Tag: Egypt

  • Bank Policies Threaten Egypt’s Leaf Imports

    Bank Policies Threaten Egypt’s Leaf Imports

    Photo: Taco Tuinstra

    The reluctance of banks to open the documentary credits required to import leaf tobacco is endangering the operations of Egypt’s tobacco factories, reports Egypt Independent, citing the Tobacco Division of the Federation of Egyptian Industries ((FEI).

    FEI Division Head Ibrahim al-Embabi warned that more than 23 factories will close following the Eid al-Fitr holiday, after which they will have used their entire stock of raw tobacco. Due to a ban on tobacco cultivation in Egypt, the country’s tobacco industry is entirely dependent on leaf imports.

    Earlier this year, Egypt’s Central Bank of Egypt stopped collecting documents upon import, requiring importers to cover the entire value of the shipment before importing. The decisions forced many factories, including tobacco manufacturing plants, to suspend their imports of raw materials.

    Al-Embabi said that stopping the import of raw materials and the consequent disruption of production will lead to the displacement of nearly 30,000 direct workers in the sector, and threaten the state’s intake of taxes and fees paid by cigarette and tobacco companies, which exceed EGP79 billion ($4.27 billion) annually.

    Tobacco factories import raw materials worth about $500 million each year while exports reach $120 million annually.

    The remaining percentage is used to satisfy the needs of the local market. Despite its high consumption of imported raw materials, the tobacco sector is the state treasury’s most important source of revenue, according to al-Embabi.

  • Egypt Legalizes E-Cigs

    Egypt Legalizes E-Cigs

    Photo: Dzmitry

    The vapor industry has welcomed Egypt’s decision to allow the import and commercialization of e-cigarette product.

    “The lifting of the ban highlights the Egyptian authorities’ progressive approach to e-cigarettes and sets the stage for the creation of a regulated market rich with business opportunities, through serving the demand for easily accessible, quality products by legal age (adult) consumers across the country,” wrote RELX International, a leading player in the segment, in a statement dated April 24.

    With its recent decision, Egypt joins global and regional markets, such as Kuwait, Saudi Arabia and the United Arab Emirates, which have legalized and commercialized the consumption of e-cigarettes. As regulators around the world become more accepting of e-cigarettes, the market is expected to continue its steady growth in the coming years.

    As of March 2022 global e-cigarette market revenues were $22.95 billion, and the market is expected to expand annually at a compound annual growth rate of 4.19 percent until 2027, according to Statista.

    “The decision by Egyptian authorities reflects its commitment to support legal businesses in the country while cracking down on the illicit trade of those products, in line with what we are seeing in an increasing number of markets around the globe,” said Robert Naouss, REXL International’s external affairs director for the Middle East, Northern Africa and Europe

    “The business and investment environment in the country will significantly benefit from this decision, as will adult consumers who can now conveniently, and legally, purchase better alternatives to combustible cigarettes. We look forward to working with our partners to grow and protect their income via our portfolio of quality products”

    By lifting the ban on e-cigarette products, Egyptian authorities have opened the door to a plethora of business and investment options, according to RELX International. “Authorized e-cigarette products are traditionally retailed by small- and medium-sized businesses, so the move will bolster existing businesses that sell such products, and will attract entrepreneurs wishing to set up new retail points across the country. It will likewise draw investment into the country from e-cigarette brands who wish to set up shop in the country and address the market,” the company wrote in its statement.  

    “Adult consumers stand to benefit from the move, as they now have legal access to e-cigarettes whether they wish to switch to a better alternative to traditional cigarettes. Several health authorities and regulators including the U.K.’s NHS and the Ministry of Health of New Zealand have positively clarified their position on vaping as a way for people to move away from smoking combustible cigarettes.

