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President’sComments

Roger Quarles - ITGA President

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Dear Members,

Each December, along with the years -end celebrations, brings a time of reflection of accomplishments from your twelve months of hard work. Expectations have been reduced to realities – hopefully positive for your family.Year 2009 will be remembered for a new onslaught of impending regulation of our industry – both by increased consumer taxes coupled with implementation of restricted access to end products of your tobacco leaf. We must never forget grower sustainability is totally linked to consumer demand. Alternative uses of tobacco plants have yet to be proven viable for any large scale production in any country.As growers cautiously enter 2010 – half of us in the marketing season with the other half in growing season – we must recognize the challenges each sector must surmount. Consumer markets surely will be shifting to different trends in types of end products. This will be driven by the Framework Convention on Tobacco Control (FCTC) protocol and the United States FDA Product Regulation. Political agendas by individual countries Health Ministries can immediately be disruptive to industry segments. The November TABINFO Asia Trade Show in Bangkok was attacked as violating the FCTC Treaty ratified by Thailand earlier. The show attendance was by private invitation to industry only yet no end consumer products were allowed to be displayed. FCTC language states no events are allowed in any ratifying country that may be considered as encouraging tobacco consumption. This action will probably severely alter planning for needed international events that educate all parties to their products and services. Locations for our own International Tobacco Growers Association Annual General Meeting (ITGA AGM) may be affected in the near future.You can expect further movement towards any product claimed to be “reduced health risk”. These products are increasing in the United States, Europe

and Australia typically as “smoke-free” products. Smokeless electronic devices delivering nicotine are marketed worldwide – even on one airline. Ongoing technology will reduce tobacco leaf needed for any product. It is most interesting that expert speakers in international meetings, including ITGA 2009 AGM in Hyderabad consistently report an expected increase in total consumer prevalence through at least 2020. There have been no reports of needed total corresponding tobacco production.The global financial meltdown is slowly recovering. Credit availability is a challenge to most leaf dealers and some manufacturers. The value of the United States dollar (USD$) is affecting the traditional marketing of all leaf. The United States processed leaf is now completely competitively priced to similar tobaccos’ elsewhere.Unlike the lightning – fast financial global meltdown, all of the above trends will slowly affect markets of consumer products and tobacco leaf production. Blending experts will insist on slow shifts to include less-expensive leaf demanded by their Chief Financial Officers (CFO). Leaf dealers with large infrastructure investments in developing countries will adjust margins to maintain those productions. Dark tobaccos’ will likely see increased demands. Second and third tier manufacturers will remain important in especially in Asian countries.ITGA will be your link to real-time information. Leaf dealers and major manufacturers are relying on ITGA to be a part of their programs for ongoing social issues with now a new link to regulation becoming a needed part of our mission representing global tobacco growers.A special thanks to our very successful 2009 AGM-Hyderabad goes to our staff and India member – Tobacco Institute with assistance from Tobacco Board. India Tobacco Company (ITC) support is greatly acknowledged and appreciated. ITGA looks forward to meeting the 2010 challenges with success for you.

December 2009tobacco courier4

09 India

10 Malawi

11 South Africa

44 Published by the International Tobacco Growers’ Association >> For further informations contact: António Abrunhosa; Chief Executive, ITGA >> address: Av. Humberto Delgado - 30 A, 1ºDtº >> Apartado 5; 6000-081 Castelo Branco - Portugal >> contact: Tel.: 00 351 272 - 325 901/2 fax: 00 351 272 - 325 906 >> mail: itga@tobaccoleaf.org >> website: www.tobaccoleaf.org

December 2009

Countries’ Reports

07 Brazil

07 Dominican Republic

14 Brazil(Afubra)

Educational, Social and Environmental Committee

15 ITGA´s 24rd AGMHyderabad, AndhraPradesh, India

Special Features

�

ChiefExecutive Report

A. Abrunhosa - Chief Executive

Economy books and stock exchanges call stocks of tobacco companies’ defensive stocks because, historically, they resist better than other stocks to economic crisis and downturns. As a matter of fact, the stocks of some of the biggest tobacco companies have outperformed almost any other stocks on a long term basis.

