Category: Leaf

USTC Plans Bankruptcy Exit

Photo: USTC
U.S. Tobacco Cooperative (USTC) has begun planning an exit from Chapter 11 bankruptcy later this summer. The cooperative originally filed for protection in July 2021 to meet contractual obligations to its member growers while the company faced uncertainty presented by an ongoing class-action lawsuit.
Oscar House
“On February 2, after 17 years of litigation, we were able to reach economic terms of a settlement with the Lewis Class,” said USTC CEO Oscar J. House. “As we await final approval from the court this summer, we are beginning to prepare our exit from bankruptcy and continue providing the exceptional service and quality products our organization is known for across the globe.”
USTC originally filed for protection in federal bankruptcy court to satisfy obligations to its 550-plus member-growers, 200-plus employees, suppliers and customers. The settlement and plan of reorganization will allow the cooperative to honor its commitments worldwide and emerge from bankruptcy well positioned to serve its member-growers. Details of the agreement will be provided in the ordinary course of obtaining formal court approval of the settlement and USTC’s plan of reorganization.
“USTC is healthy and set for a sustainable, successful future,” continued House. “Throughout the bankruptcy process we have fulfilled all obligations to all stakeholders: our customers, grower-members, vendors and employees. Going forward we will continue to do so, stronger than ever.”
February 17, 2022
Voedsel To Set Up Leaf-Processing Plant

Photo: Taco Tuinstra
Voedsel Tobacco International will set up a $6 million leaf-processing plant in Rusape, Zimbabwe, this year, reports Bulls n Bears.
“We have purchased the material to set up a tobacco-processing plant for the value addition of tobacco,” said Voedsel’s commercial director, Tennyson Hwandi.
“This process involves beneficiating the tobacco from its state into a semi-finished product. It also means that there is going to be more earnings for the farmers as we grow the value chain. As an indigenous company, we are proud to have achieved this as this creates new jobs.”
Hwandi said the plant is expected to start operations this year.
Voedsel’s investment is in line with the government’s Tobacco Transformation Plan, which aims to grow the Zimbabwean tobacco industry to $5 billion by 2023 by increasing the level of value-added tobacco to 30 percent from the current 2 percent.
February 17, 2022
Zimbabwe Licenses Buyers for 2022 Season

Photo: Taco Tuinstra
Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) has licensed 33 buyers and 31 contractors for the 2022 tobacco marketing season, reports The Herald.
TIMB statistics indicate that 122,769 growers have registered for the 2022 growing season compared with 145,625 last year.
According to Tobacco Association of Zimbabwe President George Seremwe, most farmers with an irrigated crop have finished reaping, and some have started grading their leaf.
“The dry land tobacco was planted a bit late, so most of the farmers are on their first reaping,” he added. “Most of the small-scale tobacco farmers grow dry land tobacco, which is still in the field.”
The Zimbabwe Tobacco Association expects good yield despite adverse weather during the growing season. “The crop has grown out well and clean in many areas and naturally in areas that received large amounts of rain,” said ZTA Chief Executive Rodney Ambrose.
Ambrose did, however, express concern over electricity supply. “Extensive load shedding coupled with faults has seen growers go days and weeks without power,” he said.
During the 2022 tobacco marketing season, growers will retain 75 percent of their earnings in hard currency, up from 60 percent last season.
February 17, 2022
Decentralized Marketing Continues in Zimbabwe

Photo: Taco Tuinstra
The decentralized auctioning of tobacco is now a permanent feature of Zimbabwe’s tobacco marketing system, reports The Herald, citing the Tobacco Industry and Marketing Board (TIMB).
Previously, tobacco sales were conducted exclusively in the capital, Harare, causing farmers to incur transportation cost and forcing them to spend days away from their fields. The centralized auction system dates from the time that Zimbabwe’s tobacco industry was dominated by commercial plantations with a limited number of large-scale growers.
Following the land reform program of the early 2000s, Zimbabwean tobacco production is now characterized by small-scale production, with hundreds of thousands of participants each selling relatively small amounts of tobacco.
Decentralized sales started in 2021, with floors opening in Marondera, Rusape and Karoi Mashonaland West, among other locations.
TIMB CEO Meanwell Gudu said decentralization of sales would continue in 2022 because it brought convenience and reduced transport cost to farmers who sold their golden leaf at the nearest town.
“The decentralization is very positive because it is in line with government policy on devolution,” he said.
During the 2021-2022 summer cropping season, Zimbabwean farmers put just over 105,000 ha of land under tobacco, down from 106,494 ha last year.
According to the TIMB, more than 121,000 farmers had registered to grow tobacco during the 2021-2022 season by Dec. 31, a decrease from the 144,462 growers who had signed up during the same period the previous year.
February 4, 2022
Zimbabwe Leaf Earnings Up

