REVIEW OF THE DAIRY PACKAGING MARKET, 2009

The polymer packaging sector has remained one of the most stable during the crisis, as food consumption declines much more slowly than, for example, spending on clothing or durable goods. Most participants in the packaging market interviewed by Newchemistry reported either stable volumes or only a slight decrease compared to 2008.

In other words, “people didn’t start eating less” - and this explains the sector’s relative stability. When it comes to a traditional product like milk, its share in the consumer basket has even increased. Even in the event of a major economic downturn, demand for milk is unlikely to fall significantly - if anything, it tends to rise.

Consumers are trying to save money by purchasing more affordable products. Since packaging makes up a significant part of production costs, this creates opportunities for optimization.

The food industry has been shifting from more expensive materials to flexible packaging, and this trend has only strengthened during the crisis. Dairy producers note that consumer demand in regional markets has shifted toward more affordable products, and this includes major players in the Russian market.

LEADING PRODUCERS MOVE INTO THE “ECONOMY” SEGMENT

In April 2009, Wimm-Bill-Dann (WBD) began producing milk in soft polyethylene packaging (in FINNPACK). Its plant “Sibirskoye Moloko” in Novosibirsk, which previously filled products only in Tetra Pak, and the Omsk plant “Manros-M,” which already had equipment for soft packaging, launched additional FINNPACK filling lines.

According to Anton Kaltygin, manager of WBD’s Novosibirsk office, milk packaged in FINNPACK will cost 30–40% less than the same product in Tetra Pak. This allows the company to compete in the lower-priced segment of the local market. By introducing milk in FINNPACK, the plants hope to increase overall sales.

Other major market players are following a similar strategy. For example, Unimilk confirms a shift in demand toward essential products since late 2008 and reports growing sales of milk in soft packaging. According to spokesperson Yulia Goncharenko, Unimilk has long produced milk in soft packaging under the brand “Selo Lugovoe” and plans to increase production volumes.

WHERE CARTON DIDN’T TAKE ROOT

Consumer preferences for certain types of dairy packaging vary not only based on income dynamics but also by region. For instance, customers of the Stavropol Dairy Plant (MKS) continue to prefer milk in polyethylene pouches regardless of the economic situation.

According to MKS Deputy Director Lyudmila Trufanova, five years ago the plant attempted to introduce “Pure-Pak” carton packaging to diversify its product line. However, the purchased line eventually had to be mothballed: consumers simply refused to buy milk in carton, even after the price was reduced to match that of soft packaging. As a result, to sell the milk already bottled in carton, the plant had to halt its FINNPACK filling line for a week.

The FINNPACK packaging materials purchased by the plant are used for an aseptic FINNPACK filling line and for UHT milk packaging. This is the first FINNPACK aseptic line in southern Russia.

Moscow is traditionally the largest market for milk in carton. However, recently even there the trend toward increasing consumption of milk in soft packaging has become noticeable. Many consumers believe that carton (“Tetra Pak”) contains sterilized milk, while pouches contain “real, fresh milk.” The economic crisis has further influenced this shift: consumers increasingly choose products in more affordable packaging.

“AN ISLAND OF STABILITY”

Thus, even under unstable market conditions, investments in flexible dairy packaging - which are relatively modest - can be fully justified. In recent years, this market has shown a steady upward trend, and the crisis, combined with growing dairy consumption, may even act as an additional catalyst for its development.