However, the present economic crisis hit the tobacco sector after several ways of tax increases all over the world and, especially, in the developed countries. This comes after the ratification by more than 160 countries of the FCTC which insists in tax raises as one of the main measures to control tobacco consumption.

This fact combined with the widespread bans in public places is calling for a closer examination of the so called “inelasticity” of tobacco consumption. That means that, this time, consumption may fall more than expected given the opposite directions to which are moving personal incomes and cigarette prices.

This, of course, does not refer to Asia where prices have risen less than elsewhere and the incomes have risen more than elsewhere. And the last figures for economic growth in the main market, China, stress the big divide between China and the rest of the world in what regards the economic outlook for 2010.

But, the Asian market, in its growing areas, consists mainly of Virginia blend markets and this has deep consequences for the Burley and Oriental markets as demand is decreasing in many American blend markets putting pressure on Burley prices given the extraordinary production increase in the biggest Burley exporter, Malawi.

This leads us to the growing importance of regulation and its impact on markets.

The Canadian government took a unilateral and controversial decision with the approval, on last October, of Bill C-32, banning all kinds of flavorings in cigarettes sold in the Canadian market. This decision makes it almost impossible to manufacture American Blend cigarettes for the Canadian market and this has trade implications that already led 8 countries to protest the decision with the World Trade Organization that will debate the issue in its coming meeting in March.

The case is not too relevant for the Canadian market which has a very small share of American Blend cigarettes but created an extremely dangerous precedent as the European Union, the Federal Drug Administration in the USA and World Health Organization are all considering directives, bills or guidelines on ingredients that might go the Canadian way. This could distort, completely, the world cigarette markets with devastating consequences for Oriental and Burley tobacco growing countries.

The World Health Organization created a Working Group to define proposals, recommendations and guidelines on article 9 (cigarette ingredients) and article 10 (ingredients’ disclosure).

Amidst the paranoid secrecy that is now the trademark of WHO’s decisions and discussions on tobacco regulations, there are rumors that the Working Group wants to follow the Canadian path. The draft proposals are basically written by the key facilitators (Norway, Canada and the European Union), clearly chosen for their radical positions on these issues and, up to now, WHO, as usual, has kept everyone from the sector completely out of the debate.

This is extraordinarily dangerous as even WHO recognizes that cigarettes are a highly engineered

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December 2009tobacco courier�

Countries’ Reports

AGM 2009 - India

product and WHO has a very limited expertise and laboratorial capacity to do a proper regulation of cigarettes exclusively with its own means.

And WHO is pushing to accelerate the decision process on proposals and guidelines with almost impossible deadlines, seriously hindering the possibility of reasonable and thoughtful comments by the numerous members of the Working Group outside

the minimal clique who is doing most of the writing.

The European Union is following closely WHO’s steps and, hopefully, we will respect democratic procedures in the decisions.

The FDA has a much more inclusive process of decision but will also define legislation on the subject during 2010.

� Countries’ Reports

BrazilAFUBRAMário André Poll

Afubra’s Department of Communication

Commercialization

For the most part, the commercialization of the tobacco crop in South Brazil started in early December. Prior to this, deliveries had started in the coastal region of Santa Catarina, where the commercialization process usually starts in November.

Early purchases by the industry benefit the growers. With the money, for example, they pay for such expenses as hired labor, particularly at harvest time, when labor is much needed. Early commercialization also benefits service sectors and shops, where traditional end-of-year purchases are a relevant factor.

With regard to the total size of the crop, the adverse climatic conditions account for the smaller-than-expected volume, which was initially estimated at 735 thousand metric tons, but the current forecast is for 679.5 thousand tons.

Pricing

The delegation of tobacco grower representatives, comprised by members of the Tobacco Growers’ Association of Brazil (Afubra) and by the Federations of Rural Unions and Rural Workers Unions in the three southern states, met with representatives of

tobacco industries, with the aim to start negotiating the prices for the 2009/10 crop. The meetings that took place 7 and 8 December were conducted individually by each company.