Photo: Transcom Sharaf
Zimbabwe has earned more than $80 million from tobacco exports to date this season, up from a little over $17 million during the same period of the prior year, reports The Herald. The country has exported 15,777 tons so far compared with 573 tons in the comparable period of the previous selling season.
Industry representatives attribute the jump to the timing of shipments. According to the Tobacco Industry and Marketing Board (TIMB), companies with customers in the Far East have moved their tobacco to ports in South Africa earlier than normal to secure space on vessels.
“During the same period last year, due to the Covid[-19] pandemic, efficient shipment of goods was affected as some shipping lines canceled their vessels,” said TIMB spokesperson Chelesani Moyo.
The Far East was the top destination for Zimbabwean tobacco, with local companies exporting 190,153 tons worth $67.5 million to date.
The Middle East imported 2,614 tons worth $6,49 million while the European Union bought 1,543 tons worth $3.71 million. African countries imported 927 tons worth $2.06 million, and the Americas bought 14 tons valued at $1.73 million, according to the TIMB.
More than 140,000 farmers now engage in tobacco production while close to 1 million people are directly dependent on the golden leaf.
Tobacco generates 30 percent of Zimbabwe’s foreign currency earnings, bringing in more than $600 million annually.
To learn more about the impact of Covid-19 on global tobacco shipments, see “Taking Freight,” in this month’s issue of Tobacco Reporter.
January 20, 2022
Fewer Tobacco Growers in Zimbabwe

Photo: Taco Tuinstra
The number of tobacco growers in Zimbabwe has declined by nearly one fifth, reports The Herald, citing the Tobacco Industry and Marketing Board (TIMB).
More than 120,000 people registered to grow tobacco for the current season, compared with 144,462 who registered during the same period last year.
The decline is attributed to the TIMB’s stricter grower vetting process and challenges facing the tobacco industry.
“Many farmers have tried and have fallen short, which is why we have less registered farmers,” said TIMB Public Affairs Officer Chelesani Moyo. “We place more pride in having fewer but legitimate tobacco growers whom we know will follow due diligence in all tobacco production processes and produce tobacco in quality ranges one to three by 2025.”
Tobacco Association Zimbabwe President George Seremwe blamed the decline in registrations on the fact that some farmers had incurred losses during the previous season.
“Too much cartels on one cake in the industry,” he said. “Surrogate contractors short changed farmers last season. We cannot have tobacco farmers not paid from last season up to now.”
Following complaints that some buyers were charging excessive premiums for inputs, manipulating prices and paying late, the TIMB has cracked down on contractors. Recently, the regulator also announced stiffer penalties for side marketing.
In related news, the government has given farmers who are still planting tobacco as a result of erratic rainfall at the start of the current farming season until Jan. 10 to destroy seedbeds.
Under normal circumstances, Zimbabwe requires tobacco farmers to destroy their seedbeds by Dec. 31 each year to prevent the spread of pests and diseases.
January 7, 2022
Stiffer Penalties for Side Marketing in Zimbabwe

