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  • “U.S. retreats from tobacco regulations in trade deal”

    FairWarning reports that the Obama administration appears to have retreated from efforts to include, in the Trans-Pacific Partnership agreement, language enabling countries to uniquely attack the tobacco industry and adopt tough anti-tobacco regulations.

    The online publication, which provides public-interest journalism on issues of health, safety and corporate conduct, says the Office of the U.S. Trade Representative put the protective language on hold last year following protests from the U.S. Chamber of Commerce and other business groups. Eight negotiating rounds passed since then without U.S. officials enabling the targeting of the industry through such language.

    Cigarette makers in recent years have invoked trade agreements to challenge anti-smoking rules like large graphic warning and plain packaging requirements. The National Association of Manufacturers, the American Farm Bureau Federation and a group of former U.S. trade representatives, including three employed by law firms with tobacco industry clients, also spoke up against language protecting countries’ authority to adopt anti-smoking regulations.

    Health advocates have said trade rules should not “inhibit any nation from exercising its sovereign authority to protect the health of its citizens,” and tobacco products “should not be treated as other consumer goods” in international trade.

     

  • African Pride

    African Pride

    Photos: Pan African Tobacco Group

    Constructing a new GLT in Uganda, Pan African Tobacco Group underscores its commitment to its home continent.

    By George Gay

    As its name implies, the Pan African Tobacco Group (PTG) has its roots firmly set in the African continent. It employs thousands of Africans at its tobacco processing and manufacturing plants, and throughout its distribution chains, and it supports many others in sourcing its leaf tobacco and manufacturing supplies. In short, its interests are closely tied to those of Africa and its people, and, I suppose, it is true to say that the interests of Africa and its people are closely tied to companies such as PTG.

    An example of this close relationship was on display earlier this year when PTG’s founder, Tribert Rujugiro Ayabatwa, announced the investment of $20 million in a new green-leaf threshing plant and warehouse at Arua, Uganda. The first sentence of the announcement included the news that the plant would directly create 700 new jobs—100 permanent and 600 seasonal—and support thousands more throughout Africa. In fact, later it was stated that the project was set to create 150 permanent and 1,000 seasonal jobs once the new plant was fully operational. The plant’s operations will help support 23,000 tobacco growers: 13,000 in Uganda and 10,000 in the Democratic Republic of the Congo (DRC) and South Sudan. And its operations will mean that PTG will have to contract with about 1,500 drivers to transport the plant’s output from Arua to the company’s factories at Kampala, Uganda; Bujumbura, Burundi; Dar es Salaam, Zanzibar, Tanzania; Yei, South Sudan; and Goma, DRC.

    The new plant will include a 30,000-square-meter warehouse and a factory for processing up to 10 tons of green tobacco an hour.

    Tribert Rujugiro Ayabatwa

    But surely one of the most interesting aspects of the project came to light when I asked the question: Is there anything about the plant under construction that is unusual? “Yes,” Ayabatwa said. “PTG is committed to developing the communities where it operates; it positions its plants in areas where there is no basic infrastructure such as water, electricity, etc. …” This was not the usual sort of response to such a question, and it was not the one I had been expecting, but it again illustrated the sort of social investment that PTG seems to making: The plant will simply have to provide water and electricity.

    There was little surprise then that Uganda’s state minister for trade, industries and co-operatives, David Wakikona, who was the guest of honor at a groundbreaking ceremony on May 17, described the plant as a landmark moment for the country and region. Calling the new facility a job creator and a timely investment, he praised PTG for its commitment to improving tobacco production and the quality of exports to other regions.

    “This factory of such funding magnitude in a rural setting like Arua is a landmark in the history of Uganda,” Wakikona said. It was especially important, he added, because of the jobs that would be created, and because of the associated amenities that would benefit the rural population and put more money into the pockets of local people.

    PTG already has a strong presence in northern Uganda, where it invests $18 million a year in tobacco farming. And that amount was expected to double during the next five years to meet demand, Ayabatwa said. “This expansion will allow us to create new, good-paying jobs in an important part of Africa,” he added. “It will also allow us to farm and process tobacco more efficiently and cost effectively. I couldn’t be more delighted with this investment.”

    The company buys about 15 million kg of leaf tobacco a year, largely flue-cured, burley and dark fire-cured, from Angola, DRC, Tanzania, Uganda, Zimbabwe and Brazil. Some of the tobacco is sourced from contract farmers, some from PTG’s direct commercial-farming operations, and some from Africa’s auction floors, while the rest is bought under annual contracts with international dealers.

