High Tech Meets Paper

Wirtschaftsforum: Mr. Stark, you are the CEO of AIP Advanced Industries Packaging GmbH and have been with the company since 2018. In these seven years, there have been not only turbulent times with COVID and the war in Ukraine, but also major challenges. How has AIP dealt with these crises? Were they a turning point, or has the company emerged stronger?

Rinat Stark: The pandemic and the war in Ukraine have significantly influenced the development of AIP. However, the company had already experienced a very eventful history before and has had to master many upheavals.

Wirtschaftsforum: Can you describe key development steps? 

Rinat Stark: The company was founded in 1990 in Northern Europe. The first production site in the Netherlands started operations in the 19th century. At that time, the company included various firms from the pulp and paper sector. The year 2005 marked a turning point: The Russian company JSC Segezha Pulp & Paper, an expert in particularly robust sack kraft paper, became the owner and led the corporate group into a new era. The paper in question is a niche product; the market is approximately 30% smaller than that of kraft paper. The Russian company encountered serious difficulties, was sold multiple times – most recently in 2014 to a large Russian investment conglomerate from Moscow named Sistema. Another turning point occurred because of the war in Ukraine. Since then, it has been impossible to continue sourcing paper from Russia. Given this background, the shareholders decided to sell the company to a pool of European investors – marking the birth of Advanced Industries Packaging.

Rinat Stark: Today, we exclusively have production facilities in Europe. A factory in Turkey was sold about a year ago because Turkey, unlike Europeans, continues to obtain cheap Russian paper. As a result, today the group includes six companies from the Netherlands, Germany, Denmark, Italy, the Czech Republic, and Romania. In the past, we always worked with Russian paper and were part of an integrated supply chain. Since 2023, we are no longer part of this supply chain, which has significant implications for our business concept.  

Wirtschaftsforum: How big is the company after these numerous changes?

Rinat Stark: We now employ around 550 people and generate a turnover of about 150 million EUR. As number two in the European market, we have a market share of about 10%. For comparison: the number one in this overall very small paper market has 45 production sites and a market share of over 50%. 

Wirtschaftsforum: AIP has a turbulent history; we are also currently living in economically and politically unstable times. What are your expectations for market development in the coming months?

Rinat Stark: The market is at rock bottom; 2022 was the last good year — a record year. Our development strongly depends on the respective product segments. 50% of our turnover comes from paper bags for cement; we also offer bags for animal feed, seeds, and dairy products. Each individual market segment is developing differently. Since the construction industry is currently in a crisis, the market for cement and other building materials has collapsed sharply. Additionally, our business is about quantity, about volume. Even if individual segments develop positively, this does not have too great an impact in the long term given the difficult situation in the construction industry. Overall, the market thus presents itself as very challenging for us.

Wirtschaftsforum: What characterizes the overall product program and how can AIP distinguish itself from the competition? 

Rinat Stark: It's not just about products for us, but about understanding the desires and needs of our customers. Service plays a pivotal role. None of the bags we produce feature our name or logo. Each bag is custom-made according to customer specifications and marked with the customer's logo. Together with our customers, we work on the design and perfect dimensions. Our technicians visit customers on-site to develop optimal solutions. Customers expect not only high-quality bags at the right time but products that really work for them. As a partner to our customers, we offer unique solutions. For example, in the Netherlands and Denmark we produce under cleanroom conditions. Our focus today is more on bags for food, animal feed, and chemical products; in these areas, we can convince with complex products and corresponding services.

Wirtschaftsforum: How does AIP as a manufacturer of paper bags deal with the issue of sustainability? 

Rinat Stark: We view sustainability as a natural obligation. Our sustainability journey started in 2017; since then, we've been working with the Ecovadis platform to achieve specific sustainability goals and improve year by year. We have all the important certifications, audits, and lifecycle assessments and are positioned to deliver exactly what customers want today and in the future. The problem is that customers often don't tell us exactly what they really want. For large cement manufacturers, bags play a subordinate role at the end of the day. While sustainability is increasingly discussed, in practice, it often plays a subordinate role in procurement decisions, and in many cases, it's not even mentioned in product specifications – ultimately, price remains the deciding factor. This shows that sustainability has not yet arrived as a central priority in the industry.

Wirtschaftsforum: Where do you see AIP in the future? 

Rinat Stark: Quality and service will continue to be important unique selling points. While many providers can manufacture bags, not many can produce technologically complex products like we can. What happens next will depend on the plans of the owners. The last two years have been tough and it was all about survival. But difficult times often bring out the best in people – that's what we've experienced. We are proud of what we have achieved. People trust us, and that motivates us.