Photo: Taco Tuinstra
The Tobacco Industry and Marketing Board (TIMB) of Zimbabwe plans to introduce stiffer penalties for “side marketing” of tobacco, reports Daily News. Side marketing is a form of contract default in which a farmer agrees to grow for one buyer but sells to another. When this happens, the contracting merchant not only loses his tobacco but also the agricultural inputs he provided to the farmer.
“TIMB has zero tolerance to side marketing,” said TIMB public relations officer Chelesani Moyo. “We are encouraging all stakeholders involved in the production of tobacco to stop the practice and make the tobacco farming business sustainable in Zimbabwe as we look ahead to the 2022 tobacco marketing season.”
At the same time, the TIMB has introduced measures to protect farmers from being shortchanged by contractors through underfunding and overcharging inputs.
The organization is currently analyzing the latest submissions from contractors who previously were not compliant.
“We have 37 licensed contractors, and nine out of the 37 are partially compliant because they have submitted partial regulatory information that we require,” said Moyo.
“We gave them up until Dec. 31, 2021, to ensure they are fully compliant. We are going to suspend those who are noncompliant, and farmers will be released and allowed to be contracted to other schemes.”
January 5, 2022
Greening the Golden Leaf

Photo: Tobacco Reporter archive
Independent leaf merchants are working to improve the sustainability of tobacco cultivation.
By Stefanie Rossel
With only eight more years to go until most of the United Nations (U.N.) Sustainable Development Goals (SDGs) are to be achieved, sustainability is becoming ever more critical in the tobacco sector.
“In recent years, we have seen sustainability grow in importance to a point where it is addressed in almost all key internal and external engagements,” notes Mat Wilde, head of group sustainability at Contraf-Nicotex-Tobacco (CNT), a Germany-based company involved in the worldwide growing, sourcing, developing, processing, extracting and producing of leaf tobacco, nicotine and natural ingredients, among other agriculturally derived products.
Set up in 2015 by the U.N. General Assembly, the SDGs comprise 17 goals designed to be a “blueprint to achieve a better and more sustainable future for all.” Goals include the elimination of poverty and hunger, quality education, health and well-being, gender equality, clean water and sanitation as well as the reduction of inequality, responsible consumption and climate action.
While the leading international tobacco manufacturers in 2016 launched the Sustainable Tobacco Program (STP), an initiative that operates in more than 52 countries and gathers data on more than 180 suppliers of tobacco across 5 million smallholders, independent leaf merchants have also intensified their endeavors to support tobacco growers in their work toward more sustainable production.
“I have always supported the growers,” says Rick Smith, founder of Wilson, North Carolina, USA-based Independent Leaf Tobacco Co. “They must be made whole for the industry to thrive. I have stepped up my efforts recently, certainly on types in short supply.”
CNT works directly with its stakeholders on its sustainability efforts and supports its farmers in implementing best practices. “At the core of our approach with our farmers is our training program, where we aim to train growers on both the ‘why’ and the ‘how’ of sustainability topics,” says Wilde. “Understanding the context in each local operation, the root cause of prioritized issues and ensuring farmer financial sustainability is embedded within our programs. All are vital in working with our farmers to meet our common goals. Integrating key stakeholders, including farmers, farmer organizations, community, nongovernmental organizations and experts, within our projects and programs increases the impact and level of success.”

Rick Smith
Creating Awareness
In a world characterized by declining smoking rates, sustainability includes ensuring financial viability for tobacco growers. For this reason, Norton Leaf Tobacco (NLT) of Zimbabwe educates its farmers on the need for diversification. “The government of Zimbabwe has introduced initiatives such as pfumvudza, a farming approach designed to maximize efficiency of labor and input resources,” explains NLT General Manager Alice Mukome Chiwanza. “NLT has field staff trained in the practice that ensures its farmers are able to increase both hectarage and yield of grains. Thus our officers are now training farmers to employ this method to encourage food security at [the] household level while assisting with the growing of the tobacco crop.”
While NewCo Global Tobacco Trade and Service does not interact directly with farmers (it buys from partners and other leaf merchants), sustainability plays a key role in all of the German company’s activities. In September 2021, the company established NewCo Pro Services and Trade to handle the group’s diversification efforts and nontobacco activities.
“This company’s main focus is to provide a proactive approach to global, social and environmental challenges as well as partner with entrepreneurs that have innovative solutions for a better future,” says Jose Maria Costa, senior executive advisor with NewCo Tobacco Services. “Through NewCo Pro Services and Trade, we are committed to doing our best efforts to make the United Nations Sustainable Development Goals a reality. As such, we are in the process to market Sydney 905 water filters globally. These filters have proved to be one of the most efficient ways to get safe water regardless of water source. By providing access to safe water, we eliminate the need to use charcoal, which in many parts of the world is used to boil the unsafe water.”
NewCo has also started replacing the plastic bags that are still used in the tobacco industry for tobacco samples with more environmentally friendly alternatives. “Most of the plastic bags that are used today for storing and shipping tobacco samples are not biodegradable and therefore they are not environmentally friendly. After several months of research and testing, we have placed our first order for the new bags, which are made out of potato starch and are 100 percent compostable and food-certified. Our plan is to contact all our suppliers, vendors and customers and offer them the possibility to make the same change NewCo has made and contribute to a world that is more sustainable.”

