Market Trends of Russia Plastic Packaging Industry
This section covers the major market trends shaping the Russia Plastic Packaging Market according to our research experts:
Pandemic Drove the Demand for Plastic Flexible Packaging
- There is an increase in the demand for flexible plastic packaging for food, beverage, and pharmaceutical applications for product packaging during COVID-19. People are resorting to panic buying and bulk stocking due to the fear of lockdowns. More people are ordering daily staples and fresh food through online channels, which increases the demand for flexible plastic packaging. The Russian Government has asked the food industry players to ramp up production to avoid supply-side shocks and shortages and maintain uninterrupted supply. FMCG companies are responding by demanding more flexible plastic packaging products.
- The demand for flexible plastic packaging in the pharmaceutical industry will remain strong as hospitals, pharmaceuticals, and PPE manufacturers respond to the crisis. Demand for household, healthcare, and medical products is not expected to decline dramatically, and retail distribution of these products through online distribution is expected to increase. This will increase the demand for flexible plastic packaging solutions for timely raw materials and finished products to their respective end-users.
- The forecasts state that demand for pharmaceutical packaging will continue to rise. The government has planned to increase the export volumes by 2030 and to use more internally-produced preparations in Russia itself. To end the black market for counterfeit medications, all medication packaging is labeled with a crypto code and a data matrix code or RFID tag for each saleable unit from January 2020.
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Food Packaging and Online Trade are Driving the Market
- Food production and processing represent a crucial component of Russia's economy. The food market is one of the most profitable industries in Russia, ranking among the top worldwide. Grocery sales in Russia have been consistently growing, with online food retail as one of the primary contributors to the market revenues during past years. Accelerated growth of the online segment brought new players onto the market, with VkusVill and Samookat ranking as the fastest-growing online food retailers in 2021.
- During the self-isolation period, Russian consumers increased their spending on online food orders, and preferences adjusted to the lockdown reality: delivery Club and Yandex. Though the coronavirus outbreak has facilitated the high demand for online food delivery in Russia, the market is set to keep the positively developing trend of the packaging need for the food and beverage industry.
- The somewhat fluctuant food exports from Russia have displayed an overall positively developing trend over the past decade. According to Agroexport, the historical high was reported in 2021 at over USD 37 billion, about seven billion Russian rubles greater than the export value of such commodities in 2020.
- The forecasts from the renowned Gaidar Institute predict an increase in online trade, which will soar to SUR 2.7 billion (around EUR 37.8 billion) by 2024. Morgan Stanley goes further, forecasting a turnover increase of SUR 3.5 billion.
- Moreover, the outburst of the pandemic has also contributed to the growth of online food delivery, leading to the demand for plastic packaging. The coronavirus (COVID-19) outbreak has actively contributed to Russia's online food sales growth. The country's capital and the Moscow Oblast were projected to be the leading region in the segment, with nearly SUR 82 billion in online food sales turnover. Saint Petersburg and the Leningrad region followed, while for other listed cities, the estimated sales value was far below the two leading areas.
- Due to the increase in demand for food, the need for packaging, specifically hard plastic, is also experiencing growth. More and more Russian households are having takeaway meals delivered to their homes by delivery services, which has also increased the need for packaging to achieve this. With the inherent growth in online trade, more packaging materials such as sturdy paper and cardboard are also needed.
- Despite a relatively weak economy, the primary consumer industries still increased production. This ensures that Russia is also set to remain an attractive market for packaging in the future. According to the prognoses from NK Pak, the industry association, demand is growing by between three and four percent annually. The Russian government is sponsoring the construction of processing facilities for packaging.
