Andrey Efanov, the production director of the Novo offset factory, also considers the competitors’ plans logical. According to him, the demand for packaging is stable and growing along with the volume of consumer goods. At the same time, he notes that Novo does not plan to enter the packaging market, considering the niche of color magazines to be promising for itself. Larisa Prokopyeva, the chairperson of the board of directors of Evalar (a major manufacturer of bioactive additives), says that the Novosibirsk printing house Harmens has become one of the main suppliers of packaging for the company in recent years. She welcomes the decision to build a printing plant to expand production. “Our need for packaging is growing rapidly, and we are ready to increase orders from Harmens,” Prokopyeva said.

In 2007, the publishing and printing company Harmens will begin construction of a printing plant with a capacity of 100 million A1 sheets per year, said the company's general director, Yuri Vereshchagin. Harmens has already received a 4-hectare plot of land near the Tolmachevo airport for a long-term lease with the right to purchase and is currently conducting design work. The plant is planned to be put into operation in 2008. Vereshchagin estimates the project's payback period at 4-5 years. By 2011, the company's turnover will reach $18-20 million, the general director believes.

Investments in the project will amount to about $20 million, says Vereshchagin. It is planned to attract investors to finance the construction of the plant. Vereshchagin declined to name potential partners, stating that negotiations are currently underway and are expected to be completed by the end of 2006. According to him, he plans to retain a controlling stake in the new enterprise and will offer the rest to investors.

Harmens has already attracted a strategic investor to develop the business, says Vereshchagin. From 1998 to 2002, the company's shareholder was the West Siberian Venture Fund of the EBRD, which invested about $1.5 million. After the project was completed, the fund sold its stake to companies close to the managers of Harmens. "With the EBRD, we have acquired extensive experience in working, preparing reports according to international standards, business plans," the CEO explained.

Currently, Harmens produces consumer packaging for food, pharmaceutical, tobacco, household chemicals and perfume factories. The printing house's production volume is 36 million sheets per year, the businessman says. "The printing house works non-stop 24 hours a day, but we still cannot satisfy the growing needs of our customers, and new customers are contacting us," he says. The consumer packaging market in Siberia and the Far East is growing rapidly, currently estimated at $60-70 million, and by 2011 its capacity will be $100 million, Vereshchagin noted. Currently, Harmens' share of this market is 6%, and with the introduction of the new plant it will increase to 15%, he believes.

Experts consider the Harmens project to expand packaging production to be promising. There is a huge shortage of cardboard packaging in Russia, says Anatoly Chernovol, vice president of RAO Bumprom. Russian manufacturers cover only a third of the enterprises’ needs, and $1 billion worth of packaging is imported from abroad per year, he explains.

Harmen's chooses packaging