Karen McIntyre, Editor04.05.12
Currently, the market for nonwovens in Latin America is dominated by three leaders. Brazilian-based Companhia Providencia and Fitesa and US-based Polymer Group Inc., who each operate large spunmelt operations throughout the region, which target hygiene product makers both within Latin America and beyond. These large players have been investing heavily in new lines during the past several years with new lines popping up in Brazil, Argentina, Colombia, Mexico and, most recently, Peru.
These investments are putting these companies in a better position to benefit from the explosive growth in the region, which is being driven by higher incomes and a more industrialized society. This has led to a rapidly increasing penetration of disposable goods, particularly diapers, says one industry executive.
Beyond these large-scale operations, there are several other companies with smaller investments in the region. Suominen operates a wipes production line in Louveira, Brazil. Former owner, Ahlstrom reportedly started this operation to chase wipes growth in the region. Additionally, Ahlstrom has a filtration-related operation in Louveira, DuPont has a joint venture with a company called Cipatex in the region and Freudenberg has operations in Bueonos Aires, Argentina and Jacarei, Brazil.
From an end use perspective, diaper market leaders Procter & Gamble and Kimberly-Clark, both show a strong presence in Latin America and typically one or the other possesses the greatest marketshare in most of the region’s major countries. The exception is Colombia, where Technoquimicas has a 39.8% marketshare according to A.C. Nielsen. Other local players include CMPC, Absormex, Mabesa and Hypermarcas.
Swedish hygiene maker SCA has traditionally not had much of a position in Latin America but is hoping to change that. In early 2011, the company announced that Brazil was one of the regions on its radar for future growth and in September, SCA proved this with the acquisition of Brazilian hygiene maker Pro Descart in a deal valued at $71 million on a debt-free basis.
With annual sales of $57 million, Pro Descart is a family-owned company focused on incontinence care products but also sells baby diapers and wet wipes. The company, with approximately 400 employees, has manufacturing in the Sao Paulo area. It has a number two position in Brazil's adult incontinence market. The most highly populated country in South America, Brazil's hygiene products market has a good growth potential, especially for incontinence care products, which has shown double digit growth, SCA executives explain. “I am very happy that we are now establishing ourselves in Brazil, which is also of strategic significance,” comments Jan Johansson, president and CEO of SCA. “We have for some time worked on finding the right solution for entering this important emerging market. With this acquisition of Pro Descart, we now have a presence throughout Latin America.”
Nonwovens leaders
Based in Parana, Brazil, Companhia Providencia is Brazil’s largest nonwovens manufacturer with sales reported at $326 million in 2010. Currently, 61% of the company’s sales are conducted in Brazil but that figure is expected to decrease as the company’s North American investments—made reportedly to ease the strain on the Brazilian operations—continue to come onstream.
While North American investment has been a focus, Providencia continues to focus efforts on Brazil. Plans for a new line—its 11th—were announced last year and the new line is expected to be complete by the end of the next year. This investment will help the company capitalize on growth in Brazil, which is forecast at 10% per year, led by the baby diaper market.
“Baby diapers are driving this growth because penetration of diapers in Brazil increased from 20% in 2000 to 48% in 2010 and is expected to grow even more,” says CEO Herminio Freitas.
Another Brazilian nonwovens manufacturer, Fitesa, has truly entered the global stage through its partnership with and eventual purchase of Fiberweb. In 2009, Fitesa and Fiberweb, London, UK, formed a joint venture to reportedly make spunbond nonwovens in North America. The deal included Fitesa’s Brazilian operation and Fiberweb’s plants in the US and Mexico and the two companies soonafter announced plans to build a greenfield site in South Carolina and Peru.
Late last year, Fitesa announced it would buy out Fiberweb’s interest in the venture, making it the sole owners of these sites. At the time, Fitesa also bough Fiberweb’s spunbond operations in Italy and Sweden, giving it a strong European presence.
According to executives, Fitesa is following a strategic investment plan to help it conquer all of Latin American and not just the market leader Brazil. Because there is no transcontinental highway, the establishment of a site in Peru, which should be complete later this year, will allow the company to target countries west of the Andes, where growth continues to be strong.
The leading international player within the Latin American nonwovens industry remains PGI who spent the last decade investing heavily in the region. Currently, the Charlotte, NC-based company has a leadership position in the Andean Pact market, where it supplies materials from its Cali, Colombia site. This line currently has two modern spunmelt lines but executives expect a third will likely be added in the short term. This facility was temporarily shut down in late 2010 due to severe flooding in the region executives said it did not disrupt supply.