The entities acted in anticipation and proposed a price readjustment table, while the industries did not present any proposal. They wanted to come to grips with the suggestions laid down by the growers and requested time for analyzing the proposal. As a result, new meetings were scheduled for 13 and 14 January 2010.

In view of the absence of any price definition, deliveries will comply with last year’s price table. Should readjustments be confirmed, the difference in value shall be settled through a separate Proforma Invoice.

Hailstorms

Hailstorms again took a heavy toll on the current crop. From transplanting time to Christmas Eve Afubra’s mutual insurance system registered hail-induced damages on 25,975 tobacco fields, totaling 62 occurrences. Over the same period last year, 23,275 fields had been damaged, in 55 occurrences.

Dom. RepublicINTABACO

THE 20�0 ToBACCo CRoP IS lAuNCHED with large incentives for growers

With an investment in excess of US$ 2.7 million in direct support programs for tobacco growers, the

Tobacco Institute of Dominican Republic launched the 2009/2010 crop.

December 2009tobacco courier�

SCoPE oF DIRECT SuPPoRT PRoGRAMS FoR GRoWERS

Seeking to improve the quality of technology transfer systems through technical visits to farms, lectures, courses, methods and results demonstrations, field days, training and other activities, the following programs have been implemented:

Free land preparation

INTABACO is supporting land preparation activities with its own equipment. Our goal is to prepare 3,775 hectares, benefiting some 3,000 growers.

Production of seedling trays

This program includes the production of 3 million seedlings for distribution to growers. In addition, in each of the 30 tobacco growing areas in the country a greenhouse with the required technology will be set up in the farm of a model grower.

Input distribution

With this program, agricultural inputs (fertilizers, fungicides, insecticides and other) will be provided to growers under two modalities. Inputs will be

donated to low-income smallholders or sold to growers, giving them easy terms of payment and special discounts, which are absorbed by INTABACO.

Financing for sprinkling pumps

This year, INTABACO is providing financing for 300 portable sprinkling pumps and 50 motor pumps. Terms of payment include 25 percent discounts and up to 36-months credits.

Curing barn construction and/or repair

One hundred curing barns are to be constructed (50 of them will be donated to smallholders and 50 will be sold with discounts and credits). Another 100 curing barns located in different growing areas are being repaired.

Agroforestry nursery

For the present crop, one million fruit tree and hardwood seedlings will be produced to be donated to growers during sowing and reforestation field days.

DETAIlS oF PlANTING SCHEDulE

VARIETIES HECTARES

Amarillo Parado 2,169

Tobacco for plug 943

Olor 1,187

Havana varieties 1,712

Burley 157

Capa 119

Total 6,287

After several meetings with business sectors, which sought to achieve a balance between market needs (demand) and production volume (supply) to thus

ensure the stability of the tobacco marketing process, an agreement was reached to plant 6,287 ha with the different varieties grown in the country.

9 Countries’ Reports

IndiaThe Tobacco Institute of India (TII)

Andhra FCV Tobacco

Crop - 20�0- Production: 170 Million KgPlantation Is Nearing Completion. Growth Of The Crop Is Satisfactory.

Karnataka FCV Tobacco

Crop - 2009- Production: 100 million kg67 Million Kgs Has Been Marketed To Date, At An Average Price Of Us$ 2.3 Per Kg.

Yeleswaram light Soil Burley

Crop - 2009- Production: 6 million kg4 Million Kg Has Been Marketed At An Average Price Of Us$ 1.15 Per Kg.

Raghavapur light Soil Burley

Crop - 2009- Production: 5 million kg Harvesting And Curing Of The Crop Is In Progress.

A field day at a tobacco farm in the Espaillat growing region.