Jose Maria Costa
New EU Anti-Deforestation Law
Worldwide, regulatory pressure on tobacco and tobacco products continues to increase, also in terms of sustainability issues. On Nov. 17, 2021, the European Commission announced a plan to ban the sale of agricultural products raised on deforested and degraded lands. The move is an attempt to ensure forests around the world remain intact and continue to absorb carbon dioxide as they grow. According to the U.N., the world has lost 420 million hectares of forest in the past 30 years—an area larger than the EU. During the recent U.N. Climate Change Conference, more than 100 states pledged to end deforestation and land degradation by 2030. For the time being, the European Commission’s list targets soy, beef, palm oil, coffee, cocoa and wood; while tobacco is not part of the commodities mentioned, the draft leaves room for future amendments.
In a 2017 report on the environmental impact of tobacco, the World Health Organization expressed concern about the impact that leaf cultivation has had on forests since the mid-1970s. The health body estimates that 11.4 million tons of wood are required annually for tobacco curing. After processing, additional wood is needed for the production of cigarette and rolling papers as well as for packaging. As tobacco requires lots of nutrients, with soils being leached after two years to three years, land extension leads to further forest depletion.
Smith notes that regulation should strike a balance. “Any laws restricting free trade affect us all and are usually detrimental to the people they are intended to help,” he says.
“The tobacco industry needs to act responsibly to ensure that sustainability is at the center of all its activities,” Costa says. “From the farmers to the cigarette manufacturers, the entire value chain needs to protect all natural resources, including the forest.”

Newco has been marketing Sydney 905 water, which allow users to get safe water regardless of source. (Photo: NewCo)
Comprehensive Measures
NLT is a member of the Sustainable Afforestation Association (SAA), a Zimbabwean nonprofit organization funded by tobacco merchants that was established in 2013 (also see “Taking Root“). “NLT has been a member since we started operations in 2018,” says Chiwanza.
The SAA aims to retain and grow existing indigenous commercial forests. One of the ways in which it has sought to do this is by entering into joint ventures with farmers in tobacco growing areas to set up eucalyptus plantations. Eucalyptus not only grows quickly but also provides good firewood.
“The bulk of Zimbabwe’s tobacco is grown by small-scale farmers who use wood-fired barns to cure their tobacco,” Chiwanza says. NLT also holds field days and workshops, encouraging farmers to grow trees and offering advice on best practices. SAA’s activities should help Zimbabwe remain compliant with anti-deforestation laws, such as the one pending in the EU.
Fighting deforestation has been a priority at CNT for years, Wilde emphasizes, primarily for flue-cured tobacco in origins that use fuel wood but also for other tobacco types—with deforestation linked to curing fuel, barn construction material and land clearance. “Addressing deforestation has been a focus prior to external regulation, with necessity of ensuring continuity of the industry in some locations being a key driver for change, along with meeting communities’ expectations of the business and ensuring our ‘social license to operate.’ Having a robust traceability system in place, connecting tobacco to its growing source, farmers and the activities carried out on farm is key for transparency and meeting increasing supply chain legislation—both for human rights and the environment.”
The company has identified high-risk origins within its supply chain and implemented systems aimed at mitigating deforestation. “The EU draft law on supply chain deforestation highlights the priority of this topic and reinforces the urgency of addressing these issues in high-risk origins, both as a company and as an industry,” says Wilde.
CNT’s reforestation efforts comprise education and awareness programs for its farmers, community and stakeholders. “Training farmers on legal requirements, conservation and reforestation practices, and listening to our stakeholders on localized issues helps to address deforestation and reforestation,” Wilde points out. “Training is supported by farmer monitoring by Extension staff, the results of which are analyzed to feed back into response projects and training cycles. We run various reforestation and carbon projects within our origins. Tailoring reforestation and conservation response programs to the local context and working with expert partners in addressing the local hurdles to success is core in our sustainability strategy.”
Spying Opportunity: Norton Has Great Expectations of Zimbabwe’s Tobacco Transformation Plan
In September 2021, Zimbabwe’s government approved the tobacco value chain transformation plan, which aims to transform the sector, currently valued at $1.2 billion, into a $5 billion industry by 2025. Launched by the Tobacco Industry and Marketing Board (TIMB), the initiative aims to turn the economy around through agriculture, boosting national income and foreign exchange to the levels from before Zimbabwe’s land reform program, which turned the industry from one dominated by large-scale commercial tobacco plantations to one characterized by smallholder production.
The plan calls for an increase of annual tobacco production from 200 million kg to 300 million kg, the exploration of alternative crops in anticipation of lower smoking rates and an increase in value addition and beneficiation from 1 percent of the tobacco crop to 30 percent.

