Operations Report

With a new 5.6m machine signed for and another planned for the near future, Brazilian producer Mili´s modernisation strategy is keeping pace with the country´s impressive growth.

A Tissue World report

Mili’s new MP7 will be installed at the company’s Três Barras mill in the state of Santa Catarina.

It came as little surprise when it was announced earlier this year that Brazil had overtake the UK to become the world´s sixth largest economy. The country – one of the BRIC countries to watch – continues to dominate economic headlines across the world and is expected to expand even faster over the course of this year.

This increasing global dominance across many industries has come off the back of significant structural, social and economic change. Brazil has edged further into the world market as a result of its remarkable access to raw materials, coupled with the increasing stability its people have benefited from through the implementation of social programmes such as Bolsa Familia.

This progress and increasing stability is having a substantial impact on the tissue industry, which is seeing demand increase between 4% and 7% year on year depending on the region. Brazil´s population – which is expected to reach 203m in 2012 – is increasing 2% to 3% per year.

Tissue manufacturers have had to plan well in advance to produce demand for the current market – but also for long term growth. Family-owned producer Mili is one such company, and its key business strategy is to invest in plant modernisation. Owner and president Valdemar Lissoni says: “Our market strategy is simple: we modernise and invest in technology in order to match market growth. Every day, I put the Mili flag one step further.”

Formed in 1983, Mili experienced 13% growth in sales last year and it is now one of the 1,000 largest companies in Brazil. Its paper mills are located in the states of Santa Catarina, Paraná and Alagoas, and it has just signed for a new Voith Paper VTM 4 machine as part of a R$ 200m investment programme. MP7 was signed for in December 2011 and is expected to be up and running in the second semester of 2013.

It will be installed at the Três Barras mill in the state of Santa Catarina, where two other Voith Paper tissue machines (MP4 and MP6) are already installed. Its operating speed of 2,000m/m means that at end the of the project, Mili will produce 620tpd of high quality tissue paper compared to its current 360tpd.

“The main product for the new Voith machine is 2-ply toilet paper, it´s all about resistance, quality and price for us,” Lissoni says. “The Voith machine is very high-tech. Our ultimate goal is to be producing 70,000tpy on this machine.”

With a current market share of 12%, Lissoni ´s investments plans are aimed at hitting the 20% market share mark. Its products include toilet paper, paper towel, napkins, disposable diapers and sanitary pads – toilet paper makes up 70% while diapers and other make up the remaining 30%.

And while the company is certainly looking into the AfH market, “it´s a very big market here in Brazil”, as yet it has no plans to enter into it. “For now, certainly our focus is on pushing further into the 2-ply consumer market. And we are always looking for new ways of putting high quality products out there at a good price.”

The Brazilian tissue market is made up of several large global companies and familyrun companies, along with several small producers. Kimberly-Clark is dominant with around 22% of the market.

There are also very large retailers, and Mili wants to continue to target the middle part of the growth. “The important thing is to have a strong grip on the medium to small customer sector. We have 30,000 clients in Brazil and the aim is to boost that number. As for location, there is a lot of potential in the north east of Brazil, and we are finding that more people want tissue products there.”

Mili products

There has been a substantial shift in the social landscape, which is largely a result of former president Lula´s Brazilian social welfare programme Bolsa Família.

Bolsa Família´s financial support means that more people are now able to buy tissue products. As a result, the so-called Class B is becoming more like the richest class, Class A, Class C is becoming more like Class B, and so on. As a result, there is much more demand to produce tissue.


Founded – 1983
Founders – Valdemar Lissoni and Vanderlei Micheletto.
Locations – Three manufacturing units and two distribution centres. Paper mills located in the states of Santa Catarina, Paraná and Alagoas
Staff – 1,400 staff across three sites
Products – toilet paper, paper towel, napkins, disposable diapers and sanitary pads
Brands – Mili, Cameratta, Louvre, Mili Bianco for the range of toilet rolls; Residence for kitchen towels

PM 7 – statistics

Installed at the Três Barras mill in the state of Santa Catarina

Operating speed of 2,000m/m and will mean that Mili will produce an additional 70,000tpy of high quality tissue paper Scope of supply includes all technologies from Voith Paper: the MasterJet Pro T headbox with double layer and ModuleJet (dilution control system), crescent former, the NipcoFlex T shoe press, the T-Rib Yankee dryer cylinder with 5,4m diameter, 510ºC high efficiency hood, MasterReel reel with automatic core shaft return, and full automation for machine operation: MCS/DCS and QCS TecoSens

He says: the Brazilian population is now experiencing a higher demand with a better urban distribution, where the least favoured classes develop an increase in consumption of several products.

He adds that, as the distribution of money changes, people want more paper, hygiene products and food. “Everything in Brazil is growing after this programme was implemented. Brazil is a young country, there are lots of opportunities here. There is a very good market to be had.”

Mili’s founder, Valdemar Lissoni

However, he adds that even with this growth, there is still difficulty with prices. “The Chinese are in the whole world, with good cheap products. The potential for China, and also countries such as India, is vast, but that is also very much the case for Brazil. We do have democracy here and we have lot of natural resources.”

Significantly, he adds that 35% of people from the “E class” (who represent some of Brazil´s poorest people) are now starting to buy tissue products. So there is huge potential that is starting to be realised. “We increasingly have young people that are ready to work. Brazil is becoming increasingly stable which helps guarantee the future. That´s why Mili is investing as it is.” This new Voith machine is part of a double project, and Mili will look to invest again around 2013. Machine 4 and 6 are made by Voith and Mili has just bought the NipcoFlex- T for both of them, the rebuild of which will take place later this year. Brazilian company Hergen Paper Machinery has also rebuilt PM3 and PM5 with the same goal. In the near future, the idea is to replace machine 1 and machine 2 with another 5.5m machine. In a separate interview, Rogério Berardi, tissue sales manager for South and North America from Voith Paper Brazil, told TW that demand for tissue paper – and quality – is increasing in Brazil in all regions, not just in the most developed cities from the south east and south of Brazil. “There is a strong migration from 1-ply toilet with 100% recycled fibre to 2-ply toilet with virgin fibres or mix of virgin and recycled fibres and there are some 3-ply toilet also being seen in the market,” he said. “The consumption of the tissue grades, such as towel and napkins, is also increasing, a result of trends that we have seen in developed countries in the past: the more developed a country, the more the population uses other tissue grades besides toilet paper.”

“Tissue consumption follows GDP growth precisely. And the less developed regions of Brazil such as the north and north east still have lots of room for GDP growth as well as tissue consumption growth.

“The tissue consumption per capita consumption in those areas is still below 1kg, very similar to the rural areas of China.” On the other hand, he adds that the most developed areas in Brazil already have a consumption per capita of 9-10kg, which is similar to some countries from western Europe such as Portugal and Spain.

“Despite that, we expect growth in all areas including the ones that already consume 9-10kg per capita because people in those areas are getting richer and richer year after year, thus, are consuming more and more toilet and also mainly, kitchen towel paper. There are still lots of people in Brazil who use cloth to clean the kitchen, for example, which you don’t see in the USA, the most developed tissue market worldwide, for example.”

There are around 60 tissue companies in Brazil, and while it is likely that many will close, the largest are also getting stronger. There is a lot of competition, especially as the smaller companies just aren´t that competitive.

Lissoni says that one way to stay competitive is through product innovation. “Our brand was seen as a `popular` product and so we invested a lot to improve the quality. We installed Perini converting lines for different qualities that we were looking for, and this has changed our image. Our goal is to have the best paper with the best price, not the best quality paper, that´s not our market”. Mili now produces more 60m than 30m toilet rolls, which Lissoni says makes sense in terms of the environment, and in terms of allowing the customer to have more time at home with the product. “At the time when we launched the 60m six years ago, no other company was doing it. It meant we had to convince consumers of the benefits, and showed them that buying 60m instead of 30m was in fact cheaper. For 2-3 years we were responsible for 40% of the sales in Brazil. “We do try to challenge ourselves to make better quality products,” he adds. “The quality of waste paper here in Brazil isn´t the same quality as in many parts of the world. It´s very short fibre. So the issue of quality, and how to get it at the right price, is one of our main challenges at the moment.”

Energy is obviously a very important issue and is 10% of the company´s costs. The size of the Tres Barras plant also brings problems, not least that of logistics. It uses 10,000 tonnes of wood per month, and at the end of the new installation project, this will translate to 40 trucks of wood per day required for the Tres Barras site.

As demand for tissue paper and quality increases alongside Brazil´s rapidly emerging global presence, Mili is geared up to take on demand.