    “In addition, the decision will contribute to the country’s economic recovery post-pandemic via the collection of tax revenues from legally imported products. Simultaneously, it will allow Egyptian authorities to clamp down on tax evasion issues associated with illegal market players. In a similar vein, the move and balanced regulation of the market offers authorities and e-cigarette vendors a path to stem the spread of inferior and dangerous black-market products that do not meet the standards and regulations outlined by Egyptian and international authorities. In doing so, adult consumers can rest assured the products they do find on sale are indeed a reliable alternative to traditional cigarettes.”

     

  • Eastern to Move to 6th of October City

    Eastern to Move to 6th of October City

    Photo: Taco Tuinstra

    Eastern Co. of Egypt intends to transfer all production capacities from its factories to the industrial complex in 6th of October City within two years, reports Daily News Egypt.

    According to Managing Director Hany Aman, the company inaugurated the industrial complex with the aim of integrating all its production capacity.

    The license of the Moharram Bey factory is about to expire. An economic feasibility study revealed that Eastern Co. would be better off transferring production of that factory than increasing investment at the exiting location.

    The Ministry of Environment and the Industrial Development Authority must still approve the transfer process.

    In related news, Eastern Co.’s board of directors approved new consumer prices for the company’s cigarette products to account for higher raw material cost and fourfold increase in freight prices caused by the disruption of supply chains around the world.

    Cleopatra Box 10 now costs EGP11.5 ($0.73), Cleopatra King Size costs EGP18.5 and Boston/Belmont costs EGP19.5.

    Aman said the company seeks to strike a balance between maintaining its profit margin and the interests of smokers. Eastern Co. is currently studying the prices of cigars and molasses.

    Eastern Co.’s profits increased by 15 percent to EGP2.92 billion in the first half of fiscal year 2021–2022. The company’s revenues grew to EGP8.53 billion from EGP8.16 billion during that period. Eastern Co. sold about 5.5 billion cigarettes in February.

  • Egypt Increases Prices Of Popular Cigarettes

    Egypt Increases Prices Of Popular Cigarettes

    Photo: Jose

    Eastern Co. of Egypt has increased prices for 10 types of cigarettes, reports Egypt Independent

    The retail price of Cleopatra Box (10 cigarettes) rises to EGP11.50 ($0.73), Cleopatra King Size (20 cigarettes) rises to EGP18.50 and Cleopatra Soft Queen (20 cigarettes) rises to EGP19.

    In January 2018, the Egyptian House of Representatives approved an increase in cigarette prices to finance comprehensive health insurance by EGP0.75 per pack of 20 cigarettes, and an increase of EGP0.25 piasters every three years until the increase reaches EGP1.5 at the end of the period.

    Eastern Co. is the largest producer of tobacco in Egypt. The company was established on July 12, 1920, by a decree from Sultan Ahmed Fouad.

  • Muharram Bek Suspends Production

    Muharram Bek Suspends Production

    Photo: Hassan

    Eastern Co. has suspended production at its Muharram Bek cigarette factory until it has calculated its requirements, reports Zawya, citing a statement filed to the Egyptian Exchange.

    Recent improvements to the work system have resulted in higher manufacturing efficiencies and, thus, surplus production.

    Inventory has grown beyond Eastern Co.’s required levels from seven to 15 days. The Muharram Bek factory accounts for 3 percent to 5 percent of Eastern Co.’s total production volume.

    Eastern Co.’s portfolio includes cigarettes, cigars, pipe tobacco and molasses tobacco, as well as filter rods and homogenized tobacco.

  • Eastern Co. Posts Record Results

    Eastern Co. Posts Record Results

    Photo: Ludmila

    Eastern Co. of Egypt achieved record sales and production volumes in fiscal 2020-2021, reports Daily News Egypt.

    The company manufactured about 70 billion local cigarettes, 16 percent more than in its previous fiscal year. Sales increased by 12 percent to 67 billion cigarettes 2020-2021.

    Eastern Co. also recorded a net income of EGP16 billion ($1.02 billion) in 2020-2021, compared to EGP14.5 billion in 2019-2020. Profits totaled EGP4.28 billion, up from the EGP 3.79 billion in the previous year.