December 2009tobacco courier�0

** (Conversion US$ 1 = Indian Rs. 46)

Vinukonda light Soil Burley

Crop - 2009- Production: 8 million kgHarvesting And Curing Of The Crop Is In Progress. It Is Estimated That The Crop Production Will Exceed The Crop Plan Of 8 Million Kgs, To Reach Around 15 Million Kgs.

Sun-Cured Tobacco (HDBRG)

Crop - 20�0- Production: 25 million kgHarvesting Of The Crop Is In Progress.

Sun-Cured Tobacco (Eluru Natu)

Crop - 20�0- Production: 13 million kgTopping Operations Are In Progress. Growth Of The Crop Is Satisfactory.

Sun-Cured Tobacco (Kurnool Natu)

Crop - 20�0- Production: 5 million kgHarvesting And Curing Of The Crop Is In Progress.

Dark Fire-Cured Tobacco

Crop - 20�0- Production: 7 million kgThe Crop Size Has Been Revised From 6 Million Kgs To 7 Million Kgs. Harvesting And Curing Of The Crop Is In Progress.

oriental Tobacco

Crop - 20�0- Production: 7 million kgHarvesting Of The Crop Is In Progress. So Far, One-Third Of The Crop Has Been Harvested.

Exports Tobacco & Tobacco Products (Quantity in Million Kg & Value in Million US$)

Item200�/09 April/Nov

200�-09April/Nov 2009-�0

Quantity Value Quantity Value Quantity Valueunmanufactured Tobacco 197 590 142 415 158 524

Tobacco Products 28 147 18 87 19 100

Total 224 ��� ��0 �02 ��� �24

Source: Tobacco Board, Govt. of India

20�0 Tobacco Estimates

From 5th to 14th January, 2010 the Tobacco Industry carried out an assessment to establish estimated figures for tobacco production for

2010. TAMA participated through the Head of Customer Service and the Tobacco Sales Representatives.

MalawiTAMACommunication department

�� Countries’ Reports

Planting rains started early to mid November, 2009 in a few parts of the country. These rains were patchy, scanty and erratic. Dry spells of two to three weeks caused a lot of seedlings to dry up, forcing some farmers to replant two to three times. Majority of the production areas received planting rains between early to end December. The bulk of the crop, therefore, is a late crop.

The general crop is free from pest and disease attacks and has good potential for growth. If the season will not have another adverse weather or attacks of diseases and pests, the crop is of good potential. Burley will decrease by 11%, Flue Cured will increase by 24% and so too Western (NDDF) tobacco by 8%. Details of the estimates are tabulated here below:

20�0 Tobacco Estimates For All Tobacco Types

REGIoNBuRlEY FluE CuRED WESTERN (NDDF/SDF)

20�0 (Kg)

2009 Actual(Kg)

% Cge

20�0 (Kg)

2009 Actual(Kg)

% Cge

20�0 (Kg)

2009 Actual(Kg)

% Cge

Northern Region 64,000,000 57,000,000 12 3,400,000 3,000,000 13 2,800,000 2,400,000 16 16

Central Region 96,200,000 119,700,000 -20 16,100,000 12,400,000 30 2,400,000 2,400,000 0 0

Southern Region 24,800,000 31,400,000 -24 6,000,000 5,100,000 18 50,000 56,000 -11

Total ���,000,000 20�,�00,000 -�� 2�,�00,000 20,�00,000 24 �,2�0,000 4,���,000 8 8

Source: Tobacco Industry Consolidation ReportAll Tobaccos together for 20�0 = 2��,��0,000 Kg

South AfricaTISA

Crop Estimate 2009/20�0

Item Flue-Cured Dark Air-Cured Total

Number of Tobacco Farms 82 73 155

Hectares Cultivated 3050 917 3 967

Farm Weight (kg) 8 235 000 2 900 000 11 135 000

SA Tobacco control legislation

The first set of draft regulations in terms of the new Tobacco Products Control Amendment Acts were published for comment on 4 December 2009. The

draft regulations pertain to reduced ignition propensity (RIP) cigarettes, commonly known as “fire-safe” cigarettes. Members of the public, including the

December 2009tobacco courier�2

tobacco industry have until 4 March 2010 to submit comments on the proposed regulations. Further aspects contained in the Acts which require regulation include public smoking; health warnings; tobacco product packaging; point of sale signage and manufacturing standards.

