Coming from a distant past, investing in the future

With a population of 144,168,000 inhabitants, Russia represents a market with a high potential for the growth and development of tissue products consumption. The availability of wood – basic raw material for the production of paper – is three times greater than that of Europe, and make this country a veritable “green gold” mine, capable of sustaining the development of the converting industry.

Maura Leonardi

Syassky Pulp and Paper Mill is located 140 km northwest of Saint Petersburg and is today the second largest tissue producer in the Russian market. Founded in 1928 on the right bank of the Syass River, the company has always been a producer of cellulose. Since 1968 Syassky PPM is also present in the tissue market.

IN 1993, THE COMPANY BECAME A JOINT-STOCK COMPANY, and today Syassky PPM represents the emblem of the growth and modernization process of the tissue industry in the northwest region of Russia. 2680 qualified employees work at the industrial facilities, which extend over a surface of 410 hectares and produce sulphite bleached and semi-bleached cellulose from softwood (fir trees), chemical-mechanical wood pulp from aspen chips, bathroom tissue, sanitary-household products, fodder yeast used in agriculture. A diversified production sustained through a commercial policy aimed at the sale of raw material (wood pulp, cellulose, etc.), cardboard, reels and finished product, supplying not only many regions of Russia and the CIS countries but also Estonia, Finland, Yugoslavia, Bulgaria, Lithuania, Romania, Iran, Slovakia, Hungary and England.

WHAT MAKES THIS COMPANY AN “UNCONTAMINATED” INDUSTRIAL OASIS, protected from the frenzy of modern times is a policy of “conservation” and care for its technologies.

Technologies which have been preserved in the course of the years and which are a symbol of the long tradition of cellulose and paper production. In every corner of the facilities, you breathe a sense of belonging to the company – primary source of employment of the small village. And the historical memory of its origins is well present in every company department and also to the management team, which follows a policy of development and growth, guaranteeing employment to the specialized operators who have been working in the company for years.

IF ON THE ONE HAND, A SOCIAL POLICY IS FOLLOWED, on the other, the growth strategy of the company is very clear, and it is one oriented towards an increase in converting market share through technological development aimed at increasing production capacity. A strategic plan that entails important investments to enhance the tissue products segment – the company’s core business – which is growing steadily in the Russian market.

THE CONSTANT MONITORING OF THE MARKET SITUATION and the analyses conducted on the consumption potential of Russia and the CIS countries, have confirmed the possibilities of development of this segment. Per capita consumption of tissue products in Russia is presently 1.2 kg and, considering the increase in the domestic consumption registered in these last few years, the average growth rate forecasted for the future is of 5-10% per year. These are comforting figures that validate the expansion strategy developed by the company. And it is not only the introduction on the market by some European producers of colored two or three-ply rolls – qualitatively superior to the single-ply roll typical of the Russian market – that has stimulated the company’s management towards the quest for a better quality of the finished product. “The competition on the tissue market has led our company to constantly improve the quality characteristics of our products,” states Loudmila Epifanova, First Deputy Director of Syassky PPM. In 2003, a promotional program for “The Soft Sign” brand of products was implemented. This brand represents a complete line that includes toilet rolls, kitchen towels and table napkins, and the campaign has brought market success and consolidation of the brand. 30% of sales is absorbed by the two main distribution platforms, Moscow and St. Petersburg. The single-ply roll remains for now the most widely sold, but consumption habits are changing. Proof of this change is also the gradual diffusion of the consumption of kitchen towels. “Up until a few years ago, the kitchen towel covered a negligible share of tissue products. Following a strong promotional campaign carried out last year by a European company, consumption of this product has increased in a very interesting way,” explains Maxim Nikitin, Brand Manager of the Group. “For this reason, we believe that the promotional activity of our brand should be enhanced” continues Nikitin. “Presently, we invest 10% of our sales turnover in advertising activities, addressed both at decision-makers in the realm of retailing as well as towards the final consumer, through advert posters and in the future also through television commercials.”

THE INFLUENCE OF EUROPEAN PRODUCTS IS DETERMINING A NEW MARKET SCENARIO thanks also to the increase in the purchasing power of consumers, who are increasingly more attentive to the quality of the finished product. Today, production of the single roll, strong during the Soviet period, becomes a limit for the conquest of new market shares. Indeed, the political, social and economic transformation that has taken place in Russia in the course of the last fifteen years has “widened the confines and the views” of management, who has become increasingly more oriented towards an increase of the core business of tissue products. From here stems the creation of a business plan for development, which includes important investments aimed at modernizing the machines present both in the paper mill and in the converting section. Production output is of 9,000,0000 one-ply rolls and 2,500,000 two-ply rolls per month and production does not entail warehousing.

PRESENTLY, THE PAPER MILL’S PRODUCTION IS ENTRUSTED TO TWO PMS BY WALMSLEY (former Beloit) which have been in operation since 1968. These guarantee a production of 36,000 tones per year through a technology that has now become obsolete and incapable of satisfying the growing demands of the market, both in terms of quantity as well as quality.

The quality of the paper produced by these machines is of 25/30 gsm, a standard that has now been exceeded and is no longer requested by the market. This has determined a need for innovation, as is testified by the purchase of a new Crescent Former PM supplied by Over Meccanica. The new machine will increment total production by 18,000 tpy, at a speed of 1500 mpm against the 600 mpm of the two machines in operation up until today. The new PM will start production in 2007. And there are novelties also in the realm of converting and packaging: for the converting side, a complete EXTRA5 line by Fabio Perini S.p.A. has been chosen, which guarantees the company a high quality two-ply product and represents the highlight of The Soft Sign.

The packaging section bears the Casmatic brand name (KPL Packaging S.p.A.) and allows to produce toilet rolls in four or six-roll packages and kitchen towels in two-roll packs.

ESSENTIAL AND NECESSARY INNOVATIONS, the turning point of a company with a long history, determined to attain important aims for the future. •

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