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2009 / JANUARY 2010 | Home |
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By Greg Grishchenko
 Bulgaria
occupies the Eastern part of Balkan Peninsula in South-Eastern Europe. The
country borders Romania, Greece, Turkey, Macedonia and Serbia. Since joining
the European Union in 2007 it has struggled to match the economic performance
of this elite club. Bulgaria (population 7.6 million) has not been spared the
effects of the international economic crisis and forecasts for growth in 2009
are distinctly lower than in any year for the last decade.
According to the Pulp and Paper Institute SA (Bulgaria), the paper industry
in the country is about 100 years old. However, real industrial pulp and paper
production began in 1952 with the construction of an integrated paper mill
in the town of Stamboliyski. During the next 40 years the paper industry grew
at a predictable pace under Soviet block planning strategy, producing mostly
kraft paper and corrugated board. All changed in 1990 after Bulgaria turned
to the market economy. The privatization process started in the 1990s significantly
reduced the number of mills and changed the array of paper products manufactured
in the country.
INDUSTRY GROWTH
According to the Pulp and Paper Institute, Bulgaria produced
approximately 31,000 tons of tissue products in 2008, just below consumption
of nearly 33,000 tons (Figure 1). Due to the recession, projected results
for year 2009 (based on current production level) show an output decrease
of nearly 17%. Tissue production still remains a bright spot in the Bulgarian
paper industry, however. Despite recent losses such as the Mondi Packaging
Stamboliyski mill (the largest paper mill in Bulgaria), which shut down
in March 2009, and the closure of the Mayr-Melnhof Karton plant in Nikopol
in 2008, the impact of the crisis seems to be not so severe for the nearly
2000 people employed in tissue manufacturing and converting.
There are three key domestic manufacturers of tissue paper and finished
products in the country (Figure 2).
The country’s leading tissue producer and converter Belovo
Paper Mill SA ($27.5 million in 2008) produced 16,613 tons
of tissue paper in jumbo rolls, toilet paper and kitchen
towel rolls, napkins and pocket hankies in 2008. Belovo uses
virgin and recovered fibre for its products, purchasing pulp
and high-grade waste paper from quality sources. The company
is dedicated to tissue manufacturing but also makes wrapping
paper, including machine glazed (MG) grades for the food industry. Belovo
employs 480 people and splits production almost equally between jumbo rolls
and ready product. The company’s Belana brand has over 30% market share,
matching similar product offers from the world multinationals in quality
and standing out in comparison with local tissue converters output. The
company has its own sales and distribution organization, with a sales office
in Sofia and distribution branch in Varna. Belovo was the first company
in the Bulgarian paper industry to acquire ISO 9001/2000 certificate in
2003. (See TW visit to Belovo Paper Mill overleaf). |
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It is hard to establish rank for number two and three players: Kostenetz
HHI SA and Sanitex Paper Mill Ltd. While Belovo mill has shown volatile growth
for the last seven years (with the exception of 2007 when production fell),
Kostenetz and Sanitex have maintained output at 7000 tons/yr.
Kostenetz is a Bulgarian public corporation ($9 million in 2008 sales) located
in the town of Kostenetz, not far from Belovo. The mill, which employs 348
people, has a history of papermaking going back to 1902. It produced nearly
6900 tons of tissue in jumbo rolls in 2008. However, the company’s potential
is very high to be an industry leader not only in Bulgaria but in the whole
Balkan region.
(Above, left to right)Gama brands in supermarket; Billa supermarket in Sofia; Clever kitchen towels (Billa supermarket private label); Sanitex – Sanitex brand in supermarket
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In May 2009 Kostenetz started up a new PM3, a 27,000 ton/yr 2.75 m trim Over
Meccanica crescent former tissue machine with sectional drives, steam,
vacuum, hood system and a three-ply combining winder. It replaces a PM
that went offline at the site in 1992. With a design speed of 1800 m/min, it
will make 1-3-ply virgin fibre tissue in a basis weight range of 13-34 g/m2.
