Largest producer of cellulose short fiber in the world, the Suzano (SUZB3) became, on Thursday (1), leader of the Brazilian market for tissue papers (segment that includes toilet paper, handkerchiefs and paper towels) by taking over the segment’s operation in the country from Americana Kimberly-Clark.
The acquisition of US$ 175 million (approximately R$ 880 million) includes a factory in Mogi das Cruzes (SP), the Neve and Grand Hotel brands and the license for the limited time use of the Kleenex and Duramax brands.
With the purchase, Suzano, which entered the tissue paper segment in 2017, now holds 24.3% of the Brazilian market. “Suzano’s consumer goods business started as a startup. We started from a Powerpoint in 2017. We had no brand or distribution channel. We will (now) take the lead in the market. It’s still a smaller business compared to the others, but what we’ve built is a highly celebrated feat”, says the company’s director of consumer goods, Luís Bueno.
GROWING WITH GDP
Suzano’s bet in this sector is to grow as per capita GDP and basic sanitation advance. According to the executive, Brazil has a per capita consumption of this product of 6 kilos per inhabitant/year. In Chile, this number is 14.5 kg, and in the United States, it reaches 26 kg.
Another possibility for the company’s expansion is the premium market. Bueno claims that this segment has been growing uninterruptedly over the last 15 years, even in periods of recession – while the sector in general has advanced 5% in the last five years, according to Euromonitor. “We are seeing a migration from single ply papers to double ply papers and, in the last five years, to tri ply papers. We believe that this movement will continue in the coming years.”
Until then, Suzano had an installed capacity of 150 thousand tons per year divided into five plants – in Belém (PA), Maracanaú (CE), Imperatriz (MA), Mucuri (BA) and Cachoeiro de Itapemirim (ES). The new factory will increase this capacity to 280 thousand tons, an increase of 87%. The group has also announced that it intends to build a new unit in Aracruz (ES), which will require R$ 600 million in investments and should increase production capacity by over 60 thousand tons per year. The work, however, still depends on the approval of the company’s board of directors.
For the time being, the Mogi das Cruzes plant should already allow for better logistics in the South and Southeast regions. “We will be able to serve our customers in a more agile and faster way. We will always have a plant close to the customer. With this, we will improve the level of service and reduce the cost of freight”, says Bueno.
Still according to the executive, there should not be an overlapping of brands, and the arrival of Neve to the company’s portfolio guarantees complementarity. Suzano already operated with the toilet paper brands Mimmo, for retail, and Max, for “cash & carry” (a segment aimed mainly at companies). Neve, however, is positioned in a higher price range than the current Suzano brands. “We intend to maintain Neve’s price strategy and, with that, offer our customers in Brazil solutions for all pockets and desires.”
The information is from the newspaper The State of S. Paulo.
Source: Moneytimes
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