Cross border liaison on anti-illicit trade mattersIn 2009, cross border meetings on curbing illicit trade in tobacco and tobacco products took place with

Angola, Botswana, Lesotho, Namibia, Swaziland, Mozambique and Zambia. In countries such as Mozambique and Zambia, it was agreed that an internal industry/government forum be established, where industry players could speak with one voice to government.

TISA presented to the SACU Commission on 16 September 2009 on the scope of illicit trade in tobacco and tobacco products within the Southern African region. The presentation was very well received and TISA will continue strengthening relations within SACU and into the SADC region during 2010.

�� Countries’ Reports

Educational, Social and Environmental

Committee

December 2009tobacco courier�4

BRAZIl(afubra)

EXPoAGRo AFuBRA 20�0

The tenth edition of Expoagro Afubra, an agricultural trade fair geared towards family farming, has been scheduled for 3, 4 and 5 March 2010. Idealized by Afubra, the major objective of the fair is to encourage the farmers to go for crop diversification and span the spectrum of activities in the sector.

The program is being prepared in a very special manner by the coordinating team, as the event reaches its 10th edition in 2010. Last year, the fair attracted 51.5 thousand visitors, an all-time record. The fair also registered a record number of exhibitors, a total of 285.

AFuBRA CHoIR

Founded in 1995, the Afubra Choir completes 15 years of activities in January 2010. To mark this special occasion, the choir singers scheduled a

special event for January 16, in Santa Cruz do Sul.

The program includes 15 notable highlights – the songs that made success year after year since the choir was founded. Homage and surprises are also part of the program. The event is open to the community.

CollECTIoN oF SATuRATED oIl

Launched in April 2009, the saturated oil collection project, an initiative of Afubra’s Life is Green project and Bioenergy team, comprises 161 registered schools in Rio Grande do Sul. Over this period, these educational institutions collected 14,139 liters. For the coming year, the activities are to be extended to the states of Santa Catarina and Paraná. The leading objective of the program is to give this oil a correct destination, avoiding environment contamination.

��Special Features

ITGA’s 24rd AGMHyderabad, Andhra Pradesh, India 2�th-2�th october 2009The ITGA’s 24th Annual General Meeting was held in Hyderabad, district of Andhra Pradesh, India, from the 26th to the 28th of October 2009.

The hospitality of our host country was flawless thus proving the competence and professionalism of the organising team.

Once again the Tobacco family bringing together members from Argentina, Brazil, Colombia, India, Italy, Malawi, South Africa, USA and Zimbabwe joined to debate common issues of interest that

currently concern tobacco growers.

ITGA’s 25th Anniversary coincided with this year’s Annual General Meeting. In its twenty-five years of existence, the ITGA has witnessed countless changes and challenges to the sector, the most significant one being the WHO’s Framework Convention on Tobacco Control that, excluding tobacco growers from a series of debates, cru-cial for their livelihoods, has over the past few years extended its reach beyond health, increas-ingly encroaching on agricultural matters.

December 2009tobacco courier��

ITGA 2009 AGMIssues DayThe one-day conference opening the AGM, the ‘Issues Day’, is a special forum where invited speakers deliver presentations on specific areas of relevance to tobacco-growing communities. The ITGA’s 2009 Issues Day was attended by delegates from all four continents and featured the following experts and presentations:

- “An Overview of the Global Tobacco Market” (Zora Milenkovic, Euromonitor, U.K.);- “Tobacco Consumption and Marketing Trends in India”

(Mr. Kurush Grant; ITC);

- “World-wide Burley Trends” (Mr. Simon Green; Alliance One);- “FCV Tobacco Cultivation in India – Opportuni-

ties & Challenges” (Dr. J. Suresh Babu; The Tobacco Board of India);

- “Tobacco Chain Partnerships” (Dr. Kai-Uwe Brüggen; Bayer CropScience)