    When I asked how PTG ensured, in a competitive world, that it paid tobacco farmers fair prices, Ayabatwa said that PTG believed in the long-term sustainability of the tobacco industry in Africa. “Not only do we make sure that a fair price is paid to both our farmers and small growers, but we also invest in social and environmental responsibility initiatives in the communities where we operate,” he added.

    This raised a question about how PTG ensured the tobacco it bought was grown in a sustainable way. “PTG trains and supports farmers and food crops by supplying food seeds and running a reforestation program,” said Ayabatwa.

    Strong fundamentals

    Currently, PTG has two green-leaf threshing plants, one in DRC and one in Uganda, which thresh and pack flue-cured, burley and dark fire-cured leaf. And the company operates nine manufacturing plants, seven of which have their own primary departments.

    The company produces at its manufacturing plants a range of local cigarette brands and five that have a pan-African presence: Forum, Legends, Peterfields, Supermatch and Yes. Most of its cigarettes are Virginia blends, but it offers also American blends. All but one of its cigarettes are filtered, with tar and nicotine levels that vary according to the regulations in the country of sale, but that, generally, are around 10 mg and 1 mg, respectively. Formats include king-sized and 100 mm cigarettes, and packs are both hinge lid and soft cup.

    PTG said it was constantly developing new cigarette brands and line extensions, and that it also manufactured roll-your-own and pipe tobaccos. And, like any other tobacco manufacturer, it followed international trends when it came to considering the introduction of alternative tobacco products and, even, e-cigarettes.

    The company distributes its tobacco products using what Ayabatwa described as a competitive mix of company-owned and third-party distributors, depending on the country.

    Ayabatwa didn’t want to disclose how many cigarettes PTG sold each year, but he said the number was increasing because of growth in the African market. And he seems confident about the future of the tobacco industry. “Despite the anti-smoking lobby, tobacco will always be one of the major, fast-moving products offering pleasure to those who choose to smoke,” he said.

    When I asked Ayabatwa whether PTG was a profitable company, he replied that, “on a group level it meets industry standards but reinvests to sustain its growth and development.” And when I further asked whether profit was increasing year on year, he said, “Yes, but this profit increase is used to reinvest in new markets.”

    Passing the baton

    If these answers sound slightly different—more equivocal, perhaps—than those you might expect to receive from a successful entrepreneur who has built up a group of businesses that, alongside tobacco, include cement, tea, plastic shoes, beer and snack foods, it’s not just that Ayabatwa dares to be different. When, in January, he announced that he was retiring from the daily operations of PTG, he made the point that making money had never been his goal but a means to an end—the end being “building something up, creating something.” “That is what I tried to accomplish, and that is the legacy I leave to my sons and son-in-law,” he said.

    I guess that to say he was successful is something of an understatement. From his roots as a young Tutsi in Rwanda and a refugee in Burundi, Ayabatwa overcame overwhelming odds to build up a group of businesses that employ about 26,000 people (who support about 182,000 people) from South Africa to the United Arab Emirates, from Angola to Tanzania.

    But, now, he has left all that to Paul Nkwaya, his eldest son, who serves as the group’s marketing director; his youngest son, Richard Rujugiro, who is technical director; and his son-in-law, Serge Huggenberger, who is financial director.

    Ayabatwa is continuing to advise his sons and son-in-law on company management but is also spending more time on his charitable endeavours. Over the years, he has financed hundreds of scholarships for primary, secondary and university students and—along with his PTG companies—has engaged in numerous other charitable works, including donating cement for area infrastructure, providing seedlings and food to farmers and factory workers and offering job training to unemployed African widows.

    And, given his background, it will come as no surprise that he is developing a foundation mainly to help aspiring African entrepreneurs. Separate from PTG, Ayabatwa is developing a private, nonprofit foundation to provide startup capital, training and education to aspiring African youth. The foundation will offer internships to African engineering students so they can gain the practical experience they need to succeed.

    But, returning to PTG for a moment, I asked how Ayabatwa saw the future for the company. “PTG has established its roots in Africa over the past decades and will continue to grow in line with industry standards and the African economy as a whole,” he said. “We have no doubt that, although it will always retain its African identity with pride, the future of the group will extend far beyond the continent in the coming decades.”

  • Pop star invests in NJOY

    Music star and 13-time Grammy Award nominee Bruno Mars has joined NJOY as an investor. While the terms of the investment were not disclosed, Mars stated that he often uses NJOY’s King product in place of traditional cigarettes and is convinced that it is a revolutionary alternative to cigarettes.