Beyond Colombia, PGI operates a facility in San Luis Potosi, Mexico, where its latest line came onstream in May 2010, and Buenos Aires, Argentina, where it operates two spunmelt lines.
Noticeably absent from PGI’s Latin American footprint is the area’s largest economy, Brazil, but executives said the establishment of a greenfield installation is high on its list of possible expansion plans.
By the numbers
Currently South America produces about 300,000 metric tons of nonwovens annually, Mexico produces about 98,000 metric tons, and the Caribbean produces about 9000 metric tons, for regional production of about 400,000 metric tons, according to INDA estimates. And, these figures are growing with investments already announced by Companhia Providencia and future investments from PGI and Fitesa likely.
Gauging figures from the total region is difficult, but ABINT, the Brazilain nonwovens and technical textiles industry, reports that the Brazilian nonwovens industry grew 12% in 2011 and 10.5% in 2010. During the past five years, investment in new technologies has been about $180 million and new projects have included technological upgrades and new units. During the next two years, investment will be about $160 million.
The largest market for these nonwovens, by far is diapers/sanitary items/wipes, which represent 40%, but other markets include shoes, construction/geotechnical, cleaning wipes, filtration, automotives and medical.
According to Bruno Pedroni, marketing communication manager for ABINT, growth in the last year was led by the diaper market and house goods (decoration and carpets), driven largely by increases of the middle class in Brazil and growth in construction of new apartments and houses.
While Brazil is clearly the leader, a number of other countries, namely Venezuela, Colombia and Argentina, are also improving their living standards and by extension using more nonwovens. The future leaders in Latin America will be ready to capture this growth.
“We are planning to expand in the US and Brazil because these are the biggest consumer countries for nonwovens and from then on we can export to all ot other countries in the America,” Providencia’s Freitas says.
Brazilian consumer goods giant Hypermarcas made some important acquisitions in the baby diaper market in 2010 in an effort to secure its place in this growing market. In March, the company announced it would buy diaper maker Sapeka Fraldas in cash and stock to grow in a market that is booming as more low-income families join the middle class in Latin America's largest economy.
Sao Paulo-based Hypermarcas paid about $126 million in cash plus a stock transfer for this company. A few months later, Hypermarcas bought Mabesa do Brazil, a deal that made it the largest diaper maker in country. At the time of the acquisition, Hypermarcas was reported to hold a 26% share of the Brazilian diaper market, a position that has since been severely challenged by foreign conglomerates such as Procter & Gamble, Kimberly-Clark and, more recently, SCA.
These investments are putting these companies in a better position to benefit from the explosive growth in the region, which is being driven by higher incomes and a more industrialized society. This has led to a rapidly increasing penetration of disposable goods, particularly diapers, says one industry executive.
Beyond these large-scale operations, there are several other companies with smaller investments in the region. Suominen operates a wipes production line in Louveira, Brazil. Former owner, Ahlstrom reportedly started this operation to chase wipes growth in the region. Additionally, Ahlstrom has a filtration-related operation in Louveira, DuPont has a joint venture with a company called Cipatex in the region and Freudenberg has operations in Bueonos Aires, Argentina and Jacarei, Brazil.
From an end use perspective, diaper market leaders Procter & Gamble and Kimberly-Clark, both show a strong presence in Latin America and typically one or the other possesses the greatest marketshare in most of the region’s major countries. The exception is Colombia, where Technoquimicas has a 39.8% marketshare according to A.C. Nielsen. Other local players include CMPC, Absormex, Mabesa and Hypermarcas.
Swedish hygiene maker SCA has traditionally not had much of a position in Latin America but is hoping to change that. In early 2011, the company announced that Brazil was one of the regions on its radar for future growth and in September, SCA proved this with the acquisition of Brazilian hygiene maker Pro Descart in a deal valued at $71 million on a debt-free basis.
With annual sales of $57 million, Pro Descart is a family-owned company focused on incontinence care products but also sells baby diapers and wet wipes. The company, with approximately 400 employees, has manufacturing in the Sao Paulo area. It has a number two position in Brazil's adult incontinence market. The most highly populated country in South America, Brazil's hygiene products market has a good growth potential, especially for incontinence care products, which has shown double digit growth, SCA executives explain. “I am very happy that we are now establishing ourselves in Brazil, which is also of strategic significance,” comments Jan Johansson, president and CEO of SCA. “We have for some time worked on finding the right solution for entering this important emerging market. With this acquisition of Pro Descart, we now have a presence throughout Latin America.”
