Timur Irtuganov, Director General, AFWIER: “The Russian furniture industry has all of a sudden turned “from a Cinderella into a princess” of the timber industry over the past 10 years”

The Association of Furniture and Woodworking Enterprises of Russia (AFWIER) is a voluntary professional & civil society non-profit organization established in 1997 to consolidate the efforts of overcoming crisis phenomena in the furniture and woodworking industry and creating the necessary conditions for its recovery in the market economy. The Association comprises more than 100 various organizations—from industry-specific mass media and research & development institutes to furniture, plywood, and panel producers and woodworking companies. WhatWood Agency talked to Timur Irtuganov, Director General of the Association, to find out the details about the current situation in the Russian market of furniture and wood-based panels.

What is your opinion of the current situation in the Russian furniture market in general? 

We believe the situation is positive. Nevertheless, the past few months have made many furniture producers think hard and challenge themselves because they have felt a decline in sales since this May. It manifested itself both in monetary and in physical terms.

On the other hand, this could be a return to seasonal fluctuations that had occurred until the year 2019 inclusive. Please remember that the second half of spring is always a low season. The situation was usually beginning to improve only by late August. Let us see what happens with the seasonal fluctuations this year.

The state of the Russian furniture industry in general is a cause for celebration. Over the past 10 years, it has all of a sudden “turned from a Cinderella into a princess” of the timber industry. If we now look at individual sub-sectors of the pulp and paper industry, which is usually done in mechanical woodworking, it is obvious that furniture is number one in the timber industry by production volume.

It was absolutely impossible to imagine such a picture 20 years ago. Now we have what we have. The industry with the greatest number of production processes is finally in the first place by production volumes. It means that we are selling and increasing the timber industry turnover not through roundwood or timber blanks but by making a product with the highest added value. We could certainly say the same about the sub-sector of the pulp and paper industry that includes, for instance, chemical processing. But it has its own specific features, after all, a certain number of enterprises and employees. You’ve got to feel happy for our timber industry—furniture producers and adjacent sectors.

Remember that only a few years ago furniture production was figuratively called a “towed industry”, primarily implying its dependence on the construction sector. Now, however, we have a “tug industry” that tows panel production behind it, gradually demonstrating its significance for other timber industry sectors as well.

The numbers speak for themselves. It is gratifying that over the past few years, the furniture production has been growing almost simultaneously and equally in both physical and monetary terms. So we are growing not only due to inflation and price hikes. The rate of furniture production in units even slightly surpasses the rate of its production growth in rubles. This means that the production volume and material consumption are actually growing, which loads adjacent industries, fills the budget, and increases the number of jobs. We can also see a greater number of enterprises officially involved in furniture production.

What were the causes of such an active growth of the Russian furniture industry?

Firstly, it was the increasing purchasing power of the population. It was even growing in crisis times. The only period of decline was in 2014–2015. We lost a significant share of the market then because of the exchange rate spike. Furniture is not an essential commodity: it is not a food or a medicine. So the sales volumes frequently decreased during the crisis. But the last time it happened was in 2014. There was a rise during all other periods in general. We have never had declines of production volume again.

Starting from 2015, we have been consistently reclaiming our market share from foreign furniture suppliers. The last time imported goods accounted for more than 50% of the Russian market was in 2014. To be precise, 52% of imported vs. 48% of Russian furniture was sold. By the early 2020s, the situation began to stabilize: the share of imported furniture reduced to 41–42%, while in 2022–2023, it dropped further to 22–23%. The share of import decreased considerably as the market was growing, which boosted the demand for Russian furniture. Furniture sales prove that people have started spending more money on such goods.

We have also become less dependent on the sales of newly built homes. The Association has been working a lot with the Ministry of Construction and DOM.RF on the initiative that would make it possible to buy furniture with a home loan. I hope it will become a law soon. So we have analyzed materials and discovered that the furniture market is by 10–12% dependent on the market of newly built homes.

It has to be noted that the quality of Russian furniture has undoubtedly improved too, in terms of both practicality and design. Huge sums of money were invested in enterprises’ production facilities. When we were talking to our Chinese colleagues in 2019 and 2021, we emphasized the enormous investment in technical upgrading of Russian furniture companies across all price segments—from economy-class to premium furniture. This undoubtedly enhances buyers’ positive attitude towards Russian producers.

Read the full interview in Russian Timber Journal 07-2024.