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Catastrophically low” consumption characterises the Russian
market for tissue,
according to AO Harris Group International, the Russian offshoot
of the US engineering consultancy. At 2.5-3 kg/yr per capita,
not only is it barely a tenth of US consumption levels, but it
is far lower than that of the Chinese, whose per capita GDP trails
far behind that of Russia.
Harris sees rapid growth in the market in the years ahead, however,
it made clear at Tissue Russia. A paper co-written by Harris general
manager Gennadiy Berestetskij and chief engineer Aleksandr Kuleshov
forecast demand rising from current levels of less than 300,00
tons to 370,000 tons by 2010 and 530,000 tons by 2015.
The forecast if based above all on GDP growth, which is expected
to continue at 6-8%/yr. Other factors include the urbanisation
of the country, demographic growth (which has been improving in
recent years), the appearance of western-style retailers and the
growth of the hotel and catering sector.
To meet this growing demand, Russia will have to install at least
9- 10 tissue machines of 30,000 ton/yr capacity in the period,
the company said. This sounds relatively modest for a country
of 140 million people but to date there is very little high-quality
capacity in the country.
Syktyvkar Tissue Group has recently started up a 25,000 ton/yr
machine from Metso, while Syassky Pulp & Paper is just starting
commercial production on its 27,000 ton/yr Over Meccanica machine
(see separate article). And SCA is adding a third modern unit,
another 25,000 ton/yr machine from PMT Italia, at is greenfield
mill site in Tula.
Apart from these three machines, however, all published projects
are for small and/or second-hand machines. For example:
| • |
Altaikrovlia has installed a second-hand
machine, imported from Copas (Spain) that can make about 5000
tons/yr of base paper. |
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TBZ has rebuilt a 3.75 m machine, using Voith
technology, which can run at 600 m/min and make up to 14,000
tons/yr. |
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ATMCC has a new 5000 ton/yr machine from Korea’s
Kyoung Yong |
 In addition, Harris said, Chinese suppliers have delivered close
to 30 small machines (each with capacity of about 1 ton/day),
and up to 100 items of converting equipment.
Speakers and delegates to the conference returned time and again
to the low levels of consumption – and the poor quality – that
are features of the Russian tissue scene. How is it, Professor
Aleksander Smolin, director of technologies of paper and board
at the State Plant Plymers University asked rhetorically, that
a country with 140 million people has registered 150 million mobile
phones but doesn’t use tissue?
Oleg Bagautdinov, general director of BEF, found it hard to believe
the official statistics. Surely, he mused, Russia must be using
more tissue than shown by the published figures.
The answer, it seems,
is both economic and cultural. Russia suffers from the impact
of a vast and generally sparsely populated territory with inadequate
transport facilities. Even the main road from St Petersburg to
Moscow is mediocre by western – or modern
Chinese – standards. Once beyond these huge cities and their
immediate surroundings, movement of goods becomes painstaking
on appalling roads and as a result carries excessive costs.
 On the cultural side,
people simply do
not see the need for modern tissue products, though consumption
is rising fast in the big cities. Several speakers drew attention
to the Russian liking for show. A mobile phone or a luxury car
(of which there are plenty in St Petersburg and Moscow, two of
the world’s most expensive
cities) shows the user’s status. Patterned kitchen towel
or three-ply toilet tissue does not.
And Smolin drew attention to the long-term nature of investment
in tissue, something that makes it less attractive than the quick
turnover associated with high tech or property development.
Another explanation might be offered by a recent article in The
Economist magazine. It noted gloomily that some 60% of young Russians
want to work for the state. The spirit of enterprise, such as
it is found in the US or large parts of Asia, seems to be missing.
There was certainly little evidence of it at the conference, where
the meeting was dominated by delegates with feet firmly planted
in the centralised bureaucracy of the past.
MOSCOW POTENTIAL UNTAPPED
Consumers in Russia, with disposable incomes of 2-3 times less
than those in the
West, are just starting
to use tissue products such as kitchen towels, napkins and pocket
hankies as everyday household goods writes Greg Grishchenko. At
present, with an average salary of nearly $1000 a month (28% growth
from last year), the large population of the Moscow Region embodies
an untapped potential for the consumption of disposable products.
Product lines Kleenex, Lotus, Mola and Zeva, which have reached
maturity in Western Europe, are now being present at all Moscow’s
supermarkets and hypermarkets such as Auchan, Ramstor, Globus,
Sedmoy Kontinent and Azbuka Vkusa.
SOLFI HOME PLANS
NEW JV
TISSUE
LINE
 
Solfi Home is
seeking foreign investment for a 6 million programme at its plant
in Omsk to add a new 10,000 ton/yr line for virgin tissue and
to extend the company’s converting capacity.
The company has
raised 2 million of its own and is seeking 4 million in foreign
investment, according to general manager Dmitry Gruzdev.
