JTI records a slump in 2015 tobacco production

Japan Tobacco International Leaf Zambia Limited says bad weather conditions have affected crop size and production this year. Japan Tobacco International (JTI), the world’s third-largest tobacco company, established its presence in Zambia in 2010 and buys tobacco leaf from 7,000 small-scale and commercial farmers. The company procures two types of tobacco namely; burley, grown in Eastern Province and flue cured virginia, grown in Western Province. JTI Leaf Zambia Ltd general manager Mike Roach said in an interview that the company’s crop size and production had been negatively affected by the El Niño, a term generally referring to prolonged warmer than normal climatic conditions, which the country has endured this year.

“Currently, weather-wise, it has been a tough year for tobacco. El Niño certainly didn’t help. Crop sizes are definitely down from previous years,” he said. “On the flue cure side, last year’s market would probably be between 30 million and 33 million Kgs.

The current number is about 26-27 million Kgs grown so it is down, and on the burley side, last year we roughly had nine million Kgs from the Eastern Province; this year we are sitting just under six million Kgs.” And Roach said while the Chinese economic slowdown has not had a bearing on local demand, world cigarette volumes had slumped, with the company also registering a shift in consumer tastes for specific brands.

“World cigarette volumes are dropping, the Chinese volumes are staying flat. What really is a change in the tobacco market is that there definitely is a move to more quality brands of cigarettes, which means that there is a move to more quality tobacco that needs to be grown,” he added. “We only buy and sell to ourselves and don’t sell to anybody else. We will actually buy all the tobacco and process it; some in Lusaka and some in Lilongwe (Malawi) and then we send it off to Antwerp (Belgium) that then ships [the tobacco] around the world.” According to Roach, JTI Leaf Zambia has around 30 per cent of the domestic tobacco market share, leaving the other 70 per cent sold largely to the Chinese market through merchant companies.

JTI, headquartered in Switzerland and established in 1999, has several world-renowned brands that account for more than 65 per cent of their tobacco sales volume. The group, whose products are distributed in more than 120 countries, recorded an operating profit of over US $4.2 billion last year.

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