Smurfit Kappa boosts Russian presence with Soyuz deal

Smurfit Kappa has acquired Russian corrugated packaging company Soyuz for an undisclosed fee, reinforcing its position in the region.

Based in Moscow, Soyuz produces corrugated packaging for a range of sectors and has approximately 300 employees.

There are attractions in the Russian market for packaging manufacturers – a large country with over 144 million people.

GDP per capita is under US$9,000 – that fell from the 2013 high of US$15,000, in the post-sanctions era.

In the long term, investors may expect GDP to recover, particularly as sanctions are lifted and oil prices increase.

Smurfit Kappa has three plants in Saint Petersburg, Russia producing paper-based and Bag-in-Box products for various European markets.

The deal could establish Smurfit Kappa as the leading international corrugated packaging supplier in Russia.

Pim Wareman, chief executive of Smurfit Kappa North East Europe, said: “I am delighted with the acquisition of Soyuz and welcome its employees into the Smurfit Kappa Group.

“Russia is an attractive growth market for us with exciting potential. We are pleased to expand our footprint in this market and in particular within the growing Moscow region.”

From a raw materials perspective, Russia is thought to hold about a quarter of the world’s wood reserves and has an active timber industry of around US$20bn per annum including the pulp and paper industry.

Nicholas Mockett, head of packaging M&A at Moorgate Capital, told Packaging News: “Typically, in emerging markets, when we see GDP growth packaging outperforms as discretionary spending often includes Consumer Packaged Goods or FMCG. Soyuz is particularly well placed to service Moscow with its population of 12 million. This can be important in corrugated packaging which is ordinarily not shipped long distances. As the market matures, products are likely to become more sophisticated, with more added-value and hence higher prices.”