Huhtamäki to expand production in Alabuga SEZ and switch to paper from plastic in catering

The ‘Finnish Business goes Kazan’ Forum opened in Kazan on 17 October with the participation of president of the Republic of Tatarstan. The Alabuga Special Economic Zone presented its opportunities for investors during the Forum. The Finnish company Huhtamäki, a resident of the SEZ, shared its experience in organizing production in Russia and announced plans to expand production in the Alabuga SEZ.

The Forum was opened by Finnish Ambassador to Russia Mikko Hautala and President of the Republic of Tatarstan Rustam Minnikhanov. During his welcome address, the president praised the potential for the development of trade and economic relations between Finland and Tatarstan and noted some of the major production projects that are being implemented in the republic. These include the Huhtamäki disposable tableware and paper packaging factory located in the Alabuga SEZ.

Alabuga SEZ General Director Timur Shagivaleyev gave a presentation to the Forum participants about the conditions that the SEZ is offering to investors to establish and develop production facilities. Alabuga has set up world-class infrastructure, and a free customs zone regime enables major companies to import equipment on an advantageous basis. Companies in the SEZ are exempt from paying property, land, and transport taxes, and the profit tax amounts to only 2% starting from the first profitable quarter for a period of 5 years. Residents have invested a total of more than USD 5 billion in projects in the SEZ. “The companies that come to Tatarstan invest initially and then continue their investments and create new projects because Tatarstan has an excellent business environment”, Shagivaleyev said.

Alabuga offers fully prepared world-class engineering infrastructure: from power supplies to high-speed Internet. There is a Ramada hotel for guests of the SEZ and the city of Elabugi, and the Three Bears modern cottage settlement has been established for employees who permanently reside in the SEZ. The Alabuga International School is the first school accredited according to the international baccalaureate system in the Volga region.

Yevgeny Osipenko, the general director of Huhtamäki Foodservice Alabuga, a resident of the Alabuga SEZ, spoke during the Forum. Huhtamäki is one of Finland’s oldest companies and has a presence all over the world with 78 factories and 17,000 employees. The company’s business exceeds EUR 3 billion annually. In 2020, Huhtamäki will celebrate its 100th anniversary.

The company decided to set up production at the Alabuga SEZ due to its need for logistical proximity to its anchor customers. When McDonald’s, one of Huhtamäki’s key customers, announced plans to build a large logistics centre in the Alabuga SEZ, the company realized that it would have to consider setting up production at the same site.

Osipenko reaffirmed all the infrastructural and logistics advantages of Alabuga and offered high praise for the quality of the work of the SEZ management company. “The SEZ helped us organize a business plan, and we successfully go through two stages: at the level of the republic and at the level of the Ministry of Economic Development. In 2014, we launched construction on a 3-hectare plot with utilities that were already connected and with a free electricity connection. The [companies] that have built in Russia understand what it’s all about – it’s a truly unique opportunity!” Osipenko said.

The factory in Alabuga opened in June 2015. It now has 12 production lines that operate around the clock. Huhtamäki already has plans to expand production at Alabuga. Osipenko said the second stage has already been designed and the company plans to put it into operation in 2020. Serious steps have been projected for the distribution of environmentally friendly products. “We have our own technological response to all the world’s calls and concerns about plastic. First, the products that are being produced in Alabuga today are environmentally friendly. We are ready to take further steps. In particular, we are currently working on the capability of switching the entire catering market industry from plastic straws to paper and from plastic lids to vegetable fibre-based lids. You can rest assured that we will only be bringing the latest green technologies to Tatarstan”, Osipenko said, concluding his speech.

The ‘Finnish Business goes Kazan’ Forum is a major annual business event for Finnish-Russian business in Russia. The Forum has been held since 2011 and has already established itself as an effective platform for discussing issues concerning Finnish-Russian cooperation and the implementation of joint projects.

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