Alice Mukome Chiwanza
Farmers have welcomed the initiative. “I believe this to be a great idea,” says Alice Mukome Chiwanza, general manager of Norton Leaf Tobacco (NLT), a local tobacco merchant. “Under the TIMB, Zimbabwe only exports at the very least semi-processed tobacco. Further beneficiation can be understood to mean [anything from] increasing the local production of regular—combustible—cigarettes to producing vaping devices. This will do wonders for the tobacco industry as it will mean employment, investments in the form of infrastructure, such as processing plants, and greater revenue as we will be exporting end products as opposed to raw materials that still need further processing.”
According to Chiwanza, this would also present a welcome opportunity for NLT to grow its sales to supply products, such as cut rag, to local cigarette manufacturers while eliminating shipping costs that have been a large deterrent in exporting. “It may also create the option of partnerships allowing companies such as ours to venture into new technology and therefore [new] markets. The ministry’s plans also include localization of tobacco financing, which should significantly reduce borrowing costs for companies such as NLT. Being a wholly Zimbabwean company, NLT is poised to grab any plans encouraging increased local involvement in the tobacco industry.” – S. R.
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 1, 2022
Rare Spice

Photo: Kavex
Oriental tobacco production has hit a record low, but crop quality is higher.
By Stefanie Rossel
After peaking at 202,000 tons in 2014, oriental tobacco production has seen many ups and downs. This year marked a new low of 128,000 tons, according to International Tobacco Growers’ Association analyst Ivan Genov, citing data from Universal Leaf. Nonetheless, in 2020, Turkey and Greece managed to increase their export earnings from the crop by $6 million and $26 million, respectively, Genov noted.
According to Dora Gleoudis, managing director of Greek leaf tobacco exporter Nikos Gleoudis Kavex, the classical oriental variety grown in the Balkans, including the Turkish Izmir and Samsun varieties, accounted for approximately 92,0000 tons of the total volume. Gleoudis believes global supply and demand are balanced at current crop size levels.
Next to dark air-cured tobacco, oriental leaf has always been a low-volume niche. It is nevertheless an important variety as it provides tobacco blends with a distinct, spicy aroma. Oriental tobacco is cultivated in dry areas with little rain and lots of sun, which leads to a lower nicotine content compared to flue-cured Virginia (FCV) and burley styles. Classical oriental tobacco is grown mainly in Turkey, Greece, North Macedonia and Bulgaria. Thailand, India, Albania, the Commonwealth of Independent States countries and China also cultivate certain varieties.
In contrast to an FCV plant, which can have up to 30 large leaves, the oriental plant can grow up to 100 smaller and darker leaves. Harvesting and curing differs too: The crop is harvested mostly manually and then sun-dried for about a week, a process that contributes to retaining some of the natural sugars in the leaves. The hint of sweetness in oriental and its unique taste make it a key ingredient not only in American blend cigarettes but also in many roll-your-own and pipe tobacco brands as well as in shisha tobacco and heated-tobacco products.
A Labor-Intensive Crop
Kavex’ portfolio includes the main oriental varieties, including Basma and Katerini from Greece and Albania; Prilep and Yaka from Macedonia; Krumovgrad and North Bulgaria from Bulgaria, and Izmir and Samsun from Turkey. The recent drop in production volume was driven by a combination of weather and the aging of tobacco growers, among other factors, according to Gleoudis. “Young people still staying in their villages turn to other crops that are easier to handle,” she says. “Additionally, drought during the summer period has negatively affected the crop size.”
The quality of the current oriental crop, though, she points out, was higher than that of the previous crop, especially in North Macedonia. The Covid-19 pandemic did not have much of an impact on production, said Gleoudis, who is more concerned about the price of energy, which has skyrocketed in Europe.
Oriental leaf cultivation is known to be costly and labor intensive. Little machinery is used for planting and harvesting. It is estimated that it takes 120 manhours to 150 manhours to cultivate one acre of Greek oriental tobacco.
Recently, stakeholders have attempted to introduce more mechanization and automation into the cultivation process. A new oriental harvester, developed jointly by VIT and Philip Morris International, was trialed during the summer of 2020 (see “The Oriental Express,” Tobacco Reporter, January 2021). First tests showed that the machine, when used to harvest crops in four stalk positions, was able to harvest eight hectares of oriental tobacco or up to 12 tons of cured oriental tobacco during one season with only two people.
Whether such efforts will succeed remains to be seen. At press time, the new technologies in curing and harvesting were still at an experimental stage, according to Gleoudis.
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 1, 2022
New Hurdles Ahead

