In Azerbaijan, the EBRD, with funding from the Small Business Impact Fund (SBIF), recently helped Altey LLC to create a roadmap for growth through a qualified business plan, laying out the foundations for the construction of a mini plant to produce kraft paper bags and meet the growing demand in the country for more sustainable packaging solutions.
Gunduz Nabiyev, Director of Altey, says, “We are moving to a new stage in terms of our operations. We have become a manufacturer, which gives us the opportunity to diversify our client base, increase the company’s competitiveness, and develop and grow the business.”
Altey cooperates with many industrial companies in Azerbaijan, providing kraft paper on a wholesale basis. Over the past two years, the company has become one of the leading suppliers of kraft paper in the local market.
A guide to kraft paper
Most will be familiar with the unique traits and brown colour of kraft paper, which is manufactured to varying thicknesses depending on the purpose. The word ‘kraft’ originates from the German word for ‘strength’, and the paper is lauded for its high elasticity and tear resistant properties, making it ideal for use in packaging products that require durability.
Founded with the objective of getting in on this burgeoning and potentially lucrative market, Altey started out importing kraft paper into Azerbaijan from Russia in 2017; however, it was not long before the business was seeking additional supplies through contacts in Sweden and Estonia, with demand showing no signs of abating.
Indeed, aside from 2020 – which saw a pandemic-related dip – the volume of kraft paper imported by Altey increased year-on-year from the company’s inception – more than doubling in that time from 434 tonnes in 2017 to 1,070 tonnes in 2021. Over the same period, demand for kraft paper bags increased dramatically, as retailers looked to move away from plastics and began seeking greener, recyclable solutions that are less damaging for the environment and more attractive to consumers.
Advice and support from the EBRD
According to market research recently provided to Altey, the annual demand for kraft paper bags in Azerbaijan is 100 million and growing. The trajectory of that growth encouraged the company to plan for the construction of a mini plant in order to produce its own domestic supply and reduce reliance on foreign imports; a decision hastened by the impact of Covid-19 on global supply chains.
The company sought assistance from the EBRD’s Advice for Small Businesses programme
for the development of a business plan and consultation on the loan application process. “As a result of the project we were able to receive a loan, purchase the required equipment, become a member of Balakhani Industrial Park and start the production of kraft paper bags,” says current CEO, Ilkin Agazadeh.
The location of this new mini plant enables the company to make use of government benefits for residents of industrial parks, including subsidised electricity, gas and water, along with tax reductions.
The combination of these benefits, modern new equipment, and a degree of autonomy through maintaining its own production quotas, has enabled the company to offer high quality products at scale to existing and potential clients and grow organically, with turnover increasing by 22% since the EBRD project concluded. Indeed, it is commendable that, considering a crisis as seismic as the pandemic, Altey did not reduce its workforce, but actually created jobs through the new production facility.
Sustainable growth and business evolution
It is clear Altey has made huge strides, and Ilkin encourages aspiring entrepreneurs not to rest on their laurels when they have achieved success, but instead to “constantly seek out new development opportunities and ideas, to maintain ambition and stay ahead of competition and disruptors in the market”.
Today, Altey can count as its clients, restaurants, catering facilities, supermarket chains, fashion stores and more besides. What distinguishes the company from its competitors is a commitment to a fair and flexible pricing policy, despite price increases in the market after two local currency devaluations.
With plans to build a website, expand production and follow green trends, Altey’s continued growth seems all but assured.