An ongoing dispute between Russia’s major domestic canmaker, the Arnest Group, and Poland-based canmaker Canpack has put the sector through turmoil, writes Eugene Gerden. 

Canpack had faced legal proceedings, but these were halted on 19 July, as the parties decided to settle their dispute outside court.

General director of Canpack Russia, Arsen Davidyan, said the initial reason for the filing of the application to the court by the Arnest Group was “the desire to reconsider the commercial terms of the current contract”.

He said he was counting on “constructive negotiations” and resolving the conflict “as soon as possible”.

However, the past few weeks have been difficult for Canpack’s operations in Russia. The Russian Federal Bailiff Service (FSSP) had confiscated the assets of Canpack LLC on 2 July following a claim from the Arnest Group, the current domestic leader in the Russian beverage and aerosol can market, and its subsidiary United Breweries Holding, which also now owns the former assets of Dutch brewery Heineken in Russia. 

The claim was based on what Arnest alleged was “a sharp unilateral reduction in the supply of aluminium cans from Canpack, an inflated price for the [ends] purchased by the company in China, as well as a number of imposed services and unfavourable logistics”.

A writ of execution to requisition the assets was issued by the Arbitration Court of the Stavropol Territory on 2 July 2024. 

As part of the judicial act, the FSSP had seized a total of RUB3 billion (US$34 million) in assets from Canpack LLC. However, on 19 July the requisition was lifted. According to the local business newspaper, Vedomosti, this was because the companies had decided to resolve their dispute by an “extrajudicial procedure”.

Since the beginning of 2024, Canpack has faced three claims, according to the file of arbitration cases. As well as the claim from Arnest and United Brewery Holdings, two were from the Samara Metallurgical Plant (SMZ: a former Russian asset of US company Arconic, which in 2023 was acquired by Industrial Investments LLC). Industrial Investments had wanted to recover more than €4.4 million from Canpack’s subsidiaries, but on 11 July it also abandoned the claims. 

All interim measures imposed on Canpack by the Arbritration Court from all claimants were lifted on 19 July.

Russian analysts believe the current disputes could also be the result of tightening competition in the Russian beverage can market and the possible ambitions of the Arnest Group to become the market leader and see its last major rival withdraw from the market. 

Canpack remains one of the largest manufacturers of cans in Russia with capacity of about 2.5bn cans per year (compared with 5.5bn cans produced annually by the Arnest Group). 

Canpack operates two beverage can plants in Russia, at Volokolamsk and Novocherkassk. Sales at Canpack Packaging LLC in 2023 increased by 17% over 2022 to RUB26.4 billion (US$307m), with net profit of RUB4.5bn ($52.3m). Canpack SA, based in Poland, is owned by the US-based Giorgi Group and amongst its global operations in 16 countries became the second-largest producer of beverage cans in Europe. Its global sales in 2023 were $3.7bn.

Canpack SA was contacted for comment, but declined.

The Arnest Group, owned by Alexey Sagal, has been growing its market share in the past few years. In September 2022, the group acquired the Russian beverage can business of the US-based Ball Corporation. This included three canmaking plants in the Moscow, Leningrad and Chelyabinsk regions. A year later the Russian division of the Dutch brewing company Heineken was acquired by the group, which began the active development of its local business. 

In 2023, the group’s sales increased by 0.3% from 2022 to RUB11.2 billion ($130m). Net profit was RUB574m ($6.7m), up from RUB259m ($3m) a year earlier. 

Despite sanctions, the situation in the Russian canmaking market has generally stabilised in recent years. Roman Chekushov, director of the department of international cooperation and foreign trade of the Russian Ministry of Industry and Trade, said Russia has managed to completely replace imports of aluminium cans in the domestic market. 

“We have replaced imports by 100% within a year. All the aluminium cans on the shelves are now of our production,” Chekushov said. Prior to 2023 about 70% of all aluminium cans in the Russian market “were of US origin”, he added. 

With its growing domestic dominance, the Arnest Group is also planning an expansion of its capacities. Last week, the company announced plans to launch a third line at the beverage can at in Ulyanovsk by the end of 2025, and if demand continues, a fourth line in 2026. The plant was in the planning stages at Ball before its Russian assets were sold in October 2022. The plant started up in March 2024 and its current capacity is 1.5 billion cans. According to Vedomosti, the expected capacity could be 3bn cans per year, and the total investment in the plant could exceed RUB20bn. 

Alexander Isaev, chief executive of Arnest Packaging Solutions, commented: “The plant in Ulyanovsk can accommodate four production lines, two of which have already been launched, and we are ready to equip and launch two in the shortest possible time. This will allow us to increase production by another 1.5bn cans, fully satisfying the Russian market by 2026.” 

The company also plans to complete a RUB1.3bn project in September to modernize end-making production at Naro-Fominsk in the Moscow region. After reaching the design capacity, the market will receive an additional 1.8bn CDL format ends per year.

The company said that an increase in volumes is planned through the development of its own production, and there are no plans for mergers or acquisitions of other companies.

Arnest Packaging Solutions operates four beverage can plants in Russia: at St Petersburg, Chelyabinsk, Ulyanovsk and Naro-Fominsk. Naro-Fominsk is the only producer of beverage ends in Russia.

According to the Russian Aluminium Association, in 2022 about 9bn aluminium beverage cans were produced in Russia which increased to almost 10bn in 2023. This year, according to the association’s forecasts, the overall output could reach 10.8bn units.