    “I’ve been using NJOY Kings instead of cigarettes these days and I’m sticking to it,” said Mars. “I believe in the product and the company’s mission.”

    “Bruno Mars is an exciting addition to NJOY and we are pleased to have him on board,” said Craig Weiss, CEO of NJOY. “Adding Bruno to our team expands our reach, raising further awareness of the NJOY brand and our company mission to obsolete cigarettes.”

    NJOY King was developed by an award-winning master tobacco flavorist. With a look, feel and flavor that closely mimics a traditional cigarette, it has become the bestselling e-cigarette in the United States.

  • WHO to conduct tobacco cost-benefit analysis

    A team of 20 WHO researchers will conduct a study in Uganda to determine the country’s earnings from the tobacco industry and costs incurred from treating people with tobacco-related illnesses, reports Monitor.

    According to the Uganda Demographic Health Survey 2011, about 15 percent of males and 3 percent of females aged 15-49 use tobacco products. Statistics show that tobacco-related illnesses claim about 13,500 lives in Uganda annually. The government raises UGX80 billion ($30.9 million) per year in tax revenue from tobacco companies.

  • Video interview: BAT’s CEO on 2012 results

    British American Tobacco’s CEO, Nicandro Durante, comments on the company’s 2012 results.

  • Pan African Tobacco Group founder to retire

     

    The Pan African Tobacco Group’s founder, Tribert Rujugiro Ayabatwa, will retire after a 52-year career, passing along the management of his companies to his sons and son-in-law.

    Paul Nkwaya, Ayabatwa’s eldest son, will serve as the group’s marketing director, while his youngest son, Richard Rujugiro, will serve as technical director. Son-in-law Serge Huggenberger will serve as financial director.

    Ayabatwa, 72, will continue to advise his sons and son-in-law on company management, but will no longer be involved in day-to-day operations.

    “I am very proud of what I’ve accomplished over the last five decades,” Ayabatwa said. “I worked extremely hard to create jobs and opportunities for Africa, and have no doubt that my sons and son-in-law will lead my companies successfully into the future.”

    In his retirement, Ayabatwa plans to spend more time on his charitable endeavors. He is developing a foundation mainly to help aspiring African entrepreneurs.

    The Pan African Tobacco Group and the other companies Ayabatwa founded operate in 10 countries and trade in 27 countries in Africa and the Middle East. Combined, Ayabatwa’s companies employ 26,000 people who in turn support at least 182,000—in Sub-Saharan Africa, each employee supports at least seven people. From South Africa and the United Arab Emirates to Angola and Tanzania, Ayabatwa companies manufacture cement, tea, plastic shoes, beer, snack foods and cigarettes.

    Ayabatwa, a Rwandan refugee with just an eighth-grade education, had to create many of his own opportunities. “My goal was never about making money; it was about building something up, creating something,” Ayabatwa said. “That is what I tried to accomplish and that is the legacy I leave to my sons and son-in-law.”

    The Pan African Tobacco Group has subsidiaries in several African countries and in the UAE. Its subsidiaries include Leaf Tobacco & Commodities in Uganda, Vision Tobacco in Dubai, Barco Trading in Angola, Burundi Tobacco Company in Burundi, Leaf Tobacco & Commodities in Nigeria, the Congo Tobacco Company, Mastermind Tobacco Company in Tanzania and Arkan Leaf in Angola.

     

     

     

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  • And the winners are…

    And the winners are…

    Tobacco Reporter hands out its 2012 Golden Leaf Awards.

    TR Staff Report

    Tobacco Reporter handed out its 2012 Golden Leaf Awards on June 14 during the Global Tobacco Networking Forum. The ceremony took place on a conference ship plying the Belgian and Dutch coastal waters. Four companies received trophies in five different categories. Mane Flavors took home awards in two separate categories. The Golden Leaf Awards are sponsored exclusively by BMJ, a global supplier of cigarette papers headquartered in Indonesia.

    Alliance One International received a Golden Leaf Award in the most impressive public service initiative category. The company was recognized for its support of U.S. tobacco growers. In the aftermath of Hurricane Irene and the retreat from the market of U.S. Tobacco Growers Direct (USGD), AOI helped stabilize the U.S. flue-cured market by taking over the USGD contracted tobacco.