Photo: Attasit
Growers discuss the challenges and opportunities facing their sector during ITGA’s annual Issues Day.
By Stefanie Rossel
Increasing regulatory pressure, sustainability, climate change and child labor emerged as the main challenges during the International Tobacco Growers’ Association’s (ITGA) Issues Day on Nov. 18. Due to the ongoing Covid-19 pandemic, the conference for took place virtually for the second year in a row.
The ITGA’s president, Abiel M. Kalima Banda, described 2021 as another year of limitations. Interestingly, though, the Covid-19 crisis wasn’t as bad for the tobacco industry as it was for other businesses, as ITGA’s CEO Antonio Abrunhosa pointed out. Especially in the main leaf countries, production went back up again, with markets returning to normal.
However, new regulations are presenting new challenges to farmers. For example, just one day before the ITGA meeting, the European Union executive outlined a draft law requiring companies to prove that agricultural commodities destined for the bloc’s 450 million consumers were not linked to deforestation. “The future of regulation will be tougher than it is now,” said Abrunhosa. “Growers will suffer the greatest part of sustainability issues. Buyers must be aware that farmers need a decent income to be sustainable and support their families.”
While burley witnessed another year of decline, flue-cured Virginia (FCV) volumes in Brazil, Zimbabwe, the U.S. and China experienced a boost, according to ITGA tobacco expert Ivan Genov, referring to data provided by Universal Leaf. An even higher growth rate is expected for 2022, but it is likely to remain below the range that was the norm before the pandemic. Growers are faced with steadily increasing production costs, Genov said. “The situation remains volatile; the pressure on the sector remains strong. Sustainability issues will increase and intensify further.”
Slight Recovery
Ivan Genov
World tobacco leaf production stood at an estimated 4.74 billion kg in 2021, with FCV production amounting to 3.47 billion kg, slightly up from 3.37 billion kg in 2020. By 2022, production is anticipated to reach 3.5 billion kg. Dark air-cured production remained stable at 111 million kg in 2021, whereas oriental declined from 155 million kg in 2020 to 128 million kg in 2021. Burley production declined to 411 million kg in 2021 from 446 million kg a year earlier. The latter crop is expected to recover next season, with production going back up to 468 million kg in 2022, which would still be below pre-Covid-19 levels.
Seven of the world’s top 10 tobacco exporters by volume saw declines in 2020. Brazil’s exports dropped from 530 million kg in 2019 to 485 million kg in 2020; China’s exports declined from 194 million kg in 2019 to 186 million kg in 2020; and India’s exports decreased from 186 million kg in 2019 to 177 million kg in 2020. Only Argentina and Turkey registered a minor increase in production for export, according to U.N. Comtrade figures.
In terms of value, Brazil finished first with $1.51 billion worth of tobacco exports in 2020, followed by Zimbabwe ($741 million) and the United States ($695 million). According to Universal Leaf, China will provide around 50 percent of global FCV production in 2021, followed by North, Central and South America with a combined 24 percent share. Africa and the Middle East, currently standing at 10 percent, are expected to increase production volumes in 2022.
Growers in the U.S. and Zimbabwe suffered challenging working conditions in 2020. The U.S. fought a trade war with China, whereas Zimbabwe was hit hard by Covid-19, which delayed auctions. On Nov. 8, the country’s ministry of lands and agriculture announced plans to generate more value from its tobacco sector. It aims to create a $5 billion tobacco industry by 2025.
Cigarette Value Under Pressure
Shane Macguill
