Ethiopia - Tobacco Enterprise will punish illegal traders..

May 19, 2009 - The National Tobacco Enterprise (NTE) has announced that it will take severe measure against illegal cigarette distributors and traders in the near future.
The enterprise, which has the exclusive right to produce, import and distribute tobacco in Ethiopia said that the illegal trade is affecting its income.

According to studies, only 2.5 per cent of Ethiopians smoke.

When the crack-down starts it will shut superstores, including small shops who sell illegal products. The announcement disclosed that currently the enterprise is preparing for the clamp down in collaboration with stakeholders, like customs, police authorities and regional administrations.

The public relations department of the enterprise said "These products do not meet quality standards and seriously affect the health of the users." According to the assessment of the enterprise, currently three types of illegal Rothman cigarettes are distributed. According to customs, over 40 cigarette brands are imported illegally. These illegal products do not have an expiry date, and also do not state the producer country.

Over the last few years, the enterprise has expanded its market share and introduced a new product, Delight, to the local market. Recently it has been preparing to introduce another new product, Nyala Premium. Wendu Bekele public relation head of NTE, told Capital: "This new product will have high quality, like internationally branded tobaccos. It will enter on the market this Ethiopian budget year." Currently, the demand for Delight cigarettes is increasing, and production has been increased by the enterprise top match.

The enterprise disclosed that in the first quarter of 2009 the company was projected to produce 1456 cartons (each containing 20 packs) of Delight, while it actually produced and distributed 2333 cartons. NTE produces four kinds of tobaccos: Eleni, Gisila, Nyala, and Delight. It imports Rothmans from Kenya and Marlboro from Europe. It also produces candles.

According to the public relation head, his enterprise market coverage is 62 per cent, with the remainder covered by illegal cigarettes. He said that the enterprise coverage will increase when the new product enters the market.
The enterprise has four tobacco farms, 20 hectares in Robe, 1,200 hectares in Blate, 25 hectares in Awassa and 1.5 hectares in Wolyata. The factory is using three types of tobacco plants for its production; virginia, oriental and berle. Aside from its own plantation, the enterprise is also collecting products from other growers. For instance 65 per cent of Virginia and 100 per cent of Oriental type tobaccos are collected from other growers.

Following the Government selling a 22 per cent share of its enterprise to a Yemeni company, Sheba investment and Holding Limited in January 2001 the company recorded a good performance on production and income. While the remaining 78 per cent is still possessed by the Government, there is a plan to transfer it to a private holding.
Last year (2008) the NTE produced tobacco and candles at the total cost of 154 million birr which exceed its projections by 1.2 per cent and was a 7.1 per cent increase from 2007. In the same year (2008), the enterprise sold products that for over 652 million birr, which was 75 million birr (13 per cent) above its projections and amounted to a growth of 17 per cent from the previous year. The enterprise made a 139 million birr profit before tax, but the plan was to make only 123 million birr.
In 2009, NTE is projected to collect 157 million birr profit before tax. (One Ethiopian birr equal 0.09USD.)

Reference: Tobacco enterprise to punish illegal traders State monopoly to introduce Nyala Premium by MulukenYewondwossen, Capital Ethiopia, 5/18/2009; Ethiopia: Tobacco enterprise to punish illegal traders by MulukenYewondwossen, Ethiopia Review, 5/18/2009.