At the time this report was written, the new machine was still running on a
trial basis. However, this $15.6 million project will add significant capacity
to the mill, which already operates a Voith machine for testliner and fluting.
Previously Kostenetz had heavily invested in its own industrial gas pipeline
almost 12 km long and modern cogeneration facility, which will operate on two
parallel modules with a total capacity of 34.6 MW. This new system when fully
operational will cover all the company’s electric and energy needs and will
generate income as surplus energy will be sold.
After completing all projects, the Kostenetz mill will become one of
the most modern operations in Europe with substantially increased output
and 25% reduction in energy cost per ton of produced tissue.
Sanitex Paper Mill (7500 tons of tissue in jumbo rolls
and finished product made in 2008, according to the Pulp
and Paper Institute) is based in Kostinbrod, 15 km west of the capital city
of Sofia. The company was founded in 2001 with private investment from a
Lebanese family and has grown into a diversified tissue paper supplier,
producing jumbo rolls, toilet paper, kitchen towels and napkins. Sanitex
currently operates two Italian made Toschi tissue formers. The older PM1
with a speed of 300-400 m/min and trim of 2.65 m makes 5,000 tons/year.
In 2006 the company started up PM2, a second-hand Toschi (now Toscotec)
unit built in 1980 and completely overhauled in 1987. With a trim width
of 2.65 m and an operating speed of 700-800 m/min, this has capacity of
around 10,000 tons/yr. Sanitex brand is a ubiquitous item in Bulgarian supermarkets
and features green packaging to promote recycled fibre tissue products.
CONVERTING
CAPACITY
Of the estimated two dozen tissue converters in Bulgaria,
the strongest private companies such as Fikosota, Gama Commerce (manufactures
private label Clever for Billa supermarkets and Optima for Maxima chain),
Ese Paper, Bulpaper Ltd, Interpred Partner OOD, and ET ZA Merdjanov were
founded after 1990, when economic reforms and privatization created a constructive
atmosphere for small tissue converting businesses. However, some of them
may not survive the economic downturn. One of the principal private label
converters, Selena Paper Ltd, was put up for sale last year.
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View of Kostenetz HHI paper mill (top) and Kostenetz mill cogeneration section
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Export of tissue rolls and toilet paper from Bulgaria was
about 9200 tons in 2008 or nearly 30% of total output. Belovo Paper Mill
is the leader in toilet paper export, shipping it to 25 countries. Tissue
imports to Bulgaria are almost equal to export at 11,245 tons in 2008. The
top four exporters to Bulgaria are Poland, Austria, Italy and Greece. Imports
are high-end tissue products for multinational supermarkets chains such
as Billa, Kaufland, Carrefour, Picadilli and Metro. A large share of low-end
tissue products in Bulgaria is still sold through small independent groceries
and kiosks. The away-from-home segment has grown alongside the restaurant
business but growth has faltered as a result of the changing economic mood.
Despite the harsh economic climate, almost all the major tissue producers
in Bulgaria have invested substantial funds in new equipment and power management.
With Kostenetz mill’s new PM at full capacity, the country’s tissue output
will be doubled creating better export opportunities and potential consumption
growth.
Despite the ongoing economic difficulties and declining population, Bulgaria
has better-than-average prospects of recovery because personal income is
lower than in Western Europe, permitting low production costs though with
an educated labour force. Current forecasts from the Pulp and Paper Institute
show modest 2-3% annual average growth for the 2008-2015 period, with a
higher rate in tissue products (3.5%). Though affected by the economic downturn,
the Bulgarian tissue market holds high potential due to the continuing gradual
growth of consumer spending.