    The company is also exploring the sale reduced-risk smoking products in Egypt.

    In an Oct. 17 statement to the Egyptian Exchange, Eastern Co. said it had examined the potential consumption and demand for such products in the local market.

  • Philip Morris Bids for Factory License in Egypt

    Philip Morris Bids for Factory License in Egypt

    Photo: Konstantin

    Philip Morris International made a “technical” offer for a new cigarette factory license in Egypt, reports Mubasher.

    British American Tobacco; Al-Mansour Group, the distributor of Imperial Tobacco products; and Japan Tobacco International failed to submit their offers, asking to delay the process instead, according to Ibrahim Embaby, the head of the tobacco division at Egypt’s Industrial Development Authority.

    The three companies have conservations regarding the bidding terms, which were amended earlier. Their requests will be submitted to Egypt’s prime minister, Embaby said.

    One of the companies also asked for separating the new licenses for conventional cigarettes and heated-tobacco products, he added.

  • Egypt Amends Invitation for Tobacco Bid

    Egypt Amends Invitation for Tobacco Bid

    Photo: マサコ アーント from Pixabay

    Authorities in Egypt have issued an amended invitation for tobacco companies to bid for a license to manufacture cigarettes, according to Reuters. The amended invitation follows complaints that the terms of the license previously offered were too narrow.

    The state-controlled Eastern Co. currently holds a 70 percent market share, and this new bid for license could end the company’s monopoly.

    Under the amended terms, the winning bidder would produce 1 billion cigarettes per year as opposed to 15 billion cigarettes per year. The updated terms also removed a rule stating any other licenses would not be offered after the tender for a decade.

    The deadline for the amended bid is Aug. 1.

  • Egypt Postpones License Auction

    Egypt Postpones License Auction

    Photo: Tobacco Reporter archive

    Egypt has postponed a tender for a license to manufacture cigarettes and vapor products, reports Reuters, citing industry sources.

    An auction for the license, which would have ended a decades-old monopoly by the state-controlled Eastern Co., was due to be held on April 6.

    “What we understand … is that the postponement is for an indefinite period … Certainly, the conditions for the auction will be changed if it is held again,” one source told Reuters.

    Earlier, several bidders had asked the Federation of Egyptian Industries to change the conditions of the license.

    According to the companies, the conditions protect Eastern Co.’s market share by preventing the new company from producing cigarettes at the same price point as the monopoly’s mass-market Cleopatra brand, which accounts for 98 percent of Eastern Co.’s revenues.

    On March 21, the tobacco manufacturer announced that the IDA has invited companies to the tobacco industry through tendering a new cigarette production license.

    The monopoly reported a 14 percent year-on-year increase in its net profit in the second half of 2020, recording EGP2.54 billion ($161.52 million).

    Eastern Co.’s product portfolio includes cigarettes, cigars, pipe tobacco and molasses tobacco as well as cigarette filter rods and homogenized tobacco.

  • Bidders Ask Egypt to Adjust Terms of Auction

    Bidders Ask Egypt to Adjust Terms of Auction

    Photo: Tobacco Reporter archive

    Several tobacco manufacturers have asked the Federation of Egyptian Industries to change the conditions of a manufacturing license auction issued by the Industrial Development Authority (IDA), reports Zawya.

    According to the companies, the IDA conditions protect Eastern Co.’s market share by preventing the new company from producing cigarettes at the same price point as the monopoly’s mass-market Cleopatra brand, which accounts for 98 percent of Eastern’s revenues.

    On March 21, the tobacco manufacturer announced that the IDA has invited companies to the tobacco industry through tendering a new cigarette production license.

    Eastern could own 24 percent of the to-be-established company without paying its share in the cost of the license.

    The monopoly reported a 14 percent year-on-year increase in its net profit in the second half of 2020, recording EGP2.54 billion ($161.52 million).

    Eastern company’s product portfolio includes cigarettes, cigars, pipe tobacco and molasses tobacco as well as cigarette filter rods and homogenized tobacco.