In 2008, the following four facilities were the major producers of stretch film in Russia: “VarioPak” LLC, “Regent-Stretch” (Group of Companies “Regent”), “Lava” LLC and “Package & Service” LLC.
Description of Stretch Film Producers
Regent-Stretch

Address: Bld. 19-11, Smirnovskaya street, Moscow 109052
Tel.: (495) 956-79-97
Website: www.stretch.ru

Regent-Stretch is one of the largest Russian manufacturers of stretch film from linear low-density polyethylene (LLDPE) for shipping package of cargoes placed on pallets.

The production facility was founded in 2001. Nowadays, the company has 4 flat-die machines. The total area of production, storage and office space owned by the company is 13,500 square meters. The number of employees is 182 people. The production shop and warehouse are located in the city of Electrostal. The company owns a wide network of branch offices throughout Russia. Regent-Stretch’s film complies with the state sanitary and epidemiological rules and standards.

In 2006, the Quality Management System of Regent Holding Company (Regent-Stretch is a part of this Company) successfully passed re-certification for ISO 9001 Standard conformity.

The range of Regent-Stretch films includes 6 formulations developed for different film applications and based on the best “price-quality” ratio. The company’s client service department helps to select the most appropriate type of films and to adjust pallet wrapping equipment for achieving its best performance based on the client requirements for pallet packaging.
 
“VarioPak” LLC

Address:  Bld. 3, Volkhonskoe Road, Saint Petersburg 198323
Tel.: (812) 320-71-18
Website: www.variopak.ru

Limited Liability Company “VarioPak” was established in 1999. It supplied large batches of polyethylene shrink films, stretch films, polypropylene and lavsan strap tapes, polyethylene bubble damping films, polymer returnable boxes, trays, pallets, etc.

In the middle of 2000, the company became one of the major players at the market of polymer shipping package. The most impressive accomplishments were made in the production and distribution of polyethylene stretch films.

As the scale of operations expanded, a decision was made to install successively five capacious process lines (the so-called “cast-lines”) to make polyethylene stretch films with both manual and automatic winding and to produce non-oriented (cast) polypropylene film.

At present, the facility has about 150 job places, including personnel of modern production and technical laboratory and corporate research center.
 
“Package and Service” LLC

Address: Bld. 2, Kudrinskoe Road, Pushkino, Moscow Oblast 141205
Tel.: (495) 933-60-40
Website: www.pack.ru

Company “Package and Service” and Production Group “Nova Roll” have production facilities with advanced equipment and distribution network allover Russia, 12 daughter companies (with the same name), 4 dealers and a logistic company with its own fleet of vehicles. Since 1993, the company has been operating at the Russian market, offering flexible packaging materials to consumers. Its products include packaging scotch tapes, stretch film, polyolefin and shrink films, bags, etc. There is a high demand for scotch tape with logo as its use facilitates the solution of various logistic and marketing issues.

Almost all products are manufactured by the Industrial Group “Nova Roll” located in the Pushkino City, Moscow Oblast. The plant has a single distributor – Company “Package and Service.” In 2008, the company celebrated its 15-th birthday. The company developed first Russian adhesive tapes and is manufacturing them successfully. Company “Nova Roll” is the only facility in Russia with complete cycle of scotch tape production. Now the company is using only Russian source materials which are fully adjusted to the Russian weather conditions.  
 
“Lava” LLC

Address: Bld. 53, 25 Oktyabrya street, Vyazma, Smolensk Oblast 
Tel.: (481) 315-25-78
Website: www.lava-polimer.ru

”Lava” LLC was established at the beginning of 2004. It is located in Smolensk Oblast, occupies a land piece with the area of 1 ha and owns 3863 m2 of production space. The amount of its paid-in authorized capital is RUR 89,010,000.

The main activity – production of multi-layer polymer films: stretch films with the thickness range from 12 to 30 microns, any width and winding, based on LLDPE (only made by the European manufacturers - DOW, Polimer Eur.) shrink films, green house films, masking films and others on the basis of PVD with the thickness range from 40 to 300 microns and any width.

Today, the company owns flow-die and blow machines made by the Italian Company "BIELLONI CASTELLO SPA" and a series of automated winding frame “CLASS ENGINEERING” with the production output of approximately 8 thousand tons of stretch film and 2400 tons of PVD products per year.

All products manufactured by the company are subject to continuous quality control in the testing laboratory of the Open Joint Stock Company MIPP-MPO “PLASTIC.” The Company holds certificate of conformity and sanitary & epidemiological conclusion. It has a well-established procedure for incoming control of raw material quality.

All experts and working personnel attended training courses in Italy and Russia under the leadership of Italian and German experts. Facility technologists, working continuously on the development of innovative formulations and new products in cooperation with the European manufacturers of source materials, have academic ranks and degrees.
 