Among the issues debated were:

- The current turmoil in terms of regulation in the present economic climate ant its subsequent impacts on production;

- India’s unique market and the struggle of its supply chain to remain competitive and pros-perous;

- Changes in tobacco product mix due to the global economy, regulations, smoking restric-tions, taxation and EU subsidies and possible new trends for the future;

- Although India is the 3rd largest producer and 2nd largest exporter of leaf tobacco, it faces serious challenges that may threaten it as a re-liable source of leaf supply;

- Bayer CropScience’s Food Chain Partnership program allows all partners along the value chain potentiate the production of high-quality tobacco under sustainable conditions.

��

An overview of the Global Tobacco IndustryZora Milenkovic, Euromonitor, U.K.

Zora Milenkovic manages the research pro-gramme for the global tobacco industry at Euro-monitor International, which she joined in 1997. Euromonitor International’s tobacco research provides strategic analysis of the global market and in-depth coverage of the tobacco industry in more than 80 countries world-wide. She is also responsible for managing the international client base of Euromonitor’s online Passport Tobacco system. Before taking up her current position, Zora was a Research Analyst specializing in the markets of Eastern Europe. Currently, she is a regular contributor to various trade journals such as ‘Tobacco Journal International’.Of her presentation, we highlight the following:The tobacco industry is undergoing continuing upheavals in terms of legislation and the current economic climate might be pictured as follows:

• Product restrictions:- The industry has to comply to tar yield caps,

pack health warnings and, progressively switch to LIP or Fire-safe cigarettes. These reduced or “Low Ignition Propensity” ciga-rettes are already a major trend in the US (at

the beginning of 2008, nine US states had a fire-safe mandate, by 2010 it is expected that a total of 50 states will have fully implement-ed legislation for fire-safe cigarettes). There are also plans for their introduction in EU.

• Operational restrictions:- The tobacco industry is forbidden to advertise

and/or sponsor any public event;- Has to deal with public smoking bans, POS dis-

play bans;- The enforcement of increasing taxation.

The FCTC aims at gaining control over tobacco content (e.g. nicotine and additives).

• The companies’ response was: innovation. To off- -set volume declines manufacturers launched cheaper brand cigarettes; the growth in women smokers led to brand variants especially targeted to them (e.g. superslims); organic and additive-free cigarette brand variants respond to public health pressure and “green concerns” and shorter fatter cigarettes with a strong nicotine release are the manufacturers’ response to public smoking bans.

Tobacco Consumption and Marketing Trends in IndiaKurush Grant, ITC

Dr. Kurush N. Grant is a Divisional Chief Executive of ITC Limited; a 3 billion Dollar diversified Indian

Company. After obtaining an Honours degree in Economics in 1977, he went on to complete his

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December 2009tobacco courier��

Masters in Business Management in 1979. His working career started in Corporate Planning in the Delhi Cloth & General Mills as a Management Trainee from where he joined ITC in 1980 in its Marketing Function.

During his tenure with ITC, he has been involved in the Marketing of a wide range of FMCG products. Mr. Grant has handled a range of responsibilities in ITC in Sales, Marketing Research, Brand Management and Product Development before becoming Executive Vice President Marketing in 1996. He assumed charge as a Divisional Chief Executive in 1999. He has been actively involved in the development of ITC’s new FMCG forays, including into Foods, Garments, and Personal Products.

He is the past Chairman of the Audit Bureau of Circulations and the National Readership Studies Council – India. He is the Deputy Chairman of the Confederation of Indian Industry (Eastern Region), the Vice Chairman of the Indian Society of Advertisers and a Director on the Board of King Maker Marketing, USA. He is also on the Executive Committee of the Indian Chamber of Commerce – Kolkata, the FMCG National Committee of the Confederation of Indian Industry, the Co-Chairman of the Federation of Indian Chambers of Commerce and Industry’s FMCG Committee and on the Committee of the Broadcast Audience Research Council – India.

