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Glassware in Russia for 10 years
04.04.2016

The last ten years Russian container glass market experienced a rapid rise, sharp drop and recovery fading into stagnation.

At the dawn of the twenty-first century, the market of glassware was one of the fastest growing and promising: the growth rate of real volumes of production steadily outpaced the rate of growth of the Russian industry as a whole. It is not surprising that in the first half of 2000 years funds were actively invested in the construction of new plants or modernization of existing facilities.

However, in 2006 year when the growth rate of glassware production has exceeded the 25%, the experts predicted the imminent onset of stagnation. The volumes of production in real terms were almost equal to the consumption volumes, and exports volumes to the imports volumes.

 

The following year it was impossible not to notice the signs of saturation of the domestic market. The growth rate fell sharply. Production grew not by 25% as a year earlier but only by 18%, exports volumes exceeded imports for the first time. In 2008, the glassware production reached the record levels (at that time) to 13.5 billion units, and then the global economic crisis reached Russia... For the first time in the last 12 years the volumes fell. Not much. Just by 16%. Not so much if we take into consideration that a couple of years ago the growth rates of production was 18%. However, the crisis provoked the bankruptcy and closure of several enterprises. As a rule these were old plants with outdated equipment and technologies. So to say the legacy of the Soviet past. Ballast. And then... Then container glass market began to rebound sharply: new modern enterprises opened, the production volumes grew, and in 2012 year the Russian container glass industry broke its own record by releasing more than 14 billion units of glassware. However, the threat of overstocking did not go away. Some time it was possible to neutralize it by reducing imports and increasing exports. Moreover the Russian government launched another anti-alcohol campaign. And then a systemic crisis in the economy became apparent.

 

As a result, the production of glassware began to decline and it has been declining for the third year in a row. If in 2012 year 14.124 billion units were produced, so in 2013 year 12.648 billion units, in 2014 year – 12.108 billion units, and in 2015 year – 11.869 billion units. As in 2009 year the market decline was accompanied by the bankruptcy and closing of glass container plants. But if six years ago only old small enterprises were closed, now large glass holdings are closed that have been once in the top ten of the market leaders.



The production of glassware in 2006 – 2015 years

 

One of the trends of the last years which is observed the second year in a row is the growth in the glass jars market share in total production of glassware. Something similar occurred in the crisis year 2009. Since the end of 2008 the rate of decline in demand for glass bottle was significantly higher than the rate of decline in demand for the jars, and this was the sign for glass container manufacturers. However, if in 2009 the share of glass jars grew by 14.47%, so in 2015 its share reached 15.5%.

 


The share of glass jars in total production of glassware in 2006 – 2015 years

 

But it's bad with the bottle market. Production volumes have been falling for the third consecutive year. The only thing that calms – is the fact that the rate of decline is being gradually reduced. In 2015 Russian enterprises released 10.03 billion units of glass bottles that is 4.66% less than a year before.

 

It is not surprising. After all, the main consumer of the bottle, the alcohol industry, is going through hard times. It was caused by rising prices because of higher excise taxes, ban advertising on television and radio, the introduction of a time limit of alcohol sale, the falling incomes of people, and much more...

As a result, the consumption of beer and its production has been steadily falling for the ninth consecutive year. If in 2007 year 11472.15 million liters of beer was brewed in Russia, so in 2015 year only 7265.76 million liters was brewed, that is 36.6% less than at peak production.

 


Beer production in Russia in 2006-2015 years, million liters


The similar situation is with vodka and other strong alcohol. Legal production is falling, although not as consistently as beer, but still the trend is. If in 2007-year Russian enterprises produced 1234.29 million liters of cognac, vodka and liqueur-vodka products, so in 2015 year 735.18 million liters was produced, that is 40.4% less.

 


Production of strong alcohol in Russia in 2006-2015, million liters



Things are a little better with champagne and sparkling wines, although the last five years a negative growth is also recorded in this segment. Moreover, this segment is 4 times less than a vodka segment, and 45 times less than a beer segment, totally 171.4 million liters by the end of 2015.

 


The production of champagne and sparkling wines in Russia in 2006-2015, million liters


In general, the reasons of the current production recession in the industry are purely economic. Life is getting more expensive, prices are rising but salary is not. And when the Russians had to choose: to be well-fed or drunk, the natural choice was made.