Solfi, which
has been in business
since 2000, currently has annual sales of €4.8
million. It employs 180 people making napkins, toilet rolls and
kitchen towels for the markets of the Urals, Siberia and the
Far East. Its plan is to use the new papermaking line to develop
its production of finished product to 2400 tons/yr of napkins
(up 25%), two-ply production of toilet rolls and kitchen towel
to 4900 tons/yr, paper handkerchiefs to 720 tons/yr and tissues
to 2000 tons/yr.
Annual consumption
in the target markets is around 95,000 tons/yr, according to
Gruzdev. Of this, 70,000 tons is made in the region, with the
rest coming mainly from other parts of Russia. In addition, some
tissue is imported from China and Europe but this is restricted
by the high logistical
costs and customs duties.
 
“From our point of view, the current state of the Russian
market for sanitary and hygienic paper production provides an
excellent foundation for joint-venture projects such as this
one,” says Gruzdev. “Our successful operational experience
in the Russian
market, an understanding of the prospects and the ability to
provide full loading for the new capacity in the short term and
the financial strength of the skilled European investor are the
key to the success of the new project.”
The company,
which has industrial
space of 5600 m2 and 1000 m2 of offices, benefits from having
its own 1260 kW electric power substation and is planning a project
to connect to natural gas supplies. It also has the water supply
and drains needed for the expansion.
He estimates
payback on the project at four years from the date of first payment
on the tissue machine, pointing to the shortfall in local supply
and the current 8%/yr demand growth rates as keys to the viability
of the project. |
Toilet paper and
kitchen towels from multinationals SCA, Kimberly- Clark and Georgia-Pacific
are now competing with Syassky’s
Myagky Znak brand
that was recently upgraded to the world class level. Some stores
diversify tissue brand presentation by placing luxury products
on the shelves and economic ones in large bins nearby.
However, when you travel 50-80 km beyond the third Moscow ring
road (MKAD), the look of prosperity changes drastically. Luxury
brands disappear from the shelves, giving room to small domestic
suppliers, some of which are now gaining reputation by creating
their own brands and improving product quality.
 Of the estimated
400 small tissue producers in Russia, the strongest companies
were founded in the 1990s, when economic reforms started to kick
in.
OOO Maden-Torg, for
example, is a privately
owned company located in Noginsk, Moscow Region. Founded in
1999, the company
manufactures and
sells a variety of good quality tissue products: six types of
toilet paper, three of kitchen towels and four of pocket hankies.
Maden-Torg sells products mainly in Moscow and Moscow Region under
its own brand names: Belux, Family & Comfort,
and Evro Standart.
The company converts a wide range of domestic and imported virgin
and secondary parent rolls, operating Casmatic and Laysh equipment
from Germany and Israel.
The company recently
introduced a new package of two two-ply kitchen towels from recycled
paper under the name of Evro Standart New. With a name tending
to the pretentious (Evro Standart means European Standard), this
package carries some educational and application information.
TW
THE
NEW FACE OF RUSSIA?
 Young,
educated, polyglot and outward-looking, Anna Akhapkina – born
just a couple of years before the fall of the USSR – represents
a generation of Russians that grew up free from the straitjacket
of the past. And, coming as she does from a middle-class background
in cosmopolitan St Petersburg, she accepts as normal the benefits
of prosperity in an increasingly rich society.
Still living at home with her parents, she is not responsible
for the day-to-day purchases of toilet tissue and kitchen towel.
But she appreciates the higher quality products now appearing
in volume on the Russian market, whether three-ply luxury toilet
tissue or high-quality absorbent kitchen towel – “so
much better than cloth towels, though the thin ones are no good
when they get wet.”
The family doesn’t always buy these premium products – their
standard toilet tissue is the famous 54 meters brand – but
Anna appreciates them for their softness, colour, patterns and
perfume, even if paying the higher price makes little sense
to her. “It’s useless to spend so much money on
them but they are pleasant to use,” she says.
She also values the napkins that the family always uses when
dining: white or plain coloured for every day, patterned for
special occasions, eg when guests visit, or for seasonal celebrations
such as Christmas or Easter. She misses such amenities when
staying with friends whose families take a more budget-oriented
approach to the dinner table.
What she does buy herself is facial tissues and pocket packs
of hankies and here she goes for the fun approach typical of
young people in Western Europe and elsewhere. She loves the
patterns and colour now available on the market, even if the
pack she produced for our photo shoot, with its printed teddy
bears, was a gift from a friend in Latvia. Lady bugs are another
favourite, though flowers or simple patterns are better than
nothing.
Anna is clearly in a small minority, living as she does in St
Petersburg, one of the two most advanced consumer markets in
Russia (along with Moscow). She admits that her attitude is
not typical in Russia even among her own age group. But, the
industry hopes, she represents the future face of Russian tissue. |
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