In India everything is different. Its difference in culture and economics also extends to the Tobacco Industry.

India is the third largest grower and the second largest consumer of tobacco products in the world. But per capita consumption of cigarettes in India is the lowest, by far, in the world. The world average of the cigarette form of tobacco as a percentage of total tobacco consumed is more than 90%. In India it is less than 15%.

Tobacco policy in India is also unique in that it has different policies for different types of tobacco. Every type of tobacco product conceivable is consumed in India. In India tobacco is smoked, chewed and sniffed. At last count, there were more than 20 distinct types of tobacco products sold in the country. India sells more Snus type of products than Sweden; more Hukka or hubble bubble type of tobacco than all of Arabia and more chewing

tobacco than was ever consumed in the United States of America. Diversity of people also results in diversity of choice.

But, like elsewhere in the world, India has severe tobacco control legislation which can be divided in 5 main fronts:

1) Taxation increases;

2) Ban of all advertising and sales promotion;

3) Restriction of consumption locations, through a ban on smoking in public places;

4) Graphic health warnings including publication of tar and nicotine levels on tobacco products;

5) Anti-tobacco communication at school and college level, apart from those aimed at the general public;

Compared to other countries, these measures similar to others taken elsewhere, resulted in something different in India:

1) Tax increases have in reality been only on cigarettes, and not on the other 85% of the tobacco industry.

2) The ban of advertising and promotion has ef-fected only the cigarette industry and, given the fact that bidis and chewing tobacco rarely advertise, they were dependent on trade dis-counts and incentives which continue.

3) The ban of smoking in public places has affect-ed the urban white collar environment where in any case mainly cigarettes were consumed and consumption of bidis was rare.

4) At this point of time, only the cigarette com-panies and the Central Tobacco Research Institutes can even measure tar and nicotine and, in fact, if all bidi manufacturers were to measure the same, investing in smoking ma-chines manufacturers like Borgwaldt and Cer-rulean would be a sound business proposition for all in India.

5) All tobacco products from 31st May 2009 have graphic health warnings covering 40% of the

�9

principal display panel. Some of the larger bidi and chewing tobacco manufacturers have followed this, but the majority simply ignores it as they do not package their product.

Although India has some of the most stringent regulation on cigarette control, it also has some of the mildest on overall tobacco control.

It is interesting to understand what the cigarette industry has done to survive.

The four key changes in the strategy of most players in India were:

1) The retailer as a medium of communication grew in importance becoming the primary source to communicate brand values in a simpler and clearer way due to fewer finan-cial resources.

2) Packaging as a medium of communication be-came even more important. The design for most Indian brands got modified, enhanced and im-proved. The Industry required flexibility and va-

riety which translated into a positive choice with regards to competitiveness worldwide.

3) The biggest change was related to the approach of brand portfolios and communication. Without national advertising, all communication and con-sumption became local. This also meant that all marketing inputs and efforts became local and easier to convey to the final consumer.

4) The basics of running any business are to know ones’ consumer and customer and pro-vide them with great value. In India all cigarette companies followed the almost heretical belief that “Marketing is too important for business to be left in the hands of the Marketing Depart-ment”. Having followed this approach it was easier to modify structures and align them to strategy rather than the other way round.

The Indian Tobacco market has changed dramatically in the past few years but Indian cigarette manufacturers chose this path to compete, survive and prosper in a very difficult environment with notorious success.

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December 2009tobacco courier20

World-wide Burley TrendsSimon Green, Alliance One

Simon Green is the Regional Director for Africa for the Alliance One International Tobacco Company. He has been in the tobacco industry for the last 31 years. Starting his career in India with Andrew Chalmers International in 1978, Simon has worked in many parts of the world. Having been trained in Asia, he was eventually based in Malawi in 1984. In 1985, he was transferred to work in the international marking department of Trans Continental Leaf Tobacco Corp in Hamburg. From this base he travelled extensively to many countries before joining the Operations group of Standard Commercial as Regional Manager of the CIS region in 1997. Simon became Standard’s Regional Director of CIS and Europe in 2004 and was made Regional Director of Europe For Alliance One at the time

of the merger between Dimon and Standard in 2005. Since September 2008, Simon has been resident In Lilongwe Malawi in his current role.

