TWM/1: What key events has the tissue industry been impacted by during 2019?
“The Brazilian market is going through a very complex year. On one side we have excess supply offer and we understand that the current market has a 30% idleness rate. On the other we see the increased concentration of retail players, with more power in negotiations, and this combination is causing the margins practiced by the industry to fall sharply. The year has been challenging with companies concerned about their costs and streamlining their processes.”
TWM/2: How have tissue company merger and acquisitions impacted the industry?
“Not only in the Brazilian tissue market, but the world market tends to consolidate and medium-sized companies tend to be rare in virtually all sectors. In Brazil, we had the consolidation of the fourth and second largest installed capacity, which generated a company with approximately 20% of the market. It is still early to assess whether there has been a change in behaviour in the companies’ commercial line because these changes usually have a maturation period and there was no significant reflex in the market per hour.”
TWM/3: What new trends have you seen in terms of the tissue segments?
“The Brazilian market continues to mature and the trend is having a good growth rate
in the AfH segment as we see in Europe and the USA. The private label sector will also have a tendency to increase forced mainly by the large concentration in the retail sector. The challenge for the industry will be to create brands strong enough to increase value in the consumer’s mind, values such as sustainability, softness and quality should serve as differentials at the moment of choice. Otherwise tissue risks becoming a commodity, which is not good for the consumer, much less for the industry.” “Automation and Industry 4.0 gain strength in equipment and processes. This will allow the emergence of differentiated products fighting for specific consumer niches, rationalising the use of inputs will also be a differential to continue competing in such a difficult market.”
TWM/4: How is the world’s economy impacting the tissue market, are we seeing increasing demand in certain regions for tissue products?
“Brazil has regions with very distinct characteristics, south and southeast behave very differently than north and northeast. We foresee a good growth in these last two regions and we note that the slowdown in global growth added to the internal crisis brings a negative mood component to all consumers. But if some internal indicators start to improve, this consumption will grow again and we have an excellent expectation for the year 2020.”
TWM/5: What key opportunities are there in 2020 for tissue companies, and what key challenges?
“We look forward to the year 2020, after three years of internal crisis and decreased consumption, new indicators of economic recovery have appeared and with them the expected increase in consumption, greater use of installed capacity will bring greater scale and cost reduction. With better margins, it will be possible to increase the flow of investments in equipment and processes making the products even more competitive. “The challenge is already having the minimum technological level to guarantee competitive operating costs. In a sector as dynamic as this, one is either growing or disappearing, there is no second way.”
