Suzano and Kimberly-Clark, a global leader in the consumer staples industry, announced in early June the creation of a US$3.4 billion joint venture focused on the manufacture, marketing, and distribution of consumer and professional tissue products, such as toilet paper, napkins, paper towels, and facial tissues, in over 70 countries. Suzano will acquire a 51% interest in the new entity, with Kimberly-Clark holding a 49% interest.
Suzano is a Brazilian multinational company with more than a century of history. It is the world’s largest producer of market pulp and a leading manufacturer of paper and tissue products in Latin America. With a fully integrated value chain—from eucalyptus plantations to industrial production—the company operates 14 manufacturing facilities and concentrates on sustainable, renewable products that contribute to the global bioeconomy.
Kimberly-Clark is a global consumer goods leader with more than 150 years of history and operations in more than 175 countries. As one of the world’s largest tissue producers, the company is known for its strong portfolio of hygiene and personal care brands, supported by continuous innovation in absorbent technologies, fibers, and disposable materials.
The primary objective of the joint venture is to capture synergies between the world’s largest producer of market pulp and one of the world's leading tissue manufacturers. The partnership is expected to:
The joint venture represents a strategic move at a particularly favorable moment. The current competitive landscape is characterized by expanding fiber production capacity in Asia and Latin America, accelerated investments in integrated pulp and paper facilities in China, and increasing pressure on wood and pulp costs.
One of the most logical outcomes of the joint venture is the integration of Suzano’s pulp production with Kimberly-Clark’s tissue machines. In this regard, the joint venture consumes fiber equivalent to approximately 11.8% of Suzano’s market pulp production, or more than half of the Ribas do Rio Pardo mill's production capacity in Mato Grosso do Sul, Suzano’s newest production site.
Currently, the tissue machines in the joint venture are mainly fed with virgin fiber: hardwood accounts for 50%, softwood for 20%, and recycled fiber for 30%. Internal process adjustments may be implemented to increase the use of hardwood fiber, thereby accelerating Suzano’s Fiber-to-Fiber strategy. Once this fiber relation is addressed, Suzano tissue production, together with JV tissue production, can reach 11.8% of Suzano pulp, a considerable increase from the current 2.7%, and all internally resolved, without going to market. In case Suzano can reach Kimberly-Clark USA also with some commercial advantage, 20.7% of Suzano is a premium to reach.
The joint venture brings together well-established brands, a presence in all regions, and a strong distribution network. These factors may support future expansion plans. Tissue is currently the fastest-growing paper segment worldwide, with a global CAGR of approximately 5%. The highest growth rates are occurring in regions with relatively low per capita tissue consumption, particularly emerging markets in Asia-Pacific, Africa, Latin America, and the Middle East. Considering regions where JV has tissue sites, the main opportunities would be in Latin America and Asia, as tissue production is growing, furnish has a high volume of recycled fiber, and per capita consumption is not high. Europe has a steady increase in production and is a region that imports market pulp; replacing fiber with hardwood is one economic option.
Cost-efficiency gains can also be expected, as already demonstrated through the successful integration of Kimberly-Clark and Suzano operations in Brazil, completed three years ago. This operation currently represents approximately 40% of Suzano's tissue production.
To understand how the joint venture will proceed, what the impact will be on other major tissue paper producers, and whether other changes will come in the short term.
Globally, the tissue industry consumes more than 65 million tons of fiber each year. The tissue market is highly fragmented; however, major companies hold a significant share of the industry, with the top 10 producers accounting for approximately 28% of total production capacity. Establishing a joint venture with one of the top 10 companies provides a rapid and highly predictable path to scale and market positioning.
Latin America has approximately 6.5 million tons of annual tissue production capacity and has the highest proportion of tissue produced from recycled fiber. This creates significant opportunities for fiber substitution to improve product quality, both in existing machines and in future investments, particularly given the region’s strong growth outlook.
Asia has substantial local tissue production and continues to experience rapid growth. Currently, 67% of tissue production comes from nonintegrated mills. The Chinese government has announced the China 2050 Strategy, with one of the targets being to increase pulp and paper integration. Today, integrated production represents approximately 15% of total output, or around 5 million tons per year, significantly higher than in many other regions. The impact of increasing integration is considerable for market pulp producers, making the search for alternative markets a strategic necessity.
Global market pulp production is currently close to 100 million tons per year. China, one of the world’s largest pulp consumers, imports nearly 25 million tons annually, including hardwood and softwood. Any slowdown in this demand would have significant implications for the entire supply chain. Additional integrated capacity announced in Asia through 2030 totals approximately 6 million tons per year. A large volume of hardwood chips is imported from other countries in Asia, such as Vietnam, Australia, and Indonesia. Latin America has also announced projects totaling approximately 12 million tons per year.
Pulp mills are highly capital-intensive operations. In addition to requiring vast plantation areas, they depend on suitable land and climate conditions to ensure sustainable wood growth, proximity to industrial facilities, and efficient logistics for the commercialization of market pulp. Most announced investments are based on eucalyptus plantations, which require nearly one-third of the harvesting cycle compared with pine plantations.
The impact of this substantial capacity expansion will likely be reflected in pulp prices and in the long-term viability of older, higher-cost production sites, which is a reason for some pulp closures in recent years. Under current market conditions, Latin America remains the lowest-cost region for market pulp production. Within this context, Suzano's strategy of being both a major pulp exporter and a tissue manufacturer makes strategic sense for maintaining competitiveness and ensuring long-term resilience. Could this become a model for other industry players to follow?
Tissue continues to demonstrate strong growth in packaging paper grades (containerboard and cartonboard) and presents attractive growth prospects, benefiting from substantial production capacity. These grades offer attractive opportunities for production integration and Fiber-to-Fiber substitution strategies.
The joint venture, expected to become operational in the coming quarter, offers several competitive advantages. Despite the significant opportunities, creating an independent global company will also present challenges. Successfully integrating two large, well-established multinational organizations with distinct corporate cultures, business processes, and geographic footprints will require careful planning and execution.
As the market landscape evolves, new opportunities and challenges are likely to emerge for other industry participants. Monitoring these developments closely will be essential.