    The tobacco business unit of Mane, a global flavorings house headquartered in France, received a Golden Leaf Award in the most outstanding service to the industry and most committed to quality categories. For the past 15 years, Mane’s tobacco business unit has been a world leader in new flavor technology innovations for the global tobacco industry. The company has been at the forefront of major innovations such as filter-flavor technologies as well as side-stream smoke amelioration technologies.

    Perten Instruments received a Golden Leaf Award in the most exciting newcomer to the industry category. The company has put itself firmly on the tobacco map with its new generation of on-line NIR instruments, among other equipment.

    Heinen-Koehl received a Golden Leaf award in the most promising product introduction category for its Twister multipurpose unit. Capable of conditioning and expanding different types of tobacco product, the Twister eliminates the need for soaking silos, saving the customer time and money. The Twister also offers remarkable increases in filling power.

    The 2012 ceremony marked the seventh edition of the Golden Leaf Awards. Established in 2006 to recognize outstanding accomplishments by the industry and its suppliers, the previous events took place in Bali, Paris, Rio de Janeiro, Bangkok, Bangalore and Prague.

    To enter into the 2013 competition, please visit www.tobaccoreporter.com.

     

  • Rising tide

    Rising tide

    Photo: tonyv3112

    The Global Tobacco Networking Forum comes into its own.

    By Taco Tuinstra

    After a cautious start in Rio de Janeiro in 2008, and a significant boost in Bangalore in 2010, Tobacco Reporter’s Global Tobacco Networking Forum truly came into its own in Antwerp this past June. The event not only attracted a record number of attendees from all parts of the world, it also enjoyed the support of major global and regional manufacturers. Some participants have already dubbed GTNF the tobacco industry’s “Davos,” after the prestigious World Economic Forum meetings in Switzerland.

    The background of the GTNF is by now well-known. Aware of the industry’s increasing need for timely information and meaningful interaction, Tobacco Reporter in 2008 came up with an alternative to the congresses that dominated tobacco events at the time. The traditional congress concept was based on one-way traffic, with participants listening to a series of prepared presentations. Interaction with experts was typically limited to a brief question-and-answer session, after which the respective parties went their own ways. The messages of the speakers, however inspiring, were often quickly forgotten as attendees returned to their offices and resumed business as usual.

    Talking with experts from inside and outside the tobacco industry, Tobacco Reporter realized it was possible to make its events more impactful. By tweaking the Congress format to allow for more interaction, the quality of communication would improve significantly. Instead of asking the audience to passively consume a series of lectures, event organizers should offer attendees an opportunity to directly engage with the experts. And because every member of the audience was inevitably an expert in his or her own field, the value of the resulting exchange of information would be greater than the sum of its parts. Thus the GTNF was born.

    While the networking concept had been successfully applied in other industries, it was new to tobacco at the time. Tobacco, of course, is a notoriously conservative industry, so the sector’s initial response to the new forum was cautious. A relatively small number of people attended the first GTNF in Rio de Janeiro, Brazil, but those who did so were well rewarded. When Dayton Matlick, the president of Tobacco Reporter’s parent company, SpecComm International, asked participants at the end of the event to share their thoughts about the forum, the response was overwhelmingly positive. Attendees said the gathering had given them an opportunity to interact with people they would otherwise have not encountered, and that the intimate nature of the discussions lowered the barriers to communications.

    As every marketer knows, there is no better marketing tool than word-of-mouth, and word about the GTNF spread quickly. When Tobacco Reporter held its second forum in Bangalore, India, in 2010, attendance was significantly higher than in Rio. More than 200 industry representatives, including senior executives from leading cigarette makers, traveled to Bangalore to see what the buzz was about. They did not leave disappointed. Some left the event determined to take actions based on the discussions they had participated in. Others said they had become aware of fundamental issues that would affect their business. And virtually everybody Tobacco Reporter spoke to acknowledged that the GTNF had given them new ideas that would benefit their organizations.

    The word continued to spread after Bangalore, and Antwerp became the best-attended GTNF to date. As the number of participants rose, so did the buy-in among the companies that the industry looks to for leadership—the major cigarette makers. GTNF Antwerp was supported, through participation in the forums, by the world’s leading tobacco companies: Philip Morris International, British American Tobacco, JTI, Imperial Tobacco Group, R.J. Reynolds TobaccoCo., National Tobacco and many others.

    Cigarette makers sent some of their top talent, with the GTNF list of speaker biographies reading like a who’s who of the tobacco industry.