Nonwovens leaders
Based in Parana, Brazil, Companhia Providencia is Brazil’s largest nonwovens manufacturer with sales reported at $326 million in 2010. Currently, 61% of the company’s sales are conducted in Brazil but that figure is expected to decrease as the company’s North American investments—made reportedly to ease the strain on the Brazilian operations—continue to come onstream.
While North American investment has been a focus, Providencia continues to focus efforts on Brazil. Plans for a new line—its 11th—were announced last year and the new line is expected to be complete by the end of the next year. This investment will help the company capitalize on growth in Brazil, which is forecast at 10% per year, led by the baby diaper market.
“Baby diapers are driving this growth because penetration of diapers in Brazil increased from 20% in 2000 to 48% in 2010 and is expected to grow even more,” says CEO Herminio Freitas.
Another Brazilian nonwovens manufacturer, Fitesa, has truly entered the global stage through its partnership with and eventual purchase of Fiberweb. In 2009, Fitesa and Fiberweb, London, UK, formed a joint venture to reportedly make spunbond nonwovens in North America. The deal included Fitesa’s Brazilian operation and Fiberweb’s plants in the US and Mexico and the two companies soonafter announced plans to build a greenfield site in South Carolina and Peru.
Late last year, Fitesa announced it would buy out Fiberweb’s interest in the venture, making it the sole owners of these sites. At the time, Fitesa also bough Fiberweb’s spunbond operations in Italy and Sweden, giving it a strong European presence.
According to executives, Fitesa is following a strategic investment plan to help it conquer all of Latin American and not just the market leader Brazil. Because there is no transcontinental highway, the establishment of a site in Peru, which should be complete later this year, will allow the company to target countries west of the Andes, where growth continues to be strong.
The leading international player within the Latin American nonwovens industry remains PGI who spent the last decade investing heavily in the region. Currently, the Charlotte, NC-based company has a leadership position in the Andean Pact market, where it supplies materials from its Cali, Colombia site. This line currently has two modern spunmelt lines but executives expect a third will likely be added in the short term. This facility was temporarily shut down in late 2010 due to severe flooding in the region executives said it did not disrupt supply.
Beyond Colombia, PGI operates a facility in San Luis Potosi, Mexico, where its latest line came onstream in May 2010, and Buenos Aires, Argentina, where it operates two spunmelt lines.
Noticeably absent from PGI’s Latin American footprint is the area’s largest economy, Brazil, but executives said the establishment of a greenfield installation is high on its list of possible expansion plans.
By the numbers
Currently South America produces about 300,000 metric tons of nonwovens annually, Mexico produces about 98,000 metric tons, and the Caribbean produces about 9000 metric tons, for regional production of about 400,000 metric tons, according to INDA estimates. And, these figures are growing with investments already announced by Companhia Providencia and future investments from PGI and Fitesa likely.
Gauging figures from the total region is difficult, but ABINT, the Brazilain nonwovens and technical textiles industry, reports that the Brazilian nonwovens industry grew 12% in 2011 and 10.5% in 2010. During the past five years, investment in new technologies has been about $180 million and new projects have included technological upgrades and new units. During the next two years, investment will be about $160 million.
The largest market for these nonwovens, by far is diapers/sanitary items/wipes, which represent 40%, but other markets include shoes, construction/geotechnical, cleaning wipes, filtration, automotives and medical.
According to Bruno Pedroni, marketing communication manager for ABINT, growth in the last year was led by the diaper market and house goods (decoration and carpets), driven largely by increases of the middle class in Brazil and growth in construction of new apartments and houses.
While Brazil is clearly the leader, a number of other countries, namely Venezuela, Colombia and Argentina, are also improving their living standards and by extension using more nonwovens. The future leaders in Latin America will be ready to capture this growth.
“We are planning to expand in the US and Brazil because these are the biggest consumer countries for nonwovens and from then on we can export to all ot other countries in the America,” Providencia’s Freitas says.
Brazilian consumer goods giant Hypermarcas made some important acquisitions in the baby diaper market in 2010 in an effort to secure its place in this growing market. In March, the company announced it would buy diaper maker Sapeka Fraldas in cash and stock to grow in a market that is booming as more low-income families join the middle class in Latin America's largest economy.
Sao Paulo-based Hypermarcas paid about $126 million in cash plus a stock transfer for this company. A few months later, Hypermarcas bought Mabesa do Brazil, a deal that made it the largest diaper maker in country. At the time of the acquisition, Hypermarcas was reported to hold a 26% share of the Brazilian diaper market, a position that has since been severely challenged by foreign conglomerates such as Procter & Gamble, Kimberly-Clark and, more recently, SCA.