Alliance One And China Tobacco Joint Venture in Brazil

Source from:  Tobacco Reporter 01/10/2012

The Brazilian subsidiaries of Alliance One International and China Tobacco will form a joint venture company in Brazil. Under the agreement, Alliance One Brasil Exportadora de Tabacos (AOB) will transfer to the joint venture production contracts with approximately 6,000 integrated farmers for the upcoming 2011/2012 crop. The joint venture's administrative and buying functions will operate in a portion of Alliance One's recently expanded facilities in Venancio Aires and tobacco processing will occur in AOB's facility. The joint venture will be owned 51 percent by China Tabaco Internacional do Brasil (CTIB) and 49 percent by AOB. "The high quality of the Brazilian tobacco, combined with Brazil's capacity to grow volumes, has meant that Brazilian tobacco is a highly desirable component in the better quality Chinese cigarettes," says Liang Deqing, president of CTIB. "For a long time, we have been studying the Brazilian market with the intention to start buying directly from the tobacco farmers. The joint venture is the union of two powerhouses of the tobacco industry, a strategic alliance that strengthens all of the parties in the Brazilian tobacco market, one of the most important in the world." "The main objective of the joint venture is to promote the production of quality tobacco to supply the Chinese market," says Alexandre Strohschoen, Alliance One's regional director for South America. "China's cigarette market is the biggest and fastest-growing market in the world and this agreement reinforces Brazil as one of the main suppliers of this market. It is a partnership aligned to Alliance One's strategy of growth and sustainability." "China Tobacco is a highly valued partner and we are pleased that our collaborative relationship has again expanded, to now include the new joint venture in Brazil," says Pieter Sikkel, Alliance One's president. "Consistent with our strategic focus, this arrangement helps a key customer achieve one of their stated goals, while providing AOI incremental growth opportunities and further alignment with the largest and fastest growing market in the world." Enditem