Market leader Belovo Paper Mill
The country’s first tissue grade paper was produced at one of the country’s
oldest paper mills, located in Belovo, a small town 90 km
south-east from the capital Sofia. Today Belovo Paper Mill
SA is the leading tissue producer in Bulgaria with its broad
range of Belana® household products. Belovo was founded in
1900 with one small paper machine under the name of Kniga (book) and, following
a name change to Sampa (an abbreviation of its owner’s name Sam Patak),
continued to grow until it was nationalized in 1947. At that time, when
Bulgaria became a part of the Soviet block, the mill was again renamed after
Dimitar Blagoev, the founder of the Bulgarian Communist movement. During
the 1968-1972 period the mill expanded with the purchase of four new paper
machines – a 20,000 ton/yr Voith unit for MG paper, a 10,000 ton/yr Beloit
tissue machine and two Soviet made B34 and B37 PMs for greaseproof paper
production. In 1984 the mill completed another extension by acquiring a
second Voith 20,000 ton/yr tissue machine, extensive converting equipment
and a 20,000 ton/yr deinking plant.
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The mill development at Belovo was a part of the government’s drive to fulfill
the country’s need for hygiene paper products. During the years of Sovietstyle
socialism, the Bulgarian pulp and paper industry was relatively well organized,
with the Pulp and Paper Institute heading R&D and budget planning. This
system continued operating until the 1990s but was stopped after the
political changes at that time. Since then the Pulp and Paper Institute has
been privatized and changed its role.Today, with a staff of about 30 people,
the institute is very active in its capacity as state-of-the-art test lab and
pilot plant for commercial orders. It also publishes its own trade magazine.
Through Krasimir Savov, Pulp and Paper Institute Executive Director, it also
provided Tissue World with the latest tissue market statistics.
After 1990, the Belovo mill was restructured into a public stock corporation
and in 1997 became part of the Zeritis Group, which operates tissue mills in
Greece, Hungary and Egypt from its headquarters in Athens (Greece). The company’s
mission, according to Deputy General Manager Sevdalina Asparuhova, is to be
“the preeminent tissue producer in Bulgaria and to achieve standards of performance
and quality that serve as the hallmark of the paper industry. With the continuing
annual investment of nearly $3 million this task is becoming reality.”
Out of four currently operating paper machines with total capacity of 58,000
tons/yr, two Voith machines are dedicated to tissue production. One of
them, PM1 (5 m Yankee diameter, 4.45 m trim, 600 m/min running speed
and basis weight range of 16-45 g/m2) was rebuilt in 2007. The wet-end overhaul
was combined with replacement of shafts and bearings and helped to improve
performance. The twin wire PM2 built in 1984 (5 m Yankee diameter and 2.70
m trim) is much faster, making 69.5 tons of tissue/day in the 15.5-40 g/m2
range. Stefan Kiosev, Belovo’s Paper Production Manager with 35 years of experience,
emphasized the benefits of operating newer tissue converting equipment from
market leaders such as Fabio Perini (Italy) and Hobema (Germany). “Our advantage
in the saturated tissue market affected by the crisis could be attributed to
professional teamwork, ability to run the best equipment in this trade, self-reliance
and low production cost,” he told Tissue World. The mill has constantly improved
performance for the last 10 years either by upgrading existing lines or purchasing
new ones mostly from top Western suppliers. Among them are three modern Fabio
Perini converting lines for toilet paper and kitchen towels with embossing
capacity, six Hobema napkin converting lines and CMG (Gambini) tissue embossers.
Belovo also operates its own core winding machine for roll products and makes
its own plastic packaging using a Bielloni film extruder and sixcolour flexo
press.
Located in the picturesque area at the foot of Rhodope Mountains, Belovo
is committed to a clean environment. It runs a modern wastewater effluent treatment
plant and recently invested $320,000 for a filter system, gaining ISO 14001
International Environmental Standard certificate in July 2009. “Our position
in the Zeritis Group is strong and, despite the economic downturn, we expect
only about 3-4% sales decrease in 2009,” said Asparuhova in mid-year, adding:
“Belovo has recently attained important private label orders from fast food
chain Goody’s and Lufthansa’s LSG Sky Chefs.” One thing is certain, she continued:
“Belovo will remain the market leader in Bulgaria and one of the major suppliers
of consumer tissue products in the Balkans due to the loyalty of our personnel
and its dedication to quality.”
(Above, left to right) Napkin converting at Belovo paper mill; Hobema converting line at Belovo paper mill; Fabio Perini toilet roll converting line at Belovo paper mill
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