Import

Despite substantial domestic production, the volume of stretch film import into Russia is also significant. In 2008 vs. 2007, import increased by 27%. However, according to experts as early as in 2009 the growth of domestic production and negative macroeconomic factors should cause reduction in stretch film import. 
 
The growth of stretch film import in monetary terms is higher than its growth in physical terms. In 2008 vs. 2007, import increased by 43.9%. It demonstrates that the costs of imported stretch films are growing.

The key importers of stretch film into the Russian Federation are Ukraine, Germany and Finland. In 2008, their shares in import made up 49.5%, 9.9% and 8.5%, respectively. Other major countries importing stretch films into the Russian Federation include Israel, Poland and Lithuania. Their shares in 2008 ranged from 3.1 to 4.5%. The share of other countries in stretch film import into Russia was less than 3%.

Though for most types of flexible package the Ukrainian manufacturers are unable to satisfy their domestic market requirements, the volumes of import of Ukrainian stretch films into the Russian Federation are considerable and in 2008 they even increased.

Stretch films are imported mostly to two regions – Moscow and Saint Petersburg. Their share reached 71.3% and 10.2%, respectively. The reason is that these cities have more stringent requirements to packing exterior and manufacturers are more interested in new types of packaging products, e.g. flexible packages.

In addition, large recipients of imported stretch film include Perm, Kaliningrad and Moscow Oblasts. Their share in the overall import volume in 2008 ranged from 2% to 4%. The share of other regions was less than 2%. It is important that in 2008 import into Moscow increased significantly – from 52.8% to 71.3% in total imports.

Numerous large whole-sale companies located in Moscow buy large batches of imported stretch films which later are distributed throughout Russia.
 
Although import shipments at the beginning of 2007 and 2008 were characterized by similar dynamics, in the second half of 2008 import of stretch films had some specific features. In October 2008, import volume shrank significantly and, despite some growth in November and December 2008, the volumes of the previous year were not achieved. Certainly, the global economic crisis had impact on the nature of import shipments in the second half of 2008. Its influence on the Russian economics became evident in the end of 2008. So, regardless of some “revitalization” of import supplies in November and December 2008 facilitated by the growth of retail sales on the New Year eve, it is most likely that 2009 will be marked by the reduction in stretch film imports into the Russian Federation, e.g. as a result of domestic production growth. 

Export
 
The volume of stretch film export from Russia is very modest. The reason is that the Russian market of stretch films is at the stage of growth and its large portion is covered by imported products, while Russian manufacturers sell all their products in the domestic market and have no need to find additional market outlets in foreign countries.
Though the domestic production of stretch films is growing, the level of export does not make up its significant portion. The Russian market of stretch films has been growing at higher rates than production volumes. Almost all Russian stretch films are exported to Kazakhstan and in 2008 its share in exports was 74.5%. Stretch film export to other countries has an occasional nature and is characterized by low volumes.

Market Trends
 
Today the Russian market of flexible package is one the most rapidly growing sectors. The evolution of production, the penetration of foreign manufacturers and the gradual transition to Western package and transportation standards dictate that it is necessary to use novel materials, such as stretch films.

In the last several years, the growth of stretch film consumption in Russia made up about 15% per year, i.e. twice higher than in Europe.

In Russia the market of stretch film is growing mainly due to the development of additional production facilities, upgrades of the operating companies and the growth of film consumption by existing clients. Primarily, it applies to the rapidly evolving companies in food industry and related sectors.

The displacement of shrink film with stretch film so far has not taken place on a large scale. Since the domestic feedstock is so inexpensive, the costs of shrink film are 1.5 times lower than those of stretch film (source material for it is not produced in Russia yet). However, despite a higher price, the use of stretch film saves up to 30% (because of lower material consumption) vs. shrink film. It’s worth noting that some Russian producers of source materials are making attempts to launch linear polyethylene production. In early 2008, pilot batches of Russian polyethylene showed up at the market. They were produced by such companies as “Kazanorgsintez,” “NizhnekamskNefteKhim,” etc. Thus, there is a hope that the introduction of Russian source material will reduce prices for stretch films. This may lead to a wide-scale transfer from shrink to stretch film.

Anyway, in 2008 the market of stretch film approached the stage of saturation. Domestic production and import have reached their ceiling, and some Russian manufacturers are beginning to look for market entering channels in the adjacent countries, primarily Kazakhstan.

However, the global economic crisis which has affected severely the Russian economy has also impacted the market of stretch films. Its influence was the most remarkable in the period of October-December 2008.

In the near future, the volume of import of stretch film intro the Russian Federation will be reducing both due to the market saturation with domestic film and the devaluation of Russian Ruble which has already resulted in significant price growth for imported films. The growth of domestic production in 2009 is expected to slow down as a result of market saturation. In near-term future, Russian manufacturers of stretch films will have to search for ways to enter international markets which will stimulate export growth.
 
The article is based on studies performed by Research Company Abercade