São Paulo – The Nitro group plans on increasing by at least 10% the capacity of its Brazil-based Specialty Chemicals plant by 2022, and this increased production will be mainly used to serve the markets of the Middle East and Africa (MEA), where the Arab countries are. In an interview with ANBA, Specialty Chemicals director Anderson Oba and International Business manager Pedro Dorea said Nitro’s higher expectations for growth are in the region.
The group has business on multiple fronts, including Specialty Chemicals. In this field, the top selling product in nitrocellulose, a naturally occurring resin obtained from pulp. Its uses range from printing ink to flexible packaging – used for packing foodstuffs, for example – to the cosmetic, varnish and pharmaceutical markets, and others. Other products like chemical solutions are also sold.
The Brazilian company is large. Last year, the group fetched BRL 1.1 billion (USD 209 million). The Special Chemical department secured BRL 713.5 million (USD 135.7 million). The department serves over 70 countries, which makes the foreign market take in two thirds of the production. The domestic market accounts for one third of business, and exports are divided into similar shares between Latin America, United States, Canada, and Mexico; Europe; and MEA.
The plans for growth in MEA are based on a series of reasons, including the good results that Nitro has obtained in the region over the last years, particularly in the last year. Factors for the great results in 2020 include services provided despite an adverse landscape in international logistics, the higher demand for food packages that the pandemic has caused, the companies’ need to diversity their suppliers, and the tailored services provided.
Dorea mentioned as Nitro’s top Arab markets Lebanon, Saudi Arabia, and North Africa, where Egypt stands out. According to the manager, in Lebanon the company has a partner that know the local market very well. As for Egypt, it’s regarded a having a large economic potential. “Saudi Arabia has an innovation- and customization-oriented approach,” Pedro Dorea says.
Customization is one of the niches that Nitro has invested a great deal in. The company tailors solutions according to the needs of the client. “If the client needs a certain formula that features some drying, some bright or another specificity, we make it through our technical development department. It combines solvents, plasticizers and resins, and we sell it preformulated,” Oba explains.
This strategy made Nitro proceed with the creation of a large range of new products for the market. According to Oba, until 2015 most of the revenue of the Specialty Chemicals department – 95% – came from two products only. Late last year, this percentage fell to 70%. Diversification and variety have gained momentum. Dorea sees this innovation as a great chance to advance in the Arab market. “They want more specialized products so that they can stand out not because of the price but the quality,” the manager says on the Saudis.
Growth through adversity
During the pandemic, a phenomenon has made the demand for Nitro’s product grow not only among the Arabs but across all markets. “People spend more time at home, consuming more products from the supermarkets, storing more food, so our market has grown tremendously,” Oba says. As the food consumption increase at home and decrease in restaurants, the trend was a higher need for individual food packages, a chain for which Nitro supplies raw materials.
COVID-19 has also led to a disruption in supply chains, making Asian players unable to serve their clients, particularly in the beginning of the pandemic, as it started in the region. In this window of opportunity, Nitro got new clients in markets such as North America and the Middle East. “We ate up a large share of the market and managed to prove ourselves reliable for these markets that weren’t our traditional market,” Oba says.
The director believes that factories have also seen the importance of diversifying their suppliers. “The main point that was tested by the pandemic is how reliable you are as a supplier,” Oba says. He notes that markets that used to look just at prices have changed their mindset. These and other factors led Nitro to post record-high exports in the middle of 2020.
For the Middle East and North Africa, Nitro exports primarily from Brazil, but it also ships from the U.S. and Uruguay, where it has plants. Director Oba says that the Specialty Chemicals department plans to grow by 10 to 20% in the region in the next three years. The increase in the Brazil-based plant’s capacity in 2020, whose increment is expected to go to the Middle East, is expected for the month of July. Last year, exports to the region grew by 50% from 2019.
In addition to the production plants of Specialty Chemicals in Brazil, U.S. and Uruguay, the department has a commercial office in Austria and distribution centers in Brazil, U.S. and Europe, as well as high stocks in several regions across the world. Besides Specialty Chemicals, the other two business lines of the Nitro group are Agribusiness, where foliar and soil fertilizers are produced, and Industrial Chemicals, which focus on sulfuric acid and sulphates.
Investment in research
Dorea says that the quick expansion reached by Nitro over the last years – with the opening of factories, investments in technology, research and development, and the launch of a large number of products – is groundbreaking in the chemical segment, where these processes are usually slower. Last year only, the company invested BRL 100 million (USD 19 million) in the modernization of the nitrocellulose plant and research and development. One hundred fifty hours were used for training.
The manager says that the company has never been so close to its clients and partners and inside their business as last year, despite the pandemic and the reduction in travel. Indeed, Dorea says, the custom satisfaction rating was also a record. Nitro is a member of the Arab Brazilian Chamber of Commerce, and the manager believes that last year’s customer satisfaction results year also stemmed from partnerships like the one the company has with the institution.
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Translated by Guilherme Miranda