Shane MacGuill, Euromonitor global lead for nicotine and cannabis, looked at the current key drivers in the global tobacco market. The Covid-19 disruption, he observed, has created both threats and opportunities. The pandemic will potentially have implications in the medium term regarding consumer choice and disposable income. Significant prevalence and visibility declines, caused by tobacco control, he noted, will probably be the long-term key driver. MacGuill expects this to ease a little in the future, though. Heated-tobacco products (HTPs) and nicotine pouches have broadened the nicotine universe and caused a fragmentation. “As a consequence, cigarette value will diminish over time,” he said. Regulatory innovation has been key in the tobacco space historically and is expected to continue, potentially even further. MacGuill singled out the “beyond nicotine” sector as another key driver.
In 2020, global cigarette volumes just held up, whereas value came under pressure, according to MacGuill. Excluding China, consumption stood at 2.79 trillion cigarettes. Illicit product accounted for 12 percent of cigarette sales.
The value of cigarette sales declined by 0.2 percent in 2019–2020, while stick equivalent value rose 1.4 percent. The overall value of the global cigarette market was $484 billion, and the global average pack price was $2.77, or $3.47 excluding China. Cigarettes represented an 84 percent share of total value sales (81 percent excluding China).
Between 2015 and 2020, total cigarette demand grew most in Ethiopia, Jordan, Egypt, Hong Kong, Cambodia, Brazil, Vietnam, Algeria, Lebanon and El Salvador—primarily developing countries that saw migration from other tobacco categories into the cigarette category and perhaps lower regulation and excise. Demand fell most in Japan, Sri Lanka, South Africa, Ukraine, Peru, the Philippines, Australia, Saudi Arabia, Lithuania and Greece. Here, the decline was pushed by a combination of strong regulatory measures, increased taxation and the rise of cigarette alternatives. HTPs were driving substantial cigarette volume loss, most notably in Japan.
Of the top 15 stick markets, Egypt, Vietnam, Bangladesh and India are expected to grow in stick/stick equivalent volume.
HTPs Heating Up
Global illicit cigarette trade dropped during 2020 as border closures and lockdowns interfered with illicit supply chains. However, MacGuill expects a return in growth, with illicit trade standing at around 15 percent eventually. Eastern Europe and Asia-Pacific will be among the most affected regions over the next five years as a result of affordability.
“HTPs will cement their place at the head of the vapor growth narrative,” MacGuill predicted. “With the leading growth markets between 2020 and 2025 including Russia, Germany, Poland, the U.S., Japan, Italy, Ukraine and South Korea. To consumers, availability, ease of use, the possible impact on health but also price are among the most important product features. In a consumer survey, lack of information on the products was named as the essential barrier for not using HTPs.”
Nicotine pouches reached a value of $1.2 billion in 2020. With benefits from lower barriers to consumers’ communication and—for the time being—less regulatory pressure, the segment is expected to grow by 40 percent to 2025.
During 2020, overall monthly nicotine use grew in 17 markets, possibly due to pandemic-related factors, such as boredom and stress, according to Euromonitor. While cigarette use mostly declined or stayed flat and e-cigarette use plateaued in some key markets, HTPs saw a significant uptake. Across formats, price remained the key product feature.
Many tobacco manufacturers see their future in “beyond nicotine” products, especially in the field of cannabis. According to MacGuill, investors are now assigning greater value to nicotine companies that are more diversified away from combustible products. Companies are also likely to focus more on cannabis as a potential substitute for their tobacco and nicotine products. Sales are set to reach $92 billion by 2026. Key trends in the cannabis space include a wider range of ingredients and formulations, targeting new populations, such as gamers, and new occasions, such as cannabis products in tins for dogwalkers.
More Regulation Looming
Michiel Reerink
