Excellence in Toabcco: A Borderless Future

Source from:  Tobacco Asia  06/21/2013

Star Tobacco International (STI) is a company that was established in 2009 in response to changing market conditions in the tobacco supply chain worldwide. Its mission is to partner exclusively with medium-sized companies in the provision of tobacco and services for the long term and its motto, Excellence in Tobacco, underlines its commitment to the products it sells as well as the provision of full services to ensure total customer satisfaction. STI is a privately owned corporation.

The company's head office is located in Turkey where the renowned Dr. Iqbal Lambat is in charge, and Asia representation is in Hong Kong China and Denpasar Indonesia. But as Baldev Mistry (director Africa region, based just outside Johannesburg) and Christopher Maan (general sales manager, Europe, based in Luxembourg) explained on their stand during a busy ProTobEx Asia exhibition in Manila, the whole of the tobacco market is becoming so globalized that there is little point any more in marking the map with hard lines and borders.

Strategic posture

STI's strategic posture is that its leaf operations are predicated on the new reality in the tobacco industry, namely that "tobaccos will be in short supply in this decade, caused by decoupling of EU subsidies, the uncertainty surrounding emerging markets in Africa and the impact of the FCTC implementation." In addition, STI highlights the fact that "multinational cigarette manufacturers have declared their intent to control up to 80% of their own requirements and are partnering increasingly with the major leaf merchants at the expense of their supplying medium-sized companies."

So STI is one of a few companies that have emerged to supply these small- and medium-sized manufacturers. It has "diligently established itself directly with major indigenous producers and processors to remove traders and leaf brokers from the supply chain, thereby enabling STI to source at best prices and to ensure that independent privately owned companies that choose to work with it will always have security of tobacco supply for the long term. It operates in the major leaf producing countries in Latin America, Africa, Asia and the Oriental tobacco countries of Turkey, Macedonia and Bulgaria. STI fully supports farmer sustainability."

"Speed of response is one way of differentiating a company's service," says Mistry. In this regard the establishment last year [2012] of a just-in-time warehousing facility in Antwerp, Belgium – a superb strategic location given the port's central position in Europe and proximity to all major shipping and air routes – provides clients with fast supply of modest or even quite substantial quantities of tobacco.

"This just-in-time store cuts down on the time taken for a client to source a specific type of tobacco from origin by at least six weeks" explains Maan. "We concentrate on serving small and medium clients and we are adept at handling part-orders. In effect we have become the tobacco warehouse for a few of our clients."

STI has now developed a portfolio of regular customers in the European Union and the Balkans that frequently and regularly purchase from the Antwerp depot. Clients – and prospective clients – are welcome to visit, inspect the conditions under which the products are stored, inspect and smoke individual grades before confirming any order.

"This transparency establishes and encourages a feeling of trust between buyer and seller," Mistry said.

With fumigation facilities on site and a highly professional logistics provider, CWT Commodities, handling all order preparation, STI is able to prepare orders and load onto client's trucks within two days of order confirmation. Excluding stock at the Antwerp facility, where there is always a selection and large quantity of the tobaccos that are most in demand, notably Brazilian and Asian FCV, African burley, stems, reconstituted tobacco and fines, STI maintains access to stock of some 50 million kg of tobacco leaf in inventories or under direct options. The success of the STI Antwerp depot has initiated projects at STI to replicate the model to service Asia (location: Surabaya, Indonesia) and Latin America (location: Montevideo, Uruguay). These are expected to become operational in 2013 and 2014.

Expansion in Asia

"In Asia, we already have some very important and well-known clients and we are planning to expand. We expect to add substantially to our client list in the Asia region over the next 12 months," according to Maan. "In this regard the first Asian sales office will be opened in Bali Denpasar, Indonesia in April 2013."

There is also interest from the US market, in which STI will partner with local companies "as appropriate".

Uplift the underprivileged

Currently most of the tobacco that STI supplies originates in Africa, much of it burley from Malawi, Uganda and Zambia, and FCV from Zimbabwe, Zambia and Uganda. To broaden its African supply footprint Mistry was due to conclude a new project in East Africa on his return from Manila. STI is proud of its role in promoting initiatives to "uplift the underprivileged" in the region.

"For us, we see it as a stepping stone for people who want to get on and become self-sustainable," he said. One recent example is a small farmers' project in Zambia, a "toe in the water" exercise covering just 10 hectares where STI's Zambian representative Vigie Vermaak got together with 10 other farmers to plant tobacco leaf (for FCV) on virgin land.

"The first crop has been spectacularly good quality," Mistry enthused. "It has come from nothing to looking to be a major long term opportunity" both for the farmers themselves, who will be able to sustain their families, and for STI.

"We will expand the operation and provide technical support in the areas of good agricultural practices, grading and manipulation, curing and lots of encouragement," he concluded.

Security of supply

One of the aims of the enterprise is to ensure for its clients better security of supply, not least given that STI is buying in nearly every major tobacco origin and actively working with farmers in many, especially in Africa, to eliminate the "disconnect" between producer and buyer that has sometimes been a problem in the industry. STI also provides "seed to box" traceability of all shipments. In addition to fulfilling this brokerage role, STI – via its subsidiary Tobacco Solutions Asia Limited (TSAL) – is able to offer a full business, engineering and technical consultancy and advisory service to companies in the tobacco industry as well as new entrants.

"With Dr Iqbal's knowledge and experience in this industry spanning three decades, we can't go wrong," says Mistry. "And the whole STI operation is a genuine team effort – everyone here has first-hand experience of this industry and we know the tobacco game from all angles." Enditem