“With global cigarette consumption fairly stable, the supply of flue-cured leaf tobaccos has remained fairly constant over the last two years. Burley has increased due to the Malawian crop size this year and oriental tobaccos are being grown against demand. Given the stable demand, Burley production increase is creating a glut in the market. Product mix and changes in cigarette design may alter the requirements for leaf tobaccos. Changes due to the global economy, regulations, smoking restrictions, taxation and EU subsidies present possible new trends for the future.”

FCV Tobacco Cultivation in India – opportunities & ChallengesSuresh Babu, The Tobacco Board of India

Dr. J. Suresh Babu is the Chairman of Indian Tobacco Board for the last three years. Prior to this assignment, he was Executive Director of the Indian Tobacco Board. Dr. Babu is basically a medical surgeon, who has turned into a general administrator. Born and brought up in tobacco growing family, he has been thriving for the welfare

of the tobacco growers. Under his leadership, the tobacco growers are benefited by fetching historic farm prices and the trade is benefited by doubling the exports. He has introduced electronic auction system for sale of tobacco. His concern for the welfare of the tobacco farmers has resulted in establishing Tobacco Growers Welfare Fund,

2�

with a corpus of US$ 6 million for the health and education needs of the grower families.

India is the 3rd largest producer and 3rd largest exporter of leaf tobacco. The strength of Indian tobacco lies in its varied agro-climatic conditions and relatively low cost production base. India produces a wide range of tobaccos that meets the requirement of most of the customers across the globe and its growers are blessed with good farming skills that are acquired over generations. The backbone of the Indian tobacco industry is the Tobacco Board of India, which takes care of the interest of tobacco growers and traders. Flanked by the contemporary research support given by the Central Tobacco Research Institute and other research divisions of the domestic manufacturers,

the productivity levels of tobacco have gone to 3000 Kg per ha from 900 Kg per ha. Indian Tobacco Board undertakes large scale awareness campaign on Good Agricultural practices, Integrated Pest Management, Integrated Nutrition Management, product hygiene and product integrity. Transparent auction system provides a better platform for international merchants to understand the domestic market and in turn the export pricing. The sheer volumes of tobacco coupled with year round supplies has turned India into a more dependable and acceptable supplier. The tobacco industry is facing the challenges of steep increase in cost of cultivation coupled with acute shortage of labor force. The Tobacco Board is striving hard to over come these challenges and will ensure India as a reliable source of leaf supply.

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December 2009tobacco courier22

Tobacco Chain PartnershipsKai-Uwe Brüggen, Bayer CropScience

Dr. Brüggen studied Agriculture at the University of Bonn, Germany and obtained a PhD in Entomology and Crop Protection in 1990. That same year he joined BAYER in April where he has since carried out a number of different roles in Research, Development and Portfolio Management. Dr. Brüggen is chiefly involved in market and product development activities in the European Union, the USA, Brazil but also covers areas of the Commonwealth of Independent States, namely Eastern Africa, Australia and New Zealand. Dr. Brüggen joined Bayer CropScience India Ltd. and is currently in charge of Project Management & Technical Development.

Bayer CropScience AG, a subsidiary of Bayer AG, is one of the world’s leading

innovative crop science companies in the areas of crop protection, non-agricultural pest control, seeds and plant biotechnology. The company offers an outstanding range of products and crop solutions for modern and sustainable agriculture. Given the more and more strict regulation on cigarette contents and ingredients, partnerships between input suppliers, cigarette manufacturers and tobacco growers is becoming more and more crucial. Bayer Crop¬Science is represented in more than 120 countries. Bayer CropScience’s Food Chain Partnership program brings together all partners along the value chain – growers, traders, retailers – to enhance their capability to produce and provide high-quality tobacco under sustainable conditions.

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Dezembro 2009tobacco courier24