Michiel Reerink, corporate affairs director and managing director at Alliance One International, listed the outcomes of the ninth session of the Conference of the Parties (COP9) to the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC), which took place Nov. 8–13, 2021. Among other things, COP9 delegates agreed on the creation of an investment fund to support control activities and noted and deferred to WHO reports on technical matters including HTPs as well as on research and evidence on novel and emerging products without discussion or decision until COP10 in 2023.
In the EU, the Supply Chain Due Diligence Act will increase the industry’s regulatory burden. In March 2021, the European Parliament adopted a resolution on corporate accountability, which stipulates a due diligence requirement for human rights and environmental standards that is likely to be aligned with OECD and United Nations Guiding Principles. By now, 15 EU member states have adopted human rights at the supply chain level. “Suppliers should prepare for this legislation,” Reerink said. “Due diligence should already be part of their company code of conduct.”
Finding Alternative Livelihoods
Heliodoro Campos, manager of the National Tobacco Fund in Colombia (Fedetabaco), described the plight of small-scale tobacco farmers in his home country. The sudden exits of Philip Morris International and British American Tobacco in 2019 and 2020, respectively, left thousands of tobacco famer families struggling for alternative sources of income (see “Blueprint for Exit,” Tobacco Reporter, March 2021). A conversion plan that envisaged the cultivation of permanent crops, such as Tahiti lemon, for the 30 percent of families that are landowners and transitory crops, such as maize or yuca, for the remaining 70 percent of families who lease their land did not materialize, as Colombia didn’t provide the required financing.
Campos’ presentation was a cry for help. Stakeholders are now hoping that a new conversion plan that foresees the production of non-THC cannabis will yield better results. A pilot project is expected to provide insights into the cost of production and potential profitability next year. Campos said he was trying to find resources for this plan, also internationally.
Stepping up the Fight
Innocent Mugwagwa, senior manager of the Eliminating Child Labor in Tobacco Growing Foundation (ECLT), outlined the development of his organization, which has moved from focusing on implementing small projects in Africa in the first decade of the millennium to signing pledges of commitment with companies and addressing minimum requirements for businesses and human rights in the 2010s.
In 2021, the foundation started concentrating on technical assistance, supporting governments so that they can protect children’s rights and supporting businesses to prevent and remedy child labor. It will also cooperate more closely with the ITGA to strengthen famers’ voices in defining fair standards and educate farmers in languages they understand. “We already worked together with the ITGA in the education of farmers on Covid[-19],” Mugwagwa explained. Furthermore, the ECLT will leverage governments and businesses to support ITGA members’ and farmers’ efforts in combatting child labor.
The ITGA’s vice president, Jose Aranda, closed the conference by emphasizing that a unified voice and strengthened efforts were needed to fight the challenges. “We must understand that the new challenges to our sector are threatening, with increasing regulations and the growing popularity of products without tobacco. Some markets are already gone.”
Antonio Abrunhosa
Vázquez succeeds Abrunhosa as ITGA CEO
The International Tobacco Growers Association appointed Mercedes Vázquez as its new CEO during the organization’s 36th annual general meeting, which took place virtually Nov. 18-19. Vázquez succeeds António Abrunhosa, who announced his retirement after serving in the position since 1998.
Members expressed their gratitude and highlighted Abrunhosa’s role in positioning ITGA as a key player in the global tobacco sector.
“In my new role I will do my best to continue this learning process from all of you so I can ensure and reinforce the long-lasting relations with our partners so we can together overcome the common challenges we are facing in our sector,” said Vázquez.
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 1, 2022