    But perhaps the most striking thing about the event’s attendee list wasn’t who participated from the industry, but who participated from outside the sector. In addition to leading financial analysts such as Erik Bloomquist (Berenberg Bank), Bonnie Herzog (Wells Fargo Securities) and Jonathan Fell (Deutsche Bank), the GTNF attracted journalists from some of the world’s leading publications. Jon Copestake and Kevin Dunning of the Economist Intelligence Unit, a sister organization of The Economist magazine, evaluated the industry’s outlook against the global economic environment. Other prominent media speakers included Jamie Dettmer, who has written for The Times of London and the Sunday Telegraph, among other publications, and Mick Hume, editor-at-large of Spiked.

    Even more remarkable was the participation of several leading public health advocates. Scott Ballin of the Alliance for Health Economic and Agriculture Development and Jeff Stier of the National Center for Public Policy are by now familiar faces at Tobacco Reporter events, but the participation of Francis Crawley, Delon Human and Anders Milton represented a true coup. Crawley is executive director of the Good Clinical Practice Alliance, Europe, and aWorld Health Organization expert in ethics; Human is president and CEO of Health Diplomats, a Swiss advisory and consulting practice; and Milton has been a senior adviser to the Swedish government delegation to the World Health Assembly and president of the Swedish Red Cross.

    Participating in sessions on harm reduction, smokeless tobacco and alternative nicotine products, these high-profile health advocates offered the industry an opportunity to interact with its critics in a constructive manner—something that hasn’t always been possible in other settings.

    The GTNF also proved a useful platform to announce new developments. Coresta, the association that promotes international cooperation in tobacco research, announced its new guideline for the treatment of cigarette beetles during the GTNF. The organization’s secretary-general, Pierre Marie Guitton, had graciously agreed to moderate a session on infestation management (and another one on low-ignition-propensity cigarette papers). The organization’s endorsement of the controlled-atmosphere technology as an alternative to existing beetle-control approaches provided a fertile base for discussions.

    In a separate forum, Oded Shoseyov of the Hebrew University of Jerusalem, Avi Tzur of Recon Inc. and Juan Sanchez Tamburrino of ATC Biotec discussed alternative uses for tobacco.

    Other sessions covered topics such as illicit trade, security of leaf supply, the impact of ingredient bans and the threat of plain packaging, which is currently under way only in Australia but is being considered in other jurisdictions. The plain packaging panelists examined the tensions between health considerations and intellectual property rights. They also assessed the strength of the industry’s pending court challenges against the measure and the potential unintended consequences, such as increases in counterfeiting.

    The presence of both manufacturers and suppliers on the panel and in the audience enabled participants to view the topics from different angles than they might have been accustomed to. For example, corporate affairs people, who might normally look at the plain packaging issue from a legal perspective, had an opportunity to see the issue from a printer’s perspective, and vice versa.

    Patrick Basham, director of the Democracy Institute, was in top form as he set the agenda and guided the audience through the program. In doing so, he skillfully drew on his extensive industry knowledge and sense of humor. On the morning following the Golden Leaf Awards banquet and celebration, Basham helpfully recited the dictionary definition of hangover.

    Fred Vandermarliere, director of Gryson Tobacco Co., welcomed delegates to his home country and provided an entertaining overview of Belgium’s history, covering the kingdom’s various occupiers, its linguistic struggles and cultural treasures, such as Duvel bier and Manneken Pis, the famous bronze sculpture depicting a naked little boy urinating into a Brussels fountain basin.

    Unlike the previous editions of the GTNF—which were held on dry land—the Antwerp event took place on two event boats that had been reconfigured to accommodate conferences. The setup proved ideal for networking—although in the downstairs rooms the noise of the engine at times forced participants to raise their voices, especially during docking maneuvers. In between sessions, delegates mingled in the bar area or went outside on the deck to enjoy a smoke and—on the first day of the event—the abundant sunshine.

    This being northern Europe, the pleasant weather didn’t persist, but that didn’t dampen the mood. The passengers simply moved inside to the upper deck, where instead of banning smoking, the organization had simply asked smokers to be considerate in deciding where and when to light up.

    As the Belgian and Dutch landscape slid past in the background, you could see procurement managers mingling with leaf suppliers and instrumentation manufacturers talking to health advocates. CSR managers drank coffee with automation specialists, while financial analysts exchanged cards with fumigation experts. The interaction continued during the gala dinner. Instead of sitting only with colleagues, many participants stepped out of their comfort zones and shared a table with people they didn’t know before. Some even dined with their competitors.

    If anybody ever doubted the GTNF concept, the networking crowds on the Oceandiva conference ships would have convincingly disproved their reservations.