, International Exhibition Centre Krokus- Expo, June 2006 What is RUSAL? The Company was established in March 2000 by a merger of a number of largest smelters and alumina refineries in CIS. RUSAL is third largest aluminium and alloy producer in the world. RUSAL exports its products to consumers in 50 countries around the world. RUSAL accounts for 75% of Russian and 10% of world aluminium output. RUSAL’s Central Office is based in Moscow. 47 000 employees work for the company. 2 From Siberia to the world economy We operate in 9 Russian regions and 13 countries, we sell our products to consumers all around the world RUSAL Rostar RUSAL Achinsk RUSAL Rostar-Vsevolozhsk RUSAL Dmitrov RUSAL Krasnoyarsk RUSAL Mosmek RUSAL Boksitogorsk RUSAL Bratsk Cathode Plant, Linshi, Shanxi Headquarters in Moscow RUSAL Germany * RUSAL Sayanogorsk (Dusseldorf) * RUSAL Structural RUSAL Sayanal * shapes RUSAL Novokuznetsk RUSALAmerica Corp. (New- * RUSAL China (Beijing) York) * BCGI (Guyana) RUSAL Japan (Tokyo) RUSAL Singapore ACG (Friguia) Nikolayev Alumina* Refinery CBK RUSAL Queensland Alumina Ltd. ALSCON Armenal RUSAL Australia Mining, processing, cathodes * Production Smelting Representative * offices 3 What is RUSAL? Full cycle of aluminium production from bauxites and alumina to high value-added consumer goods RUSAL-Managing Company Alumina Division Cans Division Aluminium Division Packaging Division RUSAL-Sayanal More about the company RUSAL-Armenal www.rusal.ru 4 Application fields of finished foil In food industry 1. Confectionary industry – packaging of chocolate candies and figures, bar chocolates, chewing gum, biscuits 2. Dairy industry – unit-dose package for oil and fat products, cottage cheeses, processed cheeses, capping of dairy products, prepacked in plastic cans Tobacco industry Pharmaceutical industry Electrical engineering Automotive industry 5 The structure of aluminium foil consumption in Russia in 2005 Packaging Other 12% 1% Fo o d Commercial 33% 14% Househo ld 5% Ph a r m a c e u ti c a l Tobacco 6% 29% In 2005 principal demand was generated by the plants in food and tobacco industry Total consumption volume of these industries made up 62%. 6 Major producers of aluminium foil in Russia Ural Foil Production volume 2005 = 56,6 ths.t. Saint- Petersburg Foil Sayanal 0 1020304050 2005 , ths. t. 2005 2006 7 Tobacco industry In 2005 Russia produced 405 bln. cigarettes, a record number since "Donskoy Peemctma/Imperi 2002 (390 bln.). Nonfilter Other, "Nevo Tabak", Tabak", al Tobaco cigarettes (without foil package) - 725t 218t 536t International, 55 bln., there is a downtrend. 798t High concentration: 10 leading producers account for 95,6% of "Balkanskaya products supplied to the market (a Zvezda"/ Plilip Altadi, 914t year ago, in 2004 – 92,8%). Morris, 3888тн About 80% of production is Japan concentrated in Saint-Petersburg Tobacco/Petro, 2437t A large 84% share of products comes from abroad ВАТ, 2538t Gallaher Russia is one of the two countries group/Ligget, displaying a positive dynamics of Dukat, 2450t growth (the other is China) 8 Tobacco industry Growth in demand for masked tobacco foil, t 16000 14600 13900 14000 12800 13200 11400 11900 12000 12000 10430 10000 8000 6000 4000 2000 0 2000 2001 2002 2003 2004 2005 2006 (прогноз) 2007 (прогноз) What could provide for such growth? Increase in share if light cigarettes, as well as slim format Increase in share of cigarettes in hard pack Reduction in share of nonfilter cigarettes, caused by the change in consumer preferences 9 Dairy Industry Growth in demand for foil with thermal varnish,t 4500 4120 4000 3750 3410 3500 3126 3000 2600 2800 2500 1900 2000 1800 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 (прогноз) (прогноз) The industry uses foil with thermoadhesive (thermal varnish) coating for vaccuum packing of consumer cans while packaging liquid products, as well as other types of foil, masked with parchment or water and fat resistant paper for unit dose packaging of butter, cottage cheeses and ice- cream Yogurts, sour-cream, puddings, processed cheeses etc; During 2005 sales volumes of premium yogurts increased by more than 10%, and by experts’ estimates the capacity of this market is 600 t per month. Sales leaders are Danone (20%) и “Vim-Bill-Dan" (27%) 10 Confectionary industry • Russia is the 4th in the world • Major producers provide for 90% of confectionary output in Russia, • By forecast in future the highest rates of growth will be witnessed in the chocolate market: by the end of 2006 its volume will be 460 ths. t, and in 2010 it will increase by 30%,up to 600 ths. t 2002 2003 2004 2005 2006 Volume of foil consumption in confectionary 4,4 4,6 4,7 4,9 5,1 industry, ths.t. Plants in confectionary industry use the following types of packaging materials: Plain foil (hard, soft, soft with stamp printing) Foil masked with imitation parchment (with stamp printing) Foil masked with laminated paper Coloured foil, stamped foil ( with stamp printing) Combined material «Safol» of BATL brand 11 Lacquered foil for food industry Growth in demand for lacquered foil 1200 1155 1005 1000 960 860 910 750 800 800 700 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 (прогноз) 2007 (прогноз) Consumption growth is expected in 2006 due to development of processed cheeses market. At present the share of processed cheeses in total production volume accounts for 40%. The forecast for demand in foil for processed cheeses will make up 500 t. keeping the dynamics of 10%-15% with tendency to import substitution According to the forecast the chocolate market will grow at the highest rates: by the end of 2006 its volume will reach 460 ths. t, and in 2010 it will grow by 30%, up to 600 ths. t Demand in foil for packing beer bottles will make up 155 t. Total demand for lacquered foil 0,009-0,012 mm thick will make up 1055 t. by 2007 12 Household foil – characteristics of В2С and В2В markets Stable growth of consumer Strict quality control welfare Applying new technologies in Constantly growing pace of life production in big cities In food industry: applying new recipes, new materials to make Commitment to healthy way of products life Demand for high quality, cost- Tendency to demand more efficient products convenient goods, helping to save time Heightened quality awareness Demand for premium and innovative products 13 A novelty in the Russian market The primary trend in Aluminium Food Container aluminium packaging is Growth retains all the positive of Demand for Aluminium Food characteristics of foil: Containers Barrier properties Hygienic properties Light and space-saving package Corrosion resistance Possibility of quick disposal Thanks to «fold memory» Aluminium Food Container has another very important property: strength 14 Substitute Materials 1. Metallized paper and film Low market cost of substitute materials In particular, 22,5% of total use of combined material for packing cigarettes in the Russian market 2. Laminated paper At present its share makes up about 70% of production output 3. Polypropylene, multi-layer polyolefin material, cellulose with moisture resistant resins and special chemicals 15 Trends and development peculiarities of foil-consuming industries Stable industry growth, including food industry = development potential of foil market approximately up to 52,4 ths.t by the end of 2006 Reduction in content of metal in materials based on aluminium foil – shift to the area of small thickness: 6-9 microns, which is basically consistent with the world trend Breaking into the Russian markets of transnational companies (PM,ICN Ph., Nestle, Kraft foods etc.) Toughening requirements for the quality of surface, accuracy of geometrical dimensions, level and stability of mechanical properties Buyers are geared to low prices, which accounts for active application of paper-base and polymer-base materials– substitutes in tobacco, dairy, confectionary and meat industry The market develops under conditions when reduction or exclusion of import duties is expected as Russian Federation enters WTO, which makes competition more tough 16 Achievements in the area of packaging materials In April 2006 the first production lot of masked water-base foil coloured with lacquer for sliding, has been successfully tested at Sayanal. Bright shades of blue, turquoise, orange, grey and red colours were produced, which will make an addition to the external design of cigarette packets. Using water-base lacquers in cigarette production is innovative and is not yet widespread in the world industry. Applying water-base lacquers in production reduces the amount of harmful emissions. Using masked water-base foil in tobacco industry lessens the risk of packages having an impact on the products. Sayanal plant is the only Russian foil producer for tobacco industry. Products were certified and received qualifications from a number of international tobacco companies. 17 Growth Strategy www.rusal.ru tel: 7 (495) 745-88-75, 745-88-78 fax: 7 (495) 745-88-76 [email protected] 18.
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