Both foreign and Russian sources agree that the label industry in Russia has been expanding at a phenomenal rate: anything from 15 to 25 percent annually over the past five years. However, Etiketka 2008 served to confirm the fall-off already noted at the 2006 event. This time round, the 80 or so booths occupied just half a hall at the shiny new Crocus expo centre in the northern suburbs of the Russian capital. There was some finishing and labeling equipment being demonstrated, but none of the major narrow web press manufacturers showed machines – and most were conspicuous by their absence. Some observers have put this down to the global credit crunch, but others feel it is more likely due to exhibitors migrating to other Moscow print shows – notably the highly successful Poligraphinter.
Before coming to any conclusion, however, we may want to hear the reactions of some exhibitors.
Avery Dennison has been sponsor of the Russian exhibition for many years.
"In terms of results per dollar invested in the show, Etiketka gave us a better result than Drupa," says Leonid Kantarchyan, Gallus' sales director for Russia. "We met half a dozen of our biggest customers on the booth, as well as several interesting prospects – all that on a booth of just 600 square feet." Gallus, through its association with Heidelberg, has its own demonstration center in Moscow, giving it an edge over most of its competitors. Switzerland's Graficon, which specializes mostly in reconditioned Gallus presses, had also taken a booth at the show, and sales director Martin Erni was equally positive about the event: "We arranged meetings with a few important customers," he explained "That's all we needed to justify our presence, particularly in the absence of so many of our competitors." Dutch press manufacturer MPS was present but only through its local agent, and Germany's Werner Kammann, maker of screen and waterless offset presses, had its own booth, but no equipment. Kammann's Sales Manager Axel Bohlmeier was upbeat: "We are making a fresh start on the Russian label market," he said. "Yes, this show has been quiet but I don't regret being here. We have made useful contacts and we have been able to take time to discuss their needs with them."
BST International, maker of web guides and inspection systems, had a more specific objective in view: recruiting local technicians to raise BST's level of service in Russia. For Martin Müller, sales manager of Germany's Mühlbauer, the Russian market is a prime source of business for the company's RFID systems. "We have been in the RFID business for over 10 years, says Müller, "and we reckon to be the only country in the world which can supply total turnkey solutions for RFID label production. One of our biggest orders recently was to equip the entire Moscow subway network – used by over seven million passengers daily – with a contactless transit card system using the latest RFID technology."
From the early days of the show, Avery Dennison has been a sponsor, and this year its stand had pride of place in front of the main entrance. "Russia and the other CIS countries are a major and growing market for Fasson labelstock," said Nikolai Moskaltchouk. "At Etiketka we not only partner the show but also the label awards given out at a ceremony on the last day of the event."
UPM Raflatac was also present. Sales Manager (Russia) Artjom Shvedun summarized UPM's position on the market "Our head office and main plant are both in Finland, not far from the Russian frontier; we're old hands in this market." Asked about the impact of UPM's new labelstock coating plant in Wroclaw, Poland, due to come on stream later this year, Shvedun reasoned that it will have little direct effect in Russia, because Raflatac will continue to ship mainly from its Finnish plants. "However the new Wroclaw plant will give all our Russian and other European customers greater security of supply," he added.
Another specialty label substrate manufacturer was also waving the flag at Etiketka: Arjo Wiggins, whose Polyart face material (a synthetic paper billed as "combining all the advantages of paper and of film") is manufactured mainly in the company's Arjobex plant in Charlotte, NC, USA. Rollstock Sales Director Eric Schuller was present at the booth to explain: "Polyart sells well in Russia, but particularly in sheets. In roll form it is used mainly as a face material for labelstock, so many Russian label printers may be using it without knowing. Our objective in Russia is to promote the advantages of Polyart to the converter and the label end-user – who can then specify it when ordering their labelstock. Last but not least among Russian labelstock distributors at the show was Alexander Braun, a company which, despite its name, is Russian, having its own roll slitting and distribution centers in Moscow, Novosibirsk, and St. Petersburg.
For a decade or more the Gurus of the label business have been asking who will be first among the global labelstock producers to build a plant in Russia. In today's climate, with Russia's label market growth down to 5 percent or lower, and with Russian banks freezing and squeezing as intensely as their Western counterparts, it seems unlikely that either of the big players will announce expansion plans in Russia in the near future. This scenario is made even less likely by the recent reduction in Russian import duties, now 5 percent for paper based labelstock and 15 percent for filmics.
Etiketka attracts major label converters as exhibitors. Several world leaders were at this year's Moscow show, including CCL: Its Moscow and Saint Petersburg plants together house no fewer than 32 presses. Home-grown market leader Okil had taken a large booth, where its CEO Denis Okulov said that Okil's Saint Petersburg plant is currently churning out over 50 million square feet of labels per month on its 23 presses.
Other label converters exhibiting at the show included Imagency and Ekotek, both Russian, and – unexpectedly – a German-Turkish converter, Ybs Etiket. "Our head office is in Germany" explained Ybs' co-owner Cemal Yilancioglu, "but we recently transferred all our production to Izmir in Turkey, where we can manufacture to the same quality but with lower costs. Now we're looking to expand our marketing into Russia and Ukraine."
Russian roller coasters
The question in everyone's mind at the end of the show was: Will Russia's economy slump, and if so, how deep and for how long? The writing is already on the wall for share prices, which on the Moscow exchange have shed around two thirds of their value since May 2008. On the other hand, not many Russians are shareholders, and household debt is low. So far there have been few job cuts, and if it comes to rescue packages, the Kremlin's pockets, lined with the world's third largest foreign currency reserves, are deeper than those of any Western country.
Russian label consumption, a sure indicator of consumer spending, is now rising much less fast, if at all. But as the world's biggest producer of gas (and second-biggest producer of oil) Russia can probably afford to bankroll its way out of the worst consequences of the global crisis.