Tissue World Magazine
Alexandra Stuthridge, Technical Business Manager, BioProducts Institute (BPI)

These are turbulent times in Brazil – but tissue is toughing it out. Helen Morris, Tissue World magazine senior editor, visits Carta Fabril’s Rio de Janeiro headquarters as the company begins the start-up phase of what will be a world record breaking tissue machine.

By Tissue World senior editor, Helen Morris

The drive to Carta Fabril’s headquarters takes TWM across Rio de Janeiro’s Presidente Costa e Silva bridge, with views stretching for miles over the stunning cities of Rio and Niterói, their beautiful seas, islands and the surrounding vast ports.

Much has been made of the troubles that Brazil, the Latin American BRIC giant, has faced in the last few years; political scandals and allegations of corruption have blighted the country, and some would say brought it to its knees.

However, driving through Rio on a sunny March day and it would seem to be business as usual. The streets are full of Cariocas and tourists going about their daily routine, shopping malls are full, stall sells stand on most corners with their carts packed full of fresh fruit, and the views across the bridge towards Carta Fabril’s head office show that trade in the ports is as busy as ever.

Vice president Victor Coutinho greets TWM. Speaking in English, he explains the history of the family-owned company, which was established 26 years ago. Carta Fabril now has two tissue mills in Brazil, one in the Rio de Janeiro state and the other in Anápolis, GO, in the centre of the country, and the home of the company’s new tissue machine. The Brazilian tissue market is a unique one, with lots of local and family-owned small to medium-sized tissue mills, but with Kimberley-Clark and CMPC the main players that also have a substantial tissue presence outside of Brazil.


It goes without saying the Brazilian tissue market is fiercely competitive. Coutinho repeatedly talks about growth throughout our meeting, and staying competitive through investment is a key market strategy. The company’s recent investment of an Andritz-supplied PrimeLineST W22 tissue machine with Steel Yankee and steam-heated hood is, according to the supplier, a world record: with a diameter of 22ft the machine is the largest Steel Yankee for tissue worldwide. Start-up at the company’s Anápolis mill in scheduled for January 2019.

Coutinho says the issues in Brazil aren’t necessarily economical, but political: “What we’re seeing now is a consequence of our political crisis. We don’t have very good expectations for the situation to change until at least 2018. We are braced for this year to be difficult, but after that we are hoping – and expecting – the situation to improve a little. It’s chaotic here in Brazil at the moment, we are all operating in a crisis.”

Here he talks to TWM about investment, resilience and changing trends.

TWM/1: Why have you made this investment?
“This machine installation is an important part of Carta Fabril’s plan to remain competitive in a market where a lot of international companies have settled in recent years. The project embeds a lot of innovative features and will bring higher productivity to our operations, being the first double width machine in our group. It will also bring a lot of important developments in terms of efficiency and water savings, as well as substantial technological and environmental advancements.”

TWM/2: What growth are you seeing in the Brazilian tissue market?
“We don’t believe there will be growth that exceeds 3-3.5% on average across Brazil. Up until 2014, the average growth has always been around 1% point over the GDP growth, so around 4.5% per year. After 2014, we experienced two years of recession, with -2% in 2015 and no growth at all in tissue in 2016.

“Our expectations are that in 2017 we will see some growth, maybe between 1-2%, and that in 2018 we will start to recover the former growth we had before the crisis. For us, local demand is not expected to grow as it did a few years ago, but the number should reach reasonable values to guarantee some development for the tissue market.”

TWM/3: Why was this growth happening?
“During the good years of growth, the main reason was a reasonable growth in the Brazilian people’s income, which we saw mainly from middle class citizens. There was a migration from medium quality products to high quality products, which have a little more basis weight and therefore are consumed more.

“Additionally, the government created a programme to enable better income distribution, taking resources to regions far away from the big cities. This has caused a boom in growth in regions where tissue consumption was really low. These actions also provided some regions and states with more income and so they could invest in infrastructure, which caused a good cycle of growth. In turn, this created a better environment for growth in tissue consumption because it saw a significant change in hygiene habits and a growing need for disposable products.

“Recently, after the political and economic crisis, the growth in these regions is still higher than the rest of the country, although it is not at the same level as it was before 2013.”

TWM/4: What trends are you seeing in terms of quality?
“Brazilian consumers are searching for better quality products. This market has experienced an important migration from low-medium quality products to high quality products. In recent years, the 1-ply market has been stable in terms of tonnes per year, while growth in tissue was only in 2-ply for toilet paper for example.

“There was also a significant growth in kitchen towel market and also in napkins and facial, although at a lower rate. Even with declining growth, we observe that quality is becoming an important advantage to reach the needs of our market.”

TWM/5: How are the economic events in Brazil impacting the country’s tissue industry, and what are the main opportunities you face?
“Although the economy here is not going as well as we wanted, our market still offers opportunities for those who differentiate themselves from others. There are a lot of opportunities in the Brazilian market, mainly because consumption is still very low when compared to other countries with similar GDP per capita. As the costs for logistics have been growing in recent years, one of the possible growth opportunities is converting products  closer to the growing markets, which are far away from the traditional actual production centres.

“Other markets that we have not yet explored with our full attention include the facial products market, and this sector could also be a good opportunity since it is currently a very small market in Brazil.”

TWM/6: And what are the main challenges for you in Brazil?
“Brazil’s market and economy offer a complicated set of challenges that have to be faced every day by all of its industry, not just the tissue sector.

“We face high levels of unemployment and bad macroeconomic  perspectives in a context where companies have grown without even considering the possibility of an economic crisis. These are elements of a formulae that shouldn’t lead companies to invest any further, mainly because we will have significant overcapacity in a few months.

“Energy costs are also increasing and it’s an important issue that all companies have to pay detailed attention to. Tissue companies in Brazil are not expected to reach more than 80% of the total installed capacity in the next few years. Productivity, when compared to developed countries, is also a very important subject when we think of matching the competitiveness needed to plan future exportations. One other important challenge in our country is that we have more than 50 tissue industries and countless number of converting companies that create a very competitive environment.”

TWM/7: Do you export and are you looking to export more products?
“At this moment, our company is still not exporting its products, mainly because we have been selling all of our production in the internal market. However, with the expected growth in tissue for the country, it’s expected that in a few months we will have even stronger overcapacity and so some of our products will have to be exported. We have full capacity and we want to export once our new machine is up and running. We have always been planning to export, starting with the south and central America and in future perhaps to the West African market. This new project makes us very competitive.

“We are seeing new players coming into the market, for example Suzano. Our competitors are also investing. We keep growing, we will close down machines in order to modernise and a big increase in capacity with the new Steel Yankee, seeing an increase of 80,000tpy to 120,000tpy. Overcapacity is a huge problem. We want to offer something different. Brazil will still grow, there will still be some space. We want to be very competitive. We will export, mainly in Latin America. This year and the next won’t be so good, but by the end of 2018, we hope to start seeing improvements. We have good expectations. In the short term however, the situation isn’t great. We don’t have a stable political scenario. But tissue is very resilient. It is an index of how a country is operating. We are growing despite of the crisis and we will keep growing. We only do around 5% of production for private label and we’re not looking to increase that. We were producing mainly 1ply, but now we’re moving more into 2ply as well.”

TWM/8: Are environmentally-friendly tissue products an opportunity for you? 
“We are seeing considerable growth in demand for green tissue products here in Brazil, as well as in other market segments. This is a considerable opportunity for the Brazilian tissue market. However, only a small portion of consumers have a clear idea of these types of products, so it will be a case of helping to educate the consumer.”

TWM/9: How are tissue buying habits changing in Brazil?
“Because of the recent economic crisis, the Brazilian consumer is searching for opportunities of good costs and benefit purchases. In certain aspects, this is seeing them moving away from traditional brands when buying tissue products.

“Sales in Brazil happen in a more spread and distributed way, and consumers don’t seem to have a preference for local or big centralised shops or supermarkets. Online purchases of tissue are not yet especially popular.”

TWM/10: What is your aim for the next five years? 
“Our plan is to continue growing as we have grown in recent years, although the expectations for growth in the Brazilian tissue market are not so encouraging.

“The main goal is to maintain